Since 1998, RESULTS’ partner organisation the Microcredit Summit Campaign have published an annual review of microfinance across the globe. This week saw the launch of the 2013 edition using data from 2011, which found that for the first time since the inception of the Campaign the number of people making use of microfinance services has actually become smaller from year to year.
This reduction in numbers was largely the result of a contraction in the Indian microfinance sector following the Andhra Pradesh crisis of 2010, but the report also paints a complex picture of the different forces influencing the progress of financial inclusion around the world.
In many parts of the world, changing donor/investor attitudes and other factors reduced the funding that was available to microfinance institutions; a situation that was compounded by the global financial crisis. The increasingly commercial and profit-oriented nature of some microcredit institutions has also created other issues as institutions lose their incentive to seek out poorer and more remote (and thus less profitable) clients and communities.
The report also contains interesting insights and expert interviews on the benefits of group lending programmes for fostering social solidarity, an exploration of the potential benefits of mobile banking for expanding microfinance outreach and a psychological study of American university students that goes some way to explaining why vulnerable people in developing countries are so susceptible to overindebtedness.
The complete report is available here.
In July, a book was published that has caused something of a stir amongst people interested in microfinance. This was not the first time an author had published a work critical of the sector, but the majority of previous attempts have been written by academics who criticise the concept from either an ideological or a technical perspective. Confessions of a Microfinance Heretic, however, is different. This is because the author, Hugh Sinclair, is not a Marxist university professor or an anarchist political activist, but rather a graduate of one of the world’s top business schools with a track record of more than a decade working in microfinance around the globe. In the book, Sinclair describes his first-hand experience of the corruption and profiteering that he believes characterises some organisations and individuals in the sector, and the evidence he presents has left many people in microfinance wondering what can be done to ensure that their work benefits the poor people who need it.
In the mid-1970s, an economics Professor in Bangladesh had a radical idea. He decided that he would lend poor women entrepreneurs tiny sums of money, which they could use to invest in small enterprises that would bring their families a steadier income and improve their circumstances. Decades later, Professor Muhammad Yunus and his idea of microloans, as well as the institution he founded to put his ideas into practice, the Grameen Bank, have won the Nobel Peace Prize and gained worldwide acclaim.
The achievements of the Grameen Bank are currently under threat, however, as the government of Bangladesh seeks to assert its control over Grameen and its subsidiaries. RESULTS is calling on all people who support the Grameen Bank to sign a petition calling for the government of Bangladesh to respect the autonomy of Grameen, as well as the rights of its female borrowers, who are in fact a majority of the company’s shareholders thanks to the innovative system of corporate ownership created by Prof. Yunus.
Posted in Development Finance, Microfinance, News, Women
Tagged alistair burt, Bangladesh, Grameen Bank, Hillary Clinton, Microcredit Summit Campaign, Microfinance, Muhammad Yunus, sheikh hasina, Yunus
The 5th session of the Global Microcredit Summit took place last week in Valladolid (Spain). The event, organized by the Microcredit Summit Campaign gathered more than 2 thousand delegates from more than 100 countries, who shared a willingness to discuss ideas and experiences related to microfinance as well as look for solutions to the main challenges in the field. Although RESULTS UK was not able to attend this year’s session, many staff from other international RESULTS organisations took part in the meeting. With so much of the summit available over the internet, we would like to offer our reflections on what we saw as some of the key sessions.
137.5 million families have been reached by microfinance services and institutions in 2010, according to “The State of the Microcredit Summit Campaign Report” recently released by the Microcredit Summit Campaign in conjunction with this years summit in Spain.
While highlighting the growth of the microfinance sector, it is a more sobering report than previous years. The Report considers the example of the Indian state of Andhra Pradesh, where the microfinance sector was hit by a deep crisis that led to clients’ over-indebtedness, inability to repay their loans and, in extreme cases, to suicides. Large microfinance institutions were lending money to a high number of clients, who were taking loans from several different sources and were not adequately monitored or supported.
There are fundamental lessons that need to be learnt from these events: microfinance institutions need to be made responsible for their work and the treatment of their clients in order to make sure that they do not harm but empower them instead. Possible solutions proposed by the Report consist in knowing clients better, in promoting financial literacy among them as well as Social Performance Management within microfinance institutions.
In sum, the Report calls for a real transformation within the sector, in order to provide clients with fair and transparent services that can help improve their lives. Continue reading
We’re excited to be able to share the news that according to a report released by the Microcredit Summit Campaign today, nearly 2 million Bangladeshi households involved in microfinance – including nearly 10 million family members – rose above the $1.25 a day threshold between 1990 and 2008.
The survey of more than 4,000 Bangladeshi households, led by Sajjad Zohir of the Dhaka-based Economic Research Group, found that a dramatic number of families moved out of poverty between 1990 and 1997, but that a massive flood in 1998 and the food and fuel crisis of 2008 were the likely cause for millions of families to fall below the $1.25 a day threshold during that later period. Even with these setbacks, on net nearly 10 million people rose above the poverty line. Continue reading
Posted in Microfinance, News
Tagged $1.25 a day, Andhra Pradesh, Bangladesh, BRAC, Grameen Bank, Microcredit, Microcredit Summit Campaign, Microfinance, Poverty, Sajjad Zohir, Sam Daley-Harris
Yesterday a motion calling on the Canadian government to dedicate new funding for microcredit lending in the world’s poorest countries received unanimous support from all Canadian Members of Parliament.
John McCallum, the Member of Parliament for Markham-Unionville, sponsored the motion and said that he was excited by the high level of interest and support he has received from politicians in all four parties. Continue reading
RESULTS founder Sam Daley-Harris gave the following speech in Princeton, New Jersey earlier this month. He begins by telling the story of what led him to start RESULTS, and later the Microcredit Summit Campaign, as well as how the transformative effect of microfinance has returned him to his original mission. Continue reading
The Africa-Middle East Regional Microcredit Summit took place last week from the 7 to the 10 April in Nairobi, Kenya. The meeting was the 14th global get-together organised by the Microcredit Summit Campaign, the organisation that was set up in 1997 by RESULTS Educational Fund in order to support the goal of reaching 100 million of the world’s poorest families with microloans – a goal that was met in 2007.
Similarly to the previous Summits, this year’s gathering was aimed at assessing progress toward the Campaign’s new 2015 goals – which include ensuring that 100 million of the world’s poorest families rise above the $1 a day threshold – and sharing best practices as well as updates on most recent innovations. Continue reading
Microcredit Summit Campaign Director Sam Daley-Harris will be in London this Friday to discuss the upcoming Africa-Middle East Regional Microcredit Summit which will be held in Nairobi, Kenya from April 7-10, 2010. This will be a great opportunity to talk about microfinance in Africa with one of the leading advocates in the field. Continue reading