As pointed out by the former UN Secretary General Kofi Annan during the launch of the International Year of Micro Credit (2005): “sustainable access to microfinance helps alleviate poverty by generating income, creating jobs, allowing children to go to school, enabling families to obtain health care, and empowering people to make the choices that best serve their needs”.
There is a much larger pool of informal businesses and micro-enterprises, but the capacity of this sector to utilise credit effectively is constrained by a raft of problems, including scarcities of business and technical skills, the high costs of inputs, and often volatile market conditions. The ability of these businesses to make profits consistently and thereby service loans is precarious.