DEPUTY SECRETARY-GENERAL SAYS MICROFINANCE POWERFUL INSTRUMENT IN HELPING PEOPLE TO HELP THEMSELVES

Press Release
DSG/SM/10

DEPUTY SECRETARY-GENERAL SAYS MICROFINANCE POWERFUL INSTRUMENT IN HELPING PEOPLE TO HELP THEMSELVES

Following is the text of Deputy Secretary-General Louise Frechette's statement delivered today at the opening of the fifth consultative meeting of the Consultative Group to Assist the Poorest:

It is truly a pleasure for me to open this important meeting of donors and leading practitioners participating in the Consultative Group to Assist the Poorest. Allow me first to congratulate Ismael Serageldin, the Chair of the Consultative Group, and Professor Mohammed Yunus, the Chair of the Policy Advisory Group, on their combined leadership in establishing this remarkable mechanism three years ago.

It is often said that the most revolutionary breakthroughs start as simple ideas. That small loans and other financial services provided on a sustainable basis can bring measurable, positive impact to the poor of our planet is a perfect example of this. On behalf of the United Nations, I wish to express special gratitude to those of you in this room who have been pioneers in establishing institutions providing these services, whether in Asia, Africa or Latin America. Your leadership and accomplishments have provided much of the inspiration that gives microfinance its promise.

While microfinance is not a panacea for poverty, it has proved to be a powerful instrument in helping people to help themselves. The attention and support it has attracted is remarkable. It follows that the expectations in terms of impact and reach are enormous.

I have often wondered what it is about microfinance that attracts such a broad range of interest. The key reason is simple: at the core of microfinance is the client. I cannot think of a better example of "people-centred development". Every day, poor households accessing microfinance services are demonstrating their resilience and creativity.

Microfinance is helping us understand the ways to reach and support this hidden or ignored market, which comprises so many of our fellow citizens.

From heads of State to the common taxpayer in developed countries, there is a new understanding that the poor need not be helpless victims. That rather, they are an untapped source of strength to the global economy.

- 2 - Press Release DSG/SM/10 23 June 1998

Yet while microfinance shows great promise, we all know what an enormous challenge it entails to make these fundamental services available on fair terms to the estimated 500 million households who could benefit. The mechanism that you are building together is an important part of establishing a sound, vibrant and growing industry. An industry able to thrive in a global marketplace. A marketplace where the private sector must ultimately play a major role in providing the capital needed to meet our objectives.

The 27 bilateral and multilateral agencies, organizations and banks in this room, in partnership with the leaders in the field, have a powerful role to play. For the past three years, you have been building a common language and a joint commitment to take microfinance to the poorest. I hope that in the next three years, you will continue to build standards in order to ensure transparency. The microfinance community is already well on its way to establishing common standards.

Your continued support and guidance in this area will set the stage for the tapping of private capital. Equally important, it will enable the industry to speak with a powerful common voice. A voice that will be far more influential than it is at present.

It is broadly agreed that lack of capacity, rather than lack of capital, hampers the growth of microfinance organizations. This is a central challenge that we in the United Nations, through our family of agencies, can and must help to address. I am pleased that six of our organizations are represented here today.

Through them, and through our other funds and programmes, I am confident that we will play an important part in helping to build a dynamic microfinance industry. An industry based on best practice and aimed at reaching the poorest market in our global economy.

I want to commend my colleagues from the United Nations Development Programme (UNDP) and the United Nations Capital Development Fund (UNCDF) for taking the initiative to host this important event, and for creating the Special Unit for Microfinance.

Finally, I want to commend you, the donors, for understanding the need to create this collaborative mechanism. Microfinance is primarily about reaching the poorest. But it is also about the donor community learning to do business in a different way. Important lessons are being learned that could have far-reaching consequences beyond our work in microfinance.

I would ask you to be bold and chart a future course for this Group in keeping with the vast demand and potential of those who bring us together today: the 500 million poorest households in the world.

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