Community | People

Micro Financing In Creative Manufacturing Sector

Dec 08, 2022 | Zaina Zaidi

Microfinance institutions are financial companies that provide small loans to people that don't have access to banks. Microloans are small financial investments provided to undernourished people or groups as a form of financial investment, to kickstart their entrepreneurial ventures. Any loan, below 1 lakh is considered a microloan. There are three types of institutes that offer microloans-

Credit Unions


•Commercial banks

The Goal of providing such loans is to alleviate poverty, assist the development of communities, and provide resources to more impoverished sections, micro-loans also mobilize and promote self-employment opportunities. This benefits the community greatly because firstly, it expands opportunities that are available to certain groups, communities, and populations. Secondly, micro-loans provide people with access to credit, and that makes future investments possible. And in general, also, we can see that entrepreneurial ventures provide increased employment opportunities, which consequently raises the standard of living in many of the underprivileged areas and sections of society. 

The Financial Sector in South Asia

Financial Sector in South Asia: Recent Developments and Challenges

South Asia Economic Report (SAER) aims to provide information to policymakers, academics, and Asian Development Bank management and staff. They highlight issues that encourage discourse and foster policies and greater cooperation and integration in the region. Creating awareness plays a huge factor in providing aid in making financial security a reality for more people.

The Fourth South Asian Economic Report which focused on the financial sector in South Asia talked about sustaining high economic growth by developing an enabling environment to increase domestic saving and investment efficiency. Many people in south Asian countries are not able to make investments because to be able to take on the risk of investment they need to be financially secure to a certain extent. Many families in south Asia fall below the poverty line, and oftentimes are single-income households or paid the minimum wage, sometimes even less than also. This takes away from their opportunity to be able to take financial risks like investments. They make a very strict income that barely supports their household. 

Development of financial markets, which is an important aspect to increase economic growth. With a bigger financial market come greater employment opportunities, which can subsequently lead to more investments from foreign investors, and that boosts the chances of getting access to such opportunities. 

One trend of challenges to financial markets that can be observed in the absence of some basic government infrastructure for financial services and commercial transactions. When we see the requirements of getting loans from government channels or banks, they have a very conditional system that requires certain guarantees of paybacks and collateral, access to which is a privilege for a relatively large population in south Asia. There even exists a lack of macroeconomic stability, job security, and financial security because of such situations, etc.

To address the challenges, recommendations made by the South Asian Economic Report include; creating prudent fiscal policies, that actually benefit the strata of society to which it needs to cater too. Strengthening legal foundation and governmental infrastructure. There needs to be reform made by removing capital account restrictions and improving the quality and application of accounting standards. 

Essentially what needs to be done is provide basic amenities that genuinely provide access to economically weaker sections and a stable structure that can actually back them into being financially secure. 

The Scope Of Micro Loans in India

Quick Note on the Scope and Growth of Microfinance in India.

The common trends that can be seen in the growth and scope of microfinance in India are that the “borrowers” are generally from humble backgrounds, and the loans are also relatively small in size. Collateral isn’t a necessity in microfinance loans and most are planned in such a way that they yield income.

Streams of microfinance in India come from two channels, the Self Help Groups Bank Linkage Micro Finance Programme. This was established in 1992, for the purpose of agriculture and rural development in the National Bank. Such methods comprise groups of 10-15 members consisting of financially insecure people. They contribute their savings to the group regularly. These contributions are used to give loans to members of the group. Afterwards, these Self Help Groups are sometimes offered bank loans 

This method gained popularity for its success and it helps fund income-generating activities, it also empowers women in entrepreneurship.

These Self Help Groups are important because they work from and for the grassroots level, there is also less risk of loss because the members are close-knit groups. These groups also teach the importance of financial stability at a grassroots level and promote the idea of credit-making. On a larger scale, they also can be supported by more formal channels like banks that will eventually provide entrepreneurial opportunities which generate employment

The second channels are Micro Finance institutions. Such institutions microfinance and lending under the concept of JOINT LIABILITY GROUP, which is an informal group of a few members who seek loans (together or individually).

The microfinance sector has multiple participants and mature microlending models despite all odds. India represents a huge opportunity for the microfinance sector, with a significant portion of its population falling into the low-income bracket. The fact is that government schemes and appointed financial institutions have improved access to microcredit by nearly 67% of the Indian population living in rural areas. However, many Micro Finance Institutions are concentrated in a few geographic locations in the country. Just about 34% of districts in our country having microfinance contribute towards 80% of the nation’s needs. And it is evident that there is a potential for the expansion of microfinance in various other parts of the country.

