A world less poor

Is there fortune at the bottom of the pyramid? The World Bank estimates reveal that there are now over 7000 microfinance institutions, serving some 16 million poor people in developing countries. The total cash turnover of microfinance institutions worldwide is estimated at US $2.5 billion and the potential for new growth is outstanding. The Micro credit Summit estimates that US$21.6 billion is needed to provide microfinance to 100 million of the world's poorest families. It has also been projected by planners that it should be possible to raise US$2 billion from borrowers' savings alone. Studies have shown that during an eight-year period, among the poorest in Bangladesh with no credit service of any type, only 4 percent pulled themselves above the poverty line. But with individuals and families with credit from Grameen Bank, more than 48% rose above the poverty line. It is estimated that worldwide, there are 13 million micro credit borrowers, with USD 7 billion in outstanding loans, and generating repayment rates of 97 percent. It has been growing at a rate of 30 percent annual growth making it perhaps the fastest growing sectors of the economy in many developing countries. It is also an irony that in the developing world fewer than 2 per cent of poor people have access to financial services (credit or savings) from sources other than moneylenders. The fact also remains that only 10 million of the 500 million people who run micro and small enterprises have access to financial support for their businesses. Some other figures remain equally interesting such as the world's seven richest men could wipe out global poverty. Their combined wealth is more than enough to provide the basic needs of the poorest quarter of the world's people. Indian Government’s estimates show that over 250 million people are without proper access to credit and are forced into informal channels for their enterprise financing – such as the village moneylenders who lend at very high interest rates. It is estimated that thousands of active microfinance institutions support 15 million micro-entrepreneurs all over India. Most of those MFIs are often created by individuals who are coming from, and living, with the underprivileged communities they serve. It is true that the shared vision and conditions between microfinance practitioners and beneficiaries allow MFIs to have a good comprehension of micro-entrepreneurs needs and concerns, but their lack of strategic, financial and organizational skills heavily constraints their efficiency and sustainability. It is imperative that micro enterprises all over the world need a strategic vision and approach concomitant with providing sustainable services to the poor who are in need of financial services to raise their capacity (esp. financial and managerial skills) capitalize on each other experiences and information, benefit from worldwide research and innovation in the field of microfinance, move from isolation to community to play a strong policy advocacy role, improve visibility and transparency to access financing, above all to think globally but act locally. The million dollar question still is who bells the cat: World Bank or the IMF!