IP NEWS: by Jennifer Mascia
UNITED NATIONS, Mar 7 (IPS) - Sandra is a 26-year-old mother of two who lives in a small town in Nicaragua close to the Honduran border. Taken as the wife of a day labourer at the age of 14, she never attended school or learned to read or write.
She was made to sleep on a dirt floor by her husband, who took the view that a woman's role was to cook and take care of his children.
Five years ago, she heard about a bank in her region that gave small loans to women, who then started their own income-producing projects. Many times, Sandra prepared to visit the bank, but being illiterate and unable even to sign her own name, she demurred.
Finally, at the urging of her godmother, she went to the bank and secured a loan of 92 dollars.
Armed with sorely needed start-up capital, she embarked on a venture: she would extract jicaro seeds, grind them up and sell the result. Today, Sandra makes a relatively decent living, feeding her family three meals a day and no longer sleeping on a dirt floor.
As part of the outreach programme affiliated with the bank's lending procedures, her husband was visited by a community group who convinced him that beating and emotionally abusing his wife was no longer acceptable.
This multifaceted outreach programme also granted her access to education and health care. She now receives twice annual gynecological check-ups.
”Now I have my own income,” she says happily. ”Now my husband doesn't beat me.”
Sandra's story exemplifies the desired result of microfinance, which is the process of awarding small loans, or microcredit, to people in remote rural areas -- mostly women --enabling them to start their own businesses and break out of the confines of extreme poverty.
But microfinance has its critics, who contend that its reaches do not extend to the poorest of the poor, the one billion people who live on less than a dollar a day in extreme, life-threatening poverty.
Less than one percent of the World Bank's funds are currently dispersed in the name of microfinance, giving some indication of where the programme falls on the agenda of the world's premier development institution.
Pioneered in Bangladesh in the early 1970s, microfinance addresses six of the seven Millennium Development Goals (MDGs), the five-year-old global directive that aims to halve poverty in the world by 2015.
Because of factors that deprive families of their heads of household -- the death of husbands and fathers to AIDS, or the necessity of migrant work -- most of the recipients of microcredit are women -- who, according to Bangladeshi Ambassador Iftekhar Ahmed Chowdury, default on loans far less than men.
The United Nations has declared 2005 the International Year of Microfinance.
”Microcredit has become a powerful weapon in attaining the MGDs,” Chowdury said at a microfinance summit sponsored by the United Nations Fund for Women, or UNIFEM, Monday at the U.N.
He hailed the role of microfinance in gender equality, arguing that increased income for women brings forth social change, since 82 percent of the 81 million clients of microcredit -- 89 percent of whom live in Asia -- are women.
Access to credit brings about economic equality, which in turn brings about social and political empowerment, Chowdhry said, pointing to the fact that the last three of his country's general elections produced three female prime ministers and 13,000 women elected to local and national posts.
”If we can change from within,” he said, ”we can change the world.”
Jayshree Vyas, managing director of the Self Employed Women's Association (SEWA), defines her main objective as releasing women from ”the clutches of moneylending”, an extremely high-interest trap that many women fall into, especially after receiving a lump sum microcredit payment.
Unable to open a bank account, they turn over their capital to moneylenders who distribute it for them, taking a hefty cut in the process.
SEWA formed as an outgrowth of the Textile Labour Association, India's oldest and largest union of textile workers. In 1972, its scattered members had been working 15-hour days and living in slums with no social security.
Now organised into an entity 700,000-strong, they formed a cooperative bank to deal with the discomfort many women suffer in the face of unsympathetic lending institutions that don't accommodate illiterate women unsophisticated in the world of finance.
Instead of signatures, the junior bankers used pictures for identification purposes, years before such technology became commonplace. The members set the interest rates and administered the loans, and established an unusual yet instrumental condition upon administering one: If the venture brings enough prosperity to purchase a home for her family, it must be in her name, and not her husband's.
Because in Southeast Asia each family is ”one cyclone away” from depleting their account, Vyas acknowledged the importance of insurance, which would save each microcredit recipient from destitution.
”We have to think about tomorrow, but also the day after tomorrow, too,” she said.
