The role of microfinance

Financial exclusion is the inability of individuals, households or groups to access financial services in an appropriate form. Financial exclusion is either a cause or a consequence of social exclusion, or both.

Access to financial services is essential for citizens to be economically and socially integrated in today's society. It is also a requirement for employment, economic growth, poverty reduction and social inclusion.

Microfinance includes provision of credits, savings, insurance and leasing, and other non-financial services, such as Business Development Services and financial literacy.

Microfinance is widely seen as improving livelihoods, reducing vulnerability and fostering social as well as economic empowerment [1]. To have access to savings, to credit or to financial assistance reduces the possibilities of falling into the poverty trap, and therefore almost all the collectives in an excluded situation could benefit in some way from microfinance.  

As an example of the relevancy of microfinance to fight the social exclusion, excluded groups mentioned in the National Action Plans for Social Inclusion (NAPs) can be highlighted as well as some examples of countries which have specific support programmes, several of which are based on microfinance, both with “professional” objectives (employment) and social ones.