The official BYU Microfinance Club Website: Helping students connect with and influence the world around them.

This is Baby. Baby lives in Sierre Leone and is a remarkable sales woman. She is friendly, genial, and well known for her goodness, Baby sold more rice than perhaps any other women in her local marketplace. However, Baby barely makes a subsistence living to feed herself and her family. Why can Baby not make a decent sustainable living? Because she sells rice that is not her own. Every day, Baby "rents" the rice that she sells from a local rice baron at a high premium. This business model creates a perpetual cycle of dependency. Baby is never able to amass wealth or capital because the markup on the sale of rented rice is barely enough to sustain her and her children. If Baby were able to obtain a mere $50, she would be able to dramatically improve her situation and break this cycle of crippling dependency.

This is where microfinancing comes in. Imagine if Baby were to receive a small, low interest loan that would allow her to purchase her own rice. This would allow her to experience returns that she has never before experienced. If managed properly, Baby could begin to amass capital and expand her small rice-selling enterprise. Eventually, this would have the potential to significantly improve her family’s standard of living.

Microfinance is a relatively new institution with lofty goals. Initially, it experienced a harsh wave of skepticism because of its simplicity. Then, as it gained momentum, it began to ride a wave of near ubiquitous acceptance as the panacea for all world poverty. Now, it is seen as an effective, yet improvable tool with great potential to do good. Although microfinance still faces many challenges in its implementation, economies have witnessed its numerous benefits.