<p>The original Microcredit Summit was held in 1997. When delegates gathered nine years later at the Global Microcredit Summit in Halifax, Canada in 2006, it had just been announced that Muhammad Yunus would share the Nobel peace prize with Grameen Bank, the institution he founded decades before. A year earlier, the United Nations had celebrated the Year of Microcredit, and just one year later,the Microcredit Summit Campaign surpassed its goal set in 1997 of reaching 100 million of the world’s poorest families with credit for self employment and other financial and business services. Those were indeed heady times for microfinance.<br /><br />Now, some five years later, 2,000 delegates will gather in Valladolid,Spain from November 14-17, for the 2011 Global Microcredit Summit.However, this time delegates will gather in a more challenging environment from those of previous summits. Earlier this year, Muhammad Yunus was forced to resign from Grameen Bank as a result of a set of bone-chillingly brazen acts by the Bangladesh government that many fear could set the clock back on women’s empowerment in that country for years to come.<br /><br />Attack poverty<br /><br />For many years, microfinance has been heralded as an exciting new way to attack poverty. One story that demonstrates its potential as a transformational intervention comes from a visit to Bangladesh some 15 years ago. A friend from the US was interviewing a borrower in a rural village when the interpreter said the borrower wanted my friend to know that her son was starting college the next year. My friend’s son was also starting college the next year, and she offered a brief congratulations. When the interpreter interrupted again with the same news my friend knew there must be more to the story.<br /><br />“Can you or your husband read or write?” my friend asked. “No,” the borrower answered. “Could your mother or father read or write?” my friend continued. “No,” the client answered.<br /><br />When my friend asked if her husband’s mother or father could read or write and heard another ‘no,’ she began to get the true picture and was profuse in her congratulations. Finally, my friend realised she was seeing the breaking of intergenerational illiteracy and probably intergenerational poverty along with it.<br /><br />A brief walk through the agenda of next month’s Global Microcredit Summit in Spain shows an industry that has begun to face its failures. In response to opaque interest rates and charges of usury, Chuck Waterfield created Microfinance Transparency and has authored a paper for the summit to address those issues. Beth Rhyne leads the Centre for Financial Inclusion at Accion and has authored a paper focused on client protection, a topic no one thought would ever need to be addressed two decades ago. The head of the Social Performance Task Force, Laura Foose, has authored a paper for the summit on ensuring that an organisation puts as much attention on its social bottom line as it does on its financial bottom line. <br /><br />But the discussion at the summit will not only be focused on the problems facing microfinance. Delegates will also learn of institutions where tens of thousands of college loans and scholarships are going to children whose parents are illiterate. In other sessions, they will learn of programmes that are working with the ultra-poor in rural areas and in urban slums. Delegates will learn how organisations are linking microfinance with health and clean energy and with agriculture and clean water. Discussions will include innovations in savings and micro-insurance andon mobile banking and Islamic microfinance. <br /><br />Many would argue that an unchecked drive for maximizing profits by some institutions has pushed the field to this point. That will be part of the debate in a session titled: ‘Initial Public Offerings: The Field’s Salvation or the Field’s Downfall?’ <br />In teaching economics I learned about money and now as head of a bank I lend money, and the success of our venture lies in how many crumpledbank bills our once starving members now have in their hands. <br /><br />But the microcredit movement, which is built around, and for, and with money,ironically, is at its heart, at its deepest root not about money at all. It is about helping each person to achieve his or her fullest potential. It is not about cash capital, it is about human capital. Money is merely a tool that unlocks human dreams and helps even the poorest and most unfortunate people on this planet achieve dignity, respect, and meaning in their lives. <br /><br />Perhaps those are words for all of us and not just for the field of microfinance.</p>
<p>The original Microcredit Summit was held in 1997. When delegates gathered nine years later at the Global Microcredit Summit in Halifax, Canada in 2006, it had just been announced that Muhammad Yunus would share the Nobel peace prize with Grameen Bank, the institution he founded decades before. A year earlier, the United Nations had celebrated the Year of Microcredit, and just one year later,the Microcredit Summit Campaign surpassed its goal set in 1997 of reaching 100 million of the world’s poorest families with credit for self employment and other financial and business services. Those were indeed heady times for microfinance.<br /><br />Now, some five years later, 2,000 delegates will gather in Valladolid,Spain from November 14-17, for the 2011 Global Microcredit Summit.However, this time delegates will gather in a more challenging environment from those of previous summits. Earlier this year, Muhammad Yunus was forced to resign from Grameen Bank as a result of a set of bone-chillingly brazen acts by the Bangladesh government that many fear could set the clock back on women’s empowerment in that country for years to come.<br /><br />Attack poverty<br /><br />For many years, microfinance has been heralded as an exciting new way to attack poverty. One story that demonstrates its potential as a transformational intervention comes from a visit to Bangladesh some 15 years ago. A friend from the US was interviewing a borrower in a rural village when the interpreter said the borrower wanted my friend to know that her son was starting college the next year. My friend’s son was also starting college the next year, and she offered a brief congratulations. When the interpreter interrupted again with the same news my friend knew there must be more to the story.<br /><br />“Can you or your husband read or write?” my friend asked. “No,” the borrower answered. “Could your mother or father read or write?” my friend continued. “No,” the client answered.<br /><br />When my friend asked if her husband’s mother or father could read or write and heard another ‘no,’ she began to get the true picture and was profuse in her congratulations. Finally, my friend realised she was seeing the breaking of intergenerational illiteracy and probably intergenerational poverty along with it.<br /><br />A brief walk through the agenda of next month’s Global Microcredit Summit in Spain shows an industry that has begun to face its failures. In response to opaque interest rates and charges of usury, Chuck Waterfield created Microfinance Transparency and has authored a paper for the summit to address those issues. Beth Rhyne leads the Centre for Financial Inclusion at Accion and has authored a paper focused on client protection, a topic no one thought would ever need to be addressed two decades ago. The head of the Social Performance Task Force, Laura Foose, has authored a paper for the summit on ensuring that an organisation puts as much attention on its social bottom line as it does on its financial bottom line. <br /><br />But the discussion at the summit will not only be focused on the problems facing microfinance. Delegates will also learn of institutions where tens of thousands of college loans and scholarships are going to children whose parents are illiterate. In other sessions, they will learn of programmes that are working with the ultra-poor in rural areas and in urban slums. Delegates will learn how organisations are linking microfinance with health and clean energy and with agriculture and clean water. Discussions will include innovations in savings and micro-insurance andon mobile banking and Islamic microfinance. <br /><br />Many would argue that an unchecked drive for maximizing profits by some institutions has pushed the field to this point. That will be part of the debate in a session titled: ‘Initial Public Offerings: The Field’s Salvation or the Field’s Downfall?’ <br />In teaching economics I learned about money and now as head of a bank I lend money, and the success of our venture lies in how many crumpledbank bills our once starving members now have in their hands. <br /><br />But the microcredit movement, which is built around, and for, and with money,ironically, is at its heart, at its deepest root not about money at all. It is about helping each person to achieve his or her fullest potential. It is not about cash capital, it is about human capital. Money is merely a tool that unlocks human dreams and helps even the poorest and most unfortunate people on this planet achieve dignity, respect, and meaning in their lives. <br /><br />Perhaps those are words for all of us and not just for the field of microfinance.</p>
