Prof Muhammad Yunus distributes microloans in his early days. Microfinance has been an effective tool of social inclusion for the poor over the last 30 years. Photo: Yunus Centre

More than 64 crore people in the world benefitted from microloans in 2009, an all-time high, according to a report released by the Microcredit Summit Campaign yesterday.

The loans to about 13 crore poorest families -- five persons per family on average -- positively affected some 64.1 crore people, which is greater than the combined population of the European Union and Russia.

"Microcredit has very effectively lifted millions of poor women and their families out of poverty," said Melanne Verveer, US Ambassador at large for Global Women's Issues.

"With the 100th anniversary of International Women's Day being celebrated on March 8, it is gratifying to see that over 81 percent of the very poor who received microloans were women -- that is more than 100 million people."

She said women entrepreneurs are one of the smartest investments in microfinance. Not only have they shown strong returns in the success of their businesses, they consistently have demonstrated high loan-repayment rates and they re-invest in their families and their communities.

In the 12 years since the Campaign's founding, the number of very poor families with microloans has grown more than 16-fold from 76 lakh in 1997.

The report includes data from over 3,500 institutions with more than 93 percent of the information collected last year and verified by a third party.

Sir Fazle Hasan Abed, founder of Brac, the world's largest nongovernmental organisation, said microfinance is the most exciting thing that has happened to poor people over the last 30 years in terms of social inclusion.

"By ensuring financial inclusion we have worked with the poor in a way that honours their dignity, and we have shown that poverty alleviation needs a multi-pronged approach," he said, according to a statement.

He said there is a lot of greed infiltrating microfinance. "A lot of people wish to make a lot of money out of it, and that worries me."

"Although I understand the rationale when return on investment is high, more money will flow into the sector, but people should not take advantage of it and make money out of poverty."

He also stressed that the sector needs to address the issue of over indebtedness that may be affecting some segments of the borrowers and not lose sight of its development focus.

Nobel laureate and Microcredit Summit Campaign co-founder Prof Muhammad Yunus hopes microfinance institutions would remain committed to their mission of helping the poor by charging low interests and that appropriate laws will be adopted for MFIs to enable them to attract and accept local deposits and lend out those deposits rather than seeking loan funds from commercial investors.

Larry Reed, the report's author and former CEO of the Opportunity International Network, said microfinance is more than just credit for micro-entrepreneurs.

"Some of the most compelling impact data is coming from savings programmes for the poor and very poor, and there is a lot of promise in outreach to rural areas, including agriculture finance and insurance, especially when integrated with other development efforts."

This comes at a time when the industry itself is facing its one of the most turbulent periods in recent memories across the world including Bangladesh, its birthplace. The microcredit pioneer, Prof Yunus, is fighting in court the government's attempts to remove him from Grameen Bank he founded three decades ago.

The Microcredit Summit Campaign aims to reach 17.5 crore of the world's poorest families by 2015 and ensure that 10 crore of those families move above the World Bank's $1.25-a-day poverty threshold.

Launched in 1997, the Campaign is a project of RESULTS Educational Fund, a US-based advocacy organisation committed to creating the will to eliminate poverty.

It has surpassed its goal of reaching 10 crore million poorest families with credit for self-employment and other financial and business services.

The next Global Microcredit Summit will be held on November 14-17, 2011 in Valladolid, Spain.

News: The Daily Star/  Bangladesh/Mar-08-2011