MICROFINANCE MATTERS

The International Year of Microcredit brings with it many opportunities to formulate far-reaching initiatives that will have a lasting effect and will stimulate the microfinance sector throughout the world. One project of special interest is the International Year of Microcredit National Committees. National Committees focus on the vision of ensuring that by 2015, at least 50% of all households will have access to quality financial services.

To date, 30 countries, at all levels of development, have formulated a National Committee or Focal Point comprising high-level representatives from 28 governments, 24 United Nations local offices, 32 multinational agencies, 45 universities, and key members of the private sector and civil society. In the upcoming weeks it is expected that another 35 countries will finalize their programmes, while an additional 13 more are also formulating their involvement, bringing the total to 78 countries participating in this truly global effort.

In each country the National Committee has a high degree of flexibility with the activities and events that are coordinated. Already 63 conferences and seminars have been planned throughout the Year that will take place in 36 countries,

and 21 countries have even developed a formal public awareness campaigns to reach even the remotest regions. Such awareness raising activities focus on introducing quality financial services to poor and low income people and are designed to reach a broad audience. Many governments realize the benefits of microfinance and have initiated innovative ideas to promote the Year. In Bangladesh, for example, January saw the issuance of two postage stamps that commemorate the Year, and in the Philippines, a 20-peso bank note was introduced imprinted with the logo of the Year. The Philippine 20-peso note is the most widely circulated currency in the country and is sure to have powerful impact.

The Role of the National Committees

Under the auspices of the Year, member states were requested to establish national coordinating committees to facilitate activities and to create a dialogue on best practices to build more inclusive financial sectors in their countries. Each national coordinating committee assesses the challenges that poor people confront in accessing financial services and decides upon activities and initiatives to address these issues. The International Year of Microcredit is an ideal platform to engage countries in aligning their financial sectors to achieve the Millennium Development Goals by 2015 and National Committees are seen as a catalyst in reaching this objective. One vision, two strategic themes, three concrete goals, and eight measures of success guide the activities of the National Committee:

Some National Committees have focused their efforts on holding conferences and seminars that draw in large audiences and are designed to educate and inform. In Mongolia, for example, a four-day National Summit on Microcredit and Entrepreneurship was attended by an astounding

1,400 people. In the upcoming months many countries have exciting events planned, including Madagascar. On March 23, Madagascar's National Committee officially launched the Year with a highly publicized opening ceremony, and in June, a week-long conference will be held with the theme "Overcoming Poverty through Microcredit" that is sure to raise awareness on all levels. Increased awareness is derived from good information that can be translated into the necessary commitment, capacity and action to improve the level of financial services for poor and low income people.

Some countries are focusing on the media as an effective platform for reaching out and promoting the Year. Kenya's National Committee will be inserting periodic supplements on microfinance in its two larger newspapers, "The Nation" and "The Standard", while in Pakistan, plans are underway to create a documentary on the benefits and successes of microfinance. Another innovative approach is that of the Nicaraguan National Committee, where a unique awards programme will be held that showcases journalists who have published works on microfinance.

Donor countries of the UN play a key role in the International Year of Microcredit and are also placing emphasis on the development of National Committees. Using a well-developed financial sector as a catalyst, the National Committee of Switzerland held an event at the Swiss Stock Exchange with the theme of "Big Finance meets Microfinance", which was very successful in drawing in private sector financial institutions. The Canadian Focal Point has also been very active. Seeking participation from Oikocredit, Development International Desjardins and the Canadian International Development Agency, a host of events are planned ranging from technical seminars and trainings, to microfinance symposiums to a nation-wide youth contest called "Building the Future Now!", which concentrates on the topic of "What can we do in 2005 to build a fairer, more prosperous, more equitable world?"

Some donor countries, such as Belgium, France and the Netherlands will focus on partnering with developing countries to promote the Year and concentrate on building the capacity of the financial sectors of those countries, whereas other countries, like Australia, will tap into existing media outlets such as "Focus Magazine", the publication of Australia's overseas aid programme, AusAid. Throughout the Year, articles related to microfinance will appear in Focus Magazine, and in addition, AusAid's Public Affairs Group will distribute posters and training curriculum as part of its Global Education Programme. In Italy, efforts are underway by the National Committee to develop a series of recommendations for the Italian Government that will outline the necessary measures needed to further develop the microfinance sector.

