"In the West, it is easy to lose sight of the urgency of tackling poverty. . . But poverty in the Third World means death. For the 1 billion people who live on less than $1.00 a day, one bad cold, one unlucky fall, one month of poor rainfall, and they or their children - or both - will likely die." (Fareed Zakaria, Editor, International Editions, Newsweek, March 28, 2005)

"There is enough food in the world to provide every human being with 3,500 calories a day. Scarcity is not the problem, but the absence of purchasing power of the ill-nourished to buy in the market." (Jeremy Seabrook, World Poverty, 2003)

"Regular salaried or wage-paying jobs are scarce in many developing countries. Most of their citizens instead make their living through self-employment in the informal sector. The Economist and the International Labour Office estimate that nearly 60% of Latin America's and two-thirds of Africa's non-agricultural employment is in the informal sector. In India, nine out of ten workers are in the informal sector, contributing 60% of net domestic product and 70% of income. The story is the same throughout the developing world. But without access to the quality, affordable financial services they need to fuel their productivity and reduce their vulnerabilities to external shocks, the poor majority can never grow their microenterprises into businesses that can help them escape poverty. They can never escape survival mode." (FINCA International, Web Site, 2005)

"Around the globe, there are 2.8 billion people, or approximately 560 million families, who are considered poor, living on less than $2.00 per day. Of those, 1.2 billion people live in abject poverty. . . Despite recognition of microfinance as a proven poverty reduction tool, fewer than 18% of the world's poorest households have access to financial services. . ." (Jennifer Meehan, Tapping Financial Markets for Microfinance, Working Paper Series, Grameen Foundation USA, October, 2004)

"The reasons for this lack of access vary from country to country but there are certain common elements. Many of the world's poor live in rural areas, scattered across geographically isolated regions that are difficult to serve. Many are illiterate, and thus cannot read or sign their names to standard loan agreements. Some come from cultures without consumer protection policies, leaving poor people routinely exploited by predatory lenders. Virtually all lack credit histories, business track records, and assets to pledge as collateral." (FINCA International, Web Site, 2005)

"Like everyone else, poor people need and use financial services all the time. They need financial services to take advantage of business opportunities, invest in home repairs and improvements, and meet seasonal expenses. . .

Most of the poor, though, usually lack access to the formal financial system, so they have developed a variety of informal financial relationships with, for instance, moneylenders, saving clubs, rotating savings and credit associations, and mutual insurance societies. These informal systems are pervasive in nearly every developing country: vendors may sell goods such as seed and fertilizer on credit and the poor may use informal savings. . . to provide liquidity when the need arises or opportunity knocks.

However prevalent, the mostly informal financial services currently available to the poor have serious limitations in terms of cost, risk, and convenience. Moneylenders generally charge extremely high interest rates on loans. Buying supplies on credit is far more expensive than paying cash. Rotating savings and credit associations usually offer little flexibility in the amount or timing of transactions. Lastly, formal financial institutions may not offer financial products that are appropriate to the needs of the poor." (CGAP, World Bank Consultative Group to Assist the Poor, Annual Report, 2004)

"Microcredit, or microfinance, is banking the unbankables, bringing credit, savings and other essential financial services within the reach of millions of people who are too poor to be served by regular banks, in most cases because they are unable to offer sufficient collateral. . . In general, banks are for people with money, not for people without." (Gert van Maanen, Microcredit: Sound Business or Development Instrument, Oikocredit, 2004)

"(Microcredit) is based on the premise that the poor have skills which remain unutilized or underutilized. It is definitely not the lack of skills which make poor people poor. . . charity is not the answer to poverty. It only helps poverty to continue. It creates dependency and takes away the individual's initiative to break through the wall of poverty. Unleashing of energy and creativity in each human being is the answer to poverty." (Muhammad Yunus, Expanding Microcredit Outreach to Reach the Millennium Development Goals, International Seminar on Attacking Poverty with Microcredit, Dhaka, Bangladesh, January, 2003)

"It could be for a new tool, a machine, or a shop in the marketplace -- millions of the world's poor and low-income people have taken advantage of small loans to improve their lives. Over the past three decades, people have used these loans, known as microcredit, to launch new enterprises, create jobs and help economies to flourish. Poor people have proved time and again that they are able to repay these loans on time." (International Year of Microcredit, United Nations, 2005)

"Because the women rarely own more than one or two pots or pans, these loans are character-based rather than collateral-based. A group of five women all vouch for each other. The women are not only individually responsible, but their group is also liable for the loan. Just as important as making microloans is providing business training and life skills classes so borrowers will learn the skills they need to succeed." (Fundacion Adelante, 2006)

