WB committed to microcredit despite Yunus criticism |
The World Bank is committed to microcredit, an official said Friday after Nobel Peace prize winner Muhammad Yunus attacked the lender for all but ignoring tiny loans for impoverished people.
Bank director Elizabeth Littlefield rejected Yunus's criticism, at a microcredit summit in Canada this week, that "not even one percent" of the World Bank's total lending goes to microcredit funding.
"That actually is quite a narrow definition of the World Bank's spending in microcredit, it relates only to credit lines on lending to microcredit institutions," she said.
The actual number "could be up to six percent of its total budget, about 1.3 billion dollars, if you use a much broader definition that includes credit lines, policy advice, payment systems, work on regulation and supervision as well."
"I would argue that the actual percentage of money spent in the field of microfinance is not the best measure for the commitment of an organisation to building that field," Littlefield added.
Both Yunus and Littlefield attended the summit in Halifax, Canada, at which campaigners announced their goal of extending tiny loans known as microcredit to 175 million of the world's poorest people by 2015.
Yunus, a Bangladeshi who won the Nobel prize in October, believes microcredit is one of the most powerful tools to combat dire poverty and help individuals boost their incomes.
Yunus's Grameen Bank makes loans averaging 100 dollars to destitute and often illiterate people so they can expand a small business, such as selling food or handicrafts.
Yunus has had frequent disagreements with the World Bank over how to best alleviate world poverty.
He said at the summit that more of the global development lender's large infrastructure projects should be owned and run by local poor people, not by governments.
Littlefield said World Bank president Paul Wolfowitz is "extremely supportive" of microfinance and has visited projects in Indonesia, Mexico and India.
She said the bank's work in helping to develop domestic financial markets, payment systems and credit bureaus was "critically important to opening up access for poor people to the kinds of financial services that can help improve their lives."
Littlefield is also the chief executive of The Consultative Group to Assist the Poor (CGAP), a collection of 33 public and private development agencies, which promote microfinance. CGAP is housed at the World Bank.
She said that Wolfowitz had attended a meeting of CGAP agency heads in Paris last month.