WASHINGTON D.C., 17 December 2007 — Microloans to the poor around the world soared to 133 million last year, up from 13 million just nine years ago, a report released yesterday by the Microcredit Summit Campaign, an initiative of Results Educational Fund. The dramatic progress was also evident in the Campaign’s focus on loans to the very poor, those living on less than a $1 a day, which reached 93 million families in 2006, just shy of the Campaign’s goal of reaching 100 million poorest. “We know that by today the 100 million poorest will have been reached,” Microcredit Summit Campaign Director Sam Daley-Harris said, “but we won’t be able to report those results until the 2007 data is collected, verified, and released at the end of 2008.”
Based on its objectives to eradicate poverty particularly in the less developed countries, and targeting the most vulnerable groups — women, children and the disabled — Agfund responded positively to the First Millennium Developmental Goal called for by the World Millennium Summit in September 2000 by modifying its strategy in adopting the support of Microcredit activities as a priority in its financing operations during the last seven years.
It has supported around 95 microfinance institutions in the less-developed countries, aside from co-organizing regional microcredit conferences in Africa and the Arab World particulary the Middle East/Africa Region Microcredit Summit Meeting of Councils (MEARMS).
Agfund also established banks for the poor in the Arab countries. In partnership with the initiative launched by Prince Talal Bin Abdul Aziz in 1997 which called for the establishment of banks for the poor in the Arab countries, Agfund has launched banks for the poor in Amman and Egypt, then in Yemen and Bahrain this year and has plans to establish other banks for the poor in the remaining Arab countries during 2008-2015.
The State of the Campaign Report 2007 highlighted Jamii Bora, a microfinance organization in Kenya that started eight years ago with loans to 50 beggars and now reaches 170,000 savers and 60,000 borrowers.
The groundbreaking institution started offering health insurance seven years ago when it realized that of those clients who struggled to repay their loans, 93 percent had the same challenge — a close family member in the hospital. “You can’t expect that anyone will let their child die because they have to pay their loan to Jamii Bora,” said the group’s founder Ingrid Munro, “so this was something that we had to solve.” As a result, Jamii Bora covers all in-hospital costs for one adult and four children by linking with mission hospitals. The total cost for the family of five is just 30 cents per week or $12 per year.
Nobel Peace Prize Laureate Muhammad Yunus said “microcredit should be about helping the poor to get out of poverty by protecting them from the moneylenders, not creating new ones. A true microcredit organization must keep its interest rate as close to the cost-of-funds as possible. There is no justification for interest rates in the range of 100 percent. My own experience has convinced me that microcredit interest rates can be comfortably under the cost of funds plus 10 percent, or plus 15 percent at the most.”
Daley-Harris, the report’s author, urged the US Congress to ensure that “half of bank spending on microfinance reaches the very poor, those living below $1 a day, use of cost-effective poverty measurement tools to ensure compliance and report annually on results.”
He urged World Bank to stop its foot-dragging and invest more money into microcredit programs for the very poor. On Oct. 3, 2007, 29 members of the US House and Senate met with World Bank President Robert Zoellick for over an hour to persuade him to get half of World Bank microfinance funds to families living on less than $1 a day. Zoellick’s main promise to the members of Congress was to meet regularly for more discussion.
