#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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How families are creating step-by-step plans for poverty elimination

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Fundación Paraguaya, the Poverty Stoplight, and a Campaign Commitment EspañolFrançais Continue reading

Microfinance India Summit 2013 Workshop On Transforming The Lives Of Poor Clients

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Learn how you can help ensure that microfinance is part of the movement to end extreme poverty by 2030. EspañolFrançais Continue reading

Reflections from the 2013 Summit: Press Conference; Expanding Value Chains to Include the Poor

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The key question in this workshop session was how to help include the poor in value chains; poor producers are generally too small to transact directly with large buyers. This exclusion leads to the poor selling to small poor buyers … Continue reading

Institutional Action Plan Raffle Winner: WAGES Togo

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Congratulations to this week’s winner of the Raffle for Institutional Action Plan Submitters! Women and Associations for Gain both Economic and Social (WAGES) began its activities in 1994 as a project of Care International Initiative in Togo. It’s goal was to … Continue reading

Raffle Winner: Hekima (DRC)

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Congratulations to this week’s winner of the Raffle for Institutional Action Plan Submitters, Hekima of the Democratic Republic of the Congo! Submit your IAP to be included in the next Raffle (download the IAP | submit your completed IAP) Hekima’s mission is … Continue reading

Beyond the Product: Creating Social Capital to Make the Most of Microfinance

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Thank you to everyone who participated in the Virtual Conference on May 2, 3, and 4 called “Extending the Conversation on Reaching the Poorest: Another look at the 2011 Global Microcredit Summit.” A lot of great ideas were covered, and … Continue reading

Commitment and creativity in reaching the poorest in remote areas

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Lea en español *** Lisez en français The Microcredit Summit Campaign would like to thank everyone who participated in the Virtual Conference on May 2, 3, and 4 entitled “Extending the Conversation on Reaching the Poorest: Another look at the … Continue reading

The Soul of Microfinance

The following post is a guest contribution from Sam Daley-Harris, Director of the Center for Citizen Empowerment and Transformation and former Director of the Microcredit Summit Campaign. This post concludes April’s theme, the “Soul of Microfinance,” as well as the student-led coalition, Month of Microfinance.


“The only thing I know for sure is it’s not all about the money.”Earlier this month I spoke to a group of students from eight high schools in the state of New Jersey. The group is part of a club that educates high school students about economic, financial, and investment principles. They wanted me to demonstrate to the next generation of leaders in finance how finance, in this case microfinance, can positively impact the global community.As we waited for the last group of students to arrive, the organizers played a segment from a television show called Sharks. The show features a panel of five wealthy investors called “Sharks”  who consider presentations from entrepreneurs seeking funding for their business. Just before I spoke, one of the Sharks said to the entrepreneur who had just presented, “It’s all about the money.”

When it was my turn, I looked out at the students and said, “The only thing I know for sure is, it’s not all about the money.” This was my cue to launch into a version of the TEDx talk I delivered in 2010 titled, “Purpose, Poverty, Pitfalls and Redemption.” I described how committing my life to ending poverty has given purpose to my life and outlined the pitfalls I faced recently. Specifically I explained about the recent period in microfinance when, for far too many, microfinance became “all about the money,” when the wellbeing of the investors was more important than the wellbeing of the clients. It was also a period when there was little interest in initiatives like the Smart Campaign for Client Protection, the Social Performance Task Force, and the Seal of Excellence for Poverty Outreach and Transformation in Microfinance.  Thankfully, that period is clearly passing.

I told the students that when I began to see and commit to microfinance that could bring redemption, that could restore people’s honor and worth, I was returned to my original purpose and vision. To illustrate microfinance for redemption, I recounted a story told to me by Ingrid Munro now of Jamii Bora SACCO in Kenya.

After the post election violence in Kenya, Jamii Bora received funds to rebuild one of the markets that had been destroyed in the rioting. They decided they had to find the rioters who burned down the market and engage them in rebuilding it.

