Author(s):
Sam Daley-Harris

“When my children cried at night from hunger, I felt like killing myself,” recalled Saraswathi Krishnan who lives in India. Saraswathi.s husband, an unskilled wage laborer, earned very little and often squandered what little he made on alcohol. Eventually, when the roof of their tiny hut was about to collapse, having no jewelry or other assets to pledge for a loan to repair it, Saraswathi sold her seven-year-old daughter into bonded labor to a local merchant for 2,000 Indian rupees (about US$40).

“My little girl complained to me daily that the merchant abused her. His family would eat food in front of her and give her none,” she remembered. Five years later Saraswathi joined Working Women’s Forum, a women’s self-help and microcredit program based in Madras, India. With her first loan she paid off her debt to the merchant, freeing her daughter, who now attends school, and began a small vegetable selling business.

With a second loan she bought her sixteen-year-old son a loom. Previously he would bring home around $5 per month doing odd jobs for wealthy families. With the loom, he can weave two saris per month, earning him $25 per month.

Now Saraswathi.s vegetable business is thriving as well, thanks to her hard work and the training she has received from the program. She is glad to be able to give her children opportunities. With the family’s new sources of income, Saraswathi has a sense of pride and security she never before experienced. “I will never mortgage my children again; they will be educated. Now I see to it that my husband is good and does not beat me anymore.” -Working Women.s Forum, India

Saraswathi’s story is not an isolated case. There are millions of women who have been empowered through microcredit. The question that this year’s State of the Microcredit Summit Campaign Report asks is “How many lives must be changed for the better before world leaders realize that sustainable microfinance for the poorest2 is a critical tool for cutting absolute poverty in half by 2015 and achieving the other Millennium Development Goals?”

The first Microcredit Summit in 1997 was inspired by the accomplishments of women like Saraswathi and a desire to extend financial services to tens of millions more like her. The Summit’s organizers believed that the UN Summits of the 1990s did not give sufficient focus to microcredit and its role in reducing poverty. More than 2,900 delegates from 137 countries gathered at the 1997 civil society-organized Microcredit Summit and 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. This report, released at the Microcredit Summit +5, looks at the achievements to date.

As of December 31, 2001, 2,186 microcredit institutions reported reaching 54,904,102 clients, 26,806,014 of whom were among the poorest when they took their first loan. Nine hundred and ninety-four institutions submitted a 2002 Institutional Action Plan outlining their progress. Assuming five persons per family, the 26.8 million poorest clients reached by the end of 2001 affected some 134 million family members.

In order to reach 100 million poorest families by 2005, the Campaign will need to have a 38% growth rate per year from its starting point of 7.6 million poorest families at the end of 1997. The growth from 19.3 million poorest clients at the end of 2000 to 26.8 million poorest clients at the end of 2001 represents 38.7 percent growth over last year, and the Campaign’s overall growth averages 37 percent per year.

This year, the Campaign was able to verify data from 211 institutions, representing 21,806,559 poorest families or 81 percent of the total poorest reported. This is a 53 percent increase in the number of institutions verified last year. A complete appendix of these institutions can be found on page 22.

This report will review our work to address a set of challenges faced by the campaign, outline the survey methodology used to arrive at the totals for this year, present the findings, and summarize our work in verifying the data of an ever larger number of institutions.