[Canada] Ottawa pledges millions to break cycle of world poverty

from The Globe and Mail

HALIFAX, N.S. — The federal government pledged more than $40-million on Sunday towards microfinance projects in Asia, Africa and Latin America that help poor people access financial services.

Foreign Minister Peter Mackay said the money will be dispersed through Développement International Desjardins, Canadian Co-operative Association and Oxfam Québec.

It's unclear, however, how much of the federal government's announcement represents new money. The Canadian International Development Agency said late yesterday the new funding will be spread out over several years and will likely fall within the $32-million it already spends annually on microfinance.

Mr. Mackay made the announcement to about 2,000 people from around the world, who gathered for a four-day summit in Halifax to discuss how to increase financial access for the poorest people on the planet.

The Global Microcredit Summit comes just a month after Muhammad Yunus and the Grameen Bank he founded won this year's Nobel Peace Prize. The premise of his bank is simple: providing tiny loans and training to poor people – women in particular – can create self-sufficiency and benefit whole communities.

Mr. Yunus said Sunday access to financial services will help create a system of inclusiveness in the world where “no one is left behind.”

“We are no longer a footnote in the financial system of the world, we are a part of the mainstream – and hopefully we will be the core of the mainstream,” he said.

In an interview, Mr. Yunus praised the federal government's move but said Canadian funding has been on the decline in the past several decades.

That said, he'd like to see microfinance organizations exist without any support from foreign donor companies.

Grameen Bank hasn't received any donor money since 1998 and says on its website it “does not see any need to take money or even take loans from local or external sources in the future.”

The summit's goal is to provide 175 million of the world's poorest families with credit and financial services by 2015. As of last year, microcredit institutions had about 81 million clients.

It also aims to lift 100 million people who are subsisting on less than $1 (U.S.) a day out of poverty.

Mr. Yunus, along with world leaders from Pakistan and Honduras, spoke at opening ceremonies of the four-day conference that will also include representatives from some of the world's largest financial institutions such as Citigroup Inc. and American International Group Inc.

The summit “is a significant milestone in progress towards an inclusive financial system that will look after the neediest in society,” said Queen Sofia of Spain.

Microfinance aims to give access to financial services to people, predominantly women, who lack collateral and credit history.

Much of that is in the form of tiny loans, which have been hailed as a key part of global poverty reduction. At Grameen Bank in Bangladesh, which has loaned $5.7-billion since its inception in 1983, repayment rates run at nearly 99 per cent.

Replicas of the Grameen Bank model now operate in more than 100 countries around the world.

The sector has grown by more than tenfold in the past decade and is expected to explode in the years ahead as money pours in from the likes of Bill Gates, Warren Buffett and international banks.

It is now branching out from credit for small businesses to savings, micro-insurance, home loans, pensions and educational savings accounts.