Microcredit loans for world's poor to be focus of Halifax conference

"When it's not in the headlines, we all need to remind ourselves that we are in a global poverty crisis," says Sam Daley-Harris, director of the Microcredit Summit Campaign.

"If you go where these people live, what you'll find is that there aren't enough jobs, there isn't a social safety net, so your choice is either to work for yourself or you starve."

Bangladeshi economist Muhammad Yunus, the winner of this year's Nobel Peace Prize, started issuing microcredit loans in his home country after founding the Grameen Bank in 1983.

There are now more than 3,100 microcredit institutions around the world.

Applicants often have no assets or money, so they can't provide collateral.

Instead, recipients borrow in small groups. This creates a collective sense of responsibility, ensuring that more than 97 per cent of the loans are repaid, says Grameen Foundation president Alex Counts.

Counts says the movement rejects a traditional banking philosophy that is anti-poor, anti-illiterate and anti-women.

In fact, more than 80 per cent of the loans recipients are women.

"Women were more faithful repayers, and were using their profits more to invest in long-term education and health and nutrition needs of children," says Counts. "They were more focused on ending poverty for that generation."

The Microcredit Summit Campaign set a goal nine years ago to lend money to 100 million of the world's poorest people, defined as those living on less than US$1 a day, by the end of 2005.

Of more than 113 million loan recipients, only 82 million fit that category by the end of last year, though the campaign says it will reach the goal this year.

The Halifax conference will set two new goals: first, to reach 175 million of the world's poorest by 2015; second, to ensure those loans lift at least 100 million people above the dollar-a-day threshold.

They're bold ambitions, says Counts, and they will require governments around the world to do more.

The Canadian International Development Agency currently spends $32 million a year on microcredit programs, representing just over one per cent of its budget.

It's the same per cent of spending as the World Bank - and it's not enough, says Daley-Harris.

"It's critical that the CIDAs, the World Banks, etc., don't make this intervention a footnote in their funding and in their policies," he says. "Governments need to do more."

Foreign Affairs Minister Peter MacKay and International Co-operation Minister Josee Verner are both scheduled to attend the conference.

A spokeswoman for CIDA says the agency sees microcredit as a vital tool in eradicating poverty.

"Microfinance is an important initiative of private sector development, which is one of CIDA's five key priority areas," Bronwyn Cruden wrote in an e-mail.

Cruden notes that last month, CIDA announced an extra $12 million for Afghanistan's national microcredit program.

The president of Developpement international Desjardins, a Quebec-based organization that helps set up financial institutions in developing countries, says microcredit is just one tool to help the world's poor.

Anne Gaboury says impoverished people also need ways to manage their money. For example, she says, it can be very difficult for people with little money in rural areas to even start a savings account.

"It's one thing to provide microcredit, but they need a diversity of financial services," says Gaboury.

"We think the real challenge is to increase accessibility, and the best way to do that is to help develop local financial institutions that will reach poor people."

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