UNITED NATIONS CAPITAL DEVELOPMENT FUND    Microfinance

Issue 11 / April 2005

Issue Table of Contents

Marketplace

Made by Microentrepreneurs

Update

on the International Year of Microcredit 2005

Upcoming Events

Conferences, events and trainings.

Links

New websites and publications.

Share your news!

If you have a current news story or know of an upcoming event that would be of interest to the network,
please email the Editor, Vanessa Ward.

Sign up

to receive Microfinance Matters by email

Past Issues

By Nandini Pandhi and Nicola Armacost, Women's World Banking

José Antonio Ocampo and Nancy Barry

In 1994, at the request of Gertrude Mongella, the Secretary General of the Fourth United Nations Conference on Women, Women's World Banking (WWB) invited 40 microfinance leaders to form the UN Expert Group on Women and Finance in preparation for the 1995 UN Women's Conference in Beijing.

During this meeting, the participants produced an influential consensus document titled The Report of the Expert Group on Women and Finance. Gertrude Mongella said that the document shaped much of the Action Platform of Beijing. The report served as the blueprint for the Donors' Guidelines on Selecting and Supporting Microfinance Institutions, and these guidelines were subsequently adopted by CGAP, and formed the basis of performance indicators and standards for the microfinance industry. This meeting also produced the core of what became the Missing Links: Building Financial Systems that Work for the Majority, adopted by 90 financial sector leaders in 1995, and used by practitioners and policy makers in many countries over the past ten years to build policies, systems, and services that work for microfinance.

To celebrate the International Year of Microcredit and to contribute substantively to the UN Blue Book on Building Inclusive Financial Sectors, WWB reconvened members of the UN Expert Group on Women and Finance, and also invited members of the Advisors Group for the International Year of Microcredit and other key participants. The WWB Expert Group+10 meeting took place from April 6 to 8, 2005, at the Goldman Sachs offices in New York. Over 40 microfinance leaders were in attendance. Nancy Barry, President of Women's World Banking, José Antonio Ocampo, Under-Secretary General for Economic and Social Affairs of the UN, former Finance Minister of Colombia, and Chair of the Coordinating Committee for the International Year of Microcredit, and Mercedes Canalda, Chair of Women's World Banking opened the meeting on the morning of April 6th. Kathryn Imboden, Senior Policy Advisor, United Nations Capital Development Fund (UNCDF) said, "This gathering has set the stage for the very type of dialogue the Blue Book initiative is designed to encourage. The Blue Book is a platform for expression, not only through its own multi-stakeholder meetings, but also through important meetings such as this. The 1994 Expert Group Meeting is remembered as shifting paradigms in the development of the microfinance industry. Once again, WWB has gathered a group that is extremely well placed to reflect on the continuum of progress in microfinance."

Prior to the meeting, invited participants responded to a questionnaire aimed at culling their views on the state of microfinance and future opportunities, challenges and vision for the industry. Responses were clustered by WWB and provided to participants as the beginning points for deliberation. Small group and plenary discussions resulted in a consensus document prepared during the meeting. The questionnaire, meeting, and report treat:

• The main accomplishments in the microfinance industry in the last ten years-and the challenges for the next ten.
• The core measures needed to build country-level financial sectors that work for poor people and the institutions that serve them-policies, institutional infrastructure, and financing.
• Key actions needed by microfinance institutions, banks, cooperatives and other actors to build the retail capacity required if hundreds of millions of low income entrepreneurs and households are to access financial services in the next ten years.
• What poor clients want in microfinance products-credit, savings, housing, insurance and remittances-to help build income and assets, and how institutions can provide responsive, efficient, and profitable product offerings.
• The key roles that global actors in the private, government and social enterprise sectors need to play to support the build-up of domestic financial sectors that work for the poor majority.
• A shared vision statement for the next ten years and key actions needed in the next three years to achieve this vision.

Our Shared Vision for 2015

Building income and assets. Financial services are working effectively to support low income entrepreneurs and households. Lending, savings, insurance products and related services are used to help poor people build incomes, assets and livelihoods. The impact is being measured. Major expansion in outreach. The number of low income households, individuals and entrepreneurs with responsive financial products and services has quadrupled globally and at least 50% of all low income households in all countries have access to financial services. Microfinance institutions are solid, respected, influential players in domestic financial systems. Most of these players are fully integrated into domestic capital markets. Specialized MFIs have continued to innovate, demonstrating how to respond to the evolving needs of poor entrepreneurs and households. A large number of regulated financial institutions have entered and expanded financial services to poor people—both directly, and through partnerships with institutions specialized in serving the poor. Many banks have demonstrated how to provide a range of financial products and services to large numbers of low income entrepreneurs, in a profitable and responsible manner. Massive outreach, at lower costs. Banks, MFIs and new actors have deployed technology effectively to massify outreach in rural and urban areas, and to radically reduce transaction costs in microfinance. In almost all countries, effective policies and strategies for financing the poor have been built and implemented, with needed policies and support services in place, and with appropriate roles played by government, regulated and unregulated financial institutions, funders and low income women and men. A coherent microfinance industry and movement exists. Local and global actors are focused on mobilizing all key actors to play their roles in building financial services that help hundreds of millions of poor people build incomes, assets and our world.

Participants noted that the vision and the proposed actions for the future would in fact fulfill the vision and unfinished agenda outlined ten years ago. The vision and key actions proposed reflect the rapid evolution of the microfinance industry and the importance of local action to build domestic financial sectors that work for the poor majority.

Individual participants shared with one another their own vision for microfinance in the next ten to fifteen years and identified actions that they believed were fundamental to realizing this vision. Ela Bhatt, founder of SEWA and WWB and an original member of the 1994 Expert Group, said, "I hope that there is a more holistic approach taken to address the needs of poor people in the coming decade." Krishna Wijaya of BRI noted the business opportunities in banking with poor people, "When we entered this business we were not looking for profit, but profit followed us. The poor are not the problem, the poor are the solution." Elizabeth Littlefield, CEO of CGAP said, "To build this vision we need to do three things: build retail capacity; build retail capacity; build retail capacity." Mahdav Kalyan of ICICI Bank in India talked about building "a comprehensive suite of financial services for the poor" and Gregory Casagrande, Advisor to the International Year of Microcredit, talked about "helping poor people build financial security."

Other participants boldly envisioned a vast increase in the impact of microfinance; they saw a quadrupling of the impact of microfinance globally with the objective that at least 50% of all low income households in all countries have access to financial services. Ranjit Fernando predicted, "There will be greater recognition of the importance of microfinance as an instrument for reaching the poor and a significant decrease in poverty." Other participants noted the importance of building successful models of collaboration among new and current actors. Marilou van Golstein Brouwers of Triodos Bank and Advisor to the International Year of Microcredit urged her colleagues to "engage with new players in a meaningful way, to combine social and commercial interests, to innovate and to push a broader development agenda."

Nancy Barry closed by saying, "Let's bring the poor woman into the center of our focus. Let's demonstrate that microfinance can be done profitably and effectively. Let's be strategic in how we want to reach the policy makers, the donors and the commercial banks. Let's build a platform of influence together. Let's use the Year and its Committees to keep the momentum going."

WWB hopes that the meeting and its report will make an important contribution in preparing the Blue Book for the UN Year of Microcredit and in structuring the agenda for the next decade in building financial sectors that work for the poor majority.

The final report of this meeting will be available in May. For more information, please contact Nicola Armacost at narmacost@swwb.org.