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Headllines continued

Microcredit: Much More Than Money

by R. Erica Doyle

New York, June 5--In a conference room filled to capacity with members of the press and representatives of women's NGOs from around the globe, panelists shared the triumphs and challenges of programs designed to finance the dreams of the world's poorest women. Seated on the panel were Hillary Rodham Clinton, First Lady of the United States; Noeleen Heyzer, Executive Director of UNIFEM; Dr. Muhammed Yunus, Managing Director of Grameen Bank, Bangladesh; Ela Bhatt, General Secretary of the Self-Employed Women's Association (SEWA), India; Sam Daley-Harris, Director of the Microcredit Summit Campaign, United States; Chief Bisi Ogunleye, founder and national coordinator of Country Women Association of Nigeria (COWAN), and a representative from the United Nations Development Fund (UNDP).

A rousing standing ovation from all the participants greeted Hillary Rodham Clinton as she stood to give the keynote. (A wry sociology professor from Malaysia seated next to me smiled, "She is more popular here than she is in her own country, eh?") The First Lady first shared her personal efforts and that of the United States government to raise awareness to the issues of women's rights as human rights, and called her attendance at the 1995 Beijing Conference one of the most moving experiences of her life. Although there have been some gains, she noted, "our work is far from done" as long as the scourges of female infanticide, devaluing of women's work, sex trafficking, honor killing and dowry deaths, violence against women, and lack of choice in family planning methods, continues. She underscored that the global response has been no match for the scope of the HIV epidemic, and that it is an international, not national problem. And, she added, the benefits of increasing globalization have not reached everyone, including women "in my country," she said. "Women must be made a priority and microcredit is one of the most effective tools for change."

Clinton has used her influence as First Lady to "convert" her husband to the promise of microcredit, arranging for microcredit clients and founders to attend an economic summit at the White House along with Secretary of the Treasury Alan Greenspan and Bill Gates of Microsoft, and their visits to microcredit enterprises were "penciled in" wherever they traveled around the globe. She shared some of the stories of the women she had met. In Chile, a woman's sewing machine meant so much to her that "she just kept kissing it;" SEWA women in India talked about how they had been able to stand up, for the first time in their lives, to husbands and mother-in-laws (the latter eliciting hearty laughter and applause from the room.) At the end of her time in India, the women sang "We Shall Overcome" in Hindi.

In the new century, Clinton said in closing, "we will look back at this first step and realize what a gift all of the women gathered here have given us." As she went to take her seat, a few voices rose from the applause singing, "We shall overcome...," gaining in strength until by the second verse, most participants were on their feet, clapping and singing the internationally recognized song of freedom. Noeleen Heyzer commended those on the panel for their commitment to transforming words into actions and the courage to be accountable, to share the problems and lessons as well as the successes of the microcredit projects.

Before the Fourth World Conference on Women, women received 5% of loans, but after the commitment to address women's access to credit the picture has changed. There are 1,063 microcredit institutions, reaching 13.8 million of the poorest people, 75% of whom are women. Women have shown themselves to be excellent credit risks, and their high rate of repayment of their loans(98-100%) rivals that of conventional banking institutions. What remains, according to Heyzer, is for women to have more control of the nature of their investments; to have greater access to global markets and information technology; and to increase business skills and other financial services, such as insurance and savings options. Creating a culture of enterprise with understandable and realistic rules while continuing to create change in the cultures where gender inequalities and domestic violence persist is essential to the holistic success of the improvement of women's lives.

An example of a successful and multifaceted program targeting the poorest women is Grameen Bank of Bangladesh. Muhammad Yunus revealed that more than half of the poor in Bangladesh are reached by microcredit programs. The triumph of the program was revealed when, after the 1998 flood which was the worst in the impoverished country's history, there was none of the typical famine and widespread disease that usually accompanies such a natural disaster. The coping of the people was reinforced by the strength of the microcredit program. Not only have participants increased their ability to withstand the harshness of their natural environment, they have confronted and created change in the political arena as well. In the 1996 elections, 73% of the population voted, and for the first time in the history of the country, women voters outnumbered men. In the following year, each local council reserved three seats for women, and over 2000 of the women elected were clients of Grameen.

Political power is not the only benefit of the program; nearly 100% of Grameen parents are educating their children, some of whom have already entered institutions of higher learning. Grameen began to diversify its projects to adapt to the needs of its members, creating in 1995 a cellular phone network than enabled "telephone ladies" in villages to sell phone time in places where no phone service existed. Though "many thought it was a crazy idea at the time," laughed Yunus, today, the "telephone ladies" are earning four times the per capita income of the country, and have gone from being the poorest to the richest in their villages.

