Microfinance as a Tool for Active Aging

> Posted by Marcella Corsi and Annika Cayrol, EMN Research Working Group

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

We are increasingly aware of the aging global population thanks to the findings from the Center’s Mapping the Invisible Market project, and yet we have been hard-pressed to find many people looking at the changing needs for financial services as people age. We were therefore delighted to learn that the Research Working Group of the European Microfinance Network (EMN) conducted a debate on “Microfinance as a Tool of Active Aging and are pleased to have Marcella Corsi and Annika Cayrol share some of their examples.   

The world is getting older, and the change is happening fast. In 2000, for the first time in history, there were more people over age 60 than children below age 5. The number and proportion of older persons are growing faster than any other age group, with more than 1 billion new people over 60 projected in less than 10 years. The older generation, which includes caregivers, teachers, volunteers, entrepreneurs, and more, represents a reservoir of talent and experience that can be tapped to reap a longevity dividend.

The EMN debate focused on projects among European microfinance institutions to promote active aging through microfinance. The programs listed below define the aging population as those 45 years and older.

In France, the Association pour le Droit l’Initiative Economique (ADIE) will shortly pioneer microcredit aimed at supporting seniors. Recent data shows that the older population in France is becoming poorer due to disability, isolation, and low retirement incomes compared to working wages. At least 70 percent of these low-income seniors are women and 62 percent of those are single (including widowed, divorced). Statistics show increasing unemployment among seniors and difficulty finding a new job after the age of 50. The jobs that are available are often part-time or temporary.

Microcredit from ADIE targets older entrepreneurs. This client opened a restaurant.

Seniors face the same barriers to starting a business that you would expect to find in other populations, such as lack of capital, lack of information about starting a business, and lack of self-confidence. However, the research also identified strong assets for these seniors to create self-employment. Among them are a decrease in expenses after children leave the household, skills and savoir-faire acquired during professional life, and family support systems.

Building on its work in providing financial services to a younger segment (age 18 to 32), ADIE is now launching two new services targeted to clients ages 45 to 65 who are in poverty. “Rebondir” (rebound) will target clients who face unemployment or want to start a business, and “Tremplin” (spring board) will target entrepreneurs who want to strengthen their businesses and integrate them into the mainstream banking system.

In Belgium, the Minister of Social Policy appointed Crédal to start a project aimed at low-income seniors ages 65 years and older in Wallonia. Thanks to partner associations that work with older people and thus know their needs, Crédal will provide microloans for products that allow seniors to stay in their homes, such as walk-in showers, lifts, height-adjustable beds, and reader software for the computer. The success of this project lies in the fact that the partner associations work closely with seniors and therefore have a deep understanding of their needs.

In Romania, Opportunity Microcredit Romania (OMRO) supports active aging by providing loans to help older clients maintain better life conditions as they age. About 39 percent of OMRO’s clients are older than 45.

These examples leave many questions about sustainability, impact, and the rationale for treating mature adults as a separate market segment from younger populations. They also do not address the full range of financial services that can benefit seniors, or that can help people prepare for their retirement. And they certainly do not address policy and regulatory issues that can create an enabling environment for older people to gain access to financial services. Nevertheless, we appreciate these pioneering efforts to focus on the fastest growing demographic segment across the globe.

Image credit: ADIE

Have you read?

Seven Trends to Watch in the March to Achieve Full Financial Inclusion for All

Microinsurance on the Roadmap to Financial Inclusion

Five Insights From Demography That Could Change Your Views on Financial Inclusion

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