HISTORY AND PRESENT

The beginnings of microfinance are linked to the initiative of an economist Muhammad Yunus from Bangladesh who decided to approve micro loans to the very poor people in order to initiate their own business, and give them the opportunity to earn income by investing in their future. He believed that on this way the problem of poverty could be solved. The initiative proved as successful one and thus, he was awarded the Nobel Peace Prize in 2006 http://goo.gl/Xdo8RN. Herewith, microfinance has been proven as a form of social entrepreneurship because it has been solving a certain social problem in a new and different way. Microfinance has come to European countries in the transition to 21st century and has a second connotation in terms of purpose, target groups, and mode of application. Exactly, the first implementation is taking place in the Balkans due to the need to finance Refugees and Internally Displaced Persons after the conflict during 90th and the replacement of several hundred thousand people of former Yugoslavia, and as one of the methods of assistance to integrate them into new states and environments. International and foreign donors and investors launched programs of grants, BDS –(training and education), and microcredit as well, with the aim of enabling those vulnerable people to start a job in order to generate income.

Today, microfinance is widespread throughout the world, and has been well developed in Africa, Asia and Latin America with the primary purpose of reducing poverty, which has improved over time into financial and social inclusion of the poorer parts of the population. Given the initial success, the expectations from microfinance were large, nevertheless, certain subsequent unsuccessful attempts in India or South America, harmed the reputation of the sector, stating that there was no evidence that microfinance is taking away clients from poverty. This was often written by Milford Bateman, a professor and expert on local economic development http://goo.gl/jtjnvE. On the other hand, statistics and research of international institutions point to benefits in all parts of the world https://goo.gl/TRonT9. The reason for this is a certain transformation of MFIs (microfinance institutions), the introduction and the promotion of standards and practices like SPM – Social Performance Management, which became an integral part of the goals and performance of microfinance institutions, as well as the Smart Campaign launched and run by the MFC – Microfinance Center from Poland http://goo.gl/KY56u2. Double or triple bottom line goals are the basic characteristics of microfinance http://goo.gl/aUVeJA  and that is what differentiates it from mainstream banking and involves within alternative sources of funding and gives it the form of social entrepreneurship.