Financial services for the poor have proven to be a powerful instrument for poverty reduction that enables the poor to build assets, increase incomes, and reduce their vulnerability to economic stress. Rigorous studies have proven that microfinance can smooth consumption levels and significantly reduce the need to sell assets to meet basic needs.
By reducing vulnerability and increasing earnings and savings, financial services allow poor households to make the transformation from every-day survival to planning for the future. Households are able to send more children to school for longer periods.
Increased earnings from financial services lead to better nutrition and better living conditions, which translates into a lower incidence of illness. Increased earnings also mean that clients may pay for health care services when needed.
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