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| Sunday, 11 July 2004 |
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UN upgrades microfinance The UN General Assembly has designated 2005 as the International Year of Microcredit. The International Year of Microcredit will help scale up efforts to build capacity so that financial services for the poor are more demand-driven and that microfinance is positioned as an integral part of the formal financial sector. Often referred to as "the fuel of private sector development," microcredit can give people the means to invest according to their own priorities so that they can move from day-to-day survival to planning for the future by investing in better nutrition, and their children's health and education. Credit is a tool that promotes investment in the productive capacities of local communities, helps include poor people in the economy, stimulates local markets, and extends employment opportunities as businesses grow into small enterprises. But while demand for microcredit services is growing, only about 10 percent of the estimated one billion people who could benefit from access to credit, currently have long-term access to quality credit services. Remittances, or transfers of funds from migrants to relatives or friends back in their country of origin, now represent the second largest source, behind foreign direct investment, of aid to developing countries. It is estimated that more than $88 billion was sent to developing countries from workers based elsewhere during 2003. Though most of this money is devoted to sustaining the livelihoods of those on the receiving end, more effective financial institutions will reduce transaction costs for households and thus free up additional resources toward savings or investment in new businesses. |
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| Editorial | Security Produced by Lake House |
