Microloans Helped Record 128 Million Families in '09

March 8, 2011

More than 190.1million people, worldwide, received microloans in 2009, including 128.2 million of the world's poorest families. Assuming an average family size of 5, it's very likely those loans to the poorest families had an economic affect over 600 million individuals, according to State of the Microcredit Summit Campaign Report 2011.

That's greater than the combined populations of the European Union and Russia. It's also a 16-fold increase in the sheer number of microloans to the poorest of the poor, over the space of 12 years. In 1997, there were just 7.6 million microloans made to poor families around the globe. Among the 2009 recipients of microloans, over 100 million were women; up from just over 10 million in 1999.

This latest report from the Microcredit Summit Campaign also includes a "concept note" and a request for public comments regarding a planned Seal of Excellence for Poverty Outreach and Transformation in Microfinance.

The purpose of creating such a seal is to recognize those institutions that make a real difference in helping to lift people up from poverty through more than just microloans. A draft of the concept note is available for public review and comments on the Campaign's Web site.

At a press conference yesterday, Sam Daley-Harris, director of the Campaign, explained that the Seal builds on client protection principles first articulated in 2008 through an initiative known as the Smart Campaign and endorsed by hundreds of microfinance institutions and leaders in scores of countries.

"Our movement is not just about money; it's about unlocking human dreams. We seek to employ financial capital to unleash human potential, and we still have a lot to learn from those who do this well," the report notes.

Need for Greater Transparency

"With such incredible growth in microfinance there is a need for certification, some objective measurement that makes it clear to the outside world that these are the goals of those microfinance institutions that are committed to reducing poverty and these re the institutions reaching those goals," said Chuck Waterfield, founder of MicroFinance Transparency, which tracks and reports rates on microloans in the developing world.

The report takes a frank look at what some have described as unbridled growth, MFI stock offerings, investor profiteering, over-indebtedness, and other issues that have plagued microfinance in recent years.

"It grieves us deeply to see the tools and systems we have supported cause harm rather than hope," the report states, adding that it's imperative that the industry "ensure that our work results in liberation, not enslavement."

The Microcredit Summit Campaign is a project of RESULTS Educational Fund, an advocacy group founded in 1997 and committed to reaching 175 million of the world's poorest families by 2015 through credit for self-employment or other financial services, and thereby helping them move above the $1.25 per day poverty threshold set by the U.N.

The Campaign regularly assesses the market; this latest report includes verifiable data from about 3,500 micro-lenders.

50 million American households are considered "unbanked" - they have no relationships with federally insured financial institutions