To accompany the increased energy need generated by the new technology, Grameen has begun Grameen Energy to provide power for the cellular network, and is developing a Grameen Digital Centers, where poor villages can use information technology to explore markets, track investments, and even learn to read. The marvel of interactive technology, said Yunus, is that it can be made accessible even to those who are illiterate. He plans to create an International Center for Global Technology to End Poverty. Described by Heyzer as the man who turned "conventional banking and economics on its head" he envisions a global marketplace where the bottom line is inextricably linked to empowering the poorest and unlocking human potential, the only profit of value.

Ela Bhatt of SEWA spoke of the future of microcredit; that it must be seen as more than access to money, but must give women freedom and power. The so-called informal economy of women's invisible and often uncompensated labor is what the "formal" economy of paid work outside the home for recognized corporations is built upon. There must be a movement from microcredit to microfinance, Bhatt emphasized, to include saving and insurance; inflation protection of assets; mutual funds, pensions, and educational, shelter, and personal loan products. This will fully protect members' earnings and assets against the unpredictable, such as hospitalization, maternity and natural disasters. How can this be extended? "We need to invite the mainstream banking institutions to treat finance for the very poor as an alternate banking service, to get central banks to deregulate interest rates on small loans, and challenge the pre-existing financial institutions to revisit their policies." Credit, she stressed, is the means, not the end.

Chief Bisi Ogunleye echoed Bhatt's sentiments in regard to national policy. "I don't care if you give credit, if one day you can wake up and give a stupid policy and that is the end of your program!" Women must be mobilized in elections, loans must be given to women to run for political office. Microcredit, after all, she said, "is not foreign to Africa. It exists in traditional society as "isusu", but it has been relegated to the informal sector and not given much support. It is 'African traditional responsive banking,' and is accepted as an effective model in Uganda, Kenya, Cote d'Ivoire, and Nigeria." As a result, much like the traditional isusu, where women pool their money and take turns using it, in COWAN microcredit lending, women do not have to pay back the loan. Instead, they are asked to save as much as was lent and deposit it in the bank as a trust fund. In fact, says Ogunleye, "they save more than what we originally lent them!"

These examples, agreed Sam Harris of Microcredit Summit, though not a panacea, disprove the conventional wisdom of the traditional banking system. Microcredit released a repot today on the status of the 1,063 microcredit lending institutions around the world. The success is also a tribute to the tens of thousands of staff people working in coalition with the clients to further their goals of economic empowerment. It is essential, stressed Harris, that the focus continue to be on the poorest of the poor -- those living in the bottom half of their nation's's poverty line. Microcredit Summit is currently strengthening the methods used to identify the "poorest."

At a Summit gathering in 1997, many in the field of microfinance argued that building self-sufficient institutions must come at the expense of reaching the poorest families. However, according to the report, the focus on these poorest clients did not come at the sacrifice of financial self-sufficiency. When women earn an income, their income tends to benefit the entire family, more so than men; it tends to raise their status in their communities; and can lend to the stability of a community if its members do not need to leave in search of work elsewhere.

Some programs also incorporate some form of business training and a self-empowerment component, though Yunus points out that the best solutions come from the poor themselves, who go on to help others. This is the case with Beulah Williams, a mother and grandmother from Olney, Maryland. With a $500 from the Foundation for International Community Assistance (FINCA) she bought a sewing machine. Before she started to make clothes, says Williams, "I did research. I went out to stores to see what was there and I decided to do something different. I made at first afrocentric robes, custom made, and then children's clothes since there wasn't any of that in the community." By finding a niche market, she built a business, and now volunteers her skills in community sewing workshops at community centers, prisons and homeless shelters. One of the women from a homeless shelter, she says proudly, "is now my employee."

Microcredit is helping women who live in extreme material degradation, sometimes, as in the case of the FINCA project in Uganda, as a result of war and AIDS, to feed their families, educate their children, provide medical care, and sadly, bury them. Women have proven time and time again, that not only do they bring their considerable skill as craftswomen and farmers to bear, but the creativity and wisdom gleaned from generations of living on the margins of an formal economy that chooses to ignore them. In Uganda, despite war, poverty, and AIDS women have perfect 100% on-time repayment rates. Although the conventional banks, says Clinton, complain the "transaction costs for these small loans are not worth it," these small entrepreneurs will grow into a global force for women's personal and political empowerment that challenges the philosophical underpinnings of the global conglomerates' precious bottom line.