Building upon the momentum that is created through International Year of Microcredit, key projects such as the National Committees can last well beyond 2005. It is expected that as the Year winds down the flurry of activity around the microfinance sector will continue to thrive and National Committees will continue in their active roles in advising their governments on key microfinance issues. The International Year of Microcredit is a starting point to engage countries in aligning their financial sectors and National Committees are seen as a driving force in spurring country commitment and to aid in the achievement of the Millennium Development Goals.

Throughout the world, students are joining their partners at Citigroup and the United Nations to make this year's Global Microentrepreneurship Awards (GMA) contest the largest and most exciting showcase of international microentrepreneurs yet.

Together, students from the 34 GMA contest countries and students from United States graduate schools will work with Citigroup and the UN on this year's Awards. In the U.S., more than 100 graduate students from seven schools, including New York University, Harvard University, and the University of Virginia, are involved in leading campus efforts to promote the critical development tool that is microfinance.

For these students, the Awards offer a significant opportunity to learn and to contribute.

"Having worked with the Women's Opportunity Fund, a microfinance institution, I have seen the innovation of local entrepreneurs," says Devon McElwee, a country team leader at the University of Virgina's Darden Graduate School of Business. "Participating in the GMA is a great way to continue my education and support."

Venezuela native and fellow Darden GMA participant Henry Sanchez says being part of the project is tremendously rewarding.

"I've seen the effect microfinance has on local economies and am confident of the fruits the additional capital can bear," says Sanchez.

A keen desire to help lead more capital to this sector and to raise awareness of microfinance's promise led Northwestern's Luca Torre to lead his school's GMA effort. Raised in Italy and educated in Belgium and France, Torre plans to pursue an international development career upon graduation from the Kellogg School of Management in 2006.

"One of the major constraints that the microfinance industry has to overcome is the lack of awareness among the major stakeholders, such as the traditional banking system," says Torre. The Awards aim "to address this issue mobilizing the whole community."

Radha Shreeniwas' belief in microfinance's power to reduce the gap between rich and poor sparked her interest in the contest. Now in her first year of MBA study at Yale's Graduate School of Management, Shreeniwas heads her school's GMA team.

"I was intrigued by the idea of the GMA - an awards contest designed to highlight achievements and accomplishments of micro entrepreneurs," she says. "Once I learned more about the contest I was thrilled that as a student I could actually affect change through this initiative."

Shreeniwas encourages students from around the world who are interested in microfinance to go ahead and get involved with the 2005 Awards.

"This effort involves affecting change on a large scale around the world," she says. "For those interested in getting their feet wet in the field this is a very wonderful way to do so."

Harvard team leader Aliya Shariff could not agree more. Raised in Canada, Shariff worked in Rwanda and Afghanistan before returning to school last September.

"Microfinance is a tool for self reliance, and the opportunity to be part of a program that encourages and celebrates the initiatives undertaken by those in developing countries is an honor," she says. "There are so many ways that we spend our time as students and very few of them are more rewarding than knowing that your work is helping to improve the lives of others."

For her part, Moriah Meyskens, a student at New York University's Stern in her final year of MBA study, says she is not surprised to see students excited about the contest. Meyskens, who helped lead the 2004 GMA, said her school's involvement in the 2004 program helped spur both a course and a new microfinance initiative there.

Microfinance "is a fantastic way to make an impact and to feel good about yourself and the world," said Meyskens, who has worked with the microlender Accion in New York and plans to continue her work in the sector after graduation. "There is a lot of opportunity to make a big difference."

Torre agrees and joins Shreeniwas in urging students from all over the world to do their part in accomplishing the Awards' goal of highlighting microfinance's power in the fight against poverty.

"The GMA is a project for people who do not want to accept the status quo and who have a dream for a better society," he says. "A global effort is needed for a global success."

A: Institutional Arrangements

The United Nations Capital Development Fund (UNCDF) and the United Nations Department for Economic and Social Affairs (UNDESA) are the General Assembly appointed joint coordinators of the International Year of Microcredit 2005.

