Graduate Advice - Microfinance
Depending on who you listen to, microfinance is either a surprisingly long flash in the pan or the future of finance. But what does it actually involve?
Put simply, it's a way of banking that lets people with very little money borrow some. This includes loans, savings and sometimes insurance. The 'micro' part is because the loans given are small - only as much as people need and can afford to pay back. Often the same people microfinance can help will use informal and community-centred ways of saving but microfinance organisations help make their money more secure.
The history
Dr. Mohammad Yunus, Professor of Economics at a university in Bangladesh, set up Grameen Bank in 1983. He had begun several years before by lending small amounts of money to Bangladeshi women in need. Small, less formal organisations had already been doing the same thing, but his work earned him a Nobel Prize. Dr. Yunus's microfinancial Grameen Bank has gone on to loan three billion pounds to over six million people.
There are now many similar banks throughout the developing world. Not everyone believes they will solve the issue of poverty but there is evidence that such organisations do help, for example by giving loans to people trying to set up their own small businesses. These people are able to earn enough to pay back the loan and hopefully continue to support themselves with no or limited future loans.
Why work in microfinance?
The ethical attributes of microfinance make it attractive to those who might otherwise work for traditional and UK-based banks. Whilst bankers in Britain face voluble criticism for their lavish and arguably irresponsible lending ways, microfinance employers can shout out their career choice loudly from rooftops and get admiration in response. Of course the poorer the customer, the less profitable the bank, which means less of those shiny looking bonuses. But for many, the ethical trade-off is worth it.
The fact so many people today consider packing up their bags and escaping hectic city life to volunteer in exotic places is one reason more people are choosing to go into microfinance. It may well offer a different lifestyle to one you'd have working in traditional finance. But as with most great ideas, there can be a negative side (fewer perks, more work and surrounded by poverty) - otherwise everyone would be doing it.
The work
Jobs in microfinance are varied. Pretty much anything that's involved in large scale lending and tracking money exists in microfinance but on a smaller scale. But as microfinance is often offered by not-for-profit organisations, there are some specialist positions like financial educators and development specialists.
As it's a burgeoning field, training programmes are rare. Those that do exist have more than one pair of hands grabbing at them. There are, however, a few specialist postgraduate courses springing up across the country. Getting on one of these is likely to push your name to the top of the pile when it comes to jobs and, in such a new field, any postgraduate research might well shape the future of the industry.
At the graduate end of the scale, pay is comparable to what's on offer in other sectors of the finance industry. While no one knows what the future might bring, at the moment the upper end of microfinance doesn't pull in the yacht-buying money that investment banking is known for. However, it is possible to make a decent living, and to do that knowing you're really helping people is no small thing.
Five steps into microfinance
1) Education.
Finance is a highly specialist business, so you would need at least a bachelor's degree in related fields like finance, business, management, or economics in order to be competitive. Some jobs require higher levels of education, so you might have to think about study at postgrad level.
2) Volunteer.
The best way to learn about microfinance is to volunteer or get an internship at organizations like Kiva and Accion. Although unpaid, you'll get valuable lessons, get to know people in the industry and get a foot in the door.
3) Research.
It pays to be informed, so read relevant journals so you're aware of the latest trends. Find out everything that there is to know about any countries or places that you might visit. This won't just be useful, it will set you up to be first choice when a future employer needs someone clued up.
4) Apply.
Send out as many CVs as you can, without giving up. You're unlikely to get a reply from everyone so be patient.
5) Get ready.
Once you have landed an interview, do some research about the company and do your best to impress the interviewer with your depth of knowledge.
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