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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 18 / November 2005 |
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Voices of Microfinance
Q. The International Year of Microcredit has received much attention worldwide. Has the Year helped increase access to finance for poor people? Why or why not? Editor's Note: While it was gratifying for we at the International Year of Microcredit Secretariat to read that almost all of the respondents felt that the Year had a positive impact, we sincerely hope that those who did not find the Year useful did not merely refrain from going on record criticising the UN in a UN publication. We certainly consider debate to be a critical element in the process of creating lasting change. That said, respondents characterised the Year's achievements in a variety of ways, saying it: "created global awareness about the importance of microcredit"; "increas[ed] the awareness of planners and policy makers", as well as "practitioners"; "contributed to increased monetary resources allocated to microcredit"; increased the offer of loans, and even substantially increased the number of investment vehicles for microfinance. Some went so far as to say that 2005 "marks the beginning of a microfinance conscience", and that the International Year of Microcredit was a "golden year, with real hope for grassroots communities". A few respondents were more tempered, emphasising that it may be too early judge the lasting impact of the Year, while critics said that the Year may actually have led to the "excessive" offer of loans, which could over indebt clients, or that the Year did not "improve financial knowledge among needy peoples in a substantial way", or did not reach the grassroots level. All of these contributions suggest that perhaps the answer to our question lies in the expectations. While the Year focused its efforts on a limited set of goals, ultimately, we hope that the overall impact of the Year will be viewed in the light one participant cast: "We still have a long road ahead towards the fulfilment of this dream, but this year, we were able to reach a milestone towards this goal". *Thank you to all those who contributed their expertise to provide valuable insight into this question. The International Year of Microcredit seems to be a golden year with real hope for grassroots communities. Access to microcredit was like a dream for some small entrepreneurs. For the entrepreneurs who know where to invest, it seems that the disease finally meets the cure. In Burkina Faso, we heard about the circumstances in which the bank has reached out to help poor communities. This reasonable tool is really going to quickly increase the number of entrepreneurs in my hometown, and worldwide, while helping them not to invest in risky places.
Cisse Abdoulaye
The International Year of Microcredit has indeed helped increase access to finance for poor people. This has been due to the activities that are carried out to inform and educate the people about microfinance. In Kenya, the events carried out like holding a procession, putting banners on the streets, advertising over the radio and holding exhibitions have created a greater awareness to people who never had access to finance due to the requirements of mainstream banks, which were out of their reach due to their economic status. As a result of these events, the demand for microfinance products and services has gone up. This is evident from the overwhelming number of savings accounts that have been opened during the Year. We have experienced a rise in the number of inquiries and loan applications as well. The Year is indeed a success.
Omar Nzomo
Both as a Member of Parliament and of the public, I haven't felt much of the effects of the International Year of Microcredit. Our government has initiated a few means of advancing legislations in favour of poor people in our country. Included in those is the Mzansi Account that has opened ways to around two million account holders, of which is dominated by the majority new account holders. Secondly, our country is currently engaged in a drive towards an affordable insurance product for the less affording. Access to finance remains a major problem, which then means for me that we haven't been able to reach out with our International Year of Microcredit, at least, in South Africa.
Mlungisi (Lulu) Johnson
The International Year of Microcredit has helped to increase access to finance for poor people. The Year has been quite effective in increasing the awareness of planners and policymakers involved in formulating poverty focus programmes as well as microfinance practitioners and promoters on the potential and limitations of microfinance as a tool for poverty reduction, especially in countries such as Nepal and Afghanistan. The stakeholders and civil society have acknowledged the significance and effectiveness of microfinance to address income and human poverty; and their participation in creating a conducive policy environment for good practice innovations has been broadened, though their effect and impact on expanding microfinance's capacity and scope to shift the frontier of service delivery to serve unserved poor people is yet to be assessed.
Nara Hari Dhakal
Through the International Year of Microcredit, access to finance for poor people has been increased. Through this meeting, the world has recognized the role of microcredit in the economic development in both developed and developing countries. Today microcredit is seen as the answer in poverty reduction in any country. This is because it has been proven that when poor people, especially women, receive credit, they can play a big part in economic development. This International Year of Microcredit created global awareness about the importance of microcredit in overall economic development. As a result, both policy makers and practitioners are now advocating microcredit as tool for poverty reduction.
Kastory Madege
While I cannot say that the International Year of Microcredit has actually increased access to credit for the world's poor, I believe that it has lead to a somewhat wider awareness of what microcredit is and does. This is an important first step in increasing access to credit.