UNCDF and UNDESA established a Coordinating Committee for the Year jointly chaired by Mark Malloch Brown, UNCDF Managing Director, and Jose Antonio Ocampo, Undersecretary General for Economic and Social Affairs. UNCDF hosts a secretariat that manages the operations of coordinating the Year. A small core team, augmented by short-term consultants and voluntary advisors, staffs the Secretariat. Five official Core Sponsors of the Year currently support the Secretariat: UNCDF, ING, the UN Foundation, Visa International and Citigroup.

The Patrons Group was established to advocate the goals and objectives of the Year. The Group comprises high-level worldwide figures who are committed to the ideals and principles of the United Nations, and who see microfinance as a tool to build assets and foster social and economic opportunity for those living in poverty. According to their specific roles and responsibilities, patrons work in one of the three groups: Advisors, Emissaries and Spokespeople.

The Advisors Group comprises a diverse group of 18 leaders that range from the heads of big banks to the leaders of small microfinance institutions. Stan Fischer, former Vice Chair of Citigroup, chairs the Group. Mr. Fischer will remain the Chair of the Advisors Group when he moves from Citigroup to become the Governor of the Central Bank of Israel in April 2005 and Citigroup will bring a new representative to the Group. Two recent additions to the Group are Princess Maxima of the Netherlands and Christopher Rodrigues, CEO of Visa International. The Advisors have actively participated in launching, in some cases major, activities for the Year in their own constituency and have contributed through Advisors Group meetings, speaking engagements, the launch of the Year, high-level meetings and events such as the World Economic Forum.

The Emissary and Spokespersons Groups raised awareness of the objectives of the Year starting with the launch event in New York. Princess Mathilde of Belgium has participated in an array of activities including visits to microfinance clients in China, Mali, and India and speaking engagements at universities in Europe, Asia and the United States. Princess Maxima of the Netherlands recently visited entrepreneurs, MFIs and government and Central Bank officials in Uganda and Kenya. Anggun has engaged in promotional trips to Indonesia, performed in benefit concerts, and has promoted the logo of the Year on her most recent album. Anggun and Souad Massi recorded public service announcements for the Year that will be distributed. Anggun's PSA will air at the Pavarotti and Friends Concert in Johannesburg, South Africa on April 2 to an audience of 18,000. Three new celebrity spokespeople are expected to support the Year as Emissaries within the next few months.

Formal National Committees or Focal Points have been established in 30 countries, and are in the process of being formed in 35 others. The Secretariat has requested National Committees submit action plans detailing their specific local activities. Most National Committees comprise diverse constituents representing government, NGOs, the private sector and academia. Many National Committees have established websites and submitted detailed action plans for the Year. Many have successfully engaged senior government. One of the more creative activities was the introduction of currency prominently displaying the logo of the Year by the Philippines. The Year has inspired presidential speeches promoting the Year (Brazil and Venezuela), policy debate and regulatory reform (Turkey), private sector engagement (Ghana - founders of the National Committee is the Association of Bankers). Many committees have organized seminars and conferences (Italy, the Netherlands, South Africa, Mongolia, Luxembourg, France, Germany and Switzerland to name a few). To further support and encourage national committees, the Secretariat is considering establishing a small innovation fund and award. Details are described in the Strategic Partnerships section below.

B: Strategic Partnerships

To date, eight high-level external partnerships have been initiated to endorse the Year in a significant way. Priority has been given to partnerships that include a broad range of constituents, have a wide geographic scope and the potential to result in a massive impact. The goal of the Coordinating Committee is to establish 10 high-profile partnerships related to the Global Themes, and up to 25 other partnerships that principally involve endorsement.

In 2004, the Global Microentrepreneurship Awards was piloted and successfully rallied the public and private sectors, UN agencies, National Committees, university students and young professionals to organize contests that featured low-income entrepreneurs in eight developing countries in all five continents. As an auxiliary benefit, microentrepreneurs, the majority winning GMA participants, rang the opening bells of 17 stock exchanges from Mumbai to Milan: bridging the gap between microentrepreneurs and private sector financial institutions. The Netherlands and the Swiss National Committees for the Year brought the microentrepreneur winners from the Cambodia and Mozambique contests respectively, to launch the Year at their countries stock exchanges. The winner of the Indonesian contest addressed the General Assembly at the launch of the Year in New York.

