PRESS CONFERENCE ON MICROCREDIT

PRESS CONFERENCE ON MICROCREDIT

This year’s report on the State of the Microcredit Summit Campaign gave hope for turning the just-ended International “Year” of Microcredit into an “Age” of Microfinance for achieving the Millennium Development Goals, the Executive Secretary of the United Nations Capital Development Fund, Richard Weingarten, said this afternoon at a Headquarters news conference to launch the report.

Also taking part were Iftekhar Ahmed Chowdhury (Bangladesh), speaking on the microcredit projects that account for 90 per cent of the global microcredit clientele; Sam Daley-Harris, Director of the Microcredit Summit Campaign launched in 1997 with a nine-year goal that culminated in the International Year; and Aminata Toure, Technical Adviser with the United Nations Population Fund (UNFPA) and Officer-in-Charge of the Gender, Culture and Human Rights Branch, speaking on the linking of the UNFPA development goals with microfinancing.

Continuing, Mr. Weingarten said the report showed that 92 million families had received a microloan in 2004, with 66.6 million of those among the poorest, and 84 percent of that group being women.  The estimate was that 333 million members of the world’s poorest families had been affected.

Obviously, he went on, microfinance had progressed since its humble beginnings and was now an important part of the global financial services marketplace.  However, 90 per cent of microfinance clients were in Asia with the other 10 per cent spread across the globe.  That left 90.5 per cent of the very poor without the financial services they needed to lift themselves out of poverty.

Describing the 1997 Campaign launched in Washington, Director Sam Daley-Harris said it was associated with RESULTS, a citizens’ lobby dedicated to creating the political will to end hunger and poverty.  The campaign was passionate about ending the “business as usual” approach in banking and about “scaling up” efforts to achieve the millennium goals.  The result was a banking revolution.  Banks lent to rich men while the Campaign lent to poor women.  Banks made large loans requiring collateral and lots of paperwork while the Campaign made small, illiterate-friendly loans requiring neither.  The nine-year goal to reach 100 million of the world’s poorest families by the end of the current year had been set to achieve a dramatic dent in poverty and a dramatic rise in the number of families finding a dignified route out of it.

Characterizing microcredit as loans, as well as other financial and business services, he said the campaign was breaking the “business as usual” approach towards development as a whole by making sure the poorest weren’t excluded.  Parliamentarians had been recruited to contact heads of the World Bank, regional banks and the United Nations Development Programme (UNDP) urging them to increase microfinance funding, commit half to the poorest, require cost-effective poverty measurement tools and to report annually.  With a World Bank study showing that microcredit was responsible for 40 percent of the poverty-reduction in Bangladesh, it was unconscionable that the World Bank spent less than 1 per cent of its funding on microfinance.

Noting that his country had initiated the International Year that just ended in November, Mr. Chowdhury said the efficacy of microfinance as an effective anti-poverty tool had been acknowledged by the United Nations system, by international financial institutions and by the recently held Gleneagles Summit.  Also acknowledged was the role of microfinance in stabilizing conflict societies, fighting terror and sustaining peace.  Criticism of microfinance had focused on its lack of impact on poverty statistics at the national level.  Now the impact had shown up in his country’s data based on partnerships.

For example in his country, he continued, the Government funded non-governmental organizations and enacted laws to build an inclusive financial sector.  Four national institutions involved with microcredit projects, including the Bangladesh Rural Development Board, had recruited 15 million clients.  The combined result was a better quality of life for 75 million family members, which was more than half the Bangladeshi population.

The 1997 Summit representing 137 countries had set a goal of reaching 100 million poor with microcredit by the current year, he added.  The report indicated a seven-fold increase in the number of clients since then, from 13.5 million clients in 1997 to 92 million in 2004.  A Global Microcredit Summit next year in Halifax, Canada, would renew the Campaign mandate with two new goals.  One would be to ensure that 175 million of the world’s poorest families were receiving credit and other financial services for self-employment by 2015, so as to impact on approximately 875 million family members.  The other would be to ensure that 100 million of the world’s poorest families rose to a level of living above one dollar a day by 2015.

The UNFPA’s Ms. Toure said the empowerment of women was the main focus of her organization, and microcredit was an important tool in empowering them.  Reproductive health, as health in general, contributed to healthy societies as measures of development.  The Campaign report cited World Bank and the UNDP statistics linking development in countries such as Bangladesh with the growth of microcredit schemes.  Approximately 90 per cent of those clients were women.  Programmes in many parts of Africa and Asia integrated microfinance with education in HIV/AIDS prevention, reproductive health and other training programmes.

In response to a question on the effect of natural disasters on the microcredit programmes, Mr. Chowdhury said his country was naturally vulnerable to environmental setbacks, and preparedness was mainstreamed into other activities throughout society.  The growth of self-sufficiency increased the country’s resilience in responding.

Mr. Daly-Harris of the Campaign said the Campaign had a staff of 30,000 in Bangladesh.  That meant there were 30,000 bankers throughout the country who could turn into relief workers in an emergency.  Relief efforts could already take in the development aspects of recovery efforts.

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For information media • not an official record