Thank you, Lorie. And thanks to my friend Carol Peasley and her staff for putting together this special event.
I expect I was invited to join you all today because of my current position in the Obama Administration as Under Secretary. Perhaps my career in economic development and microfinance also weighed into the decision. But I also am here because of a special tie to CEDPA. I joined the staff of CEDPA as a young professional, and it was a particularly influential time in my life.
This is unique organization. And those of you who sit in this audience are the driving force behind it. When I worked on the very first “Women in Management” program, we could not have imagined—even in our more ambitious and idealistic dreams—that someday this program would go on to train thousands of inspirational women around the world. The Women in Management course, now the longest program in CEDPA’s repertoire, has conducted over 100 global month-long training courses, and many hundreds more shorter, in-country trainings to build women’s leadership and management. CEDPA alumni are now leading organizations, and in some cases, their countries’ parliaments and ministries. I understand you even count Afghanistan’s first female presidential candidate among your ranks.
Together, with generous partners like ExxonMobil, CEDPA—and you in this room—are helping drive social and economic change in communities the world over. So, I applaud you.
Now, it’s been a couple years since I worked for CEDPA, but luckily it helped launched a long and fulfilling career in economic development and women’s empowerment. As CEO of ACCION International, I helped build banks for the poor. We looked to those who had the least, and discovered ways to give them access to financial opportunity in an otherwise bleak environment.
Many of the people ACCION served lived in sprawling cities with no education, few skills, limited connections, and a negligible support system. Or they lived off of the land in rural areas with little infrastructure. In the absence of employment, they resorted to building their own tiny businesses—from the corner kiosk in the village, to banging old metal into pots and pans, to cooking and selling meals on a sidewalk.
These microenterprises, like any other business, couldn’t grow without working capital, so ACCION and others started to see the poor through a new lens. No longer were they helpless. Instead, we saw them as resourceful. And smart. And creative. And determined. They would find ways to build enterprises where these didn’t exist. The only thing they needed was access to capital that could help them grow. A couple hundred dollars—and sometimes even less—to invest in their idea and make it happen.
An estimated 150 million people worldwide are now served by microfinance. And microfinance has grown, from making loans – microcredit - to developing a wide array of financial services for the poor that include savings accounts, remittances, payment services, insurance, housing loans, mobile banking, and the list goes on. It’s now so expansive that we are seeing a trend towards full financial inclusion—in which all people have access to a suite of productive, tailored financial products to help them work their way out of poverty.
But this phenomenon—banking for the poor—did not happen overnight. In fact, the words “banking” and “the poor” had hardly ever been placed in the same sentence before. No self-respecting traditional bank would make a loan to a poor person who had no collateral.
The transformative change came in two waves. By the mid 1980s, ACCION had developed a breakthrough lending methodology that used character as collateral.
Let me say that again, because I think it’s especially important in the context of why you are all here today. Microfinance uses character as collateral. In other words, your ability to succeed is not contingent on the size of your house or the assets you have accumulated. Instead, aptitude for success is dependent upon your determination and creativity.
This recognition—that the poorest women were worthy and held potential—is what still drives microfinance today and is driving the concept of financial inclusion - from the barrios of Latin America to the fields of Africa and the slums of India. I will never forget one of the first clients I met back in the early 1980’s. Onion vendor – she got up at 3:30 am every morning and went to the main market where the trucks came in from the highlands with vegetables. She would get onions for her stall from one of the intermediary who charged her a huge rate and selected the onions. When she learned of ACCION’s micro-loans, she looked incredulous and asked “do you mean that you would lend me $150 just because I say I will pay it back?”
Increased access to financial services helps people see themselves differently within their communities and societies. Their children have better education and health care. It is especially evident in the lives of women—mothers, sisters, daughters—all of whom are empowered to make economic decisions that improve the situations of their families and communities. In short, they have gained more control over their lives. And that onion vendor, with a loan, chose who to buy the onions from, selected quality onions, improved her sales and sold them faster.
We had proven that the poor were reliable trustworthy borrowers. But we wanted to also allow them to save, and to build a model that would be sustainable. That is why in the early 1990’s ACCION started the second transformative wave in microfinance – it started building banks – commercial, licensed, regulated banks – for the poor.
This was a bold ambition, but one with the potential of systemic change to traditional banking. Microfinance started locally, as small community development projects in several different pockets—in Latin America, Bangladesh, Indonesia— but we wanted banking systems to transform entirely, to reach the majority. We needed to attract investors, tap the capital markets for funds, convince regulatory agencies --- in short, we sought to bring about transformative change, all on the promise of a market woman , an onion vendor, in a dusty, open market who promised to repay her loan. And we are beginning to see the fruits of this work. Over the last 25+ years, 98% have repaid their loans.
There are banks for the poor which operate profitably in dozens of countries in every region. The first one created, by ACCION in 1992 in Bolivia comprised 2% of the banking assets in the country. Today, this bank, Bancosol, and others that have been built in the country since, comprise 38% of the total assets of the banking sector. That means that 38% of the capital in the system is in the hands of microentrepreneurs, mostly women. That is transformative.
Part of what broke the mold was the introduction of a business model based on sound business analysis and principles, strong management practices, and partnerships with the private sector to accomplish our goal of building social good. Much like you all are doing in each of your businesses and organizations. I see no reason why such ambition should be limited to banking systems—on the contrary, we should also be so bold as to envision such social, systemic change in every other facet of development. Because, whether we are talking about education, healthcare, or political rights; we are essentially talking about the same thing—a society and world based on inclusion.
Fortunately, we live in a time when the President of the United States and the Secretary of State share that vision. And they not only share it, but elevate and promote it in every avenue of US foreign policy. Under President Obama and Secretary Clinton, we have the first ever Ambassador at Large for Global Women’s Issues, Melanne Verveer. We also have unprecedented attention to women’s rights as a development and diplomatic imperative. Because, as then-First Lady Clinton said in Beijing 15 years ago, women’s rights are human rights, and human rights are women’s rights. And because, as she said more recently, a country cannot move forward when half of its citizens are left behind.
Foreign policy under the Obama Administration is often described with the three D’s—development, diplomacy, and defense. At the State Department, we work with USAID to advance the first two, making sure that they are in line with our national security objectives. In this new era of foreign policy, we understand the pursuit of these three D’s with a shared context and rationale: to improve lives, fight poverty, expand rights and opportunities, strengthen communities, and promote democratic institutions and governance. In doing so, we advance global stability, improve our own security, and project our values and leadership in the world.
Secretary Clinton has also called it “smart power”—and it is underpinned by several key understandings, among them:
That we cannot build a stable, global economy when hundreds of millions of workers and families who have yet to find their place within the growing markets of a globalized world ;
That we cannot advance democracy and human rights when hunger and poverty threaten to undermine the good governance and rule of law needed to make those rights real;
That we cannot stop global pandemics until billions of people gain access to better healthcare;
And that we cannot solve the great security, governance, environmental, and economic challenges of our time without the participation of women at all levels of society.
All of this adds up to using America’s tools of diplomacy and development in a smart, holistic way.
And, as you can imagine, the protection and empowerment of women is at the heart of our work. Just in the bureaus I oversee we are working to increase the safety of women and girls in refugee camps.
We are protecting the rights of women affected by gender-based violence, especially in war-torn areas.
We are encouraging governments to pass equitable laws that recognize the financial, property and legal rights of women—so that they are no longer dependent on their husbands or fathers for an identity card or a small business loan.
And we are encouraging countries to prevent sex and labor trafficking through education and awareness, protect those who do fall victim, and prosecute the criminals who carry it out.
We have a long way to go on all of these issues, but progress is being made.
From the outset, Secretary Clinton identified two major initiatives through which women’s empowerment is not just important but essential. With the cooperation of other agencies throughout US government, we are funneling major time and effort into the Food Security Initiative and the Global Health Initiative, both of which have women’s roles at the core of their strategies.
Around the world, an average of 60 percent of farmers on every continent are women. So when we are looking at the efficiency of agricultural production, or linking harvests to export markets, or providing better advice on new farming techniques, more often than not we will be working with, educating, and training women.
And when we're working with local communities to improve family planning or decrease child mortality or train more local health workers—all through the Global Health Initiative—we will be working with, educating, and training the women.
For example, I know that CEDPA is working with USAID’s Health Policy Initiative to implement an important training event that build the capacity of women leaders to reinvigorate family planning/reproductive health (FP/RH) programs, funding and policies within their communities and countries.
Whether we are promoting better regulation for financial inclusion, increasing access to health care, or helping design remote educational tools, the empowerment of women is at the core of our diplomatic and development priorities.
But before I close, allow me to share an anecdote from my recent travels. On all of my trips abroad, I make a point to visit with representatives from civil society—and in particular with women who are working in development or human rights. In January, I had the opportunity to return to Kenya, where I had been several times before but never as Under Secretary. While there, we organized a dinner for “women of change.” The idea was to converse with women leaders who have dedicated their careers to fighting for women’s rights. So, I shouldn’t have been surprised when the first face I saw that evening was that of Phoebe Asiyo—a dear friend whom I met through CEDPA over 20 years ago. It was a powerful evening, especially in the wake of Kenya’s political struggles. But there we were, Phoebe and me, two CEDPA alums, still working with and for our sisters around the world. So with that, I encourage you to cherish the network that you are building. You never know when you will run into each other on the other side of the world.