In 2005, the GMA has become a formal collaboration between Citigroup, UNCDF and UNDP, and the GMA Student Alliance. More than 30 countries will organize awards programs in 2005, bringing together thousands of microfinance clients, students, private and public sector professionals, senior government officials and UN agency staff.

The "Blue Book on Building Inclusive Financial Sectors for Development", scheduled to be completed and published by mid-2005, will comprise the results of a series of innovative consultations with a wide variety of financial sector experts, addressing the question "Why are so many bankable people unbanked?" The project undertakes regional and global multi-stakeholder dialogues, questionnaires and interviews, an E-Conference (March 28 to April 8) and related events. The first dialogue, held in Jordan (10/2004), garnered input from experts in the Middle East and North Africa. An Africa meeting (12/2004) was organized in Bamako. An Asia dialogue took place at the Asian Development Bank in Manila (03/2005); and a Latin America dialogue is foreseen in Chile, in cooperation with ECLAC, the World Savings Banks Institute and Banco Estado (04/2005). A final Global Meeting will be hosted by the ILO in Geneva (05/2005). UNCDF and UNDESA, supported by a Steering Committee of UNCDF, UNDESA, ILO, IFAD, the World Bank and the IMF, lead the process.

A collection of 25 products, labeled with the logo of the Year will convey to the public the importance of microentrepreneurs. The chosen products will represent various world regions, male and female entrepreneurs, young and older craftspeople, various media as well as different market segments. The products will be sold in an "online boutique" on the Year web site. The "story" of the product and the artisan will be told in a pamphlet with each product to illustrate the link to microfinance. National Committees and partner organizations are also invited to market and sell these products. Please visit www.shopmicro.org.

The online store currently has five products from Macedonia, Colombia, Rwanda and Bangladesh. Three other products are in the development stage. We will expand the product line to at least twenty-five and also increase the geographic sourcing of these products by fall 2005. Our principle target markets will be corporations, universities and socially responsible individuals.

With the support of Citigroup's promotional department, Public Service Announcements have been filmed featuring Anggun (English, French and Indonesian); Souad Maasi (French); and an additional PSA was shot with guest artist Karina (Spanish). Citigroup has agreed to distribute the PSAs internationally with its advertising package. The PSAs will also be distributed through the Year website and to microfinance providers and National Committees throughout the world. Plans are underway for an additional promotion campaign through posters, postcards and decals and to secure additional mainstream celebrities to promote the objectives of the Year.

The film short: "Microfinance: In Their Own Voices," a collection of client stories produced by Sterling Van Wagenen, has been completed and is ready for distribution. The United Nations Department for Information (DPI) has committed to distribute the film to all UN Information Centers, as well their target broadcasters. The film is already in demand from many parties National Committees, conference organizers, universities and other to promote microfinance messages.

In addition, the Secretariat has offered input into a number of documentary film and television productions on microfinance. Films on microfinance produced for the Year will be made available on the Year website.

Viewers have a high degree of loyalty to soap operas around the world and many of these viewers are poor and low-income people who can benefit from microfinance services. The Secretariat is working to graft the theme of microfinance and entrepreneurship onto the storyline of serial dramas to expand outreach to potential clients. Negotiations are underway with a number of serial drama outlets. It is our hope that the use of popular culture will build understanding the issues faced by poor and low-income people in accessing financial services. Several National Committees, including the Philippines and Poland have established similar links with the popular media channels within their own countries to celebrate the role of microentrepreneurs in their countries and promote the complexity of their financial needs.

Although there is a broad consensus that microfinance is widely and increasingly used, there is little hard data about who provides it, in what form it is provided, who receives it and at what cost. Hard data, by itself, will give incentive financial market development and aid governments, donors, banks, and the media in identifying opportunities to broaden and improve financial access for all people. The breadth and scope of microfinance makes collecting this information a difficult task-one that will require the combined efforts of governments, private financial institutions, consultancies, and the major international public financial institutions. Current efforts are not comprehensive and all would benefit from pooling resources.

