Access to credit is key to Africa’s growth

Enhanced access to credit facilities by low income earners is crucial to their social and economic development as well as the attainment of the Millennium Development Goals, Muhammad Yunus, Grameen Bank’s managing director has said.

Speaking at the Africa Middle East Microcredit Summit held in Nairobi last week, Prof Yunus said the majority of the poor mainly from sub-Saharan Africa operate without access to conventional banking and financial services, and are therefore unable to productively contribute to their countries’ overall economic development through entrepreneurship.

“There is a correlation between access to credit and MDGs. This being the age of making the impossible possible; citizens are getting engaged and have become very creative. Hence not all the responsibilities should be left to the government,” said Prof Yunus, founder of the Bangladesh-based bank which pioneered the practice of giving out loans to the poor with no collateral in 1983.

Kenya’s Association of Microfinance Institutions (AMFI), which won the bid to host the summit in 2009, organised the two-day event in partnership with the Microcredit Summit Campaign, the largest global network of microfinance players which has to date surpassed its initial goal of reaching 100 million of the poorest people by 2007.

Poverty in sub-Saharan Africa

Kenya’s President Mwai Kibaki told the meeting the challenge of fighting poverty is more urgent in sub-Saharan Africa where one in every six people do not have access to sufficient food to lead a healthy and productive life.

“The combined effects of high food and energy prices had devastating effect on our economies as the global recession took centre stage, with the shocks halting the steady progress many countries had made over the last decade in growth and poverty reduction,” said President Kibaki.

A recent World Bank report indicates that the growth in the global economy came down steeply from an annual average of 6.1 per cent in 2007 to 1.7 per cent in 2009 while global per capita declined for the first time in a decade.

President Kibaki noted that the summit provided an avenue for microfinance players to “deliberate and agree on how to reverse the worsening trend in poverty rates” and chart a new way forward to help in the attainment of the MDGs.