OTTAWA, 9 December 2005 — 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 on Wednesday 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.
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 UN’s 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 $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 micro-loans, 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.
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.
As a priority of utmost importance, reducing poverty and targeting the poorest of the poor, and responding to the first millennium developmental goal called for by the World Millennium Summit, United Nations, during the summit conference of the world leaders in September 2000, The Arab Gulf Program for United Nations Development Organization (AGFUND) has succeeded in accomplishing two major steps in support of these goals: The year 2004 witnessed the preparation and organization of the Middle East/Africa region microcredit meeting of councils (MEARMS), which was held in Amman-Jordan during Oct. 10-13, 2004. During the conference, Prince Talal ibn Abdul Aziz, AGFUND president, announced AGFUND initiative to set up an Arab African Fund for micro-credit, with the aim of mobilizing launching necessary mechanism needed for this type of micro-credit in the Arab region and Africa. A feasibility study of establishing the fund commissioned by AGFUND has been finalized by experts from PKSF-Bangladesh. AGFUND is currently working with the experts on setting the implementation plan needed to establish the fund.
The year 2005 witnessed the launching of the banks of the poor in Yemen and Jordan, and AGFUND is now in the process of establishing the bank in Syria.
Another great support to poverty alleviation was AGFUND’s initiative to allocate Microcredit as the main theme for its International Prize for Pioneering Development Projects for the year 2005. Prince Talal was to present the prizes to the winners in a ceremony yesterday in South Africa under the auspices of Thabo Mbiki, president of the republic.
