Monday morning the Micro-Credit summit began. Since it was a hartal day, special transportation had been arranged to take us to the hotel where the summit was taking place, which was about a half hour drive from where the Grameen Foundation USA people were staying. A bus showed up to take us to the summit that was guarded by several uniformed soldiers carrying rifles. They sat prominently in the front of the bus, very visible from outside. The bus had an armed guard, and no one messed with us as we drove to the conference. It was not the best start to the summit!

The conference was held in a large hotel. There was a large display room where many booths were set up by the various micro-credit programs from around the world. There were a bewildering variety of organizations represented, all with different implementations of the basic micro-credit methodology pioneered by Grameen Bank in Bangladesh. Registration booths were placed on the left hand side of a long corridor that led to some restaurants, the pool and the large function room where the plenary sessions were held. Quotations by various people were placed on poles along the corridor. Two that I especially liked were:

“Money, says the proverb, makes money. When you have got a little, it is often easy to get more. The great difficult thing is to get that little.” - Adam Smith

and

“Whenever you are in doubt … apply the first test. Recall the face of the poorest and weakest man whom you may have seen, and ask yourself if the step you contemplate is going to be of any use to him. … true development puts those first that society puts last.”

- Mahatma Gandhi

Over the next few days, many speakers from many countries got up to speak in the plenary sessions, including the Prime Minister of Bangladesh, the opposition leader, Queen Sofia of Spain, and U.S. Senator Richard Durbin. All of the proceedings were conducted in English. Unfortunately, the acoustics in the hall were not great, and it was often quite difficult to understand the majority of speakers for whom English was not their native language. If it was hard for me, a native speaker, how much harder must it have been for the many people in the audience who primarily spoke other languages!

I was fascinated by the great diversity of approaches to micro-finance. Currently, about 60 million people are participating in micro-finance programs around the world. At the first Micro- Credit summit a few years ago, a target was set of reaching 100 million people by 2005, and it seems like the various groups are on target to reach that goal.

Many topics were discussed at the summit, but much of the discussion centered around controversies over what interest rates are appropriate for the various programs to charge. In order to be self-sustaining, many of the programs charge higher interest rates than we are used to in the U.S., but many of the programs would not be viable if they charged significantly lower rates. In many countries, the governments are putting pressure on the MFIs to reduce their rates. To complicate the matter even further, some micro-finance programs provide social services in addition to the micro-loans. These services cost money, so either the interest rates end up higher or the programs must rely on additional donor support to stay alive.

Another problem is that the laws in many countries do not fit well with the micro-credit concept. Banking laws designed for traditional banks are not a good fit in many cases, and the rules regulating non-profits do not fit exactly either. In several countries, for example, non-profits are not allowed to take deposits from the borrowers or to offer insurance products to them. Many programs were trying to find ways to work around these problems. One popular but difficult option is to transform the organizations to the non-bank finance companies mentioned above, but this is a complicated and costly approach. In general, though, the various programs seem to be very successful, and many millions of families are benefiting from the micro-finance approach.