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Posted on Fri, Mar. 30, 2007
Small loans, poor women, success
Q&A with the new chief of a network of microfinance institutions and banks.
By Suzette Parmley
Inquirer Staff Writer
Mary Ellen Iskenderian: Women are more likely than men to use profits
to aid families.
When Muhammad Yunus won a Nobel Peace Prize for his efforts to provide
small loans to the poor to foster economic development, the world's
attention was drawn to microfinance.
That will continue today when a leading microfinance organization,
Women's World Banking, conducts a conference on the subject at the
Wharton School.
Women's World Banking is a global network of 53 microfinance
institutions and banks in 30 countries throughout Africa, Asia,
Eastern Europe, Latin America and the Middle East. It is based on the
idea of lending tiny sums of money to poor people, particularly women,
to start businesses as a way to escape poverty.
Mary Ellen Iskenderian, 47, the newly appointed president of Women's
World Banking, will give a keynote address at today's microfinance
conference.
Iskenderian, a former senior manager at the International Finance
Corporation of the World Bank Group, is the microfinance group's first
new president in 16 years. She took time this week to answer questions
about the rapidly changing microfinance industry and where she wants
to take the group at this critical juncture.
Question: How did Yunus' Nobel Prize affect the microfinance industry?
Answer: The direction for microfinance is being driven a lot by the
attention being given to the industry by players or organizations that
have not been previously involved. Winning the Nobel Peace Prize has
put it into the spotlight.
Q: What trends are you seeing in the microfinance industry?
A: What we're seeing so much more of is greater commercial interest in
the industry among largely institutional investors, commercial banks
and philanthropists. They're now looking at this market for lending -
as a new distribution channel to tap into to reach low-income people
for a whole range of reasons. Commercial funding grew to $7.3 billion
in 2005 from $4.9 billion in 2003. It's not charity, but giving people
a sustainable way to lift themselves from poverty. That's very
appealing to a philanthropist.
Q: The WWB has been established especially for women. Why?
A: That entrepreneurial step tends to be taken by women. Certainly,
that is our target focus and at the heart of the founding of our
organization. Women have proved to be very responsible
borrowers. Their repayment rates are on average 98 percent. There is a
huge multiplier effect on the community when you lend to a woman vs. a
man. She is far more likely to file her proceeds and savings from her
business and put them toward the education of her children, the
improvement of health care in the community, and her own family's
housing.
Q: What are the challenges ahead for microfinance?
A: There are questions around technology, and whether it can reduce
operational costs and reach more rural populations - which is an
enormous problem facing the industry in places such as in Africa, for
example. Also, in a lot of these developing countries, they don't have
good credit-reporting systems in place . . . and a person can get in a
lot of trouble with a lot of outstanding debt. There needs to be a
good financial infrastructure in place, including a regulatory
environment, to allow for microfinance to flourish and be carried out
in a sustainable way.
Q: You said one of your priorities was making inroads with commercial
banks, a community that possesses little knowledge or experience in
making loans to poor women. What are some of your concerns as this
sector becomes more involved?
A: We are worried that more commercial banks are recognizing that the
low-income market segment can be very profitable, but that the product
they are offering may not be microfinancing, but loans for consumer
purchases, like buying a television. The overindebtedness of this
low-income population would be a terrible tragedy.
Small loans, poor women, success
Q&A with the new chief of a network of microfinance institutions and banks.
By Suzette Parmley
Inquirer Staff Writer
Mary Ellen Iskenderian: Women are more likely than men to use profits
to aid families.
When Muhammad Yunus won a Nobel Peace Prize for his efforts to provide
small loans to the poor to foster economic development, the world's
attention was drawn to microfinance.
That will continue today when a leading microfinance organization,
Women's World Banking, conducts a conference on the subject at the
Wharton School.
Women's World Banking is a global network of 53 microfinance
institutions and banks in 30 countries throughout Africa, Asia,
Eastern Europe, Latin America and the Middle East. It is based on the
idea of lending tiny sums of money to poor people, particularly women,
to start businesses as a way to escape poverty.
Mary Ellen Iskenderian, 47, the newly appointed president of Women's
World Banking, will give a keynote address at today's microfinance
conference.
Iskenderian, a former senior manager at the International Finance
Corporation of the World Bank Group, is the microfinance group's first
new president in 16 years. She took time this week to answer questions
about the rapidly changing microfinance industry and where she wants
to take the group at this critical juncture.
Question: How did Yunus' Nobel Prize affect the microfinance industry?
Answer: The direction for microfinance is being driven a lot by the
attention being given to the industry by players or organizations that
have not been previously involved. Winning the Nobel Peace Prize has
put it into the spotlight.
Q: What trends are you seeing in the microfinance industry?
A: What we're seeing so much more of is greater commercial interest in
the industry among largely institutional investors, commercial banks
and philanthropists. They're now looking at this market for lending -
as a new distribution channel to tap into to reach low-income people
for a whole range of reasons. Commercial funding grew to $7.3 billion
in 2005 from $4.9 billion in 2003. It's not charity, but giving people
a sustainable way to lift themselves from poverty. That's very
appealing to a philanthropist.
Q: The WWB has been established especially for women. Why?
A: That entrepreneurial step tends to be taken by women. Certainly,
that is our target focus and at the heart of the founding of our
organization. Women have proved to be very responsible
borrowers. Their repayment rates are on average 98 percent. There is a
huge multiplier effect on the community when you lend to a woman vs. a
man. She is far more likely to file her proceeds and savings from her
business and put them toward the education of her children, the
improvement of health care in the community, and her own family's
housing.
Q: What are the challenges ahead for microfinance?
A: There are questions around technology, and whether it can reduce
operational costs and reach more rural populations - which is an
enormous problem facing the industry in places such as in Africa, for
example. Also, in a lot of these developing countries, they don't have
good credit-reporting systems in place . . . and a person can get in a
lot of trouble with a lot of outstanding debt. There needs to be a
good financial infrastructure in place, including a regulatory
environment, to allow for microfinance to flourish and be carried out
in a sustainable way.
Q: You said one of your priorities was making inroads with commercial
banks, a community that possesses little knowledge or experience in
making loans to poor women. What are some of your concerns as this
sector becomes more involved?
A: We are worried that more commercial banks are recognizing that the
low-income market segment can be very profitable, but that the product
they are offering may not be microfinancing, but loans for consumer
purchases, like buying a television. The overindebtedness of this
low-income population would be a terrible tragedy.