asked Her Majesty's Government:
Whether they have plans to develop the micro-credit lending programme, pioneered by Professor Muhammad Yunus and the Grameen Bank in Bangladesh, to alleviate poverty, particularly among women, in the work they are doing in other developing countries. [HL785]
I was delighted that Muhammad Yunus and the Grameen Bank were awarded the Nobel Prize. Professor Yunus has inspired the growth of microfinance worldwide.
Microfinance has been shown to be very useful in reducing poverty and reaching the millennium development goals. Poor households use microfinance to raise their income, build-up their assets and protect themselves against unexpected events and shocks. I use the term “microfinance” rather than micro-credit because in addition to small loans, poor households use a variety of other financial services such as savings and remittances.
The White Paper on International Development published in 2006 commits to tackling barriers to access to financial services and to supporting microfinance initiatives in partnership with banks and regulators. DfID has supported microfinance and financial sector development projects in more than 25 countries and has contributed approximately £165 million in total to these projects. DfID also supports microfinance through global initiatives such as the Consultative Group to Assist the Poor (CGAP) and the Financial Sector Reform and Strengthening (FIRST) Initiative.
Examples of DfID's support to microfinance include:
a £40 million seven-year “PROSPER” programme launched in 2006 in Bangladesh that will support legal and policy reform, private sector innovation, and capacity building of microfinance institutions; and
a US $1.5 million grant for the Deutsche Bank Community Microfinance Facility that leveraged US$79 million in additional investment.
It is estimated that microfinance institutions serve 200 million people globally, eight out of 10 of whom are women. DfID supports the extension of microfinance to women, for example through:
committing £20 million to the Microfinance Investment Support Facility for Afghanistan (MISFA). MISFA has provided funding and technical assistance to microfinance institutions that has led to more than 300,000 Afghans (70 per cent of whom are women) accessing small loans; and
supporting the Kashf Foundation in Pakistan, a not-for-profit microfinance institution serving poor women, to help it extend its outreach from 75,000 to 300,000 women in the next five years.
Microfinance of course is not the only answer though, and DfID will continue to spend large resources on education, health and other programmes of direct relevance to improving the lives of poor households.