The middle class and wealthy have banks to lend them money. The poor have microfinance -- financial institutions or cooperatives that make loans to those shunned by traditional banks.
"Three billion people in the world do not have any access to affordable, reliable financial products," says Mary Ellen Iskenderian, CEO of Women's World Banking, a global nonprofit dedicated to providing low-income women with access to financial tools and resources.
Iskenderian spoke with The Daily Ticker's Aaron Task at last week's TEDx Wall Street conference. "Of that 3 billion people, 1.7 billion have cell phones," allowing financial service providers "to reach very remote populations," says Iskenderian.
If these poor people were given smartphones and a microfinance app was created, 1.7 billion people could have easier access to credit, says Iskenderian.
Microfinance is conventionally thought of as a resource for small business owners in developing economies, primarily women. But Iskenderian says that conventional wisdom is misleading.
"Not everyone is an entrepreneur…we've started working with people who are very low salaried… and they are desperately looking for a place to bank that money," says Iskenderian.
Asked to provide an example of an individual her organization has helped, Iskendarian points to Joyce Wafukho, a Kenyan woman who got financing to open a hardware store from an affiliate of Women's World Banking. Starting with a $70 microfinance loan, along with some financing from her family, Wafukho eventually transformed a "little shack on the side of the road selling nails, eggs and tomatoes" into an established hardware store with a lumberyard in the back, 26 employees, a $3,000 line of credit and several thousand dollars in a savings account.
"She was such an inspiration to me, and I've never forgotten her," says Iskenderian.
Watch the video above to learn even more about how microfinance is helping more people like Wafukho.
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