Given the World Bank’s mission is to alleviate poverty, the Bank should provide increased funds for microfinance and make sure that half of those funds go to families living below $1 a day. If the Bank doesn’t do it, who else will? It’s the right thing to do.
—Muhammad Yunus, Nobel Peace Prize Laureate and Grameen Bank Managing Director
As the largest international lender for developing countries, the World Bank has an enormous ability to influence whether the world will achieve the MDGs. The Bank’s stated mission is “global poverty reduction and the improvement of living standards” and “working for a world free of poverty.”
The World Bank’s own research shows that microfinance is a proven, effective tool for addressing the worst aspects of poverty, even among the very poor. An in-depth World Bank study examining three Bangladeshi microfinance institutions found that three percent of clients left poverty each year due to their microloans, one percent of non-clients left poverty due to the spillover effect of increased economic activity, and microfinance accounted for 40 percent of the reduction of moderate rural poverty.[1]
Now more than ever, World Bank investment in microfinance for the very poor is needed to mitigate the impact of the financial crisis and ensure MFIs can continue to invest in people.
Congratulations! 1/3 of the Senate Signed the July 2010 Letter to the World Bank!
Your amazing efforts got 33 senators to sign a letter to the World Bank (pdf) to the World Bank urging the Bank to take action on a set of initiatives to support microfinance for the very poor in Africa. The letter was initiated by Sens. Bennett (R-UT), Durbin (D-IL), and Enzi (R-WY). RESULTS is the only group that worked on this letter- so to get 1/3 to sign is quite an achievement! We'll be following up and will provide updates as we receive them.
Background: In December 2008, the U.S. Congress sent letters to the World Bank requesting it to: 1) create a new $200 million grant facility for MFIs trying to reach the very poor, 2) create and support Centers of Excellence at MFIs like Grameen Bank in Bangladesh where interested parties can learn how to reach the very poor with microfinance, 3) create a sub-Saharan African apex fund, a funding mechanism that will allow more MFIs focusing on the very poor to access capital. The Congress has heard that the World Bank is moving forward on a special grant facility, but it has not been clarified if it will focus on the very poor and when it will be launched.
How is RESULTS working to shape World Bank microfinance funding?
RESULTS continues to work with our congressional allies to enact positive pro-poor Bank financing streams. We are encouraged by increased dialogue between Congress and the World Bank and are engaged with Congress and the Consultative Group to Assist the Poor (CGAP), microfinance advisors to the World Bank, to move the Bank towards new investments in the very poor.
What are the current congressional requests RESULTS is supporting?
In December 2008, the U.S. Congress sent letters to the World Bank requesting it to: 1) create a new $200 million grant facility for MFIs trying to reach the very poor, 2) create and support Centers of Excellence at MFIs like Grameen Bank in Bangladesh where interested parties can learn how to reach the very poor with microfinance, 3) create a sub-Saharan African apex fund, a funding mechanism that will allow more MFIs focusing on the very poor to access capital.[2]
Timeline of RESULTS World Bank advocacy
October 2003: The House and Senate sent sign-on letters to the World Bank, regional development banks, and UN Development Program urging increased microfinance funding and a clearer poverty focus. Parliamentarians from Japan, the United Kingdom, Canada, Australia, and Mexico also sent letters.
December 2003: The World Bank replies were courteous, but non-specific.
2005: Sens. Bennett (R-UT) and Durbin (D-IL) and Reps. Smith (R-NJ) and Holt (D-NJ) sent letters to World Bank president Wolfowitz, each with an impressive bipartisan list of signers, urging increased funding for microfinance for the very poor.
2006: Wolfowitz responded to the House letter, but his response was nonspecific.
February 2007: The House sent another letter to Wolfowitz, who responded in April and agreed to a meeting (he resigned before it could take place).
July 2007: The House sent a letter to new World Bank President Robert Zoellick.
October 2007: Zoellick came to the Hill to meet with 27 representatives and Sens. Brown (D-OH) and Enzi (R-WY). Zoellick agreed to continue the dialogue and meet again.
