950815

IBRD tries 'micro-loans'

to globe's poorest

WASHINGTON: The World Bank, in an initiative that blends business and development, soon will provide funds for "micro-loans" to the earth's poorest people, primarily women, officials said on Sunday.

The loans, as small as $100 and made through local lenders, could have a powerful effect in improving income and reducing poverty in the developing world, they said.

"The demand for these loans among women is enormous," said Bank vice president Ismail Serageldin, chairman of the Consultative Group to Assist the Poorest, created in June to implement the micro-loan strategy.

Donor nations, banks and institutions have pledged $200 million for the micro-loans. Three-fourths of it will go to institutions that lend mainly to women. About $30 million has been collected so far. Disbursement will begin in two or three months.

By aiming at the poorest segments of society, a focus on women was inevitable, Mohini Malhotra, administrator of the programme, said in an interview Thursday with Reuters.

"The poorest, landless, most destitute heads of households are women," she said, and they also face many obstacles to gaining credit. Property rights favour men and many times, a man is required to co-sign a loan that goes to a woman.

Nonetheless, poor women have a stellar record in repaying loans. Aid officials also note that womens' income goes to activities that promote family welfare, such as education, better diets and health care.

"We see this as a new model" for development programmes, Molhani said, by encouraging lenders to reach a segment now often unable to get loans.

"We're really looking at transforming the way financial institutions work," she said, describing the projected as marrying "development and business, charity and sustainability. These aren't tradeoffs."

In several nations, "banks for the poor" already exist but they often are under-financed, which limits their reach.

The CGAP micro-loan programme will work through institutions such as philanthropies, credit unions and banks that have a record in lending to the very poor.

Muhammad Yunus, president of the Grameen Bank in Bangladesh, which works with two million poor borrowers, will chair a panel of expert advisers to CGAP.

"This is the most significant event in the world of micro-finance. This is a beginning to a new future," he said.

In a report on a similar topic, the International Food Policy Research Institute, based in Washington, said women were "an untapped source of productivity gains" in food output in developing nations.

"If women were given the same resources as men, developing countries would see significant increases in agricultural productivity," the authors of the report, "Women: The Key to Food Security," said. They cited lack of access to credit as one of the inhibiting factors.-Reuter