In the 1970's Bangladesh was facing extreme hardship. According to Dr. Widad Ali A'Rahman, assistant professor at Ahfad University for Women, about 80% of the Bangladesh population was living in poverty (2010). Around this time a Professor named Muhammad Yunnus decided to go to a neighboring village, Jobra, and try to gain a better understanding of what his impoverished neighbors were going thru. He wanted to gain insight into the "real-life economics that were playing out" (Yunnus, 1998). On one of his visits he realized that people were unable to save enough money to purchase supplies to sell their goods. As a result people referred to as “paikars” or “middle-men” would loan supplies and buy back the finished product at the end of the day for a profit of about a penny, 50 paisa. Completely appalled at how hard these people were working for next to nothing, Yunnus and his colleagues gathered about $27 U.S. dollars and loaned it out to 42 families. These meager $27 was what made a difference between barely surviving and thriving for 42 families. This is when many people say the birth of microfinance, as we know it today, was born. Yunnus and his colleagues saw what a difference they were able to make with such a small amount of money, but they wanted to make a lasting change. They developed Grameen Bank, which, according to their website, as of October 2021 serves 9.44 million members, 94% of which are women, and has 2,568 branches. According to their June monthly report their recovery rate was at 97.28%! Which, in case you are wondering, is extremely high!

Since the start, and success, of Grameen Bank there has been a surge of interest and investment in similar institutions. Today there are approximately 10,000 microfinance institutions. Over the years microfinance has evolved and has gained a lot of traction. You might hear the term microcredit, which refers strictly to lending of relatively small amounts of money at a time. In addition to a lack of financial services other key resources that the poor often do not have access to are healthcare, education, “training in operating modern tools in day-to-day activities” (A’Rahman, 2010). These services are equally important as financial services, which is why many microfinance institutions have grown to include a more holistic approach, which include services such as training, healthcare awareness, insurance etc. This is more specifically what microfinance is. It isn’t just giving people small loans to help them get on their feet. It helps give them tools to be successful with the loan in hand, and helps them build a cushion if they should fall.