A substantial portion of the Indian population still lacks access to legal credit and has to rely on informal channels like moneylenders or family to meet their financial needs. This emphasises the significance of microcredit for creating more economic inclusion which eventually leads to industrial growth. Microcredits should be able to transform a borrower's journey from job seeker to job generator. As the sector evolves as a result of enhanced regulation and investment flows, there will be an increased need to leverage funds in order to build a sustainable and profitable ecology for borrowers.

India's scope in microfinance opportunities is huge because of the population size and the disparity between rich and poor. And the dominant work sector is agro-based. But there is a newer shift to secondary and tertiary sectors which allows this wide growth opportunity for such intuitions. 

The Gates Foundation

Gates Foundation

Bill & Melinda Gates Foundation Grant Opportunities | Global Grand Challenges

The Bill & Melinda Gates Foundation, a merging of the William H. Gates Foundation and the Gates Learning Foundation, is an American private foundation founded by Bill Gates and Melinda French Gates. Their foundation provides grants (among other things) to those whose work aligns with the funding priorities.

Their funding priorities include gender equality, global development programs, global growth and opportunity program, global health program, global policy and advocacy, etc. 

There are two ways of getting investments via the Gates Foundation; grants and strategic investment. First, grants, provide funds to organisations to achieve measurable impact (poverty, disease, inequality). And second, strategic investments fund entrepreneurs, companies, etc. to private enterprises to create change.

Africa | Bill & Melinda Gates Foundation

The Gates Foundation has focused on Africa. Here they work alongside national governments, local organisations, and even private enterprises, etc. They contribute to funding and scientific expertise. The Foundation has a focus on countries with possibly the greatest impact. And their primary impact focus includes health, nutrition, gender equality, disease prevention, treatment and research of disease, water sanitation, hygiene, agriculture and financial services for the poor

Kenya | Bill & Melinda Gates Foundation

The Gates Foundation’s work in Kenya includes collaboration between their expertise and the government’s priorities under the Kenya Vision 2030 development blueprint and their United Nations Sustainable Development Goals, which included primary health care and gender equality.

Agriculture is a major contributor to the Kenyan economy, however, 10 million people in Kenya are food insecure. And the situation is worse because of climate change which has led to drier and less productive areas. The foundation invests in tools and technology, and market infrastructure to help smallholder farmers to improve their productivity and incomes and deal with climate change.

Kenya is a pioneer in Africa in providing digital financial services, so the foundation helps expand those services to more people in destitute communities enabling them to get access to digital financial services.  

The Foundation also work with partners to empower people in the lowest-income communities to improve their livelihoods and lift people out of poverty. Expanding digital financial services and payments, ensuring they meet the needs of low-income people, and small and mid-size enterprises, improving agricultural productivity of smallholder farmers

Their goal and work also include helping farmers deal with climate change, expanding access to family planning services and products, and improving economic opportunities for women. 

Nigeria | Bill & Melinda Gates Foundation

In Nigeria, The Foundation works with the government of Nigeria and other partners to improve health outcomes, boost agricultural productivity, and expand access to digital financial services, empower women, marginalised populations with better economic opportunities. 

Nigeria has achieved a lot of progress in reaching its health goals. They've eradicated wild polio from their country. And their other Health issues include family planning, nutrition, strengthening primary health care, improving public health systems, etc. 

They also work towards supporting smallholder farmers to increase their yield and reduce food insecurity as well as ensuring women, farmers, etc.  have access to digital financial services

The Foundation partners with the government, private sector, and civil society organisations and they aim to reduce preventable death with a focus on maternal and child health. They do so by investing in programs that provide prenatal through postnatal care, and childhood immunization programs. Deal with common health challenges like pneumonia, diarrheal disease, and malnutrition, and improve access to clean water and proper sanitation and hygiene by aiming to bolster primary healthcare delivery.

When it comes to agricultural opportunities, the Foundation in collaboration with its partners helps smallholder farmers boost productivity by investing in higher-yield strains of important crops such as yams, cassava,  sorghum, cowpeas, and rice. They work towards increasing the productivity of livestock and improving tools and systems that are available to farmers. The Foundation also support research and policies that help the farmers in the long run

And their primary goals also include helping women and marginalised groups gain access to digital financial services as well as helping them save, spend, and plan money effectively.


When it comes to proving economic and financial opportunities, it is essential to know that people who require them, shouldn’t be treated as economic propositions. They are people who require a little extra help to get on par with other so that they can provide for and earn a decent living. They require assistance and access to credit opportunities to actually establish their financial security. Work foundation like The Gates Foundation so is imperative, regardless of the field they invest in, be it agriculture, education, entrepreneurial ventures, etc. Because essentially they are enabling people to establish their economic independence.

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