This week, from November 12 to 15, the Global Microcredit Summit will hold court in Halifax, Nova Scotia. Thousands of experts from 107 countries will be in attendance. It’s being billed as a watershed event for the microcredit community and will have ramifications for hundreds of millions of people over the next decade. So why might this summit be one of the seminal moments in world history?

“…[b]ecause global poverty continues to stand as an affront to our humanity, a haunting reminder of the gross inequity of human progress,” answers the powerful statement from the State of the Microsummit Campaign Report 2006.

The affront in question can be attributed to the following reality – that there are still nearly one billion people living below US $1 a day in our world. Microcredit practitioners take that statistic and use it as a rallying cry.

Attacking world poverty

The idea behind microcredit is a simple: organizations (many of them nonprofit) lend small sums of money to the world’s poorest to help them build businesses for themselves and work themselves out of poverty incrementally. The Nova Scotia Credit Union’s new Microcredit Project website describes it this way: “Microcredit is one of very few lifelines out of poverty found in poor communities. The institutions that provide these services try to avoid traditional barriers to lending such as lack of collateral and the illiteracy of potential clients.”

Unlike traditional banking institutions that look at the bottom line and demand repayment of loans on time or else tack on huge interest rates, microfinance organizations concern themselves with the social progress of their clients as well as repayment of the loan. And if the loan can’t be repaid on time, which happens less than you might expect, many microcredit organizations will extend the loan to give their clients a chance to build their loves and livelihoods, still with the expectation that they will pay it back.

“If you only want to have people repaying their loans, then you aren’t paying attention to the social aspect. But if you’re reaching the very poor and you go bankrupt, your mission is over. So both [sides] are very important. We want to make sure we balance those bottom lines,” says Dalia Palchik, assistant media and development director for the Microcredit Summit Campaign in Washington, D.C.

New strategies

Palchik is excited about the upcoming week of discussions, panels and plenary sessions and says the campaign will focus on two major objectives for the next decade.

“The first goal is to reach 175 million of the world’s poorest,” she says. “The second is to ensure that 100 million of the world’s families rise out of extreme poverty from below $1 a day, to above $1.” A laudable goal, but is it possible?

The executive summary of the State of the Microsummit Campaign Report 2006 again provides an answer. “The engagement of global commercial banks has ‘fundamentally altered’…strategy for financing,” it states. “In the past we relied on loans from socially responsible investors. Now we are increasingly relying on stand-by letters of credit that allow us to borrow in local currency from local banks. We believe that this is a better strategy for us to be using.”

Measuring poverty alleviation

“The core themes of the Microcredit Summit Campaign are reaching the very poor, empowering women, creating financially self-sufficient organizations and measuring the progress,” says Palchik.

The United States Agency for International Development (USAID) was supposed to develop some key poverty measurement tools by October 1st this year, but Palchik says the campaign is still waiting for them. Nevertheless, others have figured out that they are making a positive impact both on the poor and on those who would help them.

Even if quantifiable numbers are not available, the 2006 Microsummit Report reminds us that there are more than just dollars and cents involved. The report states that, “Microcredit is an intervention capable of producing a quadruple bottom line. When executed effectively, it can 1) relieve suffering, 2) bring dignity, 3) become sustainable, and 4) inspire supporters.”

Over in Langley, BC, Gary Walsh, president and CEO of Opportunity International Canada (OI), one of the summit’s major sponsors, stresses that there is a sea-change occurring in the microcredit community that bodes well for the success of the campaign.

According to Walsh, between the first microcredit summit in 1997 and this year’s awarding of the Nobel Peace Prize to microcredit guru and Grameen microloan bank head, Muhammad Yunus, microcredit has gained immeasurable credibility.

“The commercial sector has become interested in microfinance,” he says. “They now realize there is money to be made at the bottom of the pyramid.” And that’s not all.

Achieving astounding results

OI seems to have figured out a system that will have people buzzing at this year’s summit. Walsh’s organization recently announced their ‘$1 billion for one million’ campaign in an attempt to ensure that the 2015 Millennium Goals for the assault on world poverty are reached.

“Our organization is totally focused on it,” he says. “The stats say there are 500 million entrepreneurs in the world for what we do. OI has said we will commit to 100 million of those. So by 2015 we will be actively connecting with them.” And OI seems poised to make it work.

Walsh says that OI has a 98% payback rate on its loans. That’s not a typo.

“Eighty-six percent of our clients are women and globally we are already sustainable,” he says. “At the end of the year, the expenses incurred on the field by our implementing partners do not exceed the income from interest and fees. In other words, even if the developed world ceased to raise charitable income, these organizations are now sustainable. So our focus now is on starting new ones.” That’s an amazing statistic and one that, hopefully, others at the summit hear and take back with them to their organizations.

Looking toward the future

Despite the optimism, Walsh and others know that there is still much work to be done.

“The need is so immense,” says Walsh. “You walk through a village in Malawi and you sit beside a family…these people work hard, there isn’t a lazy bone in their bodies, but they’ve never had a chance. If only we could get the word out that a hand-up is what is needed. They’ll pay it back and it transforms individuals, families and communities.”

Let’s hope this week’s Microcredit Summit sparks this transformation on a global scale.

Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at andy@wordlaunch.com.