Leaders Call for More Loans to Poor

World leaders opened a microcredit summit Sunday with calls to support an innovation in banking that may strike a blow against poverty--loans to poor people to start businesses in the United States and abroad.

Bangladesh Prime Minister Sheik Hasina Wajed, a co-chairman, said the world has taken too long to realize that charities and handouts help maintain and deepen poverty, are invented to avoid giving the poor equal opportunities and deny them the initiative to improve their lives.

“This summit provides the perfect opportunity for practitioners, non-government organizations, savings and credit cooperatives, foundations, educational religious institutions, governments and leaders in finance and business to take a pivotal next step in creating a poverty-free world and help human potential bloom,” she said.

Hasina was the first of 18 speakers that included three presidents, a prime minister, Queen Sophia of Spain and representatives of international aid organizations, private companies and the World Bank.

First Lady Hillary Rodham Clinton and Treasury Secretary Robert Rubin will address the meeting, being attended by more than 2,000 people from 100 countries, today.

Another speaker from Bangladesh was Mohammed Yunus, who founded the microcredit movement in his country 20 years ago when he lent $27 from his own pocket to a furniture maker. He said the meeting is a celebration of “the freeing of credit from the bondage of collateral.”

Noting that two-thirds of the beneficiaries of microcredit are women, Queen Sophia, also a co-chairman of the conference, said such loans give the poor leverage in the economy and “allow them to become players, not recipients of charity.”

Organizers of the summit estimate they need to raise $21.6 billion by 2005 for programs that typically offer an average of $100 to borrowers to help them open stores, raise poultry and start vegetable gardens for profit. The conference was organized by dozens of nongovernmental organizations, foundations and cooperatives around the world. Sponsors include several private companies, among them big U.S. banks.

So far, 8 million people have used microcredit in places ranging from Kenya and Peru to inner-city Chicago and Washington.

The World Bank plans to spend $200 billion in expected donor pledges on microcredit. Other organizations hoped to announce their contributions at the summit or pledge to do so by February 1998.

Organizers of the summit say microcredit is just one part of a broad range of strategies to help an estimated 2.5 billion people living in abject poverty. Other elements are health and education improvement.

Critics say the summit’s targets are too ambitious and raise unrealistic expectations.