Sam Daley-Harris, the director of the Microcredit Summit Campaign, admitted the shortcomings of microfinance, but also extolled its accomplishments.
Falling 20 million short of its goal to administer microcredit to 100 million of the world's poorest families by this year, the Microcredit Summit of 1997 set forth ambitious goals that have been delayed, but only by about two years, Harris contends.
The author of last year's State of the Microcredit Summit Campaign Report, Harris described his approach as a ”revolution in banking,” achieved by observing how mainstream banking institutions ran their businesses and ”doing the exact opposite.”
This meant rewarding small loans to illiterate women with no collateral at a low interest rate, and traveling to the villages where normally the villagers would travel to the banks.
He reminded the panel at the Monday summit, ”This is not junior banking,” rather, the 931 participating institutions were engaged in an effort to break the rules of banking.
Chowdhry agreed that microcredit acceptance remains on the fringes of finance.
”This is an experimental tool, but we have not been able to convert mainstream agencies and organisations just yet.” He went on to say, ”A major, major obstacle to the concept of microcredit is reaching the world's poorest of the poor.”
Barriers remain, which Harris describes as ”vision and money.” He admits that much of microcredit's benefits go to Asia and that Africa's microfinance is mostly donor-driven, often excluding those on the lowest rung from relief.
And Ambassador Chowdhry admitted that there exists a ”glass ceiling” for those in dire poverty that even microcredit cannot penetrate.
In terms of the World Bank, Harris says he was told by an acquaintance there, ”The World Bank is not a development institution; it is an academic institution.”
”It's dismaying, the ignorance of the World Bank,” laments Lynne Patterson, executive director of Pro Mujer, which offers credit and outreach services in Nicaragua. Patterson, who relayed Sandra's success story, remains angered over the lack of microcredit recognition on the macro level.
”What we do today affects the future,” she reiterated.
But progress can be made even without the full attention of the world's mainstream banking institutions, Choudhury insisted.
”People may be poor, but this demonstrates that they can work their way out of this claptrap of poverty with dignity,” he told the panel. (END/2005) "
UNITED NATIONS, Mar 7 (IPS) - Sandra is a 26-year-old mother of two who lives in a small town in Nicaragua close to the Honduran border. Taken as the wife of a day labourer at the age of 14, she never attended school or learned to read or write.
She was made to sleep on a dirt floor by her husband, who took the view that a woman's role was to cook and take care of his children.
Five years ago, she heard about a bank in her region that gave small loans to women, who then started their own income-producing projects. Many times, Sandra prepared to visit the bank, but being illiterate and unable even to sign her own name, she demurred.
Finally, at the urging of her godmother, she went to the bank and secured a loan of 92 dollars.
Armed with sorely needed start-up capital, she embarked on a venture: she would extract jicaro seeds, grind them up and sell the result. Today, Sandra makes a relatively decent living, feeding her family three meals a day and no longer sleeping on a dirt floor.
As part of the outreach programme affiliated with the bank's lending procedures, her husband was visited by a community group who convinced him that beating and emotionally abusing his wife was no longer acceptable.
This multifaceted outreach programme also granted her access to education and health care. She now receives twice annual gynecological check-ups.
”Now I have my own income,” she says happily. ”Now my husband doesn't beat me.”
Sandra's story exemplifies the desired result of microfinance, which is the process of awarding small loans, or microcredit, to people in remote rural areas -- mostly women --enabling them to start their own businesses and break out of the confines of extreme poverty.
But microfinance has its critics, who contend that its reaches do not extend to the poorest of the poor, the one billion people who live on less than a dollar a day in extreme, life-threatening poverty.
Less than one percent of the World Bank's funds are currently dispersed in the name of microfinance, giving some indication of where the programme falls on the agenda of the world's premier development institution.
Pioneered in Bangladesh in the early 1970s, microfinance addresses six of the seven Millennium Development Goals (MDGs), the five-year-old global directive that aims to halve poverty in the world by 2015.
Because of factors that deprive families of their heads of household -- the death of husbands and fathers to AIDS, or the necessity of migrant work -- most of the recipients of microcredit are women -- who, according to Bangladeshi Ambassador Iftekhar Ahmed Chowdury, default on loans far less than men.
