IOM Report Sets Goals for U.S. Global Development Role
Written by Malorye Allison
on Friday, 22 May 2009
Global development is at a crucial crossroads, where the world economy is struggling and the poor are in danger of being left even further behind. There has been much debate about the U.S.'s role in helping the developing world, so it is with interest that we saw The Institute of Medicine has just released a report articulating its vision for this:
increase the utilization of existing interventions to achieve significant health gains;
generate and share knowledge to address prevalent health problems in disadvantaged countries;
invest in people, institutions, and capacity building with global partners;
increase the quantity and quality of U.S. financial commitments to global health;
and engage in respectful partnerships to improve global health
This report springs from the Institute of Medicine's expert Committee on the
U.S. Commitment to Global Health, which was organized to look at the current situation and articulate a vision for going forward. It addresses the involvement of the U.S. government and U.S.-based
foundations, universities, nongovernmental organizations, and
commercial entities.
Committee member Ruth Levin summed up the report's conclusions this way in a recent blog post : "The IOM reinforces others’ focus on living up to commitments, balancing
the portfolio to include more than AIDS, and making better use of the
U.S. assets in the area of science and technology and global leadership."
The U.S. has raised its commitment to global health over the last few years, according to the report: "Between 2001 and 2008, global health programming through the United States Agency for International Development (USAID) and the State Department grew by nearly 350 percent. As a result, health now makes up a significantly larger portion of both the U.S. foreign affairs budget and the overall overseas development assistance (ODA) budget." This rise mainly involved special programs to fight specific diseases including, AIDS, malaria, and tuberculosis.
While the Committee commended this increase in aid, they also point out that in terms of overall giving, the U.S.: "is below the efforts of other high-
income countries in relative terms and is among the lowest levels of net ODA as a percentage of gross national income (GNI). Even when private giving is included, per capita spending by the United States does not approach the level of most other wealthy nations."
To meet the Millennium Development Goals (MDG)s that were adopted by the United Nations' Member States in 2000, the Committee estimates that the U.S. contribution should be $13 billion per year by 2012. President Barack Obama's funding request in May 2009 was for $8.645 billion by 2010. That's a modest increase over current levels and still below the Committee's estimate.
Written by Malorye Allison
on Wednesday, 29 April 2009
Despite the global downturn, Grameen's poor borrowers in Bangladesh and elsewhere are still repaying their microloans at the same high rates, according to a recent interview of Grameen Bank founder Muhammud Yunus by Bloomberg. Yunus says the bank has maintained its 98% to 99% repayment rate.
"There is an amazing contrast between what conventional banks are experiencing and the rate at which Grameen bank's borrowers are repaying their loans," Yunus said. "We have not experienced any movement, and are still showing strength even in the crisis period." This is particularly important, Yunus noted, because "at a time people are losing jobs they can create their own jobs."
The average loan to a borrower is about $200, but these figures seem huge to the borrowers. "Imagine a woman who is receiving a loan of $35 and trembling as she takes the money," Yunus said.
Pressed by the interviewer to explain why these particular borrowers are working so hard to repay their loans, Yunus explained that the Grameen Bank lending process, "Creates a system that prides itself on timely repayment. Microfinance creates its own culture and we see it in Bangladesh, South America, Eastern Europe, anywhere in the world."
Grameen America, located in Queens New York, is the first U.S.-based lending organization that uses the Grameen Bank approach. The bank has lent $1.5 million to nearly 600 women in Queens over the last year. Loans range from a few hundred dollars to the low thousands.
Yunus and the Grameen Bank shared the 2006 Nobel Peace Prize for "..their efforts to create economic and social development from below."
Grameen's Approach to Microfinance Withstanding Downturn
Written by Malorye Allison
on Wednesday, 25 March 2009
Some microfinance organizations are suffering because of the global downturn, but Grameen's unique approach is helping it to weather the economic storm, according to a recent article in the Economist.