In October 2004, the data project brought a small group of expert statisticians and researchers from the Bretton Woods Institutions and the United Nations, together with governments and private sector to address current data gaps, anticipate future needs, and build agreement on the best way forward. The World Bank has agreed to develop indicators on the quality of that access. The Human Development Report has agreed to report on the data collected. The IMF had agreed to work to develop headline indicators of the depth of financial markets but has recently rescinded this offer - the Secretariat will continue discussions, as the participation of the IMF in the stability management of financial sectors is critical to the wealth creation of the poor.

Innovation and creativity is essential component to raise public awareness about the importance of microfinance. The innovation fund would be used to provide $10,000 grants to National Committees that demonstrate excellent proposals in this area. Grants would be available to the top four countries in each region for a total of 20 grants. National Committees would be encouraged to work with GMA country teams to apply for these grants, thereby fostering collaboration and partnership amongst microfinance constituents.

C: Promotional Materials

The information kit for the Year was produced by the UN Department of Information with the Year Secretariat and includes a basic microfinance brochure, a Year summary paper translated into six languages, and other promotional materials related to the various projects of the Year. The kit has been sent to all UN Information Centers. A CD Rom with kit materials and a limited number of readymade kits are available to National Committees and UN agencies.

The approved Year of Microcredit 2005 logo depicts power and evokes the idea of unleashing energy. Designed by the DPI Graphic Design Unit, the logo is unusual in design with a dynamic quality that has become an integral part of all UN communications materials and sales products (including bags, pins and coasters) for the Year. It is available in six languages and has been made available to UN agencies, National Committees, UNICs and NGO partners. The logo is used for all Year-related, printed and web-based materials and will promote awareness and activities pertaining to the observance. Guidelines on logo usage are available on the UNCDF website.

The official website for the Year (www.yearofmicrocredit.org, www.microcredito2005.org, www.microfinance2005.org) provides extensive information on the Year, its objectives and activities, National Committee contact information and a calendar of national, regional and international events. The site is designed to appeal to and serve as a reference for a wide audience including newcomers to microfinance, industry practitioners, UN country teams and Agencies, and donors, Organizations may link to the website (guidelines on how to do this are available on the site). The site also includes documents in all official UN languages to support an international audience. Key areas include an events calendar, media resources, an interactive microfinance education area, an experts forum, international contact information for all Year country teams, and information about our key sponsors and patrons group.

Microfinance MATTERS, is a monthly web publication from UNCDF which was started by the Secretariat in January 2004. The newsletter now reaches over 6,000 direct subscribers and expects to have a circulation of more than 10,000 by the end of 2005. In addition to our subscription list, the newsletter is also distributed through: the Microfinance Practice, Dev-Finance, surf-semin, and surf-pov listserves, as well as the PRN network and the Microfinance Gateway reaching an estimated additional readership of well over 50,000 people worldwide. Microfinance Matters takes advantage of the Year to promote innovative partnerships, raise public awareness, and share effective practices and expertise on building inclusive financial sectors. By inviting reader opinions, the newsletter is developing into a platform for discussion. Contributors to date range from Ambassadors to microfinance clients.

The close collaboration between the Department of Public Information (DPI) and the Secretariat has greatly benefited the public awareness of the Year. A communications strategy, prepared by the DPI and the Year Secretariat, was distributed to all UN Information Centers (UNICs) and UNDP offices in September 2004. It included guidance on key messages, partnering with local NGOs and National Committees, outreach to the media and distribution of microcredit materials that were being produced by DPI.

As a result, UNICs have undertaken a range of activities from: translating of DPI-produced microcredit materials to partnering with civil society and local media. The DPI focal point has also connected UNICs with various Year partnerships such as the Global Microentrepreneurship Awards.

UNIC Warsaw, Poland: With the support of the UNIC and coordinated by the Microfinance Centre, a launch ceremony was held on 18 November at the Warsaw Stock Exchange. UNIC Warsaw translated the Secretary-General's message and prepared a backgrounder for the Year in Polish. The UNIC also prepared a Polish website on the International Year of Microcredit. The National TV channel Polish TV2 aired stories on the event twice in their Panorama News programme. The UNIC has been invited to become a member of the Polish National Committee on Microfinance.

