[MDGs] Microcredit a 'Practical' Way to Fight Poverty

Excerpt of report from Inter Press Service (Johannesburg)

by María Vega
Rome

Of the wide range of strategies identified for combating world poverty, the promotion of microcredits -- and other forms of financing for people with limited resources in developing countries -- has proven to be a highly effective tool, say experts from international agencies.

In fact, the success of these initiatives has led the United Nations to designate 2005 as the International Year of Microcredit.

"Microcredits are one of the most effective ways to fight poverty, and represent a tool that could contribute significantly to achieving the Millennium Development Goals," said Lennart Bage, president of the International Fund for Agricultural Development (IFAD), a specialised U.N. agency.

Microcredit programmes can play an extremely important role in development strategies because they give small farmers and traders the possibility of increasing their earnings and improving their standard of living through the creation of small businesses, he said.

Bage cited the example of Egypt, where the establishment of "microenterprises" in the agricultural sector has led to encouraging results: "Crop production has increased by as much as 100 percent in some cases, in addition to other benefits."

There have been similarly successful experiences in Latin America, particularly in Argentina, Mexico, Peru and Bolivia, where 80 percent of the microcredit-funded initiatives are led by women.

Nevertheless, Bage pointed out, 70 percent of the world's poor still lack access to credit, savings and money transfer services, which are essential elements for the creation and management of small businesses.

IFAD has joined with the Food and Agriculture Organisation (FAO) and the World Food Programme (WFP) -- two other Rome-based U.N. agencies -- in stating that it will be possible to achieve the eight Millennium Development Goals (MDGs) by the established deadline of 2015 "if the developing and industrialised countries take action immediately" by implementing plans and projects, in which microcredit could play a major role.

Pedro Sánchez, who presented the Millennium Project report in Rome, remarked that in order to effectively combat poverty, there has to be a change in attitude on the part of leaders, governments and the international community, one that leads to concrete actions.

"We have to be realistic and confront the countries and leaders who opt to perpetuate poverty for political purposes. We must act to genuinely help those who live in a never-ending 'tsunami' of hunger, poverty and disease, like the countries of sub-Saharan Africa," said Sánchez, director of tropical agriculture at the Earth Institute of Columbia University, in New York.

According to Sánchez, everyone knows, in theory, what the most effective strategies for fighting poverty should be, but what is needed now is "greater political will and more commitment."