I don’t know of any microfinance organization in the world that, if given funds to rebuild a market destroyed in rioting, would say, “We have to find the rioters and engage them in rebuilding it.” And if they said it, I don’t think they could find them. And if they found them, I don’t think they could convince the rioters to help rebuild what they had destroyed.

But Jamii Bora’s staff are all former members of the program, people who were former slum-dwellers, some of them former beggars, prostitutes, and thieves, so they are close to the ground.

The leader of the gang that destroyed the market was known as “The General.” Jamii Bora staff talked with him about helping rebuild what they had destroyed. His initial reaction was to be angry at her staff because they didn’t realize how dangerous he was.

But they convinced the General and his gang to help rebuild the market. They paid the gang to guard the materials at night and paid them to help rebuild with others during the day.

After the market was rebuilt, Jamii Bora engaged the General and some of the gang in microfinance. The General created a business that uses sheet metal to build cases that children use to keep their things in when they go to simple boarding schools.

He came to Ingrid and told her that he hadn’t gone to his home village for 13 years because his mother was so ashamed of him. But he had just gone home and his mother cried for three days because she was so happy about how he had turned his life around.

There are many visions for microfinance, including this one:  using microfinance for redemption. The dictionary defines redemption as restoring one’s honor or worth, setting one free. That’s what the world’s poor need—redemption that restores their honor and worth and sets them free.

Sam Daley-Harris is founder of RESULTS and of the Microcredit Summit Campaign and launched the Center for Citizen Empowerment and Transformation in 2012. www.citizenempowermentandtransformation.org
sam [at] empoweringcitizens365 [dot] org 

Breaking the Stovepipe Syndrome to Reach the Extreme Poor

The following is re-posted with permission from Microlinks’s blog. Click here to see the original. You can also watch a screencast of the March 21 After Hours seminar and a post-seminar interviews with panelists Jaya Sarkar (Trickle Up) and Jan Maes (The SEEP Network). 
This blog post was written by Carine Roenen of Fonkoze and Sabina Rogers and Bridget Dougherty of the Microcredit Summit Campaign who attended the recent After Hours Seminar, “Lessons Learned From Sequenced, Integrated Strategies of Economic Strengthening of the Poorest.”
“Economic strengthening” is all about breaking with the “microenterprise myth” that everyone, even the ultra poor, can start a business—that all they need is a loan. Building on a deeper understanding of the idiosyncrasies that characterize extreme poverty, organizations have developed promising interventions that incorporate “push” strategies that help build assets for those who cannot make ends meet and “pull” strategies to bring the excluded into the system.
During USAID’s Microlinks After Hours Seminar “Lessons Learned From Sequenced, Integrated Strategies of Economic Strengthening of the Poorest” on March 21, 2012, Aude de Montesquiou (CGAP), Jaya Sarkar (Trickle Up), and Jan Maes (The SEEP Network) presented integrated strategies that aim to meet the needs of the ultra poor so that they can negotiate their way out of poverty.
Understanding ultra-poor populations and developing appropriate interventions
“A household in extreme poverty is in a state of bankruptcy—not capable of covering its minimum expenditures for daily survival—and the sequenced strategies we are discussing today are very similar to remedies used for bankruptcies:  cash injection to pay for most critical needs followed by debt reduction and asset (re)building.” – Jan Maes, The SEEP Network
pull quote reading being ultra poor should become unacceptableTo overcome the roadblocks of the past, organizations promoting the economic rights of the poorest realize that they need to better understand who their clients are and what their psychological, social and economic characteristics are. De Montesquiou explained that many among the extreme poor lack what is necessary to be successful entrepreneurs, such as confidence, knowledge, assets, and tools. Maes stressed that, even among the extreme poor, we need to recognize that there is a wide range between “destitute” and “struggling to make ends meet.” We need to look at the causes of their poverty and the nature and degree of their vulnerability. By understanding this nuance, we can design appropriate activities, programs, and services that integrate the right components (e.g. asset transfers, handholding, and financial services) with the proper sequencing to address these vulnerabilities.
From pilots to proof-of-concept
Organizations participating in the CGAP Ford Foundation Graduation Program are testing this model of integration and sequencing. De Montesquiou presented qualitative and monitoring results for Fonkoze, their partner MFI in Haiti. The Fonkoze Foundation developed its Chemen Lavi Miyò (CLM), or “Pathway to a Better Life,” program to provide a multipronged livelihood protection and promotion service to carefully target ultra-poor women in rural Haiti. Specifically, CLM provided the women with assets for entrepreneurial use, enterprise training, health services through Partners in Health, housing support, a consumption stipend, and social links with village elites—all facilitated by the close support of a CLM case manager.  This push strategy decreased food insecurity among participants by over 50%. Severe wasting among CLM children decreased from 13% to 4% and Personal Potential Index (PPI) scores show 16% of participants passed the $1/day line. After 18 months, more than 90% of the participants were ready to participate in Fonkoze’s regular microfinance program. Thanks to support from the MasterCard FoundationConcern Worldwide, the Haitian Timoun Foundation, and Fondation Kanpe, the program has now been scaled up to include more than 2,000 families.
In her presentation, Jaya Sarkar described Trickle Up’s challenge as “struggling to make our initiatives more effective” and adapting a series of interventions in their graduation pilot in India. Since 2009, the graduation model has been Trickle Up’s standard approach in India. Now, they are mainstreaming learning into the rest of the organization by effectively using the push strategy developed through the pilot project to learn about the ultra poor and better designing pull strategies through other programs. When Trickle Up moved from the pilot phase to proof-of-concept, they shifted their focus, putting an emphasis on self-help groups (SHGs). They found, as Sarkar described, impact in unexpected areas. In particular, they found that groups were taking collective action. SHGs in Mali were creating a social safety net for members and creating access to financial services for non-members in their community, thus enlarging the population that directly benefited from the intervention. In India, they found SHGs are taking action on social issues, improving public shared space, and advocating on behalf of others for better service from banks.
Call to action
“What do the ultra poor need?” asked Jan Maes. That is the key question, and to figure this out, integrated strategies will be needed to learn from a variety of sectors such as microfinance, social safety nets, market development, protection and promotion, women rights, and others.  The STEP UP Initiative from The SEEP Network aims to connect these silos of practice, breaking the “stovepipe syndrome,” to enable multidisciplinary learning. Maes encourages practitioners to join STEP UP to enhance discussion on these issues.

