INTERNATIONAL YEAR OF MICROCREDIT: NEW STRATEGIC PARTNERSHIPS
"The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. The International Year of Microcredit offers a pivotal opportunity for the international community to engage in a shared commitment to meet this challenge. Together, we can and must build inclusive financial sectors that help people improve their lives."
- Kofi Annan, United Nations Secretary General
On January 27, 2005, the Department of Public Information/Non-Governmental Organizations (DPI/NGO) Section held their weekly briefing and panel discussion entitled International Year of Microcredit: New Strategic Partnerships .
The Panel consisted of Peter Kooi, Director of the Special Unit for Microfinance, United Nations Capital Development Fund (UNCDF), Fatimata Lonfo, Client and Recipient of a Global Microentrepreneurship Award, and Paul Hoeffel, Chief of the NGO Section of the UN Department of Public Information and the panel moderator.
Fatimata Lonfo fled Cote d'Ivoire in October 2001. Now the proud owner of Windyla's Boutique and Hair Braiding Salon in Staten Island, Fatimata credits her success to God, to perseverance, and to ACCION New York, a non-profit microfinance organization that provided her with her first small business loan.
Her business supports her and her three children, the oldest of whom started community college this past fall. She was chosen as the winner of the New York contest of the Global Microentrepreneur Awards due to the great economic and social impact of her business on her family and community.
According to the International Year of Microcredit's website, microcredit is "a small amount of money loaned to a client by a bank or other institution. Microcredit can be offered, often without collateral, to an individual or through group lending." This form of credit is a growing trend in financing low-income individuals in their small-scale and local enterprises, particularly women, who tend to be the poorest in developing countries.
Before the panel discussion, a video was played, showing how microcredit was helping women all over the world, particularly in underdeveloped areas such as in Africa and southeast Asia. Women used the small loans to expand their small businesses, which were usually located in a local market, and once they expanded successfully, they would use the extra revenue to pay back their loans.
Women are considered excellent targets for microcredit, because they are much more likely than men to invest the money they make from self-employment back into their families and community, by sending their children to school, and by managing their household budgets more effectively.
However, the rationale behind microcredit is very different from that of charitable income going to poor families. As Mark Malloch Brown, Administrator of the UNDP, states: "Microfinance is much more than simply an income generation tool. By directly empowering poor people, particularly women, it has become one of the key driving mechanisms towards meeting the Millennium Development Goals,
specifically the overreaching target of halving extreme poverty and hunger by 2015."
The eradication of extreme poverty and hunger is one of eight Millennium Development Goals (MDGs), which the United Nations is putting special focus on until the year 2015. Another one of the goals is to promote gender equality and empower women.
Microcredit helps empower poor women by providing independent sources of income outside the home, which tends to reduce the economic dependency of the women on their husbands and thus helps enhance autonomy. It also exposes them to new sets of ideas, values and social support which should make these women more assertive of their rights.
Women's Federation for World Peace, International runs microcredit programs, including one in Bangladesh, and one in Jordan.
Bangladesh: 59 women, between 18 and 46 years old, received loans and started businesses such as selling sari (traditional dress), growing stock, small retail shop and tailor shop. The repayment rate is 100%. Since 1997 a total of 240 women living in slum districts received loans, applying the "Grameen Bank" system.
Jordan: Currently 94 women, 22 - 75 years old, have received loans from US$150-US$500 to establish small businesses at home such as rearing poultry, candy stores, thrift shops, grocery stores, tailor shops, accessory shops, beauty salons, etc. The repayment rate is almost 100%. While we collect the monthly repayment, we also provide management guidance.