WHAT IS MICROFINANCE?

Microfinance institutions (MFIs) help the poor transform their entrepreneurial enterprises into self-sustaining businesses by providing them with investment capital, financial information and other services including savings and health insurance. The following client success story illustrates the transformative role that WWB network institutions can play in the lives of poor but hardworking women entrepreneurs.

Oyunchimeg Dendev is a seamstress and mother of five in Ulan Bator, Mongolia. In 1995 she left her factory job to start her own tailoring business in her home. She sold her products on the street, as she could not afford to rent a stall in the market. In 1996, her husband lost his job and joined her in the business. Her oldest children helped too but the business did not grow because it lacked investment capital.

After five years of struggling, Dendev heard about a financial institution called XacBank, a member of WWB's Global Network for Banking Innovation that was making small loans to low-income entrepreneurs. XacBank has more than 50,000 borrowers (more than half of them women) and more than 65,000 savers. In 2001 Dendev received a loan of MNT 200,000 (about USD 160) from XacBank and bought a second manual sewing machine and materials. She repaid this loan at 4.5 percent interest per month, and took out another loan to buy two motorized sewing machines. Since then she has received 13 loans from XacBank, most recently a growth loan of MNT 5 million (about USD 4,000), as well as essential guidance on business practices from XacBank advisors.

Today her family rents five stalls in the market to sell their products, as well as imported shirts and ties. During high-demand seasons Dendev's daily sales can reach MNT 1 million (about USD 800). At these times, she hires assistants whom she teaches to sew, providing temporary employment and training to more than 15 young people.

With loans from XacBank, Dendev has built an extension to her house as a workplace and bought a car to deliver her products. Thanks to her business, she has seen two of her children graduate from the country's best universities.