International Year of Microcredit 2005

In 1998, the General Assembly of the United Nations designated 2005 as the International Year of Microcredit. UNCDF and the United Nations Department of Economic and Social Affairs (UNDESA) were invited to jointly coordinate the activities of the United Nations system during the preparations for and the observance of the Year.

Why a Year?

The Year was established to:

• assess and promote the contributions of microcredit and microfinance to the MDGs;
• to increase public awareness and understanding of microcredit and microfinance;
• to support sustainable access to financial services; and
• to encourage and establish innovation and partnerships among the many institutions participating in microfinance activities.

Unprecedented international participation

The International Year of Microcredit was a resounding success. It significantly raised public awareness around the world regarding microcredit and microfinance.

• More than 100 countries participated in activities associated with the Year;
• more than 60 National Committees were established to promote microfinance and broader access to financial services for the poor;
• more than 350 conferences and events were held during the Year; and
• more than 100 academic institutions hosted seminars, conducted research, or were otherwise involved in the activities of the Year.

On 7-9 November, 2005, the Year culminated in a Forum at the United Nations in New York in which more than 700 people attended a highly focused series of discussions on microfinance and issues related to expanding financial services to more poor and low-income people and to more micro and small enterprises.

Substantive initiatives: Addressing constraints

1. The Blue Book: Building Inclusive Financial Sectors for Development

   Two major substantive initiatives began during the Year. First, UNCDF, in partnership with the Financing for Development Office of UNDESA, led an innovative consultation process to identify key constraints and opportunities for the promotion of inclusive financial sectors. The result of this year-long initiative is Building Inclusive Financial Sectors for Development, also known as "The Blue Book."

   The Blue Book addresses the challenges to building inclusive financial sectors and provides a compelling analysis of why so many people do not yet have access to sustainable financial services. The publication provides an invaluable tool and guide for policy makers in developing countries who seek to build inclusive financial sectors. It is also a reference point for governments to collectively discuss strategies, share best practices and improve processes.

2. The Data Project: Filling information gaps

   A second initiative was the "Data Project." This project, which included various United Nations agencies, the World Bank, the International Monetary Fund (IMF) and the UK Department for International Development (DFID), among other institutions, aimed to understand what type of access poor and low-income people have to financial services. The working group sought to address current gaps in available data regarding who has access to financial services in developing countries, who provides those services and at what cost. Extensive work began in 2005 to develop suitable indicators on access and techniques for gathering the necessary data. The World Bank, DFID and FinMark Trust of South Africa are currently working towards common approaches in survey work for financial access to the poor, particularly in Africa.

Working for LDCs

The International Year of Microcredit, the Blue Book, and the Data Project have direct and immediate applicability and impact in UNCDF's primary focus area: Least Developed Countries (LDCs) and are fully aligned with the Commitments of the Brussels Programme of Action. The challenges associated with financial exclusion and weak financial sectors are particularly acute in the LDCs, and each of these initiatives by UNCDF was designed and implemented to create more inclusive financial sectors in the LDCs to contribute to the achievement of the Millennium Development Goals.

For more on the International Year of Microcredit, please visit www.yearofmicrocredit.org.