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July 2007: Write a letter to the editor urging the World Bank to invest in microcredit

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

Microcredit is a proven and cost-effective tool to help the very poor lift themselves out of poverty and improve the lives of their families. However, despite microcredit’s proven success and the Norwegian Nobel Committee’s recognition of its power to end poverty and promote peace by awarding Dr. Muhammad Yunus and Grameen Bank the Nobel Peace Prize in 2006, the World Bank is spending little if any funding on microcredit for the very poor (those who live on less than $1 a day). The World Bank would take a major step toward fulfilling its stated mission to fight poverty by increasing its investment in microcredit for the very poor and ensuring that at least 50 percent of the overall money it invests in microcredit goes to people living on less than $1 a day. Through letters to the editors of our local papers, and calls to our U.S. Representatives to sign a letter to him, we will be urging incoming World Bank President Robert Zoellick to seize the opportunity to make this happen and to rectify the blatant inaction of his two predecessors.

Follow the guidelines for letters to the editor provided by your local papers. Always include your address and phone number with your submission. Make your letter short and punchy. To write a letter through the RESULTS website, go to http://capwiz.com/results/dbq/media/.

Take Action! Write a Letter to the Editor

  1. Acknowledge (and “hook” your letter to) any recent global poverty or international policy issue the newspaper has recently covered.
  2. Inform your newspaper that Robert Zoellick, former U.S. Trade Representative, officially became President of the World Bank on July 1 and now has the opportunity to correct years of inaction on microcredit funding for the very poor.
  3. Explain that (a) despite the World Bank’s stated mission of fighting poverty and the effectiveness of microcredit in alleviating its worst aspects and (b) despite the fact that nearly 100 members of the U.S. Congress sent letters to the former World Bank Presidents in 2003 and 2005 urging the Bank to do more in this area, the World Bank still invests little if anything in microcredit for those living on less than $1 a day. If we are to achieve the Millennium Development Goal of cutting absolute poverty in half by 2015, the Bank must do more in the area of microcredit for the very poor.
  4. Remind the newspaper that Dr. Muhammad Yunus, member of RESULTS’ Board of Directors and founder of the Grameen Bank of Bangladesh, won the Nobel Peace Prize in 2006 for his work in alleviating poverty through microcredit.
  5. Highlight that many poor families are often forced to sell their children into servitude because they do not have the money to care for them, and as Dr. Yunus noted 18 years ago, one of the first things women do with the proceeds from their microloans is to bring their children home.
  6. Inform the editor and readers that members of Congress have been calling for a meeting on the Hill with the President of the World Bank for four years. A new letter asking for a meeting with incoming President Robert Zoellick to discuss the Bank’s investment in microcredit for the very poor is currently being circulated by Representatives Rush Holt (D-NJ) and John Carter (R-TX). Call upon your representative to sign on to this letter by July 30 or thank him/her for doing so already.
  7. Include all of your contact information. Limit the length of your letter to150–250 words.

Sample Letter

Thank you for your recent coverage of _____. The World Bank is a powerful international development institution with the stated mission of fighting poverty. The nature of the Bank’s work is crucial if the global community is to achieve the Millennium Development Goals of cutting absolute poverty in half by 2015. Despite committing to these goals, and lending nearly $20 billion a year to low-income countries, the Bank spends little or no resources on one of the most successful and innovative development programs available today: microcredit for the very poor.

As Nobel Peace Prize laureate and RESULTS Board member Dr. Muhammad Yunus has shown the world, microcredit is a cost-effective and proven tool which allows the very poor, especially women, to lift themselves and their families out of poverty. Many destitute families are forced to sell their children into indentured servitude because they cannot care for them, but, as Dr. Yunus started witnessing 18 years ago, with access to microloans, many women are able to bring their children home and provide for their nutrition and education.

In 2003 76 Representatives and Senators wrote to former World Bank President Jim Wolfensohn urging him to meet with them on Capitol Hill to discuss this issue. Wolfensohn’s response to them was polite but unhelpful. In 2005, 76 Representatives and Senators wrote to recent World Bank President Paul Wolfowitz with the same request. After nearly 12 months, Wolfowtiz finally agreed to a meeting with Congress, but he was subsequently forced to resign.

I urge Rep. _____ to sign on to a new letter to incoming World Bank President Robert Zoellick initiated by Representatives Rush Holt (D-NJ) and John Carter (R-TX), requesting that Zoellick meet personally on Capitol Hill with congressional leaders to discuss ensuring that the World Bank ramp up its investment in microfinance and most important, that at least half of all microfinance funds go to the very poor.

President Zoellick now has the opportunity to correct years of inaction by his predecessors by meeting personally with the Bank’s biggest funder — the U.S. government — and ensuring that the World Bank invests more in microcredit for the very poor.

Background

Microcredit refers to the provision of tiny loans and other financial services to very poor people in order to start or expand individual businesses and pull themselves out of poverty. Microcredit is a solution to the poorest people’s inability to find satisfactory employment and obtain needed credit.

The loans, often averaging less than $150, allow people to start and expand tiny businesses without depending on money-lenders who demand exorbitant interest rates. Access to the tools and credit needed to succeed allows the poor to reap the benefits of their skills and hard work.

Microcredit gives borrowers the capacity to improve the quality of their lives and the futures of their children. Extra money earned is used to obtain better food, housing and education. As a result, the returns to the entire society are high.

Microcredit has proven to be an effective tool in 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, the latter a government program. The study found that 3 percent of clients left poverty each year because of 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.

What Makes Microcredit a Smart Investment?

Microcredit is an economically sustainable method of fighting poverty. In developing countries, the rate of repayment of well-established microcredit programs ranges from 95 to 99 percent. Microcredit is cost-effective: monies are loaned and paid back to programs and can then be used again by programs for new loans, providing other poor individuals with credit. For example, one estimate of Foundation for International Community Assistance (FINCA) programs indicates that $1 million of loan capital invested in a FINCA village bank will generate $15 million in small loans and $3 million in savings in 5 years.

What Should the World Bank Do?

In order to achieve the Millennium Development Goal of cutting absolute poverty in half by 2015, the World Bank and other International Financial Institutions must expand their investments in microcredit and, most important, ensure that at least half of that investment is devoted to very poor people.

What Should the U.S. Congress Do?

Members of Congress must demand that incoming World Bank President Robert Zoellick meet with them to discuss World Bank investment in microcredit for the very poor. Rep. Rush Holt (D-NJ) and Rep. John Carter (R-TX) have initiated a letter to President Zoellick including this request and their colleagues should sign on and attend this important meeting. To sign on, representatives should contact Chris Gaston with Rep. Holt or Spivey Paup with Rep. Carter by July 30.