Microcredit gives entrepreneurs in Kenya new reason to dream

‘You may start very small but [by] the way you handle the money [and] the accountability you give to the bank, they understand that you can handle the cash,” says Jane Mugambi, an Equity Bank microcredit customer who sells petrol pumps in Nairobi.

Mugambi and her husband, who started their business by borrowing much smaller amounts, are now trusted by the bank with a loan of KES (Kenyan shillings) two-million.

Microcredit, the offering of small loans (as low as Kshs 1000) to inspire entrepreneurship among those who lack collateral or a steady income as a way out of poverty, started with Grameen Bank in Bangladesh in the 1970s.

In Kenya, microfinance (offering financial services to the poor) and its main component, microcredit, may have started as a nonprofit movement to lift people out of poverty, but commercial banks have now also become players in the market.

Microcredit, the offering of small loans (as low as Kshs 1000) to inspire entrepreneurship among those who lack collateral or a steady income as a way out of poverty, started with Grameen Bank in Bangladesh in the 1970s.

In Africa, Kenya scores first in the region and fourth overall in a study of microfinance business markets in 55 countries, done by the EIU. The rating is “based on an expansion of its mobile banking network and strengthening of the regulatory framework over the past year”, say the authors of “Global Microscope on the Microfinance Business Environment 2011”.

One of the ways to help the poor and disadvantaged suffering from the effects of climate change is to boost their access to finance, according to the United Nations’ 2011 Human Development Report.

The report, compiled under the auspices of the United Nations Development Programme (UNDP), maps the challenges to sustainable and equitable progress and finds that, as environmental degradation continues, already disadvantaged people overwhelmingly bear the brunt of the burden.

“In the 176 countries and territories where the United Nations Development Programme is working every day, many disadvantaged people carry a double burden of deprivation,” said UNDP administrator Helen Clark in a foreword to the report. “They are more vulnerable to the wider effects of environmental degradation because of more severe stresses and fewer coping tools. They must also deal with threats to their immediate environment from indoor air pollution, dirty water and unimproved sanitation.”

The report shows that undeveloped countries that have contributed the least to global climate change are the ones that are experiencing the greatest loss of rainfall and more erratic weather patterns, resulting in failing crops and the loss of livelihoods.

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