Ensuring World Bank Microfinance Funds Reach the Very Poor

Summary

Globally, one in five people must survive on less than $1 per day. Yet, according to the UN Development Program we have the resources to end poverty. One of the very best ways to achieve the Millennium Development Goal of cutting absolute poverty in half by 2015 is to reach the Microcredit Summit Campaign's new goal: ensuring 100 million of the world's poorest families rise above the $1 a day threshold. Meeting this goal would lift half a billion people out of extreme poverty and build a safer and more equitable world. Thanks to congressional leadership supported by the work of RESULTS and allies, landmark microenterprise legislation was signed into law in June 2003. The law will help ensure that at least half of U.S. microenterprise funds targeted to benefit the very poor actually reach them. If we are to halve severe poverty by 2015, other key financial and development institutions, especially the World Bank, must do more to reach the very poor.


Strategy

We will ask our Representatives to participate in the meeting with new World Bank Robert Zoellick and insist that he agrees to progress toward these four action items: 1) expanding resources for microfinance, 2) committing half of all microfinance resources to families living on less than $1 a day, 3) requiring the use of cost-effective poverty measurement tools to ensure compliance, and 4) reporting annually on results.


Why Microfinance

Microenterprise works. A long-term World Bank study found that microcredit was responsible for 40 percent of the moderate poverty reduction in Bangladesh. For individual borrowers, microloans can mean a powerful transformation from hopelessness to a bright future. M. Motuke lived in a wrecked car in the Democratic Republic of Congo with her four children. If she could find something to eat, she would feed two of her children; the next time she found something to eat, her other two children would eat. She got her first loan of $100 and bought production materials to make chikwangue (manioc paste). Today, Motuke and her family no longer live in a broken down car; they rent a house with two bedrooms and a living room. Her four children go to school on a regular basis; they eat regularly and dress well. She currently is saving to buy some land in a suburb farther outside of the city and hopes to build a house.

Expanding Access for the Poor Public Law 108-484, requires that half of all U.S. international microenterprise funding benefit people living on less than $1 per day and that new tools be developed and used to ensure this happens. It has already begun to fundamentally change the microenterprise work of our foreign aid agency, the U.S. Agency for International Development (USAID).

The mission of the World Bank is to reduce global poverty and it exerts much sway on other countries and institutions through the policies it supports. In order to achieve the MDGs, it is critical that its resources and policies directly benefit very poor people and reduce rather than exacerbate poverty.

A letter to new World Bank President Robert Zoellick was signed by 72 members of the House of Representatives and delivered on Friday, July 13 th, 2007. The letter asked Mr. Zoellick to meet with members of Congress and take several critical steps to help further the world's progress toward the Millennium Development Goal of halving severe poverty by 2015.

The key requests are:

• Increase funding for microfinance
• Commit at least 50 percent of funds to families living on less than $1 a day
• Require the use of cost-effective poverty measurement tools to ensure compliance
• Report annually on results

By writing the following letter you can help reach millions more very poor people with credit and other financial services.

Take Action

Write a letter to your Representative or Senator.

Introduce yourself and explain that you are a constituent.

Share your concern that over a billion people are forced to survive on less than $1 per day.
Explain that the U.S. must lead in a concerted global effort to ensure that the goal of cutting severe poverty in half by 2015 is reached. Tell him/her that Microcredit, often starting at $50 or less, has transformed the lives of tens of millions of very poor families around the world.
Ask your Representative to participate in the meeting with new World Bank President Robert Zoellick and push for acceptance on the four bullet points above requesting that the Bank expand resources for microenterprise and take specific steps to ensure that at least half of those resources reach very poor people. Mention that the meeting is being organized by Reps. Rush Holt (D-NJ) and John Carter (R-TX).

Ask for a reply.

Note: letters must be faxed or e-mailed, as regular mail delivery to Congress is delayed by several months. Rep. __________; U.S. House of Representatives, Washington, DC 20515 .