February 2008: Reps. Holt and Carter (R-TX) sent a letter, signed by 46 representatives, responding to the meetings key points of discussion. Senator Enzi has sent his own follow-up letter to Zoellick, and Sens. Durbin, Brown, Enzi, and Bennett sent a letter with 30 senate signatories reemphasizing the request.
April 2008: The World Bank responded to the February Senate and House letters.
December 2008: Recognizing the need to move the Bank forward, Reps. Holt and Carter, and Sens. Enzi and Brown, sent letters to Zoellick suggesting a set of initiatives that would increase financial access for the poor and marginalized. 93 representatives and 21 senators signed these letters, requesting the Bank create:
A flexible grant facility of $200 million per year to help build the capacity of microfinance institutions (MFIs) to reach the very poor.
“Centers of Excellence” to encourage cross-learning and good practice dissemination on how to reach the very poor and with microfinance services.
A sub-Saharan Africa funding mechanism to allow more MFIs focusing on the very poor to access capital.
February 2009: The World Bank responded to the December Senate and House letters. The Bank notes that it is seriously considering all of the proposals and is working to move forward on them by the end of the year.
February and Summer 2009: Reps. Holt and Carter are working to arrange a congressional meeting with President Zoellick for July 2009 to address points raised in the previous exchange and receive information on progress towards realizing the initiatives suggested by Congress.
Summer 2010: Sens. Bennett (R-UT) and Durbin (D-IL) will be initiating a Senate sign-on letter that addresses points raised in the previous exchange and receive information on progress towards realizing the initiatives suggested by Congress.
This is a potential ground-breaking development. With continued congressional leadership, it is possible that these initiatives can be running by the end of 2009, thereby creating an urgent source of funding to help the poorest and most marginalized access financial services. RESULTS is working with our congressional allies to ensure that the focus of these initiatives clearly remains on the very poor.
Congressional Supporters of Recent Actions
Senate December 2008: Sens. Enzi (R-WY) and Brown (D-OH) sent a letter to World Bank president Zoellick highlighting possible ways the Bank can increase its investment in microfinance for the very poor. The letter was sent in early December to President Zoellick.
21 senators signed the Senate letter (pdf, with signatures): Enzi (R-WY), Brown (D-OH), Dole (R-NC), Burr (R-NC), Feinstein (D-CA), Durbin (D-IL), Cantwell (D-WA), Nelson (D-FL), Levin (D-MI), Murray (D-WA), Martinez (R-FL), Menendez (D-NJ), Sanders (I-VT), Inhofe (R-OK), Cardin (D-MD), Johnson (D-SD), Bingaman (D-NM), Isakson (R-GA), Hatch (R-UT), Mikulski (D-MD), Bennett (R-UT).
House December 2008: Rep. Holt (D-NJ) and Carter (R-TX) initiated a letter to World Bank president Zoellick highlighting possible ways the Bank can increase its investment in microfinance for the very poor. The letter was sent in early December to President Zoellick.
