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02.11.2011

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MicroWorld

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Microcredit to serve the Millenium Development Goals

Ten years after the UN commitment to reduce extreme poverty to a half by 2015, microcredit has become one of the essential financial tools to achieve its goal.

In 1990, 189 states gathered by the UN, committed to reduce to a half the proportion of the world population living with an income under $1.25 (0.95€) per day.
In 2000, the Campaign of the 8 Millenium Development Goals (MDGs) was launched to establish the prior targets to fight poverty. In September 2010, another Summit was held in New York that reported progress about the achievement of the targets and about appropriate methods to persue.

During the same period, the increasing development of microcredit in developing countries, with about 200mln borrowers, made it the spearhead of the fight against poverty.

In this sense, UN proclaimed 2005 “International Year of Microcredit”. At this occasion, UN Secretary General Kofi Annan declared : “Sustainable access to microfinance helps alleviate poverty by generating income, creating jobs, allowing children to go to school, enabling families to obtain health care, and empowering people to make the choices that best serve their needs.” 1

According to economist Esther Duflo, specialist in questions linked to poverty and human development, the impact of microcredit seems to be positive at short term. The possibility for the poorest to borrow “represents an important achievement in countries where services towards the poor, whether private or public, are none.” 2 Through the emergence of an efficient MFI’s network it is now proven that “it is possible to lend money to the poor at much lower rates than those charged by moneylenders.” 3 While creating small businesses, buying equipment or livestock or women empowerment.

At the occasion of her inaugural lecture at College de France, Esther Duflo in her chair “knowledge against poverty” still reminded the necessity of an experimental approach within the programs fighting poverty and social misery. The lack of rigorous datas about the impact of microcredit is quite clear, whereas “studying the impact of specific interventions is precisely what will allow us to understand how to sustainably reduce poverty. 4

If Microcredit is an admitted slogan among the Millenium Goals members, it seems that ressources and real possibilities of this instrument still remain to understand, in order to use it the best way for a long term efficiency.

1 The International Microcredit Year 2005 points out the importance of microfinance as playing an integral part in our collective effort to achieve the Millenium Development Goals.
“Sustainable access to microfinance helps alleviate poverty by generating income, creating jobs, allowing children to go to school, enabling families to obtain health care, and empowering people to make the choices that best serve their needs.”
The main challenge that stands before us is to face the constaints that are an obstacle to the participation of populations in the financial world. Together we can, we must build integrating financial fields that help populations to improve their living conditions.

Secretary General Kofi Annan, 29 December 2003
http://www.yearofmicrocredit.org/pages/multilingual/french.asp
2 Esther Duflo, Microcredit, miracle or disaster?, The Monde.fr, January 11, 2010
3L’extrême pauvreté peut être endiguée
4 First Chair "Knowledge against Poverty" created at the College de France, in collaboration with the AFD, Esther Duflo, an associate professor at the PSE-Paris School of Economics, gave his inaugural lecture, experience, knowledge and control against poverty, January 8, 2009.
Combattre la pauvreté

Traduction Seforah Benhamou

This article is part of the special report: