December 2007: Ask your senators to sign the Bennett-Durbin-Enzi Letter to World Bank

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

Professor Yunus recently reiterated his vow to create a “poverty museum” in Bangladesh by 2030. Bangladesh is cutting poverty rates by 2 percent every year, and by 2015, Dr. Yunus hopes that half of the population will be above the poverty line. It is remarkable that one of the poorest countries, with few natural resources, could make such progress.

It is no coincidence that Bangladesh is home to Grameen Bank and BRAC (Bangladesh Rural Advancement Committee), two of the largest and most successful microfinance institutions (MFIs) in the world. Rather than dismiss the poorest as unreachable, these MFIs, and others in Bangladesh and around the world, are helping the poorest people — those living on less than $1 a day — to break free from the cycle of poverty by providing them access to microfinance.

There should be many other museums of poverty erected between 2015 and 2030. Every country and international financial institution has committed to achieving the Millennium Development Goals (MDGs) by 2015, with the overarching goal to halve poverty by 2015. We have the means to end poverty, and microfinance is one of the most effective and proven tools to make a lasting difference in the lives of the very poor. It currently provides hope to millions of people that their children will have a better future. We are missing only the will of our leaders to fulfill their millennium promises.

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.” However, the World Bank is investing very little into microfinance for the very poor (those who live on less than $1 a day).

The World Bank’s new president, Robert Zoellick, has the opportunity to steer the Bank in a new direction and reform policies in favor of more pro-poor investments that will align Bank practices with its stated mission of alleviating poverty. The World Bank must increase its investment in microfinance for those living on less than $1 a day. In his recent meeting with members of the House of Representatives, Mr. Zoellick said he would examine whether the Bank can invest more in microfinance for the poorest (see background section below) and agreed to further meetings to discuss this issue.

Call and Write Your Senators to Sign the Letter to World Bank President Zoellick

Introduce yourself and explain that you are a constituent.
Share your concern that although the World Bank’s stated mission is to ensure poverty reduction and improve living standards, the Bank is not investing enough in microfinance for the very poor.
Explain that although microfinance is a proven and cost-effective tool to help the very poor lift themselves out of poverty and improve the lives of their families, the Bank invests less than 1 percent of its budget in microfinance and does not track whether this money reaches the very poor.
Stress that even though the new president of the World Bank, Robert Zoellick, recently met with members of the House of Representatives and promised to evaluate this concern, it is critical that senators weigh in to express their concern about the Bank’s lack of investment in microfinance for the poorest and the need for Bank reform.
If your senator signed the 2005 Senate letter to then World Bank President Wolfowitz, please thank him/her (list below).
Tell the staffer that Senators Bennett, Durbin, and Enzi have initiated a letter to President Zoellick asking him to direct at least half of the Bank’s microfinance funding to the very poor. Ask the staffer to urge his or her boss to sign the letter. You can provide a copy of the letter (check the RESULTS website for a copy, or call a global staff member).
To sign on to the letter, tell your senators to contact Nate Graham in Bennett’s office (202) 224-5444 (Republicans) or Reema Dodin in Durbin’s office (202) 224-2854 (Democrats). Tell the office that you look forward to knowing whether the senator will be signing the letter, and that you will contact them again to follow this request.

If you also send a letter, please fax or e-mail it, as postal delivery is delayed by several weeks. Send to: Senator _____, U.S. Senate, Washington, DC 20510.

Background on Congressional Action on the World Bank’s Underinvestment in Microfinance for the Poorest

In July 2007, Representatives Rush Holt (D-NJ), John Carter (R-TX) and 71 of their House colleagues sent a bipartisan letter to the incoming president of the World Bank, Robert Zoellick, requesting a meeting to discuss the Bank’s underinvestment in microfinance for the poorest. Mr. Zoellick agreed to a meeting, and on October 3 came to Capitol Hill to meet with 27 representatives and 2 senators (Sens. Enzi and Brown). It was incredibly important for Mr. Zoellick to see the strong support in Congress for reform and to hear important critiques of the Bank’s microfinance policies. In a break from his two predecessors, Mr. Zoellick specifically offered to continue meeting with Congress, which is an important opportunity to push for follow-through and changes in Bank policies. We must ensure that these discussions lead to action: the 26,500 children who die each day from largely preventable malnutrition and disease and the more than 77 million children who are not in primary school demand it.

Now it is time for the Senate to act and support the requests of their House colleagues and push the Bank for reform. Senators must express their concern about Bank policies and request their own meeting with Mr. Zoellick so he will have to once again be called to answer for the Bank’s underinvestment in microfinance for the poorest.

The last Senate request on microfinance to the World Bank took place in 2005, when Senators Dick Durbin (D-IL) and Robert Bennett (R-UT) sponsored a sign-on letter addressed to the president of the World Bank, Paul Wolfowitz, urging the Bank to do more on microfinance for the poorest. Thirty senators signed the letter: 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).

What is Microfinance?

Microfinance programs provide small loans, assure a safe place to save money, and sometimes even offer insurance. It is a proven, cost-effective tool to help the very poor, particularly women, lift themselves out of poverty and improve the lives of their families. Microfinance loans, averaging less than $150, allow people to start and expand tiny businesses without depending on money-lenders who charge exorbitant interest rates. Muhammad Yunus notes the first thing a woman does with the proceeds from her loan is “bring her children home” — literally liberating her children from servitude forced by poverty.

What Should the World Bank Do?

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 examined three Bangladeshi microfinance institutions (MFIs): BRAC, Grameen Bank, and RD-12 (a government program). The study found that 3 percent of clients left poverty each year due to their microloans, that 1 percent of non-clients left poverty due to the spillover effect of increased economic activity at the village level, and that microfinance accounted for 40 percent of the entire reduction of moderate poverty in rural Bangladesh.

However, microfinance is a development tool that has been underutilized by the Bank, especially with regard to empowering the very poor. The Bank has confirmed that it cannot completely assess the level of funding dedicated to microfinance, nor what proportion of that funding is benefiting the very poor — those living on $1 a day or less.

To take advantage of this critical development tool, the U.S. Congress must insist that the World Bank: 1) increase its investment in effective microfinance programs with a track record of reaching large numbers of very poor people; 2) commit to ensuring that half of those resources directly benefit borrowers living on $1 a day or less; 3) require the use of cost-effective poverty measurement tools to measure the poverty level of borrowers and thereby ensure compliance with that goal; and 4) report on the results.

What Should the U.S. Senate Do?

We must continue to increase U.S. congressional pressure on Mr. Zoellick so that this dialogue leads to real action and reform. It is now time for the Senate to take action and request a meeting with Mr. Zoellick to demonstrate that the full U.S. Congress is behind reform of World Bank policies on microfinance for the very poor. Senators Bennett (R-UT), Durbin (D-IL), and Enzi (R-WY) have initiated a letter to President Zoellick including this request. To sign on, senators should contact Nate Graham in Bennett’s office ((202) 224-5444) or Reema Dodin in Durbin’s office ((202) 224-2854).