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Impact of Micro lending to the Economy

Impact of Micro lending to the Economy

Access to capital for entrepreneurs

Micro lending allow entrepreneurs and potential entrepreneurs to access much needed capital – collateral less capital to fund operations of their enterprises.

Lower interest rates

In an open market where players can offer micro lending with limited control, market forces allow competition, which drives interest rates down.

Financial Inclusivity

Micro lending provide affordable financial facilities which are accessible to majority of the population including low income earners.

Micro lending has been credited to increase financial inclusivity in all economies.

Creation of employment

Access to capital through the microloans spur growth of microenterprises.

Microenterprises account for upto 80 percent job creation in developing economies. There micro lending create job opportunities in the market.

Growth in micro enterprise

Micro lending allow micro enterprises to grow within the economy. Access to micro credit allow creation of new micro enterprises within the market.

Micro lending funds as well allow micro enterprises to take advantage of opportunities in the market that lead to growth of these enterprises

Rise in Inflation

Availability of funds in the market, may increase consumer purchasing power which create some levels of inflations