Between bills, gas and your social life, an extra 20 bucks may not seem like it can have any significant impact on your life, but Creditscore.net begs to differ, especially if you’re a female. The infographic the website put together explains why microloans, even as small as $20, can help women entrepreneurs in developing countries change their lives, and in turn, maybe the world.
The graphic explains 1970s economist Muhammad Yunus’s belief that small loans make a difference, and why he was correct. It reveals that Yunus’s bank, Grameen, has been administering small loans since 1983 and has helped almost half its customers get out of poverty in developing countries. Today, the average loan from Grameen is $309. Without banks like Grameen giving microloans, people, mostly women, in these countries would have to borrow money from loan sharks that require very high interest rates. After they use the money for whatever they need, such as supplies for their businesses, they are left with enough money to eat, but not much else. It becomes a cycle. To show how these small loans help women in developing countries become financially stable, the graphic begins by explaining that 46% of men in these countries have bank accounts compared to 37% of women. Women make up the majority of those taking out microloans because of the disadvantages they face. For example, in Africa, women receive less than ten percent of the credit provided to farmers even though they make up 60% of the rural labor force, and contribute up to 80% of food production. To make up for the money denied to them, women take out small loans as a way to slowly get financially independent.
These loans also prove to be important when looking at a survey conducted in Africa in January. It showed that 34% of female entrepreneurs in Zimbabwe had a negative perception of obtaining credit from financial institutions, or found it to be “very difficult.” However, the survey did point out that more than half of the respondents were unaware of public and private programs that lend to female entrepreneurs, speaking to a lack of information on their part, which may be a result of the fact that Zimbabwe does not have a specific female chamber of commerce. Also, 66% of women reported that they felt discriminated against by banks when trying to get credit. For many women looking to better their lives, small loans are sometimes the only option.