VALLADOLID, Spain, Nov. 10, 2011 /PRNewswire-USNewswire/ -- More than 137.5 million of the world's poorest families received a microloan in 2010—an all-time high, according to a report released today by the Microcredit Summit Campaign. Assuming an average of five persons per family, these 137.5 million microloans affected more than 687 million family members, which is greater than the combined populations of the European Union and Russia. Microloans are used to help people living in poverty in both industrialized and developing countries to expand a range of small businesses, such as selling products in a local market, making clothes, and providing computer and other business services in rural areas.
The report's release precedes the Global Microcredit Summit 2011 to be held November 14-17 in Valladolid, Spain, which will be inaugurated by Her Majesty Queen Sofia and Nobel Peace Prize laureate and Grameen Bank founder, Muhammad Yunus.
"At the first Microcredit Summit in 1997, only 7.6 million of the world's poorest families had been reached," said Prof. Yunus, who will arrive for the Summit later this week. "While the growth in numbers has been inspiring, we must keep our attention on the wisdom from the clients. The report tells us that when asked what they want for themselves and their families, their answers include, 'education for their children, health for their family, decent housing that keeps the rain and cold out, and regular, nutritious meals.' This is what we will pursue when we gather at the Microcredit Summit in Valladolid."
While more than 205 million people worldwide received a microloan in 2010, this multi-year campaign focuses on outreach to the poorest clients. According to the report, over the last 13 years, the number of very poor families with a microloan has grown more than 18-fold from 7.6 million in 1997 to 137.5 million in 2010. The latest data comes from more than 3,600 institutions worldwide, with more than 94 percent of the information having been collected within the last 18 months.
However, in the last year microfinance has faced setbacks as well. An initial public offering of SKS, a microfinance institution (MFI) based in Andhra Pradesh, India, was followed by charges of over-indebtedness and suicides among clients in that state, resulting in a clamp-down by the state government last October.
"While our progress has been stunning, the challenges in Andhra Pradesh and elsewhere will take a toll," said Campaign director Sam Daley-Harris. "As of August 31, 2011, when this report was completed, the situation in Andhra Pradesh had not yet improved, and repayment rates of MFIs there were reported as low as 10 percent. Were we, therefore, to deduct 90 percent of the Andhra Pradesh numbers from our calculation of clients reached, we would see nearly 200 million total clients and more than 132 million poorest clients reached in 2010. This represents more than 5 million clients who received loans in 2010 but may not receive loans in 2011."
The report also highlights the number of poorest women reached. Not only have these women been the most excluded from traditional banking, but they are also the ones most likely to ensure that the increased income is used to improve the lives of their children. From 1999 to 2010, the number of poorest women reached has increased from 10.3 million to 113.1 million.
The report was released in Valladolid at a non-governmental organization fair held as a prelude to next week's Global Summit. The State of the Microcredit Summit Campaign Report 2012 sets the tone for several of the more than 100 sessions scheduled for the Global Summit. Papers have been written for the Summit by top leaders in the areas of client protection, social performance, interest rate transparency, and financial inclusion. The report discusses one of the central plenary sessions at the Summit, focusing on the continued development of a Seal of Excellence for Poverty Outreach and Transformation in Microfinance.
The Seal of Excellence has been under development for 19 months and will continue to evolve with input from a broad range of stakeholders. It will recognize those institutions that deepen financial inclusion by providing products and services that reach poor people and support their movement out of poverty. The Seal of Excellence will build on other microfinance industry initiatives, including the Smart Campaign's client protection principles and the Universal Standards of the Social Performance Task Force. The Steering Committee for the Seal of Excellence plans to use the existing social rating and evaluation systems to assess the performance of microfinance institutions in poverty outreach and transformation.
"As a microfinance community, we need to shift our focus from outreach to results," said Larry Reed, incoming director of the Microcredit Summit Campaign. "The State of the Microcredit Summit Campaign Report 2012 outlines important steps that we can take together to insure that the financial services we provide result in regular meals, secure housing, uninterrupted education, and better health for our clients and their families."
The Microcredit Summit Campaign aims to reach 175 million of the world's poorest families by 2015 and ensure that 100 million of those families move above the World Bank's $1.25-a-day poverty threshold.
Download the report online: http://mcs2015.org/2012_Report_English
Microcredit Summit Campaign:
The Microcredit Summit Campaign is a project of RESULTS Educational Fund, a U.S.-based advocacy organization committed to creating the will to eliminate poverty. The Campaign was launched in 1997 and, in 2007, surpassed its original goal of reaching 100 million poorest families with credit for self-employment and other financial and business services. The Global Microcredit Summit 2011 will be held November 14-17 in Valladolid, Spain. www.globalmicrocreditsummit2011.org
SOURCE Microcredit Summit Campaign