The United Nations has declared 2005 the International Year of Microfinance.
”Microcredit has become a powerful weapon in attaining the MGDs,” Chowdury said at a microfinance summit sponsored by the United Nations Fund for Women, or UNIFEM, Monday at the U.N.
He hailed the role of microfinance in gender equality, arguing that increased income for women brings forth social change, since 82 percent of the 81 million clients of microcredit -- 89 percent of whom live in Asia -- are women.
Access to credit brings about economic equality, which in turn brings about social and political empowerment, Chowdhry said, pointing to the fact that the last three of his country's general elections produced three female prime ministers and 13,000 women elected to local and national posts.
”If we can change from within,” he said, ”we can change the world.”
Jayshree Vyas, managing director of the Self Employed Women's Association (SEWA), defines her main objective as releasing women from ”the clutches of moneylending”, an extremely high-interest trap that many women fall into, especially after receiving a lump sum microcredit payment.
Unable to open a bank account, they turn over their capital to moneylenders who distribute it for them, taking a hefty cut in the process.
SEWA formed as an outgrowth of the Textile Labour Association, India's oldest and largest union of textile workers. In 1972, its scattered members had been working 15-hour days and living in slums with no social security.
Now organised into an entity 700,000-strong, they formed a cooperative bank to deal with the discomfort many women suffer in the face of unsympathetic lending institutions that don't accommodate illiterate women unsophisticated in the world of finance.
Instead of signatures, the junior bankers used pictures for identification purposes, years before such technology became commonplace. The members set the interest rates and administered the loans, and established an unusual yet instrumental condition upon administering one: If the venture brings enough prosperity to purchase a home for her family, it must be in her name, and not her husband's.
Because in Southeast Asia each family is ”one cyclone away” from depleting their account, Vyas acknowledged the importance of insurance, which would save each microcredit recipient from destitution.
”We have to think about tomorrow, but also the day after tomorrow, too,” she said.
Sam Daley-Harris, the director of the Microcredit Summit Campaign, admitted the shortcomings of microfinance, but also extolled its accomplishments.
Falling 20 million short of its goal to administer microcredit to 100 million of the world's poorest families by this year, the Microcredit Summit of 1997 set forth ambitious goals that have been delayed, but only by about two years, Harris contends.
The author of last year's State of the Microcredit Summit Campaign Report, Harris described his approach as a ”revolution in banking,” achieved by observing how mainstream banking institutions ran their businesses and ”doing the exact opposite.”
This meant rewarding small loans to illiterate women with no collateral at a low interest rate, and traveling to the villages where normally the villagers would travel to the banks.
He reminded the panel at the Monday summit, ”This is not junior banking,” rather, the 931 participating institutions were engaged in an effort to break the rules of banking.
Chowdhry agreed that microcredit acceptance remains on the fringes of finance.
”This is an experimental tool, but we have not been able to convert mainstream agencies and organisations just yet.” He went on to say, ”A major, major obstacle to the concept of microcredit is reaching the world's poorest of the poor.”
Barriers remain, which Harris describes as ”vision and money.” He admits that much of microcredit's benefits go to Asia and that Africa's microfinance is mostly donor-driven, often excluding those on the lowest rung from relief.
And Ambassador Chowdhry admitted that there exists a ”glass ceiling” for those in dire poverty that even microcredit cannot penetrate.
In terms of the World Bank, Harris says he was told by an acquaintance there, ”The World Bank is not a development institution; it is an academic institution.”
”It's dismaying, the ignorance of the World Bank,” laments Lynne Patterson, executive director of Pro Mujer, which offers credit and outreach services in Nicaragua. Patterson, who relayed Sandra's success story, remains angered over the lack of microcredit recognition on the macro level.
”What we do today affects the future,” she reiterated.
But progress can be made even without the full attention of the world's mainstream banking institutions, Choudhury insisted.
”People may be poor, but this demonstrates that they can work their way out of this claptrap of poverty with dignity,” he told the panel. (END/2005) "
