The Effective Application of Microfinance to Alleviate Poverty in the Indigenous Populations of Peru and Bolivia

Over two billion people are currently living in poverty (less than $2 a day) around the world. 15 percent of this group is of indigenous backgrounds. Similar to the overall composition of the world, 10 percent of Latin America’s population is indigenous, yet one quarter is living on less than $2 a day. Approximately forty years ago the modern day microfinance movement began in Bangladesh and has since spread throughout the world. Microfinance strives to provide financial services to those who do not have access to the traditional financial sector. Making capital available helps alleviate poverty by providing the poor with credit and other financial services that can help generate income through smart investments. Bolivia and Peru currently have the most advanced microfinance sectors, which is in large part attributed to the financial reforms of the 1990s. However, regardless of the quality of the microfinance sectors in Bolivia and Peru, the indigenous people remain untouched by their services. Specifically, the Quechua and the Aymara, who live in the highlands of the Andes and around Lake Titicaca, are among the poorest people in both countries. The Quechua and the Aymara would greatly benefit from access to microfinance by utilizing their traditional cultures to make income-generating businesses