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In 1993, World Vision began to implement microfinance programming to benefit the economically active poor. VisionFund is the microfinance subsidiary of World Vision.
Microfinance refers to the practice of providing financial services such as microcredit, microsavings and microinsurance to the very poor. Microfinance fosters small-scale entrepreneurship and acts as a handup when a handout is no longer beneficial.
World Vision International understood the importance of microfinance within the areas it serves and developed VisionFund International, the microfinance subsidiary of WVI. All of World Vision’s microfinance programming is administered through VisionFund which averages a 98% portfolio repayment rate.
VisionFund International owns or monitors microfinance institutions in 12 countries throughout Asia and hires staff that specialize in banking and economics. More information on VisionFund is available at www.visionfundinternational.org.
A proven method for breaking the cycle of poverty, microfinance works by addressing one of poverty’s main contributing factors: the fact that most poor do not have a credit history, and are therefore ineligible for traditional financial services.
Micro-enterprise development is based on sound economic theory, made possible through community banks called microfinance institutions (MFIs).
MFIs work on the same principles as credit unions. They are designed to bring maximum benefit to their customers, with their profits recycled into further loans. Each institution has an independent board who understands the needs and challenges of the community they’re working in.
Microfinance is an integrated part of World Vision’s development work and is not a standalone programme. Potential loan recipients are first given business training to equip them with the basic skills required to successfully run a small business.
The resulting increase in small businesses, which may include livestock rearing, opening a shop or food stall, or many other initiatives meeting community needs has many advantages:
Employment increases – as the business expands, the owner can provide jobs for others in the community
Family income increases – families can afford to provide schooling and medical care for the children without outside intervention
Empowerment – especially for women and children. MED brings new opportunities for decision-making, education and community positioning
Sustainability – the success of the business continues long after the loan has been repaid, meaning greater family income for education, healthcare and a better life.
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