Sebastian Teunissen
Yes, it has helped a lot of poor people worldwide, my country inclusive. It is because of the timely assistance rendered to poor people and their success after acquiring the loan. It has helped a great deal.
Sanusi Yusuf
The International Year of Microcredit has indeed contributed to increasing the monetary resources allocated to microcredit. However, access continues to be mainly related to the number of loans offered to poor people but not to the price of the credit service. Despite a general decreasing trend of interest rates throughout Latin American countries, the reduction has not been transferred to poor people. The excessive offer of loans resulting from the International Year of Microcredit could also be tailored in the near future to a generalized situation of overindebtedness of microentrepreneurs with further negative social impact and increased risk for the MFIs.
Lavinia Camacho
The International Year of Microcredit has helped increase access to financing for poor people around the world in many different ways: providing information to governments, banks, universities, and the general public. People in general have been informed about microcredit, its impact, benefits and how to access it. National Committees have held workshops and roundtables and research about microfinance has been conducted. The objectives were fully reached not only for this year. Now the world has the basis and the tools to build inclusive financial sectors.
Leonor Melo de Velasco
One of the major problems in accessing finance for poor people is financial illiteracy. The International Year of Microcredit has not done much to improve financial knowledge among needy peoples in a substantial way. Governments and private enterprises may have increased facilities to poor people to obtain financial services; however, without improving financial literacy, people may not use such facilities. The International Year of Microcredit has made some valuable improvements, however, in my opinion, it has not addressed core issues such as the above.
Dr P. Edirisuriya
Here in Colombia, microfinance has gotten a lot of public awareness because of the International Year of Microcredit. This has helped more cooperatives get interested in offering the service.
Marìa Josè Rubio
With proper training on finance management, any serious person should uplift him or herself when given the opportunity. I commend the United Nations for declaring 2005 as the International Year of Microcredit.
Imeh Samuel Udom
The Year did accomplish the goal of increasing the awareness of microfinance as a tool for development and can now look forward to follow up this awareness and transform it into more access. Representatives of all sectors of society worked together to share experiences, challenges and solutions worldwide. The debate still leaves us with unanswered questions, but it demonstrates how much we have in common and can learn from one another, proving the value of shared knowledge and efforts. To increase access to financial services, there is a fundamental task remaining: follow up government's actions and regulatory laws. A suggestion is to keep the Year website to follow what is happening in each country.
Camila de Assunção Appel - Brazil
The International Year of Microcredit is a key acknowledgement from the world community of the importance of microcredit for overall economic development. In my opinion it is too early to assess the impact of the observance of the Year on increased access to finance for poor people. We have two more months to the end of the year and the campaign for extending credit to the "assetless" poor is still on-going. An empirical study on "Access to finance by the poor: Pre- and Post- IYM2005" may be relevant in 2006 to explore the impact of the celebration. However, I wish to emphasize that so much awareness has been created by the celebration of the Year that governments, NGOs, the private sector and the media are championing the role of microcredit in poverty eradication and its contribution to social development.
Patrick Awuku Dogbe
Yes, the International Year of Microcredit has helped increase access because rural areas are often forgotten by financial institutions because of the difficulty to reach clients and because of their extreme poverty. This newsletter is based on various concrete cases that help to understand better the different issues and the different approaches and strategies that can be implemented to reach the poorest rural people. Your organization has really helped poor people very well.
Jeremiah Kofi Odonkor
Declaring 2005 the International Year of Microcredit has brought considerable recognition to microfinance as a major intervention for poverty eradication. Governments, corporate houses and financial institutions are promoting microcredit, throwing open vast potential for increasing outreach and access to financial products and services to the poor. Strengthening the grassroots level communities and participatory approaches in the implementation of 'thrift and credit' related programmes, would bring about better focus on the improvement of standard of living and livelihood of the poor. The pace of growth should be sustained by improving infrastructure facilities, usage of technology and provision of innovative products and services.
R. Nalini
It is obvious that access to formal finance for the poor has been increased during the International Year of Microcredit. Microfinance institutions (MFIs) are concentrating on increasing their outreach, diversifying products with flexible policies and providing quality services to the clients. MFIs have been accelerated in the International Year of Microcredit by the support of donors, governments and NGOs to increase outreach. I think, however, that the Year could not disseminate its information to the grassroots level. Large numbers of people are still unknown to microcredit.