93 representatives signed the House letter (pdf, with signatures): Holt (D-NJ), Carter (R-TX), Klein (D-FL), McDermott (D-WA), Bordallo (D-GU), A. Smith (D-WA), A. Hastings (D-FL), Shuler (D-NC), Capps (D-CA), Schakowsky (D-IL), Lewis (D-GA), Baldwin (D-WI), A. Green (D-TX), Rothman (D-NJ), Berkley (D-NV), Doggett (D-TX), Hirono (D-HI), Moran (D-VA), Jackson (D-IL), Jackson Lee (D-TX), Wolf (R-VA), Kirk (R-IL), L. Smith (R-TX), Van Hollen (D-MD), Grijalva (D-AZ), McCollum (D-MN), Giffords (D-AZ), Davis (R-VA), Gonzalez (D-TX), Myrick (R-NC), Waxman (D-CA), Blumenauer (D-OR), Young (R-AK), Ros-Lehtinen (R-FL), Hill (D-IN), Rohrabacher (R-CA), Walberg (R-MI), Inglis (R-SC), Miller (D-NC), DeGette (D-CO), Berman (D-CA), Filner (D-CA), Kildee (D-MI), Conyers (D-MI), Lee (D-CA), Sullivan (R-OK), Inslee (D-WA), McCotter (R-MI), Schiff (D-CA), McCaul (R-TX), Miller (D-CA), Mitchell (D-AZ), Harman (D-CA), Nadler (D-NY), Lewis (R-CA), Engel (D-NY), Wexler (D-FL), Lofgren (D-CA), Loebsack (D-IA), Serrano (D-NY), Moran (R-KS), Brown (D-FL), Eshoo (D-CA), Sherman (D-CA), Johnson (D-GA), Andrews (D-NJ), Bono Mack (R-CA), Payne (D-NJ), Pomeroy (D-ND), Larsen (D-WA), Thornberry (R-TX), Dicks (D-WA), Crowley (D-NY), McNerney (D-CA), Levin (D-MI), Sires (D-NJ), Conaway (R-TX), Herseth-Sandlin (D-SD), Honda (D-CA), Pallone (D-NJ), Waters (D-CA), Pascrell (D-NJ), Maloney (D-NY), Capuano (D-MA), Terry (R-NE), Watson (D-CA), Hooley (D-OR), Clarke (D-NY), Perlmutter (D-CO), Tauscher (D-CA), Wu (D-OR), Kaptur (D-OH), Woolsey (D-CA).
Senate February 2008: In February 2008, Senators Bennett (R-UT), Durbin (D-IL), Enzi (R-WY), and Brown (D-OH) initiated a “Dear Colleague” letter (PDF) calling on World Bank President Zoellick to meet with the Senate to discuss why the Bank is not increasing its focus on providing the poorest with greater access to microfinance. For background and talking points, please see the December 2007 Action.
30 senators signed the letter, including 11 Republicans: Bennett (R-UT), Durbin (D-IL), Enzi (R-WY), Brown (D-OH), Murkowski (R-AK), Lieberman (I-CT), Cardin (D-MD), Bayh (D-IN), Murray (D-WA), Boxer (D-CA), Stabenow (D-MI), Hatch (R-UT), Lugar (R-IN), Chambliss (R-GA), Levin (D-MI), Coleman (R-MN), Nelson (D-FL), Casey (D-PA), Mikulski (D-MD), Klobuchar (D-MN), Inhofe (R-OK), Isakson (R-GA), Obama (D-IL), Clinton (D-NY), Schumer (D-NY), Feinstein (D-CA), Burr (R-NC), McCaskill (D-MO), Martinez (R-FL), Cantwell (D-WA).
30 senators also signed the last Senate letter in 2005: Bennett (R-UT), Bingaman (D-NM), Boxer (D-CA), Cantwell (D-WA), Coburn (R-OK), Coleman (R-MN), Cornyn (R-TX), Corzine (D-NJ), Dayton (D-MN), DeWine (R-OH), Dole (R-NC), Domenici (R-NM), Durbin (D-IL), Feinstein (D-CA), Inhofe (R-OK), Inouye (D-HI), Jeffords (I-VT), Kohl (D-WI), Lautenberg (D-NJ), Levin (D-MI), Martinez (R-FL), Murray (D-WA), Nelson (D-FL), Reed (D-RI), Salazar (D-CO), Santorum (R-PA), Sarbanes (D-MD), Smith (R-OR), Stabenow (D-MI), and Stevens (R-AK).
House February 2008: During the October congressional meeting with World Bank President Zoellick, members of Congress raised critical points on the need to increase the Bank’s investment in microfinance for the very poor. In response to Mr. Zoellick’s comments, Rep. Holt (D-NJ) and Rep. Carter (R-TX) initiated a follow-up letter to Mr. Zoellick (pdf) that was sent February 2008.
