Ladies and Gentlemen
It is not only an honor but also a great pleasure to be here with you today. I thank Dean Aggarwal of the Business School, for welcoming me to this prestigious University which has had such a long history in providing outstanding education. Georgetown University is well known for its bright and dynamic students. This University prepares you for a great future with many opportunities in life. I am convinced that a good education is the key that can open many doors to the future. This also applies to youngsters in the developing world.
This conference on microfinance is organized within the framework of the United Nations International Year of Micro-credit 2005. And I am proud to be a part of it.
Your active participation in organising the conference together with the United Nations Capital Development Fund, as well as your presence here today, shows your interest in eradicating poverty in the world through using a promising means for reaching the financially undeserved.
I congratulate you on the fruitful outcome of this very interesting event.
As an emissary of the United Nations for the International Year, I have visited several projects on microfinance in China, Mali, and India during the past months. I have spoken a lot with microfinance clients and I am more than ever convinced that microfinance is an interesting tool that can turn poverty into progress. Of course it is not a panacea as you probably have heard this afternoon, but it can change poor people’s lives considerably.
I know it because I have seen it.
Only three weeks ago, I met in India with a group of self employed women participating in a cooperative bank. They travelled more than 800 kilometres – or 500 miles- to meet me and to inform me about their experiences with microfinance. I must admit I was really impressed by these women. Most of them received no education , but it did not seem to matter! What I saw in front of me was a group of well informed, committed and strong women determined to make a better life not only for themselves but above all for their family, especially their children. They underscored the fact that micro-credit has given them more respect and a better integration within their societies. They were so proud of their achievements.
And it all began with a small loan to start up a modest business.
At first there were some misgivings by their husbands who feared that their wives would become too independent. But once the men saw that the whole family could benefit from her efforts, they came on board and supported the women!
I wanted to share this personal experience with you, because behind the theory, there often exists the harsh reality of daily life. I personally believe that we cannot stress enough the importance of the social impact of microfinance . We need to remind ourselves that the recipient is a human being who has to struggle to survive.
It is not always easy for microfinance clients who are also poor to have a ready access to microfinance services. These entrepreneurs operate in a low-income economic environment. Poverty is widespread and mostly concentrated in the country’s rural areas where access to financial services is even more problematic.
The poor, especially the women, work hard. They are the biggest users of micro-credits. But they do not want charity. They do want to be sustained in their own economic activities that will generate increased earnings. Microfinance is an important financial instrument which can be used to empower the poor. Furthermore, it keeps the poor, who are mostly defenceless, out of the hands of unscrupulous money-lenders who demand exorbitant interest rates. Micro-entrepreneurs are among the most energetic groups in the developing world.
However, we must give them the opportunity and offer them the right framework to participate fully in economic life. This demands constant innovation by microfinance institutions to meet the specific needs of the people they serve.
For example, how can people who can not write their names get credit? That is where innovation comes in. Fingerprint technology can be used to identify the client who can then get financing. Of course this technique should not distract us from our first priority which is to teach them reading and writing.
As you have heard today, the importance of developing new technologies and other innovations will play an important part in building financial sectors for the poor people.
Microfinance institutions also face the challenge of providing financial products that change as the needs of their clients change. In Brazil, a bank discovered some microfinance-clients were getting loans from many different lenders. It decided to offer a product to consolidate those loans into one larger loan to better serve them. As the needs of clients change, microfinance institutions must adapt to those needs.
The closer proximity of microfinance services will facilitate their use on a broader scale. This will allow the building of inclusive financial sectors that help people increase their status within society. Achieving financial sustainability and integrating the microfinance industry into the formal financial sector seem to be crucial elements in the debate on inclusiveness.
This afternoon you heard a lot about the future , the challenges and the innovations of microfinance. I hope the discussions have given you ideas to develop further your thinking on this subject. Many questions probably remain open, starting with the definition of micro-credit itself. Or perhaps the discussions spur you to look for more data in this field to fill the gaps that still exist today. I can only but encourage you to do so.
I am looking forward talking with you later and exchanging views, initiatives and experiences on the issue.
But above all, I invite you to lend your support to the poor and low income microfinance clients and entrepreneurs all over the world.
I am convinced that with your creative minds you can play a crucial role in realising this important goal of the International Year of Micro-credit and make the Year a success!