Micro-enterprises Bring Macro-results

By Dan Sullivan (Assistant Secretary of Economic and Business Affairs, Department of State, USA)

As the Nobel Committee has awarded the Nobel Peace Prize to Muhammad Yunus and the Grameen Bank, we are all reminded again of the important role micro-enterprises can play in economic development and poverty reduction. In this era of globalization, we face the dual development challenges of generating economic growth and reducing poverty.

Business development

The United States has long supported the extraordinary work of Dr. Yunus. In 1965, as a young economist, Dr. Yunus received a Fulbright Scholarship from the Department of State to study economics at Vanderbilt University. Micro-enterprise development has been an important component of U.S. foreign assistance for over 30 years. The United States has supported micro and small enterprises (MSES) through assistance programs which provide access to financial and business services; facilitate participation in markets; and enable the poor to participate in business development.

Around the globe, the U.S. is the leading bilateral donor for micro-enterprise development, which includes micro-finance. Last year, the United States provided $211 million in micro-enterprise assistance. These funds have acted as a catalyst for additional funding by banks, other private sources and multilateral institutions, making more resources available for sound business initiatives by the world's poorest citizens.

The United States Agency for International Development (USAID), the primary civilian foreign assistance agency of the U.S. government, provides micro-enterprise funding for more than 3.8 million entrepreneurs and households throughout the world. USAID accomplishes this assistance in a variety of ways: by supporting NGOs, credit union networks and financial institutions. Micro-finance projects particularly assist women in developing countries, who have traditionally had limited access to conventional financing. They also allow MSES to take advantage of the benefits of globalization through increased export opportunities.

As MSES expands and integrates into the formal economies of their countries, it empowers and transforms the lives of the world's poor, both women and men, creates more jobs and higher incomes, contributes to economic growth and strengthens democratic societies. In announcing the award, the Norwegian Nobel Committee said, "Every single individual on earth has both the potential and the right to a decent life. Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development."

Recognition

The Nobel Prize is recognition of the key role micro-finance plays in alleviating poverty and empowering citizens. As the Nobel Committee noted in its announcement, "Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Bottom up development from the grassroots level also serves to advance democracy and human rights."

Muhammad Yunus and Grameen Bank have helped create the enabling conditions for economic and social development from below. We salute them for their efforts to alleviate poverty and promote prosperity through innovative micro-financing, and we look forward to working cooperatively with Dr. Yunus and the micro-finance community in the future.

Throughout its 55 years here, USAID/Nepal has provided tens of millions of dollars to NGOs whose programs provide micro-credit that benefit hundreds of thousands of people in almost all of Nepal’s most remote and disadvantaged districts. These programs provide seed funds for micro enterprises primarily to women, low caste, and socially disadvantaged people and, more recently, victims of conflict. They link basic literacy and numeracy, and training and consulting on appropriate businesses to the receipt of the credit, which has been identified as a key to the success of these programs. 

USAID/Nepal-supported programs that provide micro-credit include:

• Anti-trafficking: women and girls who are victims of or at high risk of being trafficked are trained and some are granted seed funds to start micro enterprises.
• A program linking micro-credit to literacy skills. The result: Increased economic activity by more than $2 million, with farmers investing $207,000 in equipment and increasing sales of high-value crops by $1.81 million. Average incomes of 15,694 families increased by more than $100 -- a 50 percent increase -- in the program’s first year. There are 13,000 women actively saving. Total savings within the groups is $116,411.
• Micro-credit to women and victims of conflict.
• Income earning opportunities created for rural women by providing them with literacy and numeracy skills, as well as the skills to form and successfully manage savings and credit groups, and generally improve their livelihoods. 
• A comprehensive program with micro-credit as an integral part:  Seed funds to start microenterprises have been provided to tens of thousands of disadvantaged Nepalis to improve their lives.
• Business Development Services for high value commodities and non timber forest products: This activity has benefited 1,021 poor women in 45 women microenterprise groups and eight Internally Displaced Person (IDP) producers’ groups which included 121 poor IDP women from Banke and Bardia districts.