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UN: Microcredits Seen As Effective Way To Empower Women

By Robert McMahon and Manana Kuzma

Among the efforts under way to improve the status of women is a campaign to provide small loans so women can start home businesses. Leaders of the five-year-old campaign say it is proving to be an effective way to lift women out of poverty and provide a sense of economic and political empowerment. Correspondents Robert McMahon and Manana Kuzma report.

United Nations, 7 June 2000 (RFE/RL) -- At the 1995 world conference on women in Beijing, a campaign was launched to help 100 million of the world's poorest families, especially women in those families, by giving them small loans.

Five years later, one-sixth of that goal has been met, and advocates say that where the program has been implemented it is proving an effective way to lift families out of poverty and raise the status of women.

The main promoters of the campaign met earlier this week at the opening of the UN's review conference on women's rights for a panel discussion led by U.S. First Lady Hillary Rodham Clinton. Drawing on real-life stories and new statistical information, the panelists reaffirmed the importance of small loan programs -- known as microcredits -- in empowering women in poor countries.

These loans, often for small sums of only one or two hundred dollars, help women set up their own home businesses. Microcredit loans have a payback rate of more than 95 percent -- far higher than the payback rate of traditional bank loans.

Clinton helped lead the effort at the 1995 Beijing conference to rally support for microcredits, and has frequently spoken out about the need for these projects. She told the meeting on Monday that women's progress depends on economic progress. And she said the microcredit campaign is already beginning to spur that progress.

"Microcredit is one of the most effective tools that we have at our disposal. So if we are to finish our work, we have to make sure that women -- too often shut out from commercial bank credit -- have access to the loans needed to turn their dreams and hard work into entrepreneurship and prosperity."

A report released this week by the Microcredit Summit Campaign shows that the effort is gaining momentum. The report said that through the end of last year, about 14 million of the world's poorest people -- most of whom are women -- had benefited from the program. The report showed a sharp increase in successful microcredit programs in the past two years.

Another prominent leader in the campaign is Muhammad Yunus, who has been a pioneer of microcredit programs in Bangladesh through his Grameen Bank. He said the success of microcredit programs in his country has not only improved economic conditions for poor women but also, by raising more women out of poverty, led to a significant rise in the number of women voters. Most recently, he said, there has also been a rise in the number of women candidates for office in Bangladesh.

Yunus says microcredit programs can become more far-reaching through the expansion of computer technology. He says he is now looking to bring Internet services into villages in a financially sustainable way.

"Microcredit empowers the powerless. The same can be done by information technology. Microcredit and information technology both can enhance the competitiveness of the individual person to be in command of his and her own destiny. Both are wonderful and mutually reinforcing. Together they offer a real opportunity to end global poverty."

Microcredit programs can also be found at work in Central Asia and Eastern Europe. For example, the World Bank says it has initiated a successful microcredit effort in Tajikistan -- the $12-million Tajikistan Pilot Poverty Alleviation Project. It has established a local microfinance institution, the Sitora Najot, in the region of Khatlon. Its clients are women, many self-employed as small-scale entrepreneurs.

The World Bank says that as of July 1999, that program had provided more than 10,000 loans to more than 4,000 clients and had a loan recovery rate of close to 100 percent.