Mr. Chairman,
Excellencies, organisers, presenters, recipients of awards, ladies
and gentlemen,
It is a pleasure to make a few remarks on behalf of the Group of 77
and China in this closing session of a stimulating forum.
The vast majority of the billions
of poor, of rural dwellers, of people without access to credit or other
financial services from the formal financial sector are in developing
countries. They are victims caught in a vicious circle. We have heard
some impelling cases including some voices from Africa over the last
two days. They need only small loans to start small ventures or facilitate
specific activities but, new ventures are risky and small loans are
costly to administer. They have no credit history – so they remain
poor and unattractive to the established financial service providers
which can make record profits providing more and more sophisticated
services to those who have access.
The results include the ever widening inequality gap within and among
countries and the increasing absolute number of persons living on less
than $2 a day.
The Millennium Development
Goal of poverty reduction requires that this vicious circle be broken.
One way to begin to break that cycle is to create access to credit
and other financial services – now fashionably
dubbed “inclusive financial services - for those who wish to create
their own employment and possibly employ others by starting their own
micro or small businesses.
It is from that perspective that the G-77 and China wishes to recognise,
congratulate and express its appreciation to:
- Those micro credit institutions which have been providing, on the
scale within their means, not only producer and trading credit but
advise, counselling and other services to those without other access.
We think, for example, of the credit unions in many countries, the
national development foundations, and the Grameen bank;
- The United Nations and the other international agencies, the advisory
group, the friends of the year of micro-credit; the regional development
banks and all others involved, including governments, in designating
and organising this year of micro-credit. It has been a very successful
year as reported by the Chair of the Advisory Board;
- The UN Department of Economic and Social Affairs and all the other
sponsors, the chairs, the keynote and other speakers in this two-day
international forum to build inclusive financial sectors. It has also
been a successful forum;
- The award winners who
demonstrate how a small amount of cash and confidence in them – representatives of the poor and those without
access – can make a huge difference; and,
- The increasing number of businesses and experienced persons in business,
in the academic and research communities and in civil society who have
been giving of their financial resources, technical and leadership
expertise to help build understanding of, and support for those without
access and those who cater to them;
As we bring this successful year to a close the G-77 and China would
ask that, mobilised as we are, more sensitised as we are, and better
informed as we are, we look through the right end of the telescope, see
what is really there, ask the right questions and take the right actions.
What do we see:
- A larger multitude of poor potential entrepreneurs, needing access
to financial services, a large portion of whom will use it effectively
as evidenced by those we now honour;
- That a small amount of cash, delivered at the right time and under
appropriate conditions can make a real difference in the lives of individuals
and communities;
- A challenge to address
their needs. It is they who are in poverty and need financing. The
information we mobilise should be to direct us to their needs – not
to address ours at least not primarily;
- There are several institutions working with poor people, which know
their needs and understand the cultural milieu within which they operate.
We should seek, first, to partner with those institutions, to extend
their reach and to strengthen their areas of weakness;
- The multitude of the poor
and the institutions working with them are not profit centres waiting
to be made ready for the plucking by our organised financial sector.
The commercial financial sector should share the risks and the development
costs to establish a legitimate basis for their long-term profits.
We have seen too often where pioneering, risk-taking institutions
build up clients only for those who become “credit
worthy” to be taken by the established commercial providers while
the pioneering institutions are left with the consistently replenishing
pool of expensive and high risk clients;
- The yardstick for measurement of performance of institutions which
cater to the poor and the remotely located cannot be the same as that
used by institutions catering to choice customers who require large
loans. We have seen otherwise successful institutions in developing
countries abandoned because their loan conversion ratios and their
percentage administrative costs are higher than those of institutions
which took a prior-decision that the clientele they serve was too expensive
to service;
- Effective micro-finance
institutions have a high proportion of social or developmental costs.
In addition to all their other disadvantages – lack
of scale, cost of physical inputs, lack of technology – the poor
cannot be expected to pay abnormally high interest to cover these costs
especially in a liberalised market environment where all efforts are
directed to reducing interest charges for established businesses. These
costs, - not any costs arising from inefficiency, -should legitimately
be supported by national governments and the international community;
- More critically we see
a development problem of massive scale. A development problem is
not a fad. It is not amenable to short-term solutions – one year solutions. We need a long-term programme.
The commitment displayed over the “year” must now be organised
for the long-haul. If we were as wise, then, as now, we would in all
probability have proposed a decade of micro-credit or perhaps more
appropriately of micro and small enterprise development to approximate
more closely to the timeframe for achieving the Millennium Development
Goals (MDGs).
Is it too late? Perhaps, we could recommend this as a follow-up to
the 2005 World Summit which has re-committed to the achievement of the
MDGs.
I thank you. |