What Is Pellital?
Pellital is a Microfinance Institution. The goal of Pellital is to aid in alleviating the poverty through a microfinance program in Agnam-Goly, Senegal.
The word Pellital means "commitment" in Fulani, the language spoken in Agnam-Goly. In this rural village, microfinance opportunities have till now not been available to most of the inhabitants. The Pellital team's objective is to assist loan recipients in the successful planning and execution of small businesses that will propel the families of Agnam-Goly out of poverty.
What Is Microfinance?
Microfinance is the loan of small amounts of capital. For Pellital it refers specifically to the provision of financial services to poor and low-income clients. It is a way of aiding to elevate people out of poverty by giving them access to financial resources and services that they would otherwise not have access to.
Traditionally, banks have not provided financial services to poor and low-income people due to the costs and risks involved. Every bank loan that is processed has significant costs, no matter how what size the loan is. Therefore banks usually only provide loans above a certain threshold ensuring the potential return is greater than the cost. Moreover, poor people are often not able to provide a bank with the required collateral, and the risks of starting a business in a developing country are inherently higher. In many instances loans provided by relatives or local moneylenders were often provided at a very high interest rate, due to the high risk of the business, making it hard for the entrepreneur to start a profitable enterprise.
In response to the lack of quality financial services in developing counties, Muhammad Yunus started the microfinance movement in the 1970s. He inspired the world with the founding of the Grameen Bank, which provided financial services to over seven million poor Bangladeshi women. Since, many others have followed his wonderful example and now there are many microfinance institutions all around the world. Microfinance has been growing rapidly and there are more than $25 billion in micro-loans now being provided to many entrepreneurs in need of capital. Notably, the repayment rate of these micro-loans has been very high with most microfinance institutions realizing a repayment rate of 98%; which is higher than the repayment rates in the developed world. The biggest challenge now facing the microfinance institutions around the world is becoming self-sustaining.