Thursday, December 8, 2005
Occasionally, women with ties to Asia and Africa spend an evening with my fiber-arts group unveiling trunks of hand-dyed fabric, mud cloth, intricate beads and batiks. We sip wine, ooh and aah over the items, and haggle for them without mercy.
This repositioning of a Third World marketplace into our first-world living rooms is at the core of eradicating global poverty. My friends and I want art-making materials as authentic as they come. We’re also attracted to temporarily eclipsing commerce’s middle man, also known as retail, and injecting our money directly into the veins of far away economies.
Consider our small gathering Exhibit A in the case for increasing and expanding microcredit.
The United Nations is wrapping up its “International Year of Microcredit” and Secretary-General Kofi Annan says the distribution of these small loans to the poor “has proved its value in many countries as a weapon against poverty and hunger.”
I know this to be true. Some of the fabrics my artist friends and I buy are woven and dyed in tiny, dusty villages before making their way to America via larger markets or relatives with connections. The fabric touching my hands was initially in the hands of a woman who may have gotten her start, and her materials such as a loom and thread, from a microloan as small as $50.
The World Bank, the largest source of microfinancing, has made significant inroads in this area. More than 92 million people worldwide received microcredit loans in 2004, up quite significantly from seven years ago when only 13.5 million people got them.
But a progress report released today looks at how well developed nations have done since 180 of them signed onto the U.N. Millennium goals to eradicate poverty and offers a mixed grade, singling out microlending as an area where developmental aid could do better.
The Microcredit Summit Campaign’s report notes that despite the dramatic increase in microlending, the World Bank spends less than 1 percent of its budget on the program.
Yet, the World Bank is where our hopes lie in meeting the U.N. Millennium goal of halving the poverty rate by 2015.
The poverty rate is made up of real people. Every day, 29,000 children die from malnutrition and disease, things that are easily preventable. More than 1 billion people live on less than $1 a day. More than 100 million primary-school-aged children do not attend school.
There are ways to help these people. Building dams and factories are a couple, but I’ve seen no greater impact than that of instant employment.
Studies of Bangladesh, a country so poor it was named the world’s basket case, document the steady movement of people up from the lowest rungs of poverty. The stories behind the people are compelling. Some used microloans to start a business and become self-sufficient and others moved into the jobs left vacant by the business starters. With fewer people desperate for jobs, the pay for some of those jobs went up. Call it the trickle-up theory.
Some might roll their eyes and sigh at a request for more money to be spent on the poor. But microcredit is not charity, it is a loan. It is money often loaned out at interest rates higher than those charged by commercial banks in this country. When the money is repaid at the end of the year, both the lender and the borrower have benefited.
Increasing the number of microloans won’t be enough. The World Bank ought to broaden access until it reaches the poorest of the poor, those living on less than $1 a day. Parsing out the poor and the very poor is tricky business, but poverty-measurement tools are being developed by the United States Agency for International Aid.
In an open letter, members of Congress called on World Bank chief Paul Wolfowitz to adopt the tools being created by USAID. The group of Democrats and Republicans also called on the World Bank to begin annually reporting how much of its microfinancing reaches the poorest of the poor.
This is good old common sense. We know the strategies that work in helping the poor. We should simply increase our investment and verify the impact.
To quote that heartthrob-cum-statesman Bono as he upends a Chinese proverb: “Give a man a fish, he’ll eat for a day. Give a woman microcredit and she, her husband, her children and her extended family will eat for a lifetime.”
Only a Scrooge could have a problem with this.
