The Year will be officially launched on November
18, 2004 at UN Headquarters in New York.
There is a growing community of
institutions and organizations committed to eradicating poverty
through the delivery of financial services to poor and low-income
people throughout the world.
Known alternately as microcredit
or the broader term microfinance, this partnership of public and
private interests began to gain momentum in the mid-1970s as a serious
tool for development. Microcredit and microfinance have changed
the lives of people and revitalized communities in the world's poorest
and also the richest countries. With access to a range of financial
tools, even modest financial services, families can invest according
to their own priorities ¡X school fees, health care, business, nutrition
or housing.
The clients of microfinance are
generally poor and low-income people. They may be female heads of
households, pensioners, artisans or small farmers. The client group
for a given financial organization depends on that organization¡¦s
mission and goals.
Microcredit helps poor and low-income
clients deal with their basic needs. For example, with access to
microinsurance, poor people can cope with sudden expenses associated
with serious illness or loss of assets. An inclusive financial sector
allows poor and low-income people to access credit, insurance, remittances
and savings products.
In a world where most poor people
are women, studies have shown that access to financial services
has improved the status of women within the family and the community.
Women have become more assertive and confident. Furthermore, as
a result of microcredit, women own assets, including land and housing,
play a stronger role in decision-making, and take on leadership
roles in their communities.
By the end of 2001, microcredit was provided to 26.8 million poor
people¡Xthough this represents only about six percent of the estimated
number of poor who could effectively use credit and related financial
services including savings, insurance and asset-building systems.
The microfinance model is well tested, but the need far exceeds
current capacity.
The UN General Assembly designated
2005 as the International Year of Microcredit and has invited Governments,
the United Nations system, concerned non-governmental organizations
and others from civil society, the private sector and the media
to join in raising the profile and building the capacity of the
microcredit and microfinance sectors.
While Hong Kong enjoys the position
of the world¡¦s leading trade and financial centre, poverty crisis
is not invisible. Many low skilled workers in the low-income sector
are vulnerable, working long hours for little money. Some women
work 10 hours a day to collect refuse from hundreds of households
for a small amount of monthly salary. Some are forced to be self-employed,
forfeiting all the benefits of employment like insurance and entitlement
to MPF. Even if the funds are available, many will not take out
loans to help set up small businesses because they are doubtful
of their abilities to pay them back. It is necessary to help the
deprived groups get out of the poverty traps, and to achieve this
we need short and long term solutions to the poverty problem with
emphasis on sustainability. Microcredit scheme is a brand new idea
in Hong Kong, while it has been proved a tremendous success in China
that a number of NGOs has been running the microcredit programs
across China to empower people to improve their own lives in the
long run and to facilitate greater capacity.
Perhaps, a special finance company
should be set up to give loans to those who are not normally eligible
for credit. The terms are such that due to fluctuating incomes,
the money can be paid back irregularly. Some microcredit schemes
also throw in free training in basic healthcare, accounting and
business skills. The interest rate charged will reflect the credit
risk and would appear high by other standards, but it embodies a
commensurate return for the lenders.
Estimates of the number of poor
people in the world who use microcredit range from 70 million to
750 million. One of the goals of the International Year of Microcredit
is to strengthen and spread the availability of good financial services,
which offer the possibility and the hope to many poor people of
improving their own situations through their own efforts. Shall
Hong Kong be ready to address the cooperation among the government,
NGOs and business sector to offer appropriate financial services
to people trapped into poverty? Microfinance is much more than simply
an income generation tool. By directly empowering poor people, particularly
women, it has become one of the key driving mechanisms towards harmony,
and sustainability of our society.
For more information on the Year
of Microcredit, please visit the following websites:
http://www.yearofmicrocredit.org/
http://www.microcreditsummit.org/
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