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What is microfinance?
Microfinance is the practice of providing financial services to low-income clients who are typically excluded from the formal banking sector. These products typically include small loans, sometimes as modest as $100, to people to start a business but increasingly savings accounts and insurance products are offered. Customers access these services through financial organizations called microfinance institutions (MFIs) and use the loans in different ways: some purchase a bicycle to transport vegetables to a market, or use the money to buy fertilizer for their crops, or a sewing machine to start a tailoring business. However, they all have one goal: to make a decent living and support their families’ basic needs. Many are able to send their children to school for the first time, allow all family members to eat three meals a day or make seemingly small home improvements that can actually have a significant effect on the health and well-being of a household such as replacing a mud floor with a cement floor.
Meet Adisue Ayu: Client of PEACE MFI in Ethiopia
Meet PEACE client Adisue Ayu. She lives 30 miles outside of Addis Ababa, measured in distance—and a century away measured in way of life. Adisue is 30 years old, divorced, and raising four children on her own. The only material possessions her husband left her were a simple thatched roof hut they had built and four sheep. With no formal education, Adisue could survive only with ingenuity and immensely hard labor. Fortunately she has both in spades.
Adisue took her first loan of $150 from PEACE six years ago to purchase a cow. She turned its milk into butter and cheese to sell in the local market. What has been the result? The impact of that one cow on Adisue’s life has been staggering. She now owns five cows, has built a larger house and replaced the leaky thatched roof with tin. All four of her children are now in school, no small feat for a struggling family. Today Adisue has a monthly income of 500-600 Brr—equivalent to the starting salary for a college graduate in Addis. Her aspiration? To keep getting larger loans so that she can build a cow shed and double her dairy business. Read more microfinance client stories >>