Empowerment Will Always Trump Charity

Rajamma lives in India. She used to do housework in “upper-caste” homes so she could feed her daughters the leftover scraps of food. At one point, she became so desperate that she borrowed money from a rich landowner. Unable to repay him, she was forced to send her daughters to work in his home as virtual slaves.

But Rajamma’s story does not end in desperation. Through access to microcredit, her story is transformed into a message of hope that delegates gathered in Geneva this week must hear. (The Geneva meeting is to review progress on goals set at the U.N. World Social Summit held five years ago in Copenhagen.)

Rajamma joined the local self-help group Bridge Foundation--an India-based microcredit organization--and took out a loan equivalent to $196 to purchase a milk cow. Within 10 months, she repaid the loan and gained the release of her daughters from their bonds. With her savings she bought half an acre of land and has taken another loan to irrigate it for groundnut cultivation. Rajamma’s eldest daughter is learning tailoring, while the younger girls are in school. Rajamma says that the program has helped her regain her dignity and self-worth.

This is not an isolated story. Rajamma is just one of millions of people around the world who are gaining access to a range of financial services, including very small loans for use in self-employment ventures, loans that were previously either denied by the commercial banking sector or provided at usurious interest rates by loan sharks. Now institutions providing microcredit are sprouting up around the world. People like Rajamma are combining access to capital with their own ingenuity and hard work to forge a path out of poverty.

The 1997 Microcredit Summit in Washington, D.C., galvanized a global movement to reach 100 million of the world’s poorest families, especially the women of those families, with credit for self-employment and other financial and business services by 2005. It was launched with the knowledge that, while not a panacea, microcredit is a critically important tool.

The good news is that millions of very poor families are being reached. A report released this month by the Microcredit Summit Campaign notes that 6 million more very poor families have been counted in microcredit programs over the last two years. From self-reported data, the campaign has learned that 1,065 institutions are reaching 13.8 million of the poorest clients, compared to 7.6 million two years earlier.

The campaign, however, struggles with some of the same issues facing those assembled in Geneva, of which the foremost is the challenge of cutting absolute poverty in half when too many foreign aid programs do not reach far enough below the poverty line.

The Microcredit Summit Campaign defines “poorest” as the bottom half of those living below their nation’s poverty line. The campaign’s greatest challenge is bridging the gap between its commitment to reaching the poorest and the lack of a sufficient number of effective “poverty measurements.”

What are these poverty measurements being called for by the campaign? One in rural Asia looks for houses with roofs that leak when it rains as the sign of a prospective client. Another measurement developed in South Africa asks the villagers, in three or four separate groups, to identify the poorest in their village. In each case the search is for poverty measurements that are effective, inexpensive and easy-to-use.

“Aren’t there enough poor people to give loans to without the need for such measurements?” you might ask. Experience has shown that unless a program specifically targets the poorest, they will be excluded as they are from almost every other opportunity. The Social Summit and the Microcredit Summit must continually ask whether their goals are rhetorical, and if not, whether their tools are appropriate.

If the Microcredit Summit is successful in reaching 100 million of the poorest families by 2005--families like Rajamma’s--it will have helped bring the Social Summit’s commitment to cut absolute poverty in half by 2015 much nearer to reality. The summit’s progress should encourage the participants in Geneva to know that it can be done and to move with equal force on the many other fronts needed, from girls’ education to youth employment. It is only then we will truly empower the poor to be the artisans of their own well-being, not the recipients of charity.