Washington, DC, November 1, 2006—Three weeks after the Norwegian Nobel Committee announced that Bangladeshi economist Muhammad Yunus and the bank he founded thirty years ago won the Nobel Peace Prize, the Microcredit Summit announced that more than 113 million clients received tiny loans last year to start or expand small businesses, 82 million of whom were among the world’s poorest people. The Nobel Laureate and Grameen Bank founder serves on the Microcredit Summit Campaign’s Executive Committee. The Campaign’s annual report provides a crucial benchmark for the growth of the field. A program of the U.S. anti-poverty group RESULTS Educational Fund, the Microcredit Summit sought to reach 100 million of the world’s poorest families with microcredit by the end of 2005, a goal it now expects to reach by the end of 2006.
According to Yunus biographer, David Bornstein, 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.” Campaign officials said that new goals for 2015 will be launched at the Global Microcredit Summit to be held November 12-15, 2006 in Halifax, Canada.
The Campaign was launched in 1997, when only 7.6 million very poor families were reached worldwide with microloans. Between 1997 and 2005 the Campaign’s overall growth has been 978 percent, averaging 34 percent per year. Globally, 847 microfinance practitioners submitted their data in 2006. These 847 institutions had 88 percent of all the poorest clients reported.
The 2006 report includes data gathered from more than 3,100 institutions worldwide and finds that of the 82 million poorest reached, 84 percent are women. Campaign officials spoke of how the microloans touch entire families by improving nutrition, access to healthcare, and school enrollment. “The loans to 82 million poorest clients affected 410 million family members,” said Campaign Director, Sam Daley-Harris, “a number greater than the combined populations of the United States, the United Kingdom, Canada, and Belgium. These microloans are giving hope to hundreds of millions of people around the world.”
Loans are used for a wide range of business activities including low-tech ventures such as selling milk and eggs, making tortillas, or producing handicrafts, as well as high-tech enterprises like selling solar-powered cellular phone time in rural areas without land-line phone service.
Balkisu Amadu, one of the millions of poor women helped by these loans, owns a small roadside food stand in Ghana. Her stand is nothing more than a simple table covered with a cloth beside a coal fire for cooking. For years, she made no more than 81 cents a day profit. Desperate to increase her income and provide for her family, just over a year ago, Balkisu joined an Opportunity International Ghana Trust Bank. After four loans, her income has more than quadrupled – today she makes $4 a day. She has learned to manage her income effectively and now has enough not only to provide for her family, but also to continually reinvest in her business.
When asked about national level impact, Campaign officials point to Bangladesh, the world’s most saturated microfinance market and Muhammad Yunus’ base of operation. “Thirty-five years after its war of independence,” said Daley-Harris, “and 30 years since the first microloans were made to 42 desperately poor individuals, the 20 largest microfinance institutions (MFIs) in Bangladesh reach 21 million clients affecting 105 million family members in a country of 140 million. According to UNICEF, the number of deaths of children under five per 1,000 live births has fallen from 239 per thousand in 1970 to just 77 per thousand in 2004 and the fertility rate in Bangladesh has fallen from 6.4 in 1970 to 3.2 in 2004.”
“Bangladesh has already reached the Millennium Development Goal on gender parity at the primary and secondary educational levels,” continued Daley-Harris, “11 years ahead of schedule.”
The most exhaustive research on microfinance was done by Shahidur Khandker for the World Bank. Khandker studied three Bangladeshi MFIs (Grameen Bank, BRAC, and RD-12) and found that microcredit accounted for 40 percent of the entire reduction of moderate poverty in rural Bangladesh.
“We’ve been waiting for the researchers to document the positive impact of millions of microloans in Bangladesh’s economic growth at the national level, and now we have it with the latest Khandker study,” said Alex Counts, President of Grameen Foundation, which supports microfinance partners in 22 countries. “The rest of the world is catching up, but not quickly enough. Innovative technology, links with local capital markets, and social performance measurement are needed to advance this bold social movement that is changing the world, one woman at a time.”
In less than two weeks, Muhammad Yunus will join 2,000 delegates in Halifax, Canada for the Global Microcredit Summit’s launch of Phase II of the Campaign with two new goals for 2015: 1) reaching 175 million of the world’s poorest families with microcredit, affecting 875 million family members and 2) ensuring 100 million families rise above the US$1 a day threshold, lifting 500 million people out of extreme poverty.
On December 10 and 11 the Nobel Peace Prize will be presented in Oslo, Norway and a concert will be held in honor of the winners.