"Microfinance allows poor people to protect, diversify, and increase their sources of income. It helps cushion poor households against the extreme vulnerability that is a feature of their everyday existence and can push a family into destitution. Loans, savings, transfers, and insurance help smooth out income fluctuations and maintain consumption even during lean periods and emergencies. Microfinance gives people more options, empowering them to make their own choices and build their own way out of poverty." (CGAP, World Bank Consultative Group to Assist the Poor, Annual Report, 2004)

"The microfinance institutions that dole out the loans and other financial products are an assortment of credit unions, cooperatives, NGOs, commercial and private banks, government agencies and a myriad of derivatives of these institutions -- every bit as varied as the rural peasants, urban mothers, roadside traders, Arctic fishermen and Slavic seamstresses who borrow their money." (MicroCapital Institute, 2004)

"Microcredit interest rates are set with the aim of providing viable, long-term financial services on a large scale. Microfinance institutions must set interest rates that cover all administrative costs, plus the cost of capital (including inflation), loan losses, and a provision for increasing equity. Unless microfinance institutions do so, they may only operate for a limited time, reach a limited number of clients and will tend to be driven by donor or government goals, not client needs.

"Why are microcredit interest rates higher than bank interest rates? Because the cost of making a small loan are higher in percentage terms than the costs of making a larger loan. The percentage cost of making microloans is even higher because clients generally have no credit history, no collateral, are frequently illiterate, and often live in remote areas." (CGAP, World Bank Consultative Group to Assist the Poor, Donor Brief No. 6, 2002)

"For a microentrepreneur, the cost of a microcredit loan represents a small proportion of total business costs. Studies conducted in India, Kenya and the Philippines found that the average annual return on investments by microbusinesses ranged from 117% to 847%." (International Year of Microcredit, United Nations, 2005)

"The best judges of the value of microfinance are poor customers themselves. Their view of the matter is evident from their actions. When good microfinance services are offered, poor customers almost always take advantage of them.

Borrowers are willing to pay interest rates that cover the full cost of lending. Most importantly, the near-perfect loan repayment in well-run programs demonstrates how highly the poor value their access to loans: the main motive for repaying unsecured microloans is the clients' desire to maintain access to future services." (CGAP, World Bank Consultative Group to Assist the Poor, CGAP Annual Report, 2004)

"Based on the available quantitative and qualitative studies on the impact of microfinance, the emerging evidence suggests that microfinance:

• Reduces poverty and hunger, by allowing the poor to improve assets and incomes.
• Improves education levels: households with access to microfinance spend more on education than non-client households. Improvements in school attendance and the provision of educational materials are widely reported in microfinance households.
• Reduces child mortality, improves maternal health, and combats disease."

(CGAP, World Bank Consultative Group to Assist the Poor, CGAP Annual Report, 2004)

"Sustainable access to microfinance helps alleviate poverty by generating income, creating jobs, allowing children to go to school, enabling families to obtain health care, and empowering people to make the choices that best serve their needs. The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector." (Kofi Annan, United Nations Secretary-General, International Year of Microcredit, 2005)

"In the past few years, microfinance has been widely heralded as a successful contributor to alleviation of poverty and a valuable tool for achieving the Millennium Development Goals. And with good reason: scores of studies have shown the positive impact that microfinance can have on the lives of poor people. A 2005 World Bank study of three microfinance institutions in Bangladesh, for example, found that 40 per cent of the entire reduction of rural poverty over 14 years was directly attributable to microfinance. . . (the) poor need access to a coordinated combination of microfinance and other development services increase income, build assets and improve health, nutrition, family planning, education, social support networks and more. " (How Microfinance Can Work for the Poor, Freedom from Hunger, 2007)

"Beginning in the 1970s, experimental programs run through non-governmental organizations (NGOs) -- in Bangladesh, Bolivia, and a few other countries -- extended tiny unsecured loans to groups of poor "microentrepreneurs," mainly women. This type of microenterprise credit was based on solidarity group lending in which every member of a group guaranteed the repayment of all the other members.

Throughout the 1980s and 1990s, these NGO-based microcredit programs. bucked conventional wisdom about financing the poor. First, it was shown that poor people, especially poor women, repay their loans. Near-perfect repayment rates, unheard of in the formal financial sectors of most developing countries, were common among the better microcredit programs. Second, the poor were willing and able to pay interest rates that allowed microfinance institutions to cover their costs. Third, the combination of these two features -- high repayment and cost-covering interest rates -- enabled some microfinance institutions to cover their costs and achieve profitability. Microfinance differs from many other development interventions in that it serves massive numbers of clients without needing continuing subsides." (CGAP, World Bank Consultative Group to Assist the Poor, CGAP Annual Report, 2004)

Figures compiled by the Microcredit Summit Campaign show that by the end of 2001, more than 54 million families around the world have benefited from microcredit. Of this number, 26.8 million are among the poorest, or those who live under USD $1.00 a day.