Govinda Bahadur Raut
Yes. The International Year of Microcredit has been important for developing microfinance because a lot of people have learned about microfinance thanks to this celebration, because of articles in newspapers, forums, meetings and conferences. It has been very useful, but the most difficult period begins at the end of the Year: we have to continue with this campaign, far away from the celebrations.
Jesús C. Lens Espinosa de los Monteros
The International Year of Microcredit helped to create seminars, new favourable policies, innovative ideas and many new MFIs. This has given momentum for poor people to access finance. Still the concerns of high demand against the inadequate services available and the cost paid by poor people for these services remain high. Regulation is also another key factor, which is yet to be in place.
Milton Devadosan
I feel the Year has done a lot to attract new serious stakeholders to the table, as was obvious at October's Geneva Private Capital Symposium and as is bound to happen once The Economist's survey comes out.
Vijay Mahajan
The International Year of Microcredit helped poor people have more access to microcredit. This celebration caused many international agencies to take special attention towards microcredit and helped poor people access more credit. NGOs and government institutions took the opportunity to get involved in expanding microcredit in a massive way and this will definitely bring a qualitative change in the lives of poor people.
K.Ganesan
I have no doubt that the International Year of Microcredit has helped a large number of people around the world. These are people who have little or no access to financing for their needs. It is through the dissemination of information about the present scenario of financing in most countries that we are able to take one little step in uplifting their way of life. Microcredit still has a long way to go, especially in third world countries, but knowing that people are now able to have access to a little credit is already a big step. A little credit could mean the difference between life and death in the third world. We still have a long road ahead towards the fulfillment of this dream, but this year, we were able to reach a milestone towards this goal.
Jackie Bernadett Dy
2005 marks the beginning of a microfinance conscience. Throughout the year we witnessed the positive impact of a massive intelligent communication that encouraged people to reflect on the subject; more than that, to bring about a change. The International Year of Microcredit helped to diffuse the theme in the academy and to create a general interest among the whole sector, uniting both. And we feel proud to be part of it! What excites us about microfinance is that it is not about "giving men the fish, but teaching them how to fish, so they can eat for a lifetime". The first steps have been taken. There is much more to be done, but we leave 2005 with the feeling that we have made it! Mission accomplished!
Anna Olimpia de Moura Leite and Helena França Fernandes Ludkiewicz.
Yes. I believe that the International Year of Microcredit has helped increase access to finance for poor people. There have been several investment vehicles launched this year targeting microfinance institutions (MFIs). Just to point out concrete examples, the combined increase in assets under management of two Luxembourg listed investment funds, BlueOrchard's Dexia Microcredit Fund and ResponsAbility's Global Microfinance Fund so far this year (January to end of Sept) amount to over US$46 million. Another example this year was the Microfinance Securities by BlueOrchard and Developing World Markets that raised over US$40 million to provide long term loans to MFIs. Just from these examples, there has been US$86 million in new funds that has been made available to poor people. Even more important is that the Year has been effective in raising the awareness for many investors of the existence of such vehicles and the impact should not be limited to this year but for the years to come.
Naoko Felder-Kuzu
A significant increase in access to various financial portfolios has been possible this year due to joint participation between governments, NGOs, MFIs, Central Banks, private banks, insurance agencies, and NBFCs. Livelihood opportunities and loan consumption have grown for poor people living in rural, semi-urban and urban slums due to flourishing new market places. Contributions from private sector banks helped MFIs to reach out to poor people.
Sudipto Pal
More needs to be done in order to accelerate the growth of the sector. It's too early to gauge the impact, as we still have few more months to go. Unfortunately, due to a number of natural disasters, most donors have scaled down their contribution to microfinance. The celebration has certainly helped policy makers to devise ways to mainstream microfinance. It has also helped many commercial banks to downscale their operations, to penetrate into the microfinance market.
Rajan Samuel
The International Year of Microcredit has received considerable attention worldwide. In India the Self Help Group (SHG) model provided access to microfinance for poor people. The numbers of SHGs have increased, showing the acceptance of the microcredit facility.
Dr. Lalit P.Chaudhari
The International Year of Microcredit has done a lot in the Philippines to increase awareness of the use of microfinancing as a tool of poverty alleviation. The country's Central Bank prioritises approval of branches of institutions that engage in microlending over the traditional lenders. Television programs and non-government organizations have invited resource speakers to talk about microfinancing as part of its information campaign. The Asian Development Bank has held fora to discuss microfinance issues. These have led to a greater outreach to the poor borrowers.
Rosemary P. Dinio
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