Microcredit Helps the Very Poor Become Self-Sustaining

in Bangladesh.....

Sufia Begum, from the district of Feni in Bangladesh, married Bachhu Mia before she was 13 years old. They had three children, but her husband married again and abandoned her and the children, whom Sufia had great difficulty feeding. Many times they had to starve along with her. The children didn’t attend school and the family slept on the ground. With no other way to survive, Sufia Begum resorted to begging. “There’s nothing in my stomach,” she would tell a passerby. “For God’s sake, would you please give me some food?”

One day Sufia met Monwara, president of Basanti Landless Women’s Group, members of ASA Bangladesh (an organization providing microfinance services). Monwara told Sufia about the loan program for the poor. Sufia worried that she would not be able to pay back a loan. Monwara encouraged her and Sufia took a loan of about $40, which she used to purchase dry fish, biscuits, nuts, chocolate, and other foods.

From her town in the Feni district, Sufia traveled to small, rural villages to sell her goods. Instead of begging, Sufia began to say, “Do you need churi, shanka, dry fish, or chocolate?”

Gradually the villagers began to see her as a regular trader and became routine customers. Sufia carried the food in a basket that rested atop her head. By June of 2004, Sufia had repaid her loan and took another loan of about $80, so that she could expand her business. With the profits she generated, Sufia bought a cot for her children to sleep on and put a tin roof on her family’s house.

Sufia's story is told in "From Microfinance to Macro Change: Integrating Health Education and Microfinance to Empower Women and Reduce Poverty", published in 2006 by the Microcredit Summit Campaign and the United Nations Population Fund. 

 

....and all over the world.

Sufia's story is one of millions of stories of achievement engendered by a daring campaign that began in 1997, when more than 2,900 people from 137 countries gathered in Washington, D.C., for the Microcredit Summit. They launched an audacious campaign to reach 100 million of the world’s poorest families, especially the women of those families, with credit for self-employment and other financial and business services by the end of 2005.

The Microcredit Summit Campaign defines “poorest” as those who are in the bottom half of those living below their nation’s poverty line, or any of the 1.2 billion who live on less than US$1 a day adjusted for purchasing power parity (PPP), when they started with a program. “Microcredit” refers to programs that provide credit for self-employment and other financial and business services (including savings and technical assistance) to very poor persons.

When the Campaign was launched in 1997, microfinance was reaching 7.6 million very poor clients who - assuming five persons per family - affected 38 million family members. By the end of 2004, microfinance institutions had reached 66.6 million very poor clients and thus brought hope to some 333 million family members - equal to the combined populations of the United Kingdom, France, Germany, Italy, Spain, The Netherlands, Switzerland, and Norway.

The Microcredit Summit 1) broke with the tradition of excluding the poor from access to financial services, 2) broke with the tradition of excluding the poorest from international development, and 3) made a commitment to dramatically accelerating and scaling up action. By 2004, the campaign’s overall growth of 776% from its starting point – 7.6 million poorest families at the end of 1997 – meant it had achieved an average annual growth rate of 36%, just shy of the 38.1% needed to reach its goal.

One of the Campaign’s greatest challenges lies in bridging the gap between its commitment to reaching the poorest and the lack of a sufficient number of effective poverty measurement tools in use. Promoting awareness of, and use of, cost-effective poverty measurement tools has been a key ongoing part of its work.

In November 2006, 2,000 delegates from more than 100 countries gathered at the 2006 Global Microcredit Summit in Halifax, Nova Scotia, Canada, and data to the end of 2005 was released at that time. 

Summarized from information provided in the State of the Microcredit Summit Campaign Report 2005, written by Sam Daley-Harris, Microcredit Summit Campaign Director. Used with permission.

 

 

A promise that will be fulfilled in one or two more years...

While considerably more than 100 million clients were reached with a microloan in 2005, the goal of reaching 100 million poorest was not achieved.

The Campaign is, however, within one or two years of achieving the goal, an astonishing accomplishment.

In The Price of a Dream, author David Bornstein writes that the progress of the Microcredit Summit Campaign “represents one of the few times that a major development promise is going to be fulfilled—and remarkably close to schedule.”

In order to reach 100 million of the world’s poorest families by the end of 2005, the Campaign required a 38.1% growth rate per year from its starting point of 7.6 million poorest families at the end of 1997. The Campaign’s overall growth of 978% between 1997 and 2005 now averages just over 34% per year.

As of December 31, 2005, 3,133 microcredit institutions have reported reaching 113,261,390 clients, 81,949,036 of whom were among the poorest when they took their first loan. Of these poorest clients, 84.2%, or 68,993,027 million, are women.

Eight hundred forty-seven of these institutions submitted an Institutional Action Plan in 2006. Together these 847 institutions account for 88 percent of the poorest clients reported. Assuming five persons per family, the 81.9 million poorest clients reached by the end of 2005 affected some 410 million family members.

Excerpted from "State of the Microcredit Summit Campaign Report 2006", written by Sam Daley-Harris, Microcredit Summit Campaign Director.

 


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