In rural areas of Africa, you will rarely find a bank or financial institute of any kind. This is not just true for Africa but in most places of the world. And this inequality of financial services is what you’ll see when you move further away from cities and urban areas.

It is very normal for villagers to have never used a banking service or to have never sought help from it. Living in towns and their suburbs, we cannot even imagine life without financial aid, and yet there are millions who don’t have access to that basic need.

To make financial services more inclusive in their services, microfinancing operations have sprung up all across the world, operating largely in countries such as Uganda, Kenya, and Tanzania. This is because the aim and the reason for such micro-financial projects came into existence, is to give impoverished people an opportunity to become financially secure and to give to these communities the independence and self-sufficiency that they too deserve.

While micro finance institutions most often provide lending, these microloans can range from as small as $100 to as large as $25,000, but many of these institutions also offer additional services such as checking and savings accounts as well as micro-insurance, and some even provide financial and business education.

Microfinance in African villages especially is something that could really lift the living conditions and welfare of those who are low wage earners, who are unemployed, or who are potential small business owners who,due to their location, have no access to financial services and growth.

In effect, microfinance projects can successfully address material poverty, the physical deprivation of goods, services, and the income to attain them. When properly guided, the material benefits of microfinancing can very easily extend beyond the household and into the community.

According to the World Bank, more than 3 billion poor people seek access to basic financial services that are essential to their livelihoods. The World Bank also estimates in one report, that more than 500 million people have benefited from microfinance-related services; but 500 million beneficiaries constitute only a fraction of the potential market of 3 billion poor people who have sought aid.


(a man brings his wares to market on a donkey – source Unsplash)  

In poor households, incomes apart from being very low are also irregular. What poor people need is for them to be able to generate a smooth income flow and have the means to finance larger investments. But because they generally lack access to banks and other formal facilities, they most often live their entire lives struggling and in a rut.

While traditional financial institutions shy away from this market because they consider it unprofitable, it is high time we realize that microfinance is no longer a service that must be obtained in person, through traditional means. There is no longer the need even for the microfinance project team to set up a building and organize a traditional bank that villagers have easy access to.

With the world transforming everything into digital, there are many microfinance companies that are embracing the benefits and faster technological infrastructure that comes with digital innovation. So the poor person does not need a traditional bank set up at his or her doorstep, all they require is to have access to technology and the internet, and for the financial institutes to include them and their community in the demographic of people who can use its services.

Inclusive microfinancing ventures are cataclysmically powerful in its effects. Economies and GDPs rise with its installment, and poverty can be wiped out with its deep-reaching nature. And one of the most important methods of bridging the gap between the rich having access to microfinance and the poor not having access to it, is to educate the poor on how to become digitally active.

With the knowledge necessary to find one’s way across digital financial services, comes the other vital necessity for Africa’s citizens: access to the internet. And this is a feedback loop, when one area improves, automatically the other will.

The International Telecommunications Union (ITU), indicates that for every 10% increase in broadband penetration, the underlying impact can be as much as a 1.9% increase in GDP per capita.

This provides evidence of how in driving digital growth, the economy prospers. In addition, it indicates that pricing remains a key enabler for the adoption of broadband and a 10% drop in prices will boost the adoption of technology by more than 3.0%.

When villagers in outlying areas have access to the internet and digital financial services, the benefits they will reap from it are vast and will not just upgrade the welfare of the poor, but it will uplift the economic state of the entire country.

Digital services that work with microfinance institutes have seen how access to loans and deposit services have empowered millions of people to work their way out of poverty. For many of the world’s poor… microfinance works!

To reach billions of more people who could benefit from such financial services, we need to provide access on a better scale. We need to convince commercial banks and other financial and non-financial institutions that poor and low-income clients represent a sustainable business proposition.

Whether it be bringing small business ideas to life through microfinance projects, or simply to eradicate abject poverty in the long term, digital technology increases the skills, knowledge, and experience possessed by an individual or population, and their value as citizens of a country.

It also lowers costs and enhances efficiency, and the wonderful part about digital technology is, it safeguards inclusion. For low-income countries, it provides a way to deliver services even if traditional institutions aren’t present for them.

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