Begum Khaleda Zia, Hon’ble Prime Minister of the People’s Republic of Bangladesh inaugurated the Dhaka Summit at Hotel Sheraton, Dhaka in the afternoon of February 16. Presided over by Prof. Wahiduddin Mahmud, Chairman of Palli Karma-Sahayak Foundation (PKSF), the opening ceremony of the Summit was addressed, among others, by Her Majesty Queen Sofia of Spain; the First Lady of South Africa Madam Zanele Mbeki; Hon’ble Minister for Finance and Planning, M. Saifur Rahman; Managing Director of Grameen Bank, Professor Muhammad Yunus; Microcredit Campaign Director Sam Daley-Harris and Assistant President of IFAD, Phrang Roy. Managing Director of Palli Karma-Sahayak Foundation (PKSF) Dr. Salehuddin Ahmed delivered the welcome speech. He also read out a message that had been sent by the Secretary General of the United Nations, Kofi Annan on this occasion. This can be seen in Annex- 4 in detail.

Dr. Salehuddin Ahmed, Managing Director, PKSF, Bangladesh

In his welcome speech, Managing Director of PKSF, Dr. Salehuddin Ahmed highlighted the financial services for the poor that have proved to be a powerful instrument to alleviate poverty by enabling the poor to build assets, increase income and reduce vulnerability to economic stress. Access to credit was recognized as a 'right' of people globally today, he said.

Dr. Salehuddin Ahmed giving his welcome address at the
Opening Ceremony

Dr. Salehuddin mentioned that the purpose of the Summit was to formulate strategies to face the emerging challenges of the microcredit sector to reach the poverty alleviation targets.

He observed that it was very difficult for the poor to get small working capital from the formal banking system, while microcredit enables the poor to get that amount. He termed credit as one of the "bare necessities." He further said that the more the microcredit movement matures, the more it will be easier to get clearer idea of its strengths and limitations.
Dr. Ahmed said, “To move forward, we need to be more effective, and increase outreach, design products to include the poorest, and any other measure needed to spread the poverty alleviation net wider, so that significant decline in poverty takes place.”

He then underscored the need for transparency in the management systems of the MFIs and preparation for the eventually decreased donor funding, to progress towards sustainability. The Dhaka Summit will work as the propulsive force behind this moving forward, he hoped.

Dr. Salehuddin Ahmed concluded by expressing his gratitude to the Honourable Prime Minister and to all the distinguished panelists and participants that included Her Majesty Queen Sofia of Spain and the First Lady of South Africa, Madam Zanele Mbeki, among others.

Prof. Muhammad Yunus, Managing Director, Grameen Bank, Bangladesh

Speaking on the occasion, Professor Muhammad Yunus mentioned that microcredit and its institutions were sustainable, adding, “You look at the microcredit program. We are in this business to see the number of poor people reduce every day and we will be celebrating Microcredit Summit in 2005.”

In the last seven years, more than 50 million of the world's poorest people have taken part in microfinance projects aimed at giving them a stepping-stone out of poverty, he said.
The Grameen Bank Managing Director told the Summit, figures are expected to confirm a further 20 million will have access to micro-credit by the end of 2004.

Prof. Muhammed Yunus speaking at the Opening Ceremony

He said that the figures meant that the micro-credit movement, which provides tiny loans to the poorest, was closer to achieving the goal it set itself seven years ago of reaching 100 million people by the end of 2005.

"Fifty million of the poorest families have been reached and I am sure we will have 70 million this year," Prof. Yunus disclosed.

"When we began, people laughed at us. Today we can tell them we have just one more step and we will make it happen."

Prof. Yunus termed the Dhaka Summit a very special one, saying, though it was named to be a Regional Summit, it turned into a global one. On people’s interest about the Summit, he said, "Registration was stopped a few days back because there was no way to accommodate more participants." People from continents across the world have assembled in Dhaka to see for themselves Bangladesh's success in microcredit.

Mr. Phrang Roy, Assistant President of IFAD, Rome

Mr. Phrang Roy, Assistant President, IFAD, Rome, said that IFAD as an agency of the United Nations came into being in 1978. While searching for an innovative approach to address poverty, they became convinced of the Grameen approach. Immediately, IFAD started funding five participating banks in Bangladesh, having a component to support the Grameen approach at the grassroots level.

Mr. Phrang Roy speaking at the Opening Ceremony

Mr. Roy mentioned that it was not easy to provide fund support to credit program for the poor, as the poor then were not deemed to be bankable by some of the policymakers. Nevertheless, IFAD took the risk to fund in microfinance program. Now the recovery rate of the IFAD-funded microfinance is beyond expectation, he said. Since then IFAD has been involved with many microfinance organizations, including BRAC.

He said that it was exciting to see how the microcredit movement continued to grow with the growing partnership between banks and self-help groups in the developing countries. Now there is a rising awareness among donors, governments and practitioners of an amicable environment for carrying forward the microcredit movement. Now the sector needs to be appropriately regulated and supervised, Phrang Roy opined.

The Assistant President of IFAD said that his organization was fully committed to microfinance and has an investment of about 630 million dollars in this field across the globe, accounting for 30% of IFAD resources.

IFAD also supports a wide range of models of microfinance approaches through collaboration with NGOs, rural banks, cooperatives, financial associations and other types of highly decentralised systems, said Mr. Roy.

Not just the loan, the poor people also need savings services and other affordable systems, and basic insurance as well. Quoting from a study in Bangladesh, he said that savings services helped to develop attitudes and practices that were essential for subsistence economics to move to sound economies on a solid base.

Mr. Roy said that there were 28 million savers and three million borrowers in IFAD-funded programs in Bangladesh and Indonesia. Their savings rate was also very high. If the very poor people are put into an informal or formal institutional arrangement, they also tend to set aside a small amount of money from their daily consumption. Microfinance institutions are, therefore, very important for these rural households. In Bangladesh, so far 15 microfinance institutions have received funds from IFAD.

About empowerment of women, Roy said, because of their involvement in microfinance, many rural women have grown to be the leaders in their communities, stimulating social changes, and mobilising social actions. Women groups are pioneering social changes and mobilising social actions by extending their activities beyond the financial services. In North Tunisia, for example, the IFAD funded women self-help groups play a vital role in peace-making efforts in the community and are impacting on the community's arms conflicts and insurgencies. Speaking well of the Bangladeshi women he said that in Bangladesh the revolution of women in thinking and practice really deserved a Nobel Prize.

Madam Zanele Mbeki, First Lady of South Africa

Addressing the inaugural session