Microfinance organizations, like many others, are seeing a dramatic downturn in financing from all sources. "Kimanthi Mutua, who runs K-Rep Bank, a big Kenyan microlender, says that in 2007 he fielded calls from prospective investors every couple of weeks. For the past six months he has not had a single call," the Economist reports.
This trend reinforces the need to grow microfinance not just through investors, donations, or traditional bank loans, but through borrowers' own savings: That's something Grameen-style organizations, including Grameen America, have always tried to do. In it's first year of operations, Grameen America's borrowers have already set aside almost $100,000 in savings -- a remarkable feat given that many of these women have never even had a bank account before.
Another important feature of Grameen is to only lend money for small business ventures, not for consumption. As the Economist article notes "Many observers suspect that at least some microfinance loans actually finance consumption, not investment, and that borrowers use new loans from one MFI [microfinance institution] to pay off their debts with another." As the global credit crunch continues, such borrowers could run into serious difficulty. According to IFC data on the top 150 microfinance institutions, during the crisis the percent of borrowers 30 days late paying off their loans has risen from 1.2% to between 2% and 3%.
But not all microfinance organizations are the same. Muhammad Yunus, who founded Grameen Bank and shared the 2006 Nobel Peace Prize with the bank, says that Grameen's borrowers have kept up their remarkably steady repayment rate despite the crisis. “We have not been touched in any way by the financial crisis,” he is quoted as saying. “The simple reason is because we are rooted to the real economy—we are not paper-based, paper-chasing banking. When we give a loan of $100, behind the $100 there are chickens, there are cows. It is not something imaginary.”
Some of Grameen America's borrowers now need to be entrepreneurial more than ever, because they are losing their regular jobs. "People are being laid off, and need to expand their business to make up for losing their jobs," one center manager reports.
As the economy continues to drag, more people will become poor, increasing the need for microfinance that works. According to World Bank estimates , an additional 53 million people could be trapped in poverty because of the crisis.
At Davos, Yunus Urges “Use Business Skills for Social Good”
Written by Noor Shams
on Friday, 20 February 2009
Muhammad Yunus urged some of the world’s leading philanthropists to “apply business skills to solving social problems,” while speaking at the Philanthropy Round Table, sponsored by the Victor Pinchuck Foundation, at the World Economic Forum in Davos recently. Yunus is the 2006 Nobel Peace Laureate. He shared the prize with Grameen Bank, the groundbreaking microfinance organization that he founded.
The panel was moderated by Tony Blair, former Prime Minister of the United Kingdom, and included Yunus, Virgin Group Chairman Sir Richard Branson, actor/philanthropist Jet Li, and Bill Gates, founder of the Bill and Melinda Gates Foundation and Chairman of Microsoft. A key theme was the immense pressure that the financial crisis has placed on philanthropic organizations.
Introducing the panel, Blair emphasized that the world needs philanthropy more than ever, and “Really creative innovative ideas, like what Muhammad Yunus has done with microfinance.”
Blair was followed to the podium by Former U.S. President Bill Clinton, who emphasized that the world economy is currently unequal, unstable, and unsustainable. “In the United States too much of our growth went to too few people,” Clinton said, “And that started the unraveling that we are living with.”
Clinton highlighted three goals for philanthropists:
• Help keep people alive
• Provide economic growth among the poor
• Promote health and address health issues.
“The focus should be on ‘how’ to address these,” Clinton said, “The reason Muhammud Yunus won the Nobel prize, finally, is because he answered a “how” question.” Clinton added that the private sector or government can never answer the “how” alone.
When it was his turn to speak, Yunus urged philanthropists to keep giving, but said “sustainable social businesses” are also part of the solution. Social businesses are self-sustaining, but they are focused on social good rather than profit maximization. Yunus pointed to arrangements such as the one Grameen has forged with Danone, whereby the French dairy firm has built a small factory that manufactures nutrient-rich yogurt that is very affordably priced. (See this YouTube Video for more on this project.)
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