About the Microcredit Summit Campaign Project

An Introduction to the Microcredit Summit Campaign

Contents

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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Whatis 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.

Building on the achievements of the 1997 Summit, a series of Global and Regional meetings have since been successfully held. They have attracted more than 15,000 delegates from over 140 countries. From 1997 to the present, the Microcredit Summit Campaign has relentlessly pursued its goals, maintaining a steadfast commitment to the Summit’s four core themes. The Microcredit Summit Campaign is a global effort to restore control to people over their own lives and destinies.

Since 1997, the Microcredit Summit Campaign has been leading, supporting, and guiding the microfinance field to address failures in reaching the very poor. The success of the first phase of the Campaign, during which those with microloans grew from reaching 7.6 million of the world’s poorest families in 1997 to more than 100 million in 2007, fueled the decision to extend the Campaign. The Campaign’s goals for 2015 were launched at the 2006 Global Microcredit Summit in Halifax, Canada.

The Microcredit Summit Campaign is the only global network linking all actors in the microfinance sector that sets and regularly measures progress toward bold goals for using microfinance to end poverty. It announces progress towards these goals through the publication of the State of the Microcredit Summit Campaign Report.

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Whatare 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]
Reaching the Poorest.While we recognize the importance of financial inclusion for all overlooked by the traditional banking sector, the Campaign specifically focuses on reaching the poorest families. In developing countries these are families living below 50 percent of the poverty line. In industrialized countries the Campaign is focused on all of those living below their nation’s poverty line.
Empowering Women.Experience shows that women are a good credit risk, and that woman-run businesses tend to benefit family members more directly than those run by men. At the same time, through earning an income women achieve a higher status in their homes, their communities, and their nations.
Financial Self-Sustainability.Experience has shown that microcredit programs in developing countries can improve their efficiency by structuring their interest rates and fees to eventually cover their operating and financial costs. Though the economic context in industrialized countries is radically different, the Summit encourages programs in these countries to explore ways of becoming self-sufficient so that, to the greatest extent possible, their operating costs will be covered through direct revenue from program services.
A Positive, Measureable Impact.While financial measures such as program repayment rates give an indication of the strength of a microcredit institution, the Campaign is committed to programs having a positive, measurable impact on the lives of the very poor. The Campaign’s 100 Million Project is directly linked to this effort by promoting the use of and collecting data from, poverty measurement tools to enable MFIs to generate products and services that best help their clients move out of poverty.

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Whygive 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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Whoare 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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Howare 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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Howcan I get involved with the Microcredit Summit Campaign?

There are four steps to get involved in the Microcredit Summit Campaign.

  1. 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.
  2. Your organization can join one of fifteen different Microcredit Summit Councils. To determine which Council your organization should join, click here.
  3. 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.
  4. 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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What is the 100 million project?

The 100 Million Project is how the campaign is working to galvanize and support work that helps advance industry toward the 100 Million Goal: helping 100 million families lift themselves out of extreme poverty.

It’s an audacious goal to set out to achieve, but the industry has set itself towards that goal, announcing it as a major step in the longer term effort to create a poverty free world by 2030. It will take a coalition of actors, working in a wide range of complementary activities to get there. Thus Campaign members are bringing about that coalition through Campaign Commitments – commitments to take specific, measureable, and time-bound actions to reach the 100 Million Goal.

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History of the 100 Million Project

History of the Project The 100 Million Project is the second phase of a program the Campaign initiated in 2006. At that time poverty measurement was an increasingly important topic of discussion among practitioners and other stakeholders. The Campaign’s second goal, in alignment with the Millennium Development Goal to cut $1/day poverty in half by 2015*, is an ambitious undertaking and one which requires appropriate quantitative measurement tools. One significant impediment for member organizations at the outset of the initiative in 2006 was a general lack of sufficient data generated by such measurement tools which could shed light on changes in the level of poverty among microfinance clients.

Since 2006, there has been a dramatic increase in the prevalence of poverty measurement tools both in terms of the number of institutions using these tools and in the diversity of tools available. As an example, one of the most viable poverty measurement tools is the PPI (Progress out of Poverty Index) developed by Mark Schreiner for the Grameen Foundation with support from the CGAP/Ford Foundation Social Indicators Project. Since its development in 2006, the PPI is now in use by over 175 institutions in 45 countries across 4 major regions. The greater prevalence of this and many other powerful poverty measurement tools represents is a major step forward in the availability of tools to measure poverty down reach and movement out of poverty over time – an important part of the 100 Million Project goals.

* The $1/day threshold of the World Bank has since been revised to $1.25/day which the Campaign now uses for its benchmark.

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