December 5, 2006

Society and Culture

Global Microcredit Summit: Halifax, Nova Scotia, November 12-16, 2006

David F. Lloyd

Conferences come and conferences go—there are few things as stale as yesterday’s conference. Usually. But the aura and commitment at the Microcredit Summit 2006 was truly exceptional, something likely to have a lasting impact.

Achievements Create “a Tsunami of Positive Recognition” 

Delegates were buoyed up by two great achievements. First, the goal set at the previous and first summit in 1997 of reaching 100 million families with microcredit would be achieved this year, albeit one year after the target year of 2005, the year of microfinance. Consider, nonetheless, that only 13 million families had been reached back in 1997, primarily in Bangladesh, and the scale of the achievement becomes clear. Who could be sparing on congratulations when this target has been reached against much ridicule and disbelief? David Bornestein, author of The Price of a Dream, remarked that this achievement “represented one of the few times that a major development promise is going to be fulfilled and remarkably close to schedule.”

The second achievement cannot to be underestimated in its importance to the microfinance movement. This was the award of the Nobel Peace Prize, jointly, to Muhammad Yunus and the people’s Grameen Bank he founded. Sam Daley-Harris, the Microcredit Summit Campaign Director, called it “a tsunami of positive recognition.” Microfinance definitely came of age during this conference, as witnessed by the presence of senior politicians, respected financial institutions and the international press corps.

Two New, Lofty Goals 

The conference launched two lofty goals to be reached by 2015: 1) reaching 175 million poorest families with microcredit, which will affect 875 million people and 2) ensuring 100 million families rise above the US$1 a day threshold, lifting 500 million people out of extreme poverty.

Muhammad Yunus told delegates: “At this summit we set new goals—reaching 175 million families in poverty. By 2015 we must come back and say ‘we made it again.’ This time we want to make sure each country reaches at least half the poorest families in their country—the distribution of microcredit is very uneven. We need to make a microcredit density map of the world . . . the whole world colored with a deep color. In Bangladesh at least 80% of poorest families have been reached—our goal is to reach 100% by 2010.” In fact, in his emotional final address at the closing dinner, Yunus reflected that he wished the conference had made the goal 200 million families rather than 175 million.

There were 112 nations represented, and more than 1,100 delegates, of the 2,222 present, signed a Declaration of Support for the new goals that, if achieved, would dramatically expand the reach of microcredit among the world’s poorest.

“On issues from health to wealth and everything in between, the world continually fails the poorest people,” said Sam Daley-Harris, director of the Microcredit Summit Campaign. “As we set bold goals and introduce new innovations in microcredit, we must be absolutely sure that we are reaching the poorest people, and we could not be happier that 10 of the world’s premier microfinance institutions have pledged to do just that.”

The Grameen Foundation launched Mifos—an open source information management platform. This new initiative was designed to address the significant technology challenges facing microfinance practitioners worldwide by revolutionizing the way they access and use technology to run their operations. Presentations at the conference made it apparent that technology is one of the tools in making microcredit more effective. For instance, Kenyan microfinance organization Jamii Bora is using a hand-held transaction recording device with a difference—it recognizes the fingerprint of each client.

Underlying Concerns 

A number of concerns and issues arose from the conference. One was measuring progress without burdening organizations with unnecessary administration. Another was how to get governments to cooperate, help and ensure that the concept of microcredit was built into financial instruments and regulations. Another was the fear that now bigger banks and other financial institutions are taking notice, the profit motive will gradually predominate. And there was concern that some of the smaller, struggling microcredit organizations might not survive without seed-corn grants or loans to give them the stability required of a financial institution. The World Bank, for instance, still allocates a mere 1% of its budget to microfinance.

The Human Face of Microcredit 

However, the conference was not allowed to forget the human face of the microfinance movement with many accounts of the desperation of poor people and what microcredit can achieve.

Among the tens of millions of microentrepreneurs reached is Rajamma, who lives in Karnataka, India. Before she received her first micro-loan, she was doing housework in “higher-caste” homes so she could feed her daughters the leftover scraps of food. She became so desperate that she borrowed money from a rich landowner. Unable to repay him, she was forced to send her daughters to work in his home–as virtual slaves. Rajamma joined The Bridge Foundation’s local Self Help Group and took out a loan of US$196 to purchase a milk cow. Within 10 months she cleared the loan and released her daughters from their bond. With her savings she bought half an acre of land and has taken another loan to irrigate it for groundnut cultivation. Rajamma’s eldest daughter is learning tailoring while the younger girls are in school.

Such accounts, and the obvious focus of most of the delegates, ensured that day-long courses on the final day such as “Starting a Microfinance Program” were packed to overflowing. We wish the many dedicated people involved in alleviating poverty through microcredit much success as they work toward their individual and collective goals.