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An Introduction to the Microcredit Summit Campaign
Contents
What is the Microcredit Summit Campaign?
What are the core themes of the Microcredit Summit Campaign?
Why give loans to very poor people for self-employment?
How are institutions, other than microcredit lenders, contributing to the Summit's goal?
How can I get involved with the Microcredit Summit Campaign?
What is Microcredit?
Microcredit is programs extending small loans, and other financial services such as savings, to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families.
La Maman Mole Motuke lived in a wrecked car in a suburb of Kinshasa, Zaire with her four children. If she could find something to eat, she would feed two of her children; the next time she found something to eat, her other two children would eat. When organizers from a microcredit lending institution interviewed her, she said that she knew how to make chikwangue (manioc paste), and she only needed a few dollars to start production. After six months of training in marketing and production techniques, Maman Motuke got her first loan of US $100, and bought production materials.
Today, Maman Motuke and her family no longer live in a broken-down car; they rent a house with two bedrooms and a living room. Her four children go to school consistently, eat regularly, and dress well. She currently is saving to buy some land in a suburb farther outside of the city and hopes to build a house.
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What is the Microcredit Summit Campaign?
The Microcredit Summit was held February 2-4, 1997. At the Summit more than 2,900 people from 137 countries gathered in Washington, DC. They launched a nine-year 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 year 2005. The Microcredit Summit Campaign brings together microcredit practitioners, advocates, educational institutions, donor agencies, international financial institutions, non-governmental organizations and others involved with microcredit to promote best practices in the field, to learn from each other, and to work towards reaching our goal.
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What are the core themes of the Microcredit Summit Campaign?
The core themes of the Microcredit Summit Campaign are:
- Reaching the poorest [Click here for more on this theme]
- Reaching and empowering women [Click here for more on this theme]
- Building financially self-sufficient institutions [Click here for more on this theme]
- Ensuring a positive, measurable impact on the lives of clients and their families [Click here for more on this theme]
To learn more about our core themes, you can read papers commissioned by the Microcredit Summit Campaign. You can also read the State of the Microcredit Summit Campaign Report, dealing with progress of the Campaign since 1997..
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Why give loans to very poor people for self-employment endeavors?
In many developing countries, the self-employed comprise more than 50 percent of the labor force. Access to small amounts of credit—with reasonable interest rates instead of the exorbitant costs often charged by traditional moneylenders—allows poor people to move from initial, perhaps tiny, income-generating activities to small microenterprises. In most cases, microcredit programs offer a combination of services and resources to their clients including savings facilities, training, networking, and peer support. In this way, microcredit allows families to work to end their own poverty—with dignity. Microcredit programs around the world, using a variety of models, have shown that poor people achieve strong repayment records—often higher than those of conventional borrowers. Repayment rates are high because, through a system of peer support and pressure used in many microcredit models, borrowers are responsible for each other’s success and ensure that every member of their group is able to pay back her loans.
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Who are the poorest families?
The Microcredit Summit defines the poorest families in developing countries as the bottom 50% of those living below their country’s poverty line or those living on less than $1 a day adjusted for purchasing power parity. In the industrialized world, the Summit targets all those who live below the poverty line. Reaching 100 million of the world’s poorest families is only one step in eradicating poverty worldwide: currently, the World Bank estimates that 1.2 billion people (roughly 240 million families) are living on less than US$1 a day.
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Why target Women?
1.2 billion people are living on less than a dollar a day. Women are often responsible for the upbringing of the world’s children and the poverty of the women generally results in the physical and social underdevelopment of their children. Experience shows that women are a good credit risk, and that women invest their income toward the well being of their families. At the same time, women themselves benefit from the higher social status they achieve within the home when they are able to provide income.
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How are institutions, other than microcredit lenders, contributing to the Summit’s goal?
Non-Governmental Organizations (NGOs) providing social services such as literacy, health and family planning, are partnering with microcredit practitioners, or moving to incorporate microcredit training into their programming. Educational institutions provide the foundation for what we value as a global society; it is important that they educate students, the future leaders of the world, about the powerful potential of microcredit as an anti-poverty tool. Advocacy organizations can help build the commitment of the general public and of the world’s governments through fundraising, education, policy development and research focused on the Microcredit Summit’s goal. These are the contributions of just three of the fifteen councils that incorporate almost every sector of society.
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How can I get involved with the Microcredit Summit Campaign?
There are four steps to get involved in the Microcredit Summit Campaign.
- You can subscribe to our new e-newsletter, Microcredit Summit E-News, and receive periodic informational updates via e-mail on the progress of the Campaign.
- Your organization can join one of fifteen different Microcredit Summit Councils. To determine which Council your organization should join, click here.
- After joining a Microcredit Summit Council, your organization should submit and implement an Institutional Action Plan. An Institutional Action Plan (IAP) outlines the work an organization has done and intends to do to further the goal and core themes of the Microcredit Summit Campaign. Each Council Member is requested to submit an IAP annually. Please click here to access the Institutional Action Plan appropriate to your organization's Council.
- Your organization should look for other ways to contribute to the campaign, including enlisting other organizations to join the Microcredit Summit Campaign. E-mail us to request outreach materials you can send to interested organizations.
You may also contact us about opportunities to volunteer with the Microcredit Summit Campaign.
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