- The Washington Times - Monday, June 18, 2007

Members of Congress have the political motivation to do many things: win federal money for their home districts, vote on war resolutions and take a stand on the social issues. But it usually takes a little push to get their support for initiatives on microfinance, one of many tools used in combating global poverty.

“The kinds of things we’re looking for, there is not a resounding call for that back in Texas,” said Mark Coats, of Austin, Texas, one of 250 activists who came to Washington last week to lobby their representatives on microfinance and other global development issues, including education and disease prevention.

Advocates of microfinance, pioneered by Nobel Peace laureate Muhammad Yunus in Bangladesh 30 years ago, say that offering small-scale financial services to the world’s poorest people raises their living standard and helps offset the many adverse health and social conditions associated with extreme poverty. Extreme poverty in this case is defined as those who live on less than $1 a day or are in the bottom half of those below their country”s national poverty line.

The activists, members of an international citizens group called Results, are trying to enlist Congress” help to ensure that microfinance funding consistently reaches those below the $1-a-day threshold.

Although it is nearly impossible to measure precisely the reach and effect of microfinance on a global scale, a report by the Microcredit Summit Campaign said that its affiliates offered small-scale financial services to 82 million of the world’s poorest people in 2005.

The campaign, started in 1997, is a collection of more than 3,000 international microfinance organizations dedicated to targeting the world’s poorest citizens — anywhere from 1 billion to 1.5 billion people. The campaign sets long-term benchmarks in accordance with the U.N. Millennium Development Goals, one of which aims to halve extreme poverty by 2015.

“A lot of times people don’t see the revolution in microcredit,” said Sam Daley-Harris, founder of Results and the Microcredit Summit Campaign. “They don’t see the rules that had to be broken to give a $20 loan or a $50 loan or a $100 loan with no collateral, no paperwork.”

Although it is difficult to track the cumulative effect of microfinance on global poverty, advocates and practitioners like to tout the social progress they see in countries where the industry has taken hold. Microfinance targets women almost entirely because they are more likely than men to pass on the benefits of their improved financial status to their children.

In Bangladesh, the country considered to have benefited the most from microfinance, poverty remains widespread. About half of the country’s 150 million people live below the national poverty line, according to the World Bank. But when advocates argue for the positive effects the industry has had on Bangladesh, they point to improvements in several social indicators. Child mortality and the fertility rate have dropped since 1970, and by 2004, as many Bangladeshi girls were attending primary and secondary schools as boys, according to the United Nations Children’s Fund.

Mr. Daley-Harris would like American legislators to persuade the World Bank to take on a policy similar to the one they adopted in 2004, when Congress passed a law calling on the U.S. Agency for International Development to spend at least half of its $200-million-a-year microfinance budget on projects that directly assist the extreme poor. The law also required the creation of tools for identifying the neediest people cheaply and efficiently, so that aid can reach them reliably.

Measures like these are important because microfinance has become very popular very fast, and one of its main weaknesses has been mismanagement, said Isobel Coleman, a global development specialist at the Council on Foreign Relations. Programs easily can fail at their mission when they are implemented untailored to an area’s particular market conditions and demographics.

Some U.S. representatives are considered friends of the global microfinance cause.

Reps. John Carter, Texas Republican, and Rush D. Holt, New Jersey Democrat, are collecting legislators’ signatures on a letter they plan to send this week to incoming World Bank President Robert B. Zoellick.

“We feel strongly that microfinance is a development tool that has been underutilized by the Bank thus far, especially with regard to reaching and empowering the very poor, and we would greatly appreciate such a face-to-face meeting with you to discuss this further,” said a draft of the letter.

Mr. Carter and Mr. Holt sent a similar letter in February with more than 50 signatures to Paul Wolfowitz, the World Bank president who accepted their invitation before an unrelated scandal forced him out of his position.

Story Continues →