#tbt: Lobbying the World Bank, Part II

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“We measure what we value and we value what we measure. It is clear that donor agencies value strong financial performance because they require their clients to measure their financial performance precisely. Except for USAID, other donors still do not demonstrate a similar value on measuring the poverty level of entering clients.”

We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in The State of the Microcredit Summit Campaign Report 2004. The RESULTS International Conference is this weekend (July 18-21), and grassroots activists from the U.S. and around the world will be in D.C. to lobby the USAID Administrator and World Bank Directors. In reviewing advocacy fights in the early 2000s, we remember our campaign to push the World Bank to mandate the use of poverty measurement tools by their partners.

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#tbt: A New Law and New Hope

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#Tbt_5We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in The State of the Microcredit Summit Campaign Report 2004.


The revolution in reaching the very poor is most evident in a new U.S. law and the resistance to it by some leaders in international development. The law, which was enacted in June 2003, calls for the U.S. Agency for International Development (USAID) to develop and certify two or more cost-effective poverty measurement tools that measure $1 a day poverty. The new tools are to replace loan size, which is currently used and has proven to be inadequate for poverty measurement. As Freedom from Hunger President Chris Dunford remarked, “The average loan size for entering clients tells you more about the institution making the loan than it does about the poverty level of the person receiving it.”

After the newly mandated tools are certified, institutions receiving microenterprise funds from USAID will be required to use one of them and report the number of entering clients who start below $1 a day. The law is an effort to bring accountability and transparency to the long-standing Congressional commitment to have at least half of USAID microenterprise funds benefit very poor clients. This new law, particularly if it is adopted by other aid-giving countries and institutions, would have a great impact on the Microcredit Summit’s commitment to reaching the very poor and provide tremendous support to the MDG focused on halving the number of families living below $1 a day by 2015.

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Grameen Foundation in a $162.5 Million Credit Guarantee Partnership with USAID

On Monday, USAID has announced a partnership with Grameen Foundation for a $162.5 Million Credit Guarantee. By this valuable partnership, it will easier for the microfinance institutions (MFI) to access private credit as USAID and Grameen Foundation will share the credit risk.

As we all know, effects of the actual financial crisis also has an influence on the MFIs. As the unemployment rate increases, more and more people are trying to setup a micro-enterprise and this has increased the demand for microcredit.

According to USAID and Grameen Foundation, the 3 major ways that MFIs get funding are reinvestment of repaid customer loans, loans from commercials banks and finally grants from donors. As the financial crisis has reduced the access of commercial financing to the MFIs, this partnership between USAID and Grameen Foundation will provide credit enhancement for the MFIs.

Moreover, the partnership will lend money in local currency as they believe that this will present less risk of currency market fluctuations. In the actual financial meltdown, this partnership should give a helpful hand to worldwide MFIs who will profit from this partnership, an estimated of 691, 500 micro-entrepreneurs will benefit the loans provided by these MFIs.

The Partners

Grameen Foundation is “global non-profit organization that combines microfinance, technology, and innovation to empower the world’s poorest people to escape poverty. It has established a global network of 46 partners in 25 countries that has impacted an estimated 18 million lives in Asia, Africa, the Americas, and the Middle East. Grameen Foundation was founded by Alex Counts, who began his work in microfinance with Grameen Bank founder and Nobel Peace Prize recipient Dr. Muhammad Yunus.”

USAID is an independent federal government agency that provides foreign assistance worldwide. “USAID has been the principal U.S. agency to extend assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms.”

To consult the Press Release