Poverty and the 2005 International Year of Microcredit

Published: 16 November 2004


The International Federation of Red Cross and Red Crescent Societies (IFRC) is taking the floor under this item to, once again, underscore the importance of debates that focus on providing support to the most vulnerable people.

The Secretary-General's Report [UN document A/59/312] on eradication of poverty contains interesting analyses of the impact of microcredit and microfinance on poverty reduction. Many of these analyses will be of interest to our member Societies.

Microcredit is, for example, an important element of the work that the Danish Red Cross supports in Vietnam and Laos. The microcredit schemes in these countries have been of considerable value to the provision of primary health care. The decisions are driven by the needs and priorities of the people themselves and articulated through the use of participatory rural appraisal techniques. This contributes to the sustainability of the programs.

We do however, share the conclusion in the Secretary-General's Report that many challenges remain to be addressed and appreciate the importance of 2005 as the International Year of Microcredit.


The Secretary General's Report describes microcredit as "a development tool aligned with the paradigm shift away from the provision of charity to poor people towards promotion of their access to financial services". It proceeds that "very poor people [IFRC would call them the most vulnerable] are better served with targeted assistance or a combination of loans and assistance, or capacity-training skills".

This closely resembles the way our member Societies work in practice. It is true that there is a need for great care when providing these forms of assistance, but when well conceived and managed such assistance can produce strong and beneficial results for extremely vulnerable communities. The Report also refers to the good work of the Bangladesh Rural Advancement Committee (BRAC). Our Bangladesh Red Crescent Society has found its cooperation with BRAC to be very good, well organised and successful.

Several positive case studies on the use of microcredit in Africa, including in Swaziland, Rwanda and Gabon, were brought forward at the recent Sixth Pan African Conference of Red Cross and Red Crescent Societies. There are, however, also countries where microcredit is not yet a viable contributor to the war on poverty because certain challenges will have to be addressed first.

The shift from charity to empowerment referred to earlier needs to be considered not just as a fact of modern life, but as a tool that can empower communities and as a tool to build their own dignity and capacity for sustainable growth. We share the vision set forth in the Report and expect that if the recommendations are implemented during the International Year of Microcredit, our member Societies will be eager to be involved in the partnerships envisaged.


We also see this shift from charity to empowerment as a factor to be reckoned with in addressing the impact of globalisation, which is the other key theme discussed under this item in the UN General Assembly.

We appreciate how the Secretary General's Report on "Globalisation and interdependence" assessed the multidimensional relationship between macroeconomic policies and social development. It is important to note that the Millennium Development Goals have a social nature and that social development is a critical prerequisite to the accumulation of the human capital that must be part of the globalisation process.

This is why we have been anxious to take part in the debates in the United Nations that have touched on the economic and social consequences of the withdrawal of public funding for important social activities, especially health and education. We agree that "social policies need sustainable funding over time".


One of the growing problems for our member Societies is the uncertainty of the environment in which they work. Vulnerability is not decreasing. The need for providing social services and other forms of care is not decreasing either. But government funding is decreasing, and so is the pool of providers beyond governments that once delivered that care.

The extended family is a diminishing social asset in virtually all countries. Similarly, the volunteer environment is much less "enabling" than we often think. That is why the International Year of Volunteers in 2001 has led to so much policy and program activity aimed at sustaining and reinvigorating the volunteerism sector, and why IFRC, UN Volunteers and the Inter-Parliamentary Union intend to publish a Guidance Note for Parliaments on Volunteerism and Legislation.

The Secretary General's Report makes other valuable points such as the need for multisectoral interventions; the implementation of HIV/AIDS prevention and treatment programs focus on educational services as a means to avoid the reversal of past education gains. This is a core element in our approach to MDG 2 on universal primary education and its link to MDG 6 on HIV/AIDS.

The sum of these concerns is the same as that in the Secretary-General's Report: we agree that there is a need for dialogue at the national level on economic and social policy formulation and implementation which should be broad-based and aimed at the achievement of the Millennium Development Goals.

We very much agree with the general statement that there is a need for enhanced investment in the health and education sectors, and that the education of girls should be seen as a strategic intervention.