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Hey everyone, welcome back to this podcast where today my good friend and I Ryan will be talking about some seriously interesting stuff! But first what has been going on in the world as of recently.

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did you hear that a woman won $125,000 while pumping her gas the other day and also recently rob gronkowski, a nfl tight end, caught a football from a helicopter completing the longest football pass ever caught at U of A

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wow thats amazing ryan, I seriously wonder how you found these things out!

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Today our topic will be Microfinance institutions in sub-saharan africa. I came across this topic while sitting in my Human Geography class in high school. This was very interesting to me so I decided to read up on it in more depth!

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Well now Shane, could you please explain to me what a microfinance institution is?

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A MFI is a company that provides small scale loans to poor, low income people and communities, who are considered non-bankable. These are called microloans. The microloans can be used for almost anything under the sun as long as it has the potential of making back the money to pay the loan. For example, someone in sub saharan africa could take out a small loan probably under $100 to buy a sewing machine and work to pay it back and then once it has been paid back it is completely their own

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Wow, interesting! So how do these companies make money by doing this, because, if they aren't making their money back from the loans, how are they able to stay in business?

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Well that is the golden question, because hopefully a company will get enough customers to bring in enough income to stay afloat, but if a company focuses too much on being able to make their money back, their outreach will be compromised meaning less people will be taking out loans with them.

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Well what about if it is the other way around?

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Wow great question! If an MFI is only focused on being able to give everyone a loan and are neglecting outreach, they are likely to be unprofitable because they are unable to cover the excessive costs of reaching the extremely poor.

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I heard that recently microfinance institutions have become more and more profitable because of the vast monopoly of people looking for small loans.  So because more people are hearing about them the market is growing but it is becoming harder for people to get new customers

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yes Ryan you are spot on!

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Well how come these MFIs are able to offer loans to these customers who were considered non bankable by other companies.

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Since the MFIs are considered non formal they can basically use whatever methods of loans they deem necessary. They are able to do this by disbursing small loans to the poor, using various non-traditional loan arrangements such as loans without collateral, group lending, collateral subsidies and so much more!

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So what does it mean when a mfi is finally able to be self sufficient?

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that is the overall goal for a company, to be self sufficient, this means that the company has been able to get enough customers and credibility to give out and have all of their loans paid back with interest one way or another.

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wow I have learned so much that I might have to go make my own microfinance company somewhere!

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And all of you other listeners out there, you too can get into the Microfinance game and start your own business in hopes to one day become a millionaire.