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Microfinance the weapon of choice

Global anti-poverty goals can be met "only by investing in the world's women and girls" stated UN Secretary General Bin Ki-moon during his 2008 message for International Women's Day.

All over the world, the significant number of women entering into the workforce over the past three decades has produced profound transformations in the organisation of families, society, the economy, and urban life. Most people living on less than one dollar a day are women. Helping women means fighting poverty and promoting gender equality. Microfinance could be the weapon of choice.

Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.

Microfinance enables impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty. Due to the success of microcredit, many in the traditional banking industry have begun to realize that these microcredit borrowers should more correctly be categorized as pre-bankable; thus, microcredit is increasingly gaining credibility in the mainstream finance industry, and many traditional large finance organizations are contemplating microcredit projects as a source of future growth, even though almost everyone in larger development organizations discounted the likelihood of success of microcredit when it was begun. The United Nations declared 2005 the International Year of Microcredit.

Gender inequalities in developing countries inhibit economic growth. There is a strong correlation between gender discrimination and greater poverty, slower economic growth, weaker governance, and a lower standard of living of the people. Microfinance is a key strategy for adressing gender poverty issues. The higher economic status, self-reliance and self-esteem that is often experienced as a result of microfinance brings increases women's power to make choices and changes about their lives especially in relation to education, housing healthcare and political participation.

By many women being able to make their own choices they become agents of change who, in turn, are able not only to challenge, but also to organize other women to challenge the social, economic, religious, and political structures of injustice that keep them down. The empowerment that is provided by financial access creates further synergies that lead to the acquisition of education and literacy, business training and management, and access to information. Poverty and powerlessness are directly associated with these factors.

The development of sound microcredit or microfinance policies underlie the course of a good approach to solving the incapacitation of the poor in rural and disadvantaged areas. Women have proven to be excellent clients - notably more of them pay back loans on time than their male counterparts - but they are also key drivers of development. Investing in women, literally, has proven the most effective way to increase individual family expenditures on health and education, improve nutrition and food security, protect against emergencies, and begin the slow process of tackling the gender inequalities that hinder development in so many countries around the world.

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