Read the lesson in English  
then translate to your own language to verify your understanding.

Microfinance | English Lesson

Nov 29, 2021

Today, our topic is microfinance.

Here is the vocabulary: It is a much longer list today. Listen closely, and listen to this section a few times if you need to!


  • Microfinance: this refers to the financial services provided to low-income individuals or groups who are typically excluded from traditional banking.
  • Working capital: money that the entrepreneur can use for day-to-day operations, or purchase transport or equipment.
  • Microcredit: A part of the field of microfinance, microcredit is the provision of credit services to low-income entrepreneurs. Another way to say microcredit is microloan.
  • Collateral: Something offered as security for the repayment of the loan.
  • Unbanked: A term used to describe the world’s working poor who are outside of the formal banking sector.
  • Microentrepreneur: Microentrepreneurs are people who own small-scale businesses that are known as microenterprises.
  • Financial Inclusion: Financial inclusion happens when people have access to a range of banking products at affordable prices.
  • Group Lending: Group Lending happens when a group of people makes a collective repayment promise.
  • Sponsors: An individual who supports a borrower.

I also want to remind you of a word you learned on last week’s podcast “pledge”. Remember? To pledge means  “to promise”.


The idea behind microfinance makes sense: it is a way to get working capital into the hands of microentrepreneurs so that they can fund their small businesses. These micro-loans are small, but they can make a big difference to the borrower because it allows them to buy merchandise to resell, to buy supplies for their production, or to invest in a means of transportation – and that might be something as simple as a bicycle. Microfinance puts money into the hands of microentrepreneurs, giving them a chance to grow.

Microfinance fills a need because traditional banks don’t like to lend money to people who have no financial history and no collateral to offer as a guarantee. 

Microfinance solves this problem by replacing the need for collateral, formal documentation, and credit history with another system that guarantees repayment of loans: social networks based on trust and familiarity.  

These so-called trust networks are groups that have joined together to somehow guarantee each other’s loans. They recommend each other. They sponsor each other. They support each other, and they encourage and they might even help each other pay back their loans. Microfinance can also be one-on-one, but what builds the trust is a high level of familiarity because the contact between the lender and borrower is personal and frequent. 

When all this works as planned, the microcredit system can grow and eventually, the goal is for the unbanked to become banked, eventually moving into the formal banking sector, now that they have established a good credit history. 

Okay friends, well, you have heard some new vocabulary and you have heard a very incomplete summary of microfinance. 

Let me leave you with a couple questions that you should think about in English right now.  

How has microfinance succeeded in your country? Is the microfinance sector growing, or getting smaller?  And why do you think that is?

Jump back to the beginning of the podcast and review the vocab if you need to, and just form a few sentences in English and practice those in your head, or better yet, write them down.


That’s all for today. Thanks for joining me for this episode of English for Economists. If you enjoyed this English vocabulary lesson, you might be interested in our International Aid podcast lesson.

Image credit: By Brett Matthews – Own work, CC BY-SA 3.0,


Join Our Podcast Club

You Can Also Subscribe to Our Podcast On These Platforms:

Follow us on spotify
Apple Podcast


Submit a Comment

Your email address will not be published. Required fields are marked *

Latest Podcasts

Riding the Investment Roller Coaster

Riding the Investment Roller Coaster

In this episode, we will be discussing an article published on March 16th in the Economist Magazine, titled "Is the global investment boom turning to bust?" The article describes how companies...

‘Premiumization’ and ‘Gentrification’

‘Premiumization’ and ‘Gentrification’

In this episode, we will be discussing an article recently published in The New York Times titled "Is the Entire Economy Gentrifying?" Listen again: Is the Entire Economy Gentrifying?” While...

China’s Population Drop | English Lesson

China’s Population Drop | English Lesson

Last week's podcast covered the controversy surrounding the French government's plan to raise the statutory retirement age. In today’s vocabulary lesson, we will discuss the challenges that China is facing due to its shrinking population. In a recent article published...

The Battle Over Retirement Age in France | English Lesson

The Battle Over Retirement Age in France | English Lesson

Today, we are going to talk about retirement age. Listen to this headline, published on February 11, 2023: France braces for protests as Macron pushes forward with pension reform. Again: France braces for protests as Macron pushes forward with pension reform....

Hedging Bets with Nearshoring | English Lesson

Hedging Bets with Nearshoring | English Lesson

Today, we'll be discussing the trend of companies transferring their operations to nearby countries, because of geopolitical reasons, or because of recent disruptions in the global supply chain, like the shipping container crisis, and problems posed by Covid. For...

CBDC, Stablecoins, DeFi and Web3 | English Lesson

CBDC, Stablecoins, DeFi and Web3 | English Lesson

Hello, friends from all over the world. Welcome to the English for Economists podcast.  This is podcast number 63. I am Alan Robert and I am very happy that you joined me today. Thank you for your support. It’s January 24th, 2023, and today our topic deals with...

Share This