Micro-credit comes of age
Trevor Page
Breezing into Halifax last week, Bangladeshi micro-credit guru Muhammad Yunus and his followers had every reason to be in a buoyant mood. The tiny loans and financial services that he and his supporters provide have helped lift almost 100 million of the world's poorest families out of extreme poverty. Micro-credit, consigned until recently to the fringes of development, is now well on its way to becoming a mainstream method of alleviating poverty. Over 2,200 development specialists from about 100 countries, along with a sprinkling of presidents, prime ministers and the Queen of Spain, flocked to the Nova Scotia capital for the Global Micro-credit Summit. They were there to take stock of their achievements, agree on ways to speed up progress and endorse a target of reaching 175 million of the world's poorest families (875 million people) by the end of 2015, the deadline set by the United Nations for the attainment of the Millennium Development Goals. The pro-poor philosophy of Muhammad Yunus, and the Grameen Bank that he founded 30 years ago, flies in the face of the conventional banking approach. Where commercial banks would not lend to high-risk customers, the Grameen Bank took them on. Prof Yunus hoped that a small amount of cash to start or expand a business would enable customers to rise out of poverty with dignity. "I used to make a sharp accusation that conventional banks are practicing some kind of financial apartheid," he told a summit news conference last week. And when asked if the World Bank would be taking micro-credit on board, Prof Yunus was reticent. He said although the World Bank's previous president, Jim Wolfensohn, was a strong supporter of micro-credit, even he had been unable to persuade his board of governors to take it on. And with tens of billions of dollars in micro-credit being disbursed today at interest rates upward of 18 percent, and with 3 billion potential customers out there, commercial banks including Citigroup, ING and Scotia Bank, are beginning to sit up. There are now over 3,100 institutions worldwide providing micro-credit loans but geographical coverage is uneven. In fact, around one quarter of the world's micro-credit customers are in Bangladesh with a further quarter in India. Sub-Saharan Africa and Latin America is poorly served but it is the poor in China and India that represent the largest untapped markets. According to Prof Yunus, less than 100,000 of the poor have access to micro-credit in China. The country still lacks the institutional and legal framework to facilitate expansion. Lennart Bage, the president of the International Fund for Agricultural Development (IFAD), the senior United Nations official at the summit, told me that important as microcredit is, it is not panacea for poverty. "There are larger issues of land, water and politics at the local and national levels and these must also be addressed. So must employment, health, education and infrastructure." IFAD was one of the earliest financial backers of micro-credit and the Grameen Bank. Orchestrating a global microcredit campaign and summit is no mean feat. Sam Daley-Harris, the director, has done it twice -- in 1997, in Washington, DC for 2,900 participants form 137 countries and now in Halifax. Mr Daley-Harris is the founder of RESULTS, an international citizens' lobby group dedicated to creating the political will to end hunger and poverty. He is one of the driving forces behind the micro-credit movement. Winning the Nobel Peace Prize last month has brought appreciably more attention to Prof Yunus and micro-credit. It will likely result in increased contributions from some donor governments and private sources such as the Gates and Clinton foundations. But Prof Yunus says that future of micro-credit should not be dependent on external funding. There are "oceans of money" out in the rural areas, "much of it kept in cash under mattresses on the bed." "We should build a mega port in Bangladesh, one that also serves northeast India and Yunnan province of China. Who would own it? "The poor of Bangladesh!" he said with a smile and a twinkle in his eye. "After all, they own the Grameen Bank." Prof Yunus is a dreamer. But so are all great men and women. He has brought and dignity to the poor and pride to a country, once described by Henry Kissinger as an international basket case. He has already made the world a better place and given us the formula to empower the poor. Trevor Page is an international relief and development specialist and commentator who has worked for 35 years for United Nations agencies and NGOs, mainly in Africa and Asia.
|
|
