Reducing Poverty Through Microcredit at CIDA


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At CIDA, our goal is to reduce poverty in developing countries to achieve greater equity, greater security, and greater prosperity. That�s the big umbrella. Out of that we have a number of broad program priorities: basic human needs, where we want to spend at least 25 percent of our resources: overarching issues, including support to women in development and environmental programming: programming to improve government and infrastructure services; and support for private sector development�and this is where microcredit comes in. 

Microcredit/microenterprise development is a very important aspect of our work. For me, it is a natural fit with our program priorities, and it is one of the most compelling and powerful tools that we can use in order to meet our overall mandate to reduce poverty. We have become very conscious, as many people around the world have, that women can be a great source of development potential in communities. They already are, and given some minimal support, they will make a huge difference. 

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We see microcredit as one of many tools to reduce poverty�it is not the only one, but it is a very powerful one and one on which we want to continue to build. Our investment thus far is quite substantial. We already have microcredit programming in forty two countries, and we want to add another eight countries during the course of the year as part of our commitment recently made at this year�s Meeting of Councils. 

What is our strategy in terms of expanding our microcredit support? First, we are already working with a number of institutions and communities. One of the things we want to do is see how we can expand this existing network to reach a larger number of people, either within the immediate geographic area, in adjacent areas, or in other areas where microcredit is non-existent. The second one is to expand the frame of opportunities. This is where our work in eight additional countries comes in. We are looking for new partners, new communities, and new major gaps, real opportunities, and readiness. 

The second approach is to try to see how we can expand the capital base. Working with financial institutions of different kinds, whether these are commercial institutions, international financial institutions, or banks within countries that already exist, to try to see how they can contribute to expanding the capital base. One of the ideas we have had is to see how we can encourage commercial banks to become wholesalers and retailers of capital�wholesalers to the many NGOs who could be their retailers, and also retailers to micro-entrepreneurs. As a matter of fact, we are working right now with a Canadian bank in Jamaica, the Bank of Nova Scotia, to try to create a new lending window for micro-entrepreneurs. A third approach is to work to find additional ways of getting our many partners in Canada, and internationally, to learn from each other, to share information. The Summit has been very important in this regard, and that is one of the reasons we continue to support it and why I�m very pleased to be a member of the Executive Committee. An important learning vehicle is CGAP, of which Canada is a founding member. We also want to look for additional opportunities, either arising out of these two strong movements, or alternatively, in the work that we do everyday . . . as we find new partners or a potential new partner and link them up with some of the well proven microfinance/microenterprise NGOs in the world, so that they can learn from each other. 

Another dimension of our plan relates to information. specifically performance indicators and how to improve them. This has been an issue at CGAP, and we have been discussing this quite a bit at the Donor Council meetings of the Microcredit Summit. This is one unfinished piece of business which we need to accelerate our work on. What we need to do is keep our eye on the goal, which we have all committed to�at least many of us have committed to�of reaching 100 million families by the year 2005. We at least, as a minimum, need to make sure that we find a way of being able to know what our base is, in terms of number of people reached now and their gender, and not make it too complicated, because otherwise we will crumble under the weight of the paper. I think it is important to at least have this first layer worked out so that we know who we are reaching and where and how many . . . and the success rate, so our plan also includes that. 

And the final aspect to our plan is the creation of an enabling environment in developing countries for microcredit to flourish. To a great extent this involves working with national governments to gauge their commitment, improve their banking legislation, and ensure that the framework is highly supportive and even promotional of the work.

Excerpted from a statement by

Huguette Labelle
President, Canadian International Development Agency

Source: Countdown 2005, the newsletter of the Microcredit Summit