Roughly 4 billion people living in developing countries and emerging economies do not have access to financial services such as credit, savings and insurance. Formal financial intermediaries, such as commercial banks, usually refuse to serve poor households and micro-enterprises because of the high cost of small transactions, lack of traditional collateral, lack of basic requirements for financing and geographic isolation. By doing so, these institutions ignore the enormous potential in talents and entrepreneurship of this stratum of society. Providing access to financial services will stimulate the independence and self-development of poor households and micro-entrepreneurs. This will help not only to improve poor people’s economic condition, but also to provide a way to maintain or improve their quality of life in the face of uncertainty. Moreover, gaining access to financial services is a critical step in connecting the poor to a broader economic life and in building the confidence for them to play a role in the larger community. Some of this slowdown can be blamed on events elsewhere. Europe’s pain, for example, has spread far beyond its immediate neighbors. The European Union remains the biggest foreign market for many emerging economies, buying about 19% of China’s exports and 22% of South Africa’s.
By increasing access to financial services for the poor segments of society, the financial sector can play an important role in alleviating poverty in developing countries. To achieve sustainable economic growth in these regions, the focus should be on the whole range of economic activities, including small and medium-sized enterprises (SMEs) and farmers. MEs are important drivers to a country’s economic development. They have the ability to create goods, innovations and employment which can take the economy to a higher level. It is essential that these enterprises