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

End Poverty all Together!

For its fourth year Stand Up and Take Action will take place worldwide this year October 16 to 18 to advocate the leaders of the planet and request them to keep their promises to eradicate poverty and to carry out the Millennium Development Goals (MDGs).
MDGs were established “in September 2000, building upon a decade of major United Nations conferences and summits, world leaders came together at United Nations Headquarters in New York to adopt the United Nations Millennium Declaration, committing their nations to a new global partnership to reduce extreme poverty and setting out a series of time-bound targets – with a deadline of 2015 – that have become known as the Millennium Development Goals.” (United Nations Millennium Development Goals)
Stand Up and Take Action is co-organized by the UN Millennium Campaign and the Global Call to Action Against Poverty (GCAP). The inception of UN Millennium Campaign was launched with the signatures of the 189 world leaders onto the Millennium Declaration and agreed to meet the MDGs. GCAP is a grouping of various organizations from the civil society calling the leaders to end poverty and inequality around the world.
Visit Stand Up 2009 and Take Action: be part of the movement to end poverty! You will find on the Website information about events happening all around the world, success stories and information on how to create your own events or join one!

Hans Rosling updates us on Global Development

Talking at the US State Department this summer, Hans Rosling uses his fascinating data-bubble software to burst myths about the developing world. Look for new analysis on China and the post-bailout world, mixed with classic data shows.

See more of his presentations on global development and poverty at his website gapminder.org.

Freedom From Want from Ian Smillie

Freedom from Want describes the success story of the Global Grassroots Organisazation BRAC whose goal is to end up poverty. It is now available to anyone eager to learn more about the spread of its work in health, education, social enterprise development and microfinance. BRAC’s accomplishments are a source of inspiration and hope for the many government or non-profit enterprises who also wish to make a difference in the life of thousands.

This book is available on the Amazon website.