The intimate link between poverty, poor health and inequality is widely acknowledged. Addressing these three issues together through microfinance programmes, coupled with health education or services, was the subject of a panel discussion hosted by UNFPA and the Microcredit Summit Campaign in conjunction with the 50th Session of the Commission on the Status of Women (March 2006).
Microfinance a major development success story of the 1990s means offering small loans at reasonable rates to poor people, usually women who would not qualify for conventional loans, to help them start or improve small-scale businesses. Groups of borrowers mutually guarantee each others loans and learn basic business principles. Increasingly, their group meetings are also used as an opportunity to educate and inform women.
A new publication, From Microfinance to Macro Change calls for combining health education with microfinance to empower women and reduce poverty. The publication offers evidence that this strategy, taken to scale, is one of the most promising and cost-effective ways to address the Millennium Development Goals. The following panelists talked about the power of microfinance to affect the lives of women, their families, their communities and the world.
Ambassador Iftekar Chowdhury, Permanent Representative from the Mission of the People's Republic of Bangladesh to the United Nations
Poverty reduction is one of the most challenging tasks for humanity. Microfinance teaches us that the poor have the innate ability and creativity to work themselves out of poverty, given the opportunity. It illustrates that the simplest of concepts can effect profound changes in society.
Bangladesh is considered a thought leader in this field. Its major microfinance institutions reach 15 million clients, resulting in better family life for 75 million that's more than half the population.
Microcredit is only a means to an end. When it is packaged with education and services it can bring about a sea-change in the life of clients, allowing them a way out of the claptrap of poverty. But there is a critical need for an integration of complementary services. The multidimensional aspects of poverty require multi-pronged solutions.
Microcredit can be a great leveler in traditional societies like Bangladesh. Empowering women financially led to political empowerment. It caused a transformation of society that marginalized extremist thinking and action. It achieved a reformation in spiritual thinking.
Thoraya A. Obaid, Executive Director, UNFPA
As I reflect on the profound impact this work can have, I am reminded of a story from Columbia University Professor, Jeffrey Sachs' recent book, The End of Poverty, where Sachs describes visiting BRAC microcredit clients in Bangladesh and learning that the women all had, or planned to have, no more than two children each. Sachs says:
Perhaps more amazing than the stories of how microfinance was fueling small-scale businesses, were the women's attitudes to child rearingHere was a group where the average number of children for these mothers was between one and two childrenThis social norm was new, a demonstration of a change of outlook and possibility so dramatic that Dr. Allan Rosenfield [the Dean of the Columbia University School of Public Health] dwelt on it throughout the rest of his visit.he remembered vividly the days when Bangladeshi rural women would typically have had six or seven children.
Dean Rosenfield was stunned by this transformation, but it is the sort of transformation that we will see more and more as an increasing number of women worldwide gain access to microfinance that is integrated with health education. This is the case because with increased status, independence, income and negotiating power, women are better able to exercise their right to sexual and reproductive health. And when women are better off, so are families and societies. Women's empowerment and participation is essential to economic growth, democracy and social justice and human rights.
Sam Daley-Harris, Director of the Microcredit Summit Campaign
Sometimes we forget how revolutionary microcredit is. When banks lent to the rich microcredit programmes lent to the poor. When banks lent to men, microcredit programmes lent to women. When banks made large loans, microcredit programmes made small ones. When banks required collateral, microcredit loans were collateral free. When banks required a lot of paperwork, microcredit loans were illiterate-friendly. When clients had to come to the bank, microbankers went to the clients.
The Microcredit Summit Campaign is passionate about breaking with business as usual in international development by making sure that the very poor aren't excluded as they often are. We are also passionate about scaling up action as evidenced in our goal to reach 100 million of the world's poorest families, especially the women of those families, with credit for self-employment and other financial and business services by the end of 2005.
Several years ago two friends of mine were speaking with a group of 40 clients at a micro-bank in South Asia. Through the translator, they asked the 40 women what impact the bank had had on the husbands of the non-borrowers; not their husbands, but the husbands of women who are not with the bank. The clients said, Before we took our loans, our husbands were day-labourers, working for others whenever they could find work. When we took our loans our husbands stopped being day-labourers and worked with us bicycle rickshaw, husking rice, growing garlic on leased land. This caused a shortage of day-labourers in this area, so the husbands of the non-borrowers who were day-laborerstheir wages went up.' That was the impact of this bank on the husbands of the non-borrowers.
Imagine what might happen when 100 million of the world's poorest families are reached. How many other families might benefit who are not among the 100 million reached? And how might that outreach empower women and their families even more if they are armed with education in reproductive health and other health information?
Lynne Patterson, Executive Director of Pro Mujer
We offer microfinance services, we offer health services, but what we really offer is empowerment. Women are the world's latent resource. But women are also vulnerable, and poor women are the most vulnerable. If you don't have money, you can't be independent and in control of your own life. If you're sick, you can't do any of it. Health is the bottom line.
Most of the women we work with have never had a business. Most have never taken out a loan. We help them understand the process, and we help them understand their rights.
Microfinance operations are sustainable. And they reach large numbers of women. Women are coming weekly to repay their loans. When they come in groups, it's like a classroom.
Over the last 16 years, we have evolved three different models based on the health services that were available. In Bolivia, the existing health clinics were so inadequate that women didn't even want to use them. So we set up simple health clinics. In Nicaragua , where the health system is more developed, we altered the approach. Because so many women there were suffering from cervical cancer, we provided screening. We found 199 cases of incipient cancer and linked the clients to treatment. In Peru, we just linked clients to existing services, and we also plan to offer health insurance for clients and their families. These programmes are extremely cost effective we were able to provide clients with access to primary health care for $3 to $6 per person per year.
Chris Dunford, Executive Director of Freedom From Hunger
We are seeing impressive evidence of the impact microcredit can have on women's empowerment. The first impact you see is increased self-confidence and improved status. Later this can lead to a change in power relationships. Mounting evidence also shows the effect it can have at the national level a recent analysis found that 40 per cent of the entire reduction of poverty in rural Bangladesh was directly attributable to micofinance. Considering Bangladesh as an example of its potential, it is not a stretch to imagine the impact microfinance could have on global poverty.
You have to see these programmes in action to believe them. When you see the interactions among the women themselves and then interaction with the financial officers, you realize that something remarkable is happening.
The poorer people are, the more they need help. Microcredit offers an infrastructure for delivering both financial and non financial servicesit could be an office in a city or a meeting spot where women meet every week or two.