Supporters of a campaign to provide small loans to 100 million of the world's poorest families by the year 2005 were confident of reaching their goal after hundreds of groups submitted action plans to meet that target. At least 1,000 institutions already had sent in plans outlining how they would assist in providing microcredit over the next seven years prior, to a review to be held in New York, June 25-27.
The review is the first to assess progress since some 2,900 people convened in Washington in February 1997, for the
Microcredit Summit, where the goal of expanding micro financing to 100 million people was first proposed. Since that summit, "on the ground, there's not so much that you can see and touch right now," conceded Muhammed Yunus, managing director of Bangladesh's Grameen Bank, one of the first major institutions to direct its loans primarily to poor women. Yunus remained confident, however, that the Microcredit Summit's target would be met, and that dozens of major institutions already were trying to devise ways to direct loans to the world's impoverished. His own Grameen Bank, which gives out an average loan of some $180 to mostly rural, poor Bangladeshi women -- who in turn have racked up impressive rates of loan repayment -- was entering into new joint ventures with the U.S. based Levi Strauss Co. and the Norway-based Telenor, Yunus noted.
Western businesses and international agencies have jumped on the bandwagon, with some major lending groups -- like the U.S. based Citibank/Travelers Group -- vowing to support the
Microcredit Summit's goals.
As Paul Osterberg, president of the Citicorp Foundation, noted this week, quite a bit of the conglomerates' interest in microcredit also was self-interest, in that their support could eventually net them millions of new customers. Getting to that point, however, would involve a dramatic expansion of micro financing, which remained generally small-scale. So far, an estimated eight million "very poor" people had been reached by microcredit facilities. In order to expand those facilities to 92 million more people by 2005, summit organizers believed they would need some $21.6 billion -- about half of it in grants or low-interest loans. Ultimately, the goal was to help direct microcredit toward the 1.3 billion people who live on less than a dollar a day -- 70 percent of whom are women, declared Noeleen Heyzer, executive director of the UN. Development Fund for Women (UNIFEM). The question is how to ensure that programs were being targeted to that population. Some microcredit ventures claimed to be reaching the poorest sectors of society simply if they were going to poor countries or poor regions of the world, without any monitoring of who were the recipients, argued Sam Daley-Harris, director of the
Microcredit Summit Campaign. The microcredit drive recently encountered another major challenge: the East Asian financial crisis, which prompted a wave of austerity in Asia's Emerging markets and dampened regional enthusiasm for microfinance. "The Asian crisis has become a real fear," Yunus said. But he contended that the collapse in East Asian currencies, fueled by a panic in speculation among investors, shows the reason why microcredit should be supported. "The frequency of crisis and chances of crisis will be much reduced if you can build up the (financial) base," he argued. Heyzer added that microcredit and the growth of small-scale businesses through low-interest loans could help to provide "shock absorbers" when businesses tied to the global market experience problems, as they have done in East Asia. The meeting in New York in June, would stress the importance that small local markets can have in providing a measure of economic stability to poor groups, even in countries hit by major financial crises, she said.