October 2007 congressional meeting with Members of Congress and World Bank president Zoellick. Members attending were Kevin Brady (R-TX), John Carter (R-TX), Michael Conaway (R-TX), Susan Davis (D-CA), Tom Davis (R-VA), Eliot Engel (D-NY), Rodney Frelinghuysen (R-NJ), Alcee Hastings (D-FL), Rush Holt (D-NJ), Michael Honda (D-CA), Jay Inslee (D-WA), Sheila Jackson Lee (D-TX), Mary Kaptur (D-OH), Rick Larsen (D-WA), Jim Matheson (D-UT), Betty McCollum (D-MN), Jerry McNerney (D-CA), Jim Moran (D-VA), Donald Payne (D-NJ), Illeana Ros-Lehtinen (R-FL), Steve Rothman (D-NJ), Albio Sires (D-NJ), Adam Smith (D-WA), John Sullivan (R-OK), Tim Walberg (R-MI), John Yarmuth (D-KY), Sen. Sherrod Brown (D-OH), Sen. Michael Enzi (R-WY).
House July 2007: In July, Reps. Holt (D-NJ) and Carter (R-TX) initiated a Dear Colleague letter calling on World Bank President Zoellick to meet with the Senate to discuss why the Bank is not increasing its focus on providing the poorest with greater access to microfinance.
71 representatives signed the letter: Baird, Brian (D-WA); Baldwin, Tammy (D-WI); Bartlett, Roscoe (R-MD); Bishop, Rob (R-UT); Bono, Mary (R-CA); Bordallo, Madeleine (D-GU); Brady, Kevin (D-PA); Brown, Corrine (D-FL); Capuano, Michael (D-MA); Carter, John (R-TX); Conaway, Michael (R-TX); Conyers, John (D-MI); Crowley, Joseph (D-NY); Davis, Danny (D-IL); Dicks, Norman (D-WA); Dingell, John (D-MI); Doggett, Lloyd (D-TX); Ellison, Keith (D-MN); Fattah, Chaka (D-PA); Filner, Bob (D-CA); Fortenberry, Jeff (R-NE); Gonzalez, Charles (D-TX); Granger, Kay (R-TX); Green, Al (D-TX); Grijalva, Raul (D-AZ); Hastings, Alcee (D-FL); Herseth-Sandlin, Stephanie (D-SD); Hill, Baron (D-IN); Hodes, Paul (D-NH); Holt, Rush (D-NJ); Hunter, Duncan (R-CA); Inslee, Jay (D-WA); Jackson-Lee, Sheila (D-TX); Jefferson, William (D-LA); Kildee, Dale (D-MI); Kucinich, Dennis (D-OH); Larsen, Rick (D-WA); Lee, Barbara (D-CA); Levin, Sander (D-MI); Lewis, John (D-GA); Lofgren, Zoe (D-CA); Matheson, Jim (D-UT); McCaul, Michael (R-TX); McCollum, Betty (D-MN); McCotter, Thaddeus (R-MI); McDermott, Jim (D-WA); McGovern, James (D-MA); McNerney, Jerry (D-CA); Meek, Kendrick (D-FL); Moore, Gwen (D-WI); Moran, James (D-VA); Murphy, Patrick (D-PA); Oberstar, James (D-MN); Pickering, Charles (R-MS); Reichert, David (R-WA); Renzi, Rick (R-AZ); Rohrabacher, Dana (R-CA); Ros-Lehtinen, Ileana (R-FL); Rothman, Stephen (D-NJ); Saxton, Jim (R-NJ); Schakowsky, Janice (D-IL); Shuler, Heath (D-NC); Sires, Albio (D-NJ); Sullivan, John (R-OK); Udall, Mark (D-CO); Udall, Tom (D-NM); Walberg, Timothy (R-MI); Wexler, Robert (D-FL); Wilson, Charles (D-OH); Woolsey, Lynn (D-CA); Young, Don (R-AK).
Resources
Powerpoint presentation by Ingrid Munro, founder of the Kenyan microfinance institution reaching the very poor
[1] Khandker SR. Fighting Poverty with Microcredit: Experience in Bangladesh. New York: Oxford University Press, Inc.; 1998.
[2] An apex fund is mechanism that facilitates the disbursement of microfinance funds to MFIs at an affordable rate to help those organizations gain access to needed funds. The World Bank already supports some apex funds, such as the highly regarded PKSF in Bangladesh.
Microfinance Advocacy: World Bank