Microcredit Summit -NY

Remarks by Kul C. Gautam
Deputy Executive Director
United Nations Children’s Fund (UNICEF)
At the Discussion in Plenary Session of the Paper:
“Building Better Lives: Sustainable Integration of Microfinance with Education in Child Survival, Reproductive Health and HIV/AIDS Prevention for the Poorest Entrepreneurs”
Microcredit Summit +5
New York, 12 November 2002

I am delighted to have this opportunity to attend the Microcredit +5 Summit and to comment on this well-researched paper which examines the integration of microfinance with other initiatives to improve the health, education and well-being of children and women. Let me commend Christopher Dunford for this fine paper on “Building Better Lives” which is so full of good ideas and insights.
As the paper says, there may be understandable concerns regarding the appropriateness of adding other basic services to microfinance schemes. However, we at UNICEF would argue for the integration of some selected services, and even see them as requirements to effectively reduce poverty.

Our experience and observation have reaffirmed the main arguments in the paper that there is likely to be greater reduction in poverty when microfinance programmes are combined with increased access to basic social services than when programmes focus on credit alone.

We have noted that when microfinance is linked with access to certain basic social services, we can see demonstrable improvement in the health, nutrition and education of the borrowers’ children-particularly girls.
Money, after all is only a means, not an end by itself. The ultimate objective of micro-credit is is not just to increase income, but to promote human development. And the purpose of human development is to enable people to live a long and healthy life, to be able to learn and earn, to enjoy social and cultural activities and to participate freely in political processes.

Availability of micro-finance or credit alone does not lead to human development or the elimination of the worst forms of poverty. To do that, it must be deliberately and explicitly linked to provision of basic social services. The pursuit of the Millennium Development Goals, intended to reduce income poverty as well as reduction of mortality, fertility, gender disparities, increase in basic education and combating HIV/AIDS, etc. must therefore be the purpose of increased income generated through micro-credit.

While we do not want to overload micro-credit schemes with too many other services, the basis for deciding what services to add or to exclude should not be what is convenient and efficient from the point of view of the microfinance managers. From the point of view of users of micro-credit, certain basic services are essential part of combating poverty. In fact, it is these services, especially health and education, that empower poor people to make effective use of micro-credit for the benefit of their children and families.
We at UNICEF are not new to microfinance, having supported the Grameen Bank’s efforts in Bangladesh since the early
1980s. I recall it was in fact a UNICEF advisor, Jowshan Rahman, who worked with Prof. Yunnus in developing the famous Sixteen Principles of the Grameen Bank.

As we know, the Principles focus on improving the well-being of children and women, including their need for health services, adequate nutrition, child spacing, safe water and sanitation and primary education, as well as the elimination of dowry in marriage. Experience has shown the value of microfinance with these add-on services as the most effective way to combat poverty.
While there is much value in certain situations of providing parallel services, as shown by the BRAAC experience in Bangladesh, the case studies presented in this paper show that unified service delivery is operationally feasible, and often programmatically preferable. If judiciously planned, micro-credit, combined with certain basic services, can create synergistic impact on income, empowerment and well-being, which after all is the ultimate goal of development.
We would therefore commend the designing of micro-credit schemes in ways that open the door for women and other disadvantaged citizens towards greater equity, empowerment, freedom from discrimination and availability of basic social services.

In summary, I would highlight 7 points from the review of the paper before us:


  • The benefits from integrating microfinance with other development interventions, particularly health and education, seem to outweigh the disadvantages, especially as regards enhancing the role and status of women and girls in society;
  • The integrated approach also seems preferable from a human rights perspective -States Parties to human rights treaties such as the Convention on the Rights of the Child have an obligation to fulfil as many rights as possible, and the integrated approach helps maximise synergies, and build on the interlinkages among rights;
  • The integrated approach can also help reduce domestic violence, neglect and abuse of women as they earn greater respect and self-esteem due to their increased earning power and independence;
  • We find the concept of “economy of scope” discussed in the paper quite valuable in UNICEF’s experience. For example, piggy-backing of vitamin A distribution with immunisation services, or income generating schemes with skills training, are examples of mutually reinforcing linkedservices;
  • With growing initiatives and innovations in the area of corporate social responsibility, it should also be possible for profit-making entities to set up microfinance schemes as part of their service to the community. We need to promote such corporate behaviour to help expand basic services and increase the purchasing power of disadvantaged communities;
  • Like all development schemes, it is vital that micro-credit programmes too contribute to the prevention and containment of HIV/AIDS, if the hard-won gains in reducing child mortality and morbidity are not to be lost due to the AIDS pandemic. Along with credit, it is important to give women the information, skills and resources necessary to make and carry out informed choices. It would be a grave lost opportunity if AIDS prevention messages were not included in the micro-credit training schemes.; and
  • Finally, I would like to reaffirm the overall conclusion of the author that a lot rests on the will of peoples at all levels-individual, collective, and political. This was also our conclusion from the review and analysis of progress made since the 1990 World Summit on Children-that the critical factor that led to success or caused setbacks was usually the availability or the lack of will and leadership.


We believe that effective use of micro-credit for generating income and empowering people is the best way to achieve the Millennium Development Goals, to reduce poverty and to promote human development.
Empowered individuals and groups can be the most effective catalysts in programmes for women and children. And they can help propel a global movement for children, and promote sustainable human development.
Thank you very much.