Regional UNIC, Brussels: The Desk Officer for Portugal undertook the translation of the microcredit brochure and six press kit inserts into Portuguese. She also initiated a civil society partnership with the National Association for the Right to Credit (ANDC).

UNIC Yaounde, Cameroon: The UNIC organized a UN Press Club Rencontre to launch the Year on 18 November. Civil society partners including representatives of the Chamber of Commerce and Industries, Ministry of Industrial Development, government officials, academia, the private sector and the UN system were invited to discuss the importance of the Year.

The DPI and Secretariat media focal points acted as co-media officers and undertook active media outreach for the pre-launch press conferences and the launch of the Year held at UN Headquarters on 18 November. Two media advisories were drafted by DPI in coordination with the Secretariat, outlining the key events and highlights for the Year. These were distributed to all resident UN journalists and jointly with the Year Secretariat to foreign journalists who focus on development and economic issues.

Outreach to all resident journalists was conducted for the press conferences held on 16 November with the Year's Spokespersons and also for the noon briefing addressed by José Antonio Ocampo and Mark Malloch Brown on 17 November. The outreach generated a substantial number of press articles.

A list of correspondents in developing regions and special interest was specifically researched, keeping in mind the success of microcredit in regions like Asia and Latin America and the likelihood of journalists wanting to cover, for example women's issues globally. The outreach has generated a continued press interest.

Outreach was also conducted to DPI units such as UN Radio, TV and the News Centre. This resulted in substantial coverage for the launch, including a number of programmes on UN Radio in English and Spanish, and a television interview conducted by World Chronicle with UNDP Administrator Mark Malloch Brown.

A compilation of press clippings is being constantly updated by the DPI focal point and select articles are promoted through the website for the Year. DPI continues press outreach, assists journalists and media outlets to write stories linked to the Year, and provides strategic communications guidance to the Secretariat on the Year's activities in general, as well as for specific projects.

D: Special Events

The Secretariat for the Year, including the Patrons Group has participated in many meetings, conferences, forums and other special events. The Secretariat has worked on providing input to the agendas of these meetings, shaping content of the discussion and by recommending and securing speakers. Hundreds of events are now being organized to celebrate the Year and put considered thought into how to improve financial services for those living in poverty. A complete list of events is being compiled and a calendar of events is available on the website for the Year. The Launch Event and the World Economic Forum are highlighted below.

More than 500 high-profile people including the heads of UN agencies, government representatives and microfinance partners, as well as other key stakeholders of the Year from the private sectors, attended the special evening reception and launch day ceremonies at UN Headquarters in November 2004. The gala reaffirmed the strong commitment to achieving the objectives of the Year. Her Royal Highness Princess Mathilde of Belgium and Mrs. Nane Annan, wife of the UN Secretary-General, made keynote remarks. HRH Princess Maxima attended the events. The Secretary General of the United Nations offered a video address to the audience. In celebration of the launch, the United Nations International School Choir performed along with Souad Massi (Algeria) and Anggun (Indonesia).

UNCDF, the ILO, IFAD and the office of the High Representative for LDCs, along with other UN Agencies and Donors, and Microfinance Partners hosted high-level luncheon roundtables of various topics pertaining to microcredit and microfinance, and its role in achieving the Millennium Development Goals.

Two substantive roundtable discussions were held for the afternoon that included the Advisors group, finance ministers, and special invited guests. The first panel, focused on the future of microfinance. The second panel focused on identifying different set of constraints to building inclusive financial sectors. The panels discussed the main issue the Year of Microcredit seeks to address: strengthening the microfinance sector and its contribution to the Millennium Development Goals.

Global media and press coverage of the launch was significant, and included spots in all major media networks.

The World Economic Forum (WEF) at Davos, Switzerland organized a number of events on microfinance that included the participation of Advisors Group members. Princess Maxima of the Netherlands and Christopher Rodrigues spoke at the HI/Visa reception on Social Entrepreneurship; and Stan Fischer, Christopher Rodrigues, Michel Tilman and Princess Mathilde of Belgium participated at a working lunch on the future of microfinance. It was agreed by the Advisors that a special effort must be made to secure a broader debate on inclusive financial sectors for WEF 2006.