Big ambitions for microcredit
Jun. 19, 2006. 01:00 AM
No one will say so officially, but most of the millennium goals set by world leaders in a burst of epochal resolve, have slipped out of reach.
The prospects of halving the number of people who live on less than $1 a day by 2015 look bleak. Poverty is rising, not falling, in sub-Saharan Africa.
The likelihood of making primary education available to every child within nine years looks slim. School enrolment is inching up in developing countries, but far too slowly.
The odds of cutting the child mortality rate by two-thirds look long. Children in the developing world are still dying at a rate of 30,000 a day.
The hopes of reversing the spread of AIDS by 2015 look faint. Prevalence rates have stabilized (primarily because the death toll in Africa roughly matches the number of new infections), but antiretroviral drugs still reach only one out of five people who need them.
Yet amidst all this gloom, there is one remarkable success story. Microcredit is flourishing.
In the poorest villages of the world's poorest countries, 92 million families are using tiny, no-collateral loans to build businesses.
They are running tearooms, sewing clothes, operating bicycle rickshaws, making crafts and renting out cellphones.
No one predicted that entrepreneurship would bloom so abundantly in such harsh conditions.
To celebrate this rare victory in the fight against global poverty — and push it further — development activists, politicians, community workers, borrowers and lenders from 100 nations will gather in Halifax this fall.
The Global Microcredit Summit will offer hope to a discouraged world.
Nine years ago, the founders of the movement set what they thought was a "wildly ambitious" goal. They would extend microcredit to 100 million of the world's poorest families by the end of 2005. (At the time, 7.6 million had access to such loans.)
By the end of 2004, they were nine-tenths of the way there.
The final tally for 2005 is not in, but there is little doubt it will exceed the target. "When we arrive at the Global Microcredit Summit in Halifax, I am sure we will have reached more than 100 million families," said campaign director Sam Daley-Harris.
The American anti-poverty activist, who organized the first microcredit summit in 1997, will challenge delegates in Halifax to raise the bar: help 175 million families by 2015.
He attributes the success of the campaign to two main factors.
First, it was driven by people who weren't afraid to take risks and defy conventional wisdom.
Everything banks do, microlenders don't do, Daley-Harris explained. Banks make large, well-secured loans. Microlenders advance small amounts (as little as $10) with no collateral required. Banks demand lots of paperwork. Microlenders accommodate illiterate borrowers. Banks prefer male clients. Microlenders target their services at women. Banks expect borrowers to come to them. Microlenders go out to villages.
Second, it was spurred along by economic forces.
Unlike traditional development programs, which get costlier as they grow, microlending gets cheaper as more clients come aboard. This creates a natural momentum.
Microcredit does have its detractors.
Some development groups complain that it draws attention away from the root causes of poverty: lack of access to land and clean water, poor or non-existent schools and health-care facilities, unfair trade rules and corrupt officials.
Some women's groups say it puts undue pressure on young mothers to be breadwinners as well as homemakers.
And some social policy groups question the use of market solutions to the global imbalance of wealth.