Microfinance – A sustainable engine for development
Background
![Impacts of microfinance to the poor](http://mcnv.org/wp-content/uploads/2016/06/microf1-300x190.png)
Impacts of microfinance to the poor
At the heart of the Sustainable Development Goals (SDGs) is a commitment “to eradicate poverty everywhere, in all its forms and dimensions by 2030”. Inspired from this goal, all MCNV programs in Vietnam are committed to contribute to poverty alleviation efforts by integrating microfinance tools to support marginalized groups who are normally the poorest in their community. Over the past 10 years, MCNV has disbursed micro finance services including loans for production and water retention, savings, and health insurance, to more than 7000 households with the total value of more than 650,000Euro in programs in Vietnam.
Microfinance has proved to be one of the most powerful engines in the global effort to end the crushing poverty that deprives hundreds of millions of the world’s people of sustenance and hope. Microfinance gives poor people the opportunity to establish an existence and to create a future with prospects.
![MCNV loan allow her to build water containers to save rain water to prepare for draught and salinity](http://mcnv.org/wp-content/uploads/2016/06/microf3-300x225.jpeg)
MCNV loan allow her to build water containers to save rain water to prepare for draught and salinity
Micro loans, saving and other financial services in combination with financial literacy trainings could greatly help the poor start-up their micro-businesses to generate income . This would provide the clients and their families with greater qua
ntities and more nutritious foods, education for their children and to the opportunity to improve their houses. Consequently, microfinance has an impact on the future generations.
Microfinance has a positive impact far beyond the individual household. Jobs are created, knowledge is shared, civic participation increases, and women are recognized as valuable members of their families and communities. Microfinance could also improve the community solidarity and connection between people.
An equally important part of microfinance is the revolving mechanism in using funds from donors so if microfinance is managed well, it could allow a certain amount of funding to serve more and more poor families. These funds would be more beneficial longer term so the impacts will be multiplied in comparison with other kind of development grants.
![An extreme poor old lady received a friendship house built from MCNV microfinance projects in Ben Tre 2015](http://mcnv.org/wp-content/uploads/2016/06/microf4-300x226.jpeg)
An extreme poor old lady received a friendship house built from MCNV microfinance projects in Ben Tre 2015
Micro-entrepreneurship is the key for the poor’s self-empowerment. It turns the poor from a passive and weak role in the development process to active agents of change. The personal talents and community support are fully mobilized for business development and this process is the best capacity building for those who are poor. Microfinance directly impacts and benefits women’s empowerment since microfinance particularly focus on women and gradually consolidates the role and capacity of women in family and in the community.
Future plan
In recent decades, the microfinance crises have showed that microfinance could harm the development if being used in an extreme way. So MCNV is making its effort to balance the social and financial performance of microfinance projects by using Social Performance Management (SPM) system. Applying the SPM permits microfinance assist the poor to escape poverty while ensuring the whole microfinance system runs as healthy as a double bottom-line financial institute.
MCNV also wants to share and expand the best practice in microfinance and social performance management to other organizations and communities. We look forward to like-minded partners and donors to promote the real microfinance with focus on social performance and sustainability.