"The most critical problem today is finding money to lend out to the poor. Existing microcredit programmes are coming to a virtual halt in their expansion programme, and finding it difficult to continue their present programme because of lack of funds.

Although, the growth of microcredit to the poor is encouraging, there is still a number of constraints to the expansion of microcredit. Bangladesh is still the only country where microcredit outreach is over 75% of the poor families. In most of countries it has not even reached 10% of the poor families within that country." (Muhammad Yunus, Expanding Microcredit Outreach to Reach the Millennium Development Goals, International Seminar on Attacking Poverty with Microcredit, Dhaka, Bangladesh, January, 2003)

“Grants which supported start-up projects are becoming inadequate to implement expansion plans. Local commercial banks have limited understanding of the dynamics of microfinance practices, and therefore see MFIs as unattractive customers. The only ready sources of adequate capital are global financial institutions.” (Godwin Ehigiamusoe, Executive Director, Lift Above Poverty Organization, LAPO, a MicroCredit Enterprises borrower-partner, September, 2006).

". . . the current combined portfolio of microfinance institutions worldwide is approximately $15 billion. Microfinance is believed to be growing annually between 15 and 30 percent, translating into a demand of between $2.5 billion to $5.0 billion for portfolio capital and requiring $300 million to $400 million in additional equity each year. . .donors, bilateral and multilateral financial institutions disburse approximately $400 million annually to the sector. They simply cannot provide the level of funding necessary to support the microfinance industry's demand for capital funds. . ." (Marc de Sousa-Shields and Cheryl Frankiewicz, Financing Microfinance Institutions: The Context for Transitions to Private Capital, USAID Accelerated Microenterprise Advancement Project, December, 2004)

"MicroCredit Enterprises is committed to reducing poverty by mobilizing private investment capital to finance micro-businesses of poor families throughout the developing world. MicroCredit Enterprises gears its entrepreneurial results to produce jobs, sustain micro-businesses and improve human lives." (Mission Statement, adopted by the Board of Directors, April 4, 2005)

For information about MicroCredit Enterprises accomplishments, status and unique attributes, see Accomplishments and Status Report.

The following menu of microfinance website portals are of broad-based interest to prospective Guarantors, microcredit practitioners, economic development experts and the general public. Taken together, they are a jumping off point to assist your education and research about microfinance, and to help to you get involved.

BYU Center for Economic Self-Reliance's television documentary, "Small Fortunes," explores the issues of poverty and microcredit with compelling interviews in locales ranging from India to the Philippines to New York City and provides actions steps for individuals and community groups.

Consultative Group to Assist the Poor (CGAP) is a consortium of 28 public and private development agencies working together to expand access to financial services for the poor in developing countries. CGAP serves four groups of clients: development agencies, financial institutions including microfinance institutions (MFIs), government policymakers and regulators, and other service providers, such as auditors and rating agencies.

Directory of Development Organizations, listing 43,500 development organizations, facilitates international cooperation and knowledge sharing in development work, both among civil society organizations, research institutions, governments and the private sector. The directory provides a comprehensive source of reference for development practitioners, researchers, donor employees, and policymakers.

MicroCapital: On Microfinance and Microcredit Investment is a news and research service on international microfinance investment. The e-newsletter reports with "a business orientation" on microfinance trends and developments.

Microcredit Summit, hosting a global conference, brings together microcredit practitioners, advocates, educational institutions, donor agencies, international financial institutions, non-governmental organizations and others involved with microcredit to promote best practices in the field.

Microfinance Gateway is the most comprehensive online resource for the microfinance industry. It includes research and publications, specialized resource centers, organization and consultant profiles, and the latest news, events and job opportunities in microfinance.

MIX (Microfinance Information eXchange) promotes information exchange in the microfinance industry. The MIX addresses one of the key challenges of the microfinance industry: the lack of reliable, comparable and publicly available information on the financial strength and performance of Microfinance Institutions (MFIs), which underpins the development of the market for microfinance services.

Small Enterprise Education and Promotion Network is a membership association of over 50 North American organizations that support micro and small enterprise development programs around the world.

United Nations International Year of Microcredit 2005 raises awareness of the importance of microcredit and microfinance in the eradication of poverty, shares good practices and enhances financial sector development that supports sustainable pro-poor services in all countries.

Virtual Library on Microcredit is an online library of bibliographies, documents, case studies, libraries, internet resources and mailing lists.

West Coast Microfinance Centre is a roster of West Coast-based microfinance and microcredit organizations, economic development institutions, research centers, clubs and councils, informational networks and internationally-minded foundations is meant to serve microcredit practitioners, economic development experts, prospective donors or investors, social entrepreneurs, students and the general public. The West Coast Microfinance Centre is a public service of MicroCredit Enterprises.