More than 66 million of the world’s poorest people, 84 percent
of them women, received tiny loans last year to start or expand
micro businesses, according to a report released today by the
Microcredit Summit Campaign.
The Campaign, a project of the US-based non-governmental
organization RESULTS Educational Fund, seeks to reach 100 million
of the world’s poorest families with microcredit by the end of
2005. End of 2005 data will be released at the Global Microcredit
Summit to be held November 2006 in Halifax, Canada.
Data for the State of the Microcredit Summit Campaign Report
2005 was gathered from more than 3,100 institutions worldwide
and its release comes at the end of the United Nations’
International Year of Microcredit. In total, the institutions
reported reaching more than 92 million clients, with 66.6 million
individuals falling into the Campaign’s focus on the very poor,
those living below US$1 a day. These 66.6 million poorest families
affected 333 million family members, which is equal to the combined
populations of Britain, France, Germany, Italy, Spain, The
Netherlands, Switzerland, and Norway. “This field was previously
considered too micro to matter much,” said Campaign Director Sam
Daley-Harris. “But now it’s affecting a population ten times
greater than that of Canada. Its reach is no longer micro.”
Microloans are used for a wide range of business activities
including low-tech endeavors such as husking rice, riding bicycle
rickshaw taxis, sewing, and petty trading as well as high tech
enterprises like selling cellular phone time in rural areas where
there are neither electrical wires nor land-line phone
services.
The report highlights two studies released this year that
underscore the importance of microcredit in achieving the
Millennium Development Goals. Both focus on Bangladesh, the world’s
most saturated microfinance market. For 14 years, World Bank
researcher Shahidur Khandker studied three Bangladeshi microfinance
institutions (MFIs): BRAC, Grameen Bank, and RD-12, the latter a
government program. Khandker found that three percent of clients
left poverty each year because of their microloans, that one
percent of non-clients left poverty due to the spillover effect of
increased economic activity at the village level, and that
microfinance accounted for 40 percent of the entire reduction of
moderate poverty in rural Bangladesh.
Another study, the UN Development Program’s Human Development
Report 2005, compares India and Bangladesh in a discussion of
how low income need not be a barrier to progress on the Millennium
Development Goals. According to the report, even with India’s
stunning economic growth, Bangladesh has overtaken India in
reducing its child mortality rate. As a result, “had India matched
Bangladesh’s rate of child mortality reduction over the past
decade, 732,000 fewer children would die this year in
India.”?
The Human Development Report credits Bangladesh’s
progress to several factors that point to the impact of microcredit
including: active partnerships with civil society and virtuous
cycles and female agency. This last area is described as
follows:
Improved access to health and education for women, allied with
expanded opportunities for employment and access to microcredit,
has expanded choice and empowered women. While disparities still
exist, women have become increasingly powerful catalysts for
development, demanding greater control over fertility and birth
spacing, education for their daughters, and access to services.
“We’ve been waiting for the effect of millions of microloans in
Bangladesh to finally show up in that country’s macro data, and now
we have it,” said Daley-Harris. “With what we’re seeing in these
studies and with the Millennium Development Goals due in just 10
years, it would be unconscionable for major donor agencies like the
World Bank to continue spending less than one percent a year on
microfinance.”
The Microcredit Summit report underscores an effort by hundreds
of parliamentarians to get additional funding for microcredit to
those living on less than US$1 a day. The initiative was inspired
by the Millennium Development Goal focused on cutting the number of
people living below US$1 a day in half by 2015. The Millennium
Development Goals were agreed to by more than 180 world leaders at
the United Nations Millennium Summit in 2000.
The report highlights stories of microcredit clients like Susan
Wangui, who grew up in a poor, rural area of Kenya. She was forced
to drop out of school after the fourth grade when her family could
no longer afford the school fees and was thrown out of her house
when she became pregnant at 17. Susan and her infant son moved to
Nairobi, where she married and had a daughter. Her husband left her
when they learned she was HIV-positive. Unable to find work and
with no means to support her two small children, Susan ended up in
prostitution.
Susan learned about Jamii Bora, a Nairobi-based microfinance
institution, from neighbors in her slum. She completed their
business training, which gave her the skills and confidence to
begin her clothes mending and sales business. The microfinance
services enabled her to quit prostitution and move her family from
a shack in their crime- and disease-ridden slum into a safer
house.
Susan sometimes struggles to pay the higher rent and
occasionally must skip meals, but feels her children’s safety
justifies the difficulties. Their house has a floor, running water,
a waterproof roof and locking door?-- all luxuries they did
not have previously. With each increasing loan, Susan buys more raw
materials in bulk at lower costs, thus increasing her business’s
profitability. She is convinced she would not be alive without
Jamii Bora’s medical insurance and access to HIV medication, and
can’t imagine what would become of her children, as there is no one
else to care for them. Susan has savings for the first time and is
striving to earn enough to ensure her children’s educations so they
can break free from the chains of poverty.
“We are committed to multiplying stories like this one 100
million times,” said Daley-Harris.?“When we arrive at the
Global Microcredit Summit in November 2006, in Halifax, Canada, I
am sure we will have reached more than 100 million families
overall, and we will attain the 100 million poorest benchmark one
or two years later.”
The Halifax Summit will also serve to relaunch the Campaign with
two new goals: 1) reaching 175 million of the world’s poorest
families by the end of 2015 and 2) having 100 million poorest
families move above the US$1 a day threshold by the end of
2015.?
(China.org.cn December 7, 2005)