Microfinance

Women like 29 year-old Tit Vy often find it difficult if not impossible to secure capital for their small businesses. CRS' microfinance program provides small loans to the self-employed poor.

CRS microfinance programming is rooted in the principles of Catholic Social Teaching. A profound understanding and application of these beliefs have guided microfinance programming at CRS, and principles for microfinance interventions were established to affirm CRS' commitment to reach the poorest with services that are sustainable over time. This commitment demands a special focus on the poor, especially women, in remote rural communities for whom the cost of access to financial and non-financial services is high. CRS' Microfinance Principles are to serve the poorest clients; link loans to savings; use solidarity guarantees; practice participatory management; invest up-front in scale and self-sufficiency; and plan for permanence.

CRS is among the major players in the microfinance world with a network of 17 country programs supporting formal microfinance institutions (MFIs), 4 country programs with formal wholesale MFIs, 6 country programs supporting informal microfinance programs including savings based community initiatives, and 2 country programs with regional learning centers. (see accompanying table)

For over 16 years, CRS microfinance interventions have been instrumental in narrowing the gap that excludes poor families from services that are integral to human development. The agency's varied investments in microfinance - ranging from credit and savings to insurance - reflect the many avenues chosen to eliminate economic injustice. CRS' commitment to its Catholic principles and social and economic justice prompted the agency to seek out the microfinance development approaches that would best serve the agency in fulfilling its mission to serve the poor.

To this end, in 2005, CRS adopted new avenues of support for microfinance programming in a five-year Microfinance 2010 Strategy that aligns microfinance interventions with CRS' mission to empower partner institutions and reach a severely marginalized target population.

Who Do These Activities Reach?

CRS' microfinance projects target the self-employed poor, especially women, who have little or no access to formal credit. Women are often the poorest members of their communities and control the fewest resources, even in societies where small businesses are traditionally women's domain.

Studies indicate that women are more likely than men to use their loans and profits to benefit their families by investing in their businesses and utilizing additional income to meet household needs such as purchasing more and better quality food, improving family housing and healthcare, paying children's school fees and saving for emergencies.

Currently our microfinance programs reach over 850,000 clients (74 percent women) in 30 countries in Africa, Middle East/North Africa, Asia, Europe, Latin America and the Caribbean.

Background of CRS' Microfinance Program

Catholic Relief Services (CRS) began offering microfinance programming in 1988 with the creation of the Small Enterprise Development Technical Unit at its headquarters in Baltimore, Maryland. CRS entered the microfinance world by funding pilot programs in Bolivia, Peru, Thailand, Togo and Senegal. Over the years, the agency and its partners have learned valuable lessons about transformation of credit institutions, provision of financial and non-financial services, application of credit and savings methodologies, and techniques and tools to enhance quality programming in the field of microfinance. Working through partner institutions in the field and participating in microfinance networks throughout the world enabled CRS to maximize institutional capacity and leverage its knowledge and experience in credit and savings-led development programming.