Washington, D.C. (PRWEB) February 05, 2013
In 2011, 13 million fewer of the world’s poorest families received access to microcredit and other financial services than in 2010, according to a report titled "Vulnerability: The State of the Microcredit Summit Campaign Report, 2013" released today by the Microcredit Summit Campaign. This marks the first time since 1998 when the Campaign began tracking this data that the total number of clients and the number of poorest families reached has declined. The total number of clients was reported to have fallen from 205 million to 195 million and the sub-set of families living in extreme poverty, defined as less than $1.25 a day, from 137 million to 124 million. Partnering with the Microfinance Council of the Philippines, Inc., the Campaign will host the 2013 Microcredit Summit October 9 – 11, 2013, in the Philippines where many of the critical issues raised in the report will be discussed and acted upon.
“This landmark report shows us that clients need education for their children, healthcare for their family, decent housing, and regular, nutritious meals,” said Professor Muhammad Yunus. “This should be the focus of our work at this upcoming Summit and in the years ahead.”
Larry Reed, director of the Microcredit Summit Campaign, added that “We can attribute all of the reduction in clients to events in Asia: over lending in a few markets in India led to a government crackdown, and, in Bangladesh, a maturing market coupled with political uncertainty led many lenders to scale back. This is a wake-up call to the industry about the need to focus more on the growth of our clients’ businesses than on the growth of the institutions that provide them financial services.”
Most other parts of the world saw moderate or slowed growth, with the exception of 1.4 million new clients in Sub-Saharan Africa. Despite this reverse in 2011, microfinance institutions (MFIs) still provided microloans to more than 124 million households living in extreme poverty. Assuming an average of five persons per family, this means that more than 621 million people were affected; this is twice the entire population of the United States.
Addressing the crisis in India, Vijayalakshmi Das, managing director of Ananya Finance in India, posited that as the industry grew, clients’ needs became the least important priority. “Somehow we distanced ourselves from our clients…[and when the crisis happened], they were very silent...Today we need to recognize that we are as vulnerable as our clients. The crisis has told us that it is time for us to invest more time in understanding our clients and their needs and then respond accordingly.”
The report argues that getting the industry back on track will require a new understanding of clients’ needs, preferences, and aspirations, as well as designing new tools for delivering products and services to them at lower costs.
Rodger Voorhies, director of Financial Services for the Poor at the Bill & Melinda Gates Foundation, highlights how digital technologies help make financial services more widely available and affordable. “There are real costs to providing financial services, and often those costs can be so expensive that the economics don’t work, particularly when it comes to providing things like credit and savings to people living in poverty,” said Voorhies. “By taking advantage of mobile technology and the digital revolution, we can reduce the costs, and expand these offerings, ultimately enabling people to weather financial crises and climb out of poverty.”
“The report highlights an ongoing challenge—how does the sector more effectively connect with those around the world who are financially excluded?” said Pamela Flaherty, President and CEO of the Citi Foundation. “The Microcredit Summit Campaign’s continued examination of innovative ways to reach underserved communities, like the potential of digital technology combined with appropriately designed products and services, will be critical in accelerating financial inclusion.”
Read the report: http://www.stateofthecampaign.org
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 brings together microfinance practitioners, advocates, researchers, investors, donors, and stakeholders to promote best practices in the field, to stimulate the interchange of knowledge, and to work towards reaching the Campaign’s two goals: 1) Reach 175 million of the world’s poorest with microfinance and 2) To help 100 million poorest families lift themselves out of severe poverty.