MICROLOANS HAVE AN INCREDIBLE EFFECT ON LOWERING POVERTY IN THE DEVELOPING WORLD.

Microloans were first introduced in Bangladesh in 1976 by professor Muhammad Yunus. Thirty years later he was awarded the Nobel Peace Prize for his effort.   As the name suggests they are small loans to the entrepreneurial poor. His first loans consisted of $27 from his own pocket which he lent to 42 people, including a woman who made bamboo furniture which she sold to support herself and her family. Worldwide, more than 92 million people received a microloan in 2004, up from 13.5 million just seven years before. Of the 92 million reached, 66.6 million were among the very poor, those living below U.S.$1 a day. The programs improved access to health and education for women, allied with expanded opportunities for employment and access to microcredit, that expanded choice and empowered women. Incidentally the average pay-back for loans is in the upper 90%

In the U.S. this effort is being led in the Senate, The parliamentarians make the following four requests:
Increased funding for microfinance,  at least 50 percent of funds reaching the poorest,  use of cost-effective poverty measurement tools to ensure meeting the target of half of the resources going to families who are living below U.S.$1 a day when they enter a program,  an an annual reporting of results.

Will our leaders commit to doubling financial resources with half of the funds reaching the very poor or will they be mired in the myth of insufficient retail capacity? Will they see that all too often, the field of development fails to reach the very poor, and that nothing short of a revolution will be sufficient to address this failure? Will they see that incentives alone cannot spark this revolution rapidly enough with the MDGs due in just 10 years? Will they see, as Freedom from Hunger’s Chris Dunford argues, that we measure what we value and that we value what we measure and, as a result, will they give the same importance to measuring the poverty level of entering clients that they give to measuring the financial performance of the microfinance institutions? In short, will they follow the visionaries or will they continue with business as usual?