I am pleased to be here today for the release of the State of Microcredit Summit Campaign and to be here with so many people committed to microfinance and the important role it plays in poverty alleviation.
I think it is fitting that the release of the study comes on the eve of the 100th Anniversary of International Women’s Day because microcredit has effectively lifted millions of poor women and their families out of poverty. The report shows that 81% of the recipients of microloans – 100 million borrowers -- were women.
Over the years we have seen that women are a smart investment. They consistently have demonstrated a high loan repayment rate and they invest their income in their families and communities.
I’m especially happy to be here with my dear friend, Mohammed Yunus, who is with us via videoconference.
I first met Dr. Yunus more than 15 years ago when I was Chief of Staff to then-First Lady Hillary Clinton. She had known him since he came to Arkansas years earlier to advise then-Gov. Clinton on ways microcredit combined with self help could improve the lives of the poor living in the Arkansas Delta region.
In 1995, for the first time, I visited one of the Grameen villages with Mrs. Clinton. To see firsthand what the poorest people – the poorest women – were doing through micro loans, which they were paying back, with the training they received and the life practices they adopted (like sending their children to school, hygiene, etc). It is inspiring to see the extraordinary transformation that occurs in their lives.
I remember listening to a woman who described how, with her first loan, she bought a milk cow. As her family’s income grew, she paid back her loan and took out a new loan to buy another cow. Things were going very well. She paid back her second loan and saw her business begin to prosper in a way she never imagined. She took out another loan and said this time it would be for a rickshaw—to put her husband to work.
When I returned to Bangladesh some months ago, I met with a group of women helped by Grameen who told me in great detail about their businesses and the improvements in the lives of their families.
Dr. Yunus is seen as a beacon of hope for all who care about human progress. He received the U.S., the Medal of Freedom from President Obama and the Congressional Gold Medal, our nations’ highest civilian honors for this global trailblazer who has never forgotten Grameen’s basic mission: to help the poor.
Today, financial services for the poor have evolved to include savings and insurance. The international community is not only focused on providing the poor with access to capital; it also provides a holistic approach to microenterprise development that truly help the poor develop their own businesses and to be economically independent. Increasingly, foundations like the Gates Foundation recognize the importance of microfinance for development. Just a few months ago, the Gates Foundation announced a 500-million-dollar investment to promote savings in the next five years.
Financial inclusion is a top priority for the U.S. government. In addition to being a topic of discussion at the G-20, microfinance for poverty reduction and economic empowerment is a significant investment in our development work.
USAID supports a range of microenterprise programs from Afghanistan to the Democratic Republic of Congo, from Bosnia to Kyrgyzstan, and so many places in between.
Secretary Clinton has been a longtime champion of microfinance as an effective development tool and powerful social innovation. In 1997 as U.S. First Lady, she delivered the keynote address at the Microcredit Summit that launched the Campaign whose 2011 report is being released today.
Rita’s story from the report is an example of the success of microfinance. Raising 5 children in rural Ghana, she initially could not take out a loan because she was considered too poor by her community. The 6-month growing season for her mangoes did not fit the repayment cycle of local microfinance providers. She and her children often struggled through the hungry season – the months before the mango harvest came in when she did not have enough money to buy food or her medicine for her sick children. Then she joined a Credit with Education group organized by Freedom from Hunger. She received both a small loan and training in how to diversify her crop so that she had money coming in year round. With a steady income and a group to support her, Rita could save money. She said the biggest thing for her was the ability to start to save. As she said, “Now I have savings to tap when it’s time for the school fees and other needs…”
In the report’s discussion of the importance of savings, we can see Rita’s experience. Today there are exciting developments with enormous potential, like M-Pesa in Kenya that provides access to financial services to the poor through mobile banking. We need a greater focus on financial inclusion, as the report points out. Microfinance alone is not enough. It is critical but when tied to insurance to protect the poor from catastrophes that can wipe away their economic progress overnight, and other types of services, it can be much more effective in reducing poverty. I hope it will be possible for microfinance to become a growing incubator for SMEs where job creation takes place. For women, this is especially true because they can be excellent accelerators of economic growth, if they can overcome the barriers that keep them from starting small businesses or expanding existing ones.
We applaud the clarity of the report and the forthright discussion of the challenges facing microcredit. These include the challenge of rapid growth which has led to abusive practices, a breakdown of lending discipline and a loss of focus on its fundamental poverty reduction mission on the part of a few. The Seal of Excellence is a helpful step.
While we celebrate the launch of the report, 3 billion people in the world remain unbanked; the majority of them are women. We have work to do to close this gap. Yet at the same time, as women around the world celebrate International Women’s Day tomorrow, many whose lives have been improved by microfinance – especially the millions at the bottom of the pyramid – have much to celebrate. Today they are truly economically empowered and their families have a better future.