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Most developing countries suffer from poverty and lack of finances to support businesses. As a result, some may be looking for ideas on how to make it out of such situations. Nonprofits have come in handy in empowering marginalized communities to achieve both financial and social goals. Such has been made possible by the introduction of microfinance programs. The programs offer capacity building to beneficiaries who start small businesses to support their families. Beneficiaries are also taught on proper management of finances to ensure the growth and continuity of the businesses. The below are some of the benefits associated with microfinance programs.
One, these microfinance institutions guarantee easy access to finance. For most people in developing countries, access to loans from banks is hard. These institutions promise access in this line as there is the provision of capital for individuals in the program. This allows them to start and finance business ideas that they have. Most people are unemployed and live in utmost poverty due to a lack of capital to start and sustain their businesses. Nonprofits use the funding they receive from donors and well-wishers to create a pool of funds that are used to finance business ideas.
Members benefit from the capacity building. Before the members get the actual funding they have to go through training sessions. Such is necessary to allow the beneficiaries to learn how to start and grow their ventures. This allows them to learn how to develop business plans which articulate their business ideas. They also learn proper management skills for their business and financial recording.
Thirdly, it encourages people to create employment. When people have access to finance, they are able to start businesses creating self-employment. As the business grows, they need more labor hence creating more employment. With such, there is poverty alleviation in the community as the people are able to fend for themselves as they have decent jobs.
Moreover, it teaches people about the culture of saving. With microfinance Kenya, members are involved in borrowing money from the pool of funds and saving as a group. Members are also held accountable for the money they borrow and so they have to pay it back in good time and with interest as agreed in the group. The more they are involved in this process they learn the importance of saving for the future. This nurtures a hopeful society that is dependable.
Mentorship is also gained through the process. Members are assigned mentors that have excelled in different industries that guide them in business. Some members also form partnerships and chose to work together if they have a similar idea that is viable. Such allows them to learn from one another and work together for the benefit of their businesses and families.
Finally, there is improved quality of life. When people have a sustainable source of income, they are able to improve their livelihood. Children can afford to go to school and have food. Social evils are also reduced as people have alternative and viable sources of income.