A microcredit is nothing more than a type of financing that allows people who have little capital to obtain loans. Those who default on their payments or are delinquent, find it difficult to obtain microcredits, due to their negative history.
However, thanks to websites that offer microcredits on the ASNEF list, these microfinances have been on the rise, stimulating economic growth.
According to certain analyzes by Oxford Economics, the outlook for world growth has worsened since the beginning of 2022. By 2023, this growth is expected to reduce by 2.3%, the lowest figure outside of a recession year since 2008. .
A key factor in the deteriorating growth outlook remains high inflation, which is sapping real consumer incomes and driving up business costs. However, microcredits will become even more present in people’s daily lives.
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Microfinance is used all over the world, and loans of less than $100 are offered in some underdeveloped countries. In the United States, microfinancing refers to loans of $50,000 or less, and in the case of Spain, microcredits can reach up to €3,000.
This makes us think of statistics, used by many economists and analysts around the world to study the impact of microcredit. Here we bring some related to this particular method, which have been used by small entrepreneurs to create something new and generate income.
There are more than 10,000 microcredit institutions in the world
Microcredit institutions are not banks, but rather organizations geared specifically toward low-income populations. They offer credit and banking services to those most in need and there are approximately 10,000 institutions worldwide. In Spain, there are many online lenders, among which Cashrush, Casheddy, Movinero, Preslo, Fiesta Credito and Hola Dinero stand out.
South Asia accounts for 60% of global microcredit borrowers.
More than 85 million microfinance borrowers reside in South Asia, the world’s largest borrowing region by population served. South Asia is also the second largest borrower of microfinance, with $36.8 billion, or nearly 30% of the global microfinance sector. Latin America is the largest, with almost 48,000 million dollars and in 2022, only in Andalusia, 98.1 million euros were granted for micro-entrepreneur projects.
Women constitute 80% of those who acquire microcredits
The purpose of microfinance is to provide small loans and financial services to those who would not otherwise be able to obtain credit. Women are often disadvantaged, usually by social norms, but in some cases, microlenders decide to focus primarily on providing financing to women. This corresponds to an effort to foster economic growth and promote the fight for gender equality.
More than 2 billion people lack access to financial services
Despite extensive efforts to provide financing through microcredit, more than 2 billion people remain unbanked. Only 20% of the estimated 3 billion poor people in the world have access to microcredit. Although these have grown a lot in recent decades, they are still unable to reach the majority of their target market.
Microfinance is estimated to reach $394.8 billion in 2027
Projections strongly suggest that microfinance will continue to grow and that microfinance lending could reach $394 billion by 2027. Despite the global economic slowdown or downturn, there will be growth in new borrowers receiving microloans.
The average interest rate for microcredits worldwide is 37%.
Although the world average is high, it must be taken into account that microfinance caters to populations considered to be at high risk. Those who do not have access to traditional financing should also be taken into account.
Some people find the high interest rate problematic as it puts borrowers at risk of not being able to repay their loans. In certain parts of the world, rates can reach up to 70%, reducing the possibility of opting for a future microcredit.
Globally, 65% of microfinance went to rural borrowers
Microcredit recipients in urban and city areas represent a minority worldwide. The Microfinance Barometer for 2019 indicated that the majority of recipients worldwide were those in rural areas.
Microcredits play a fundamental role in the world economy, allowing the opening of new businesses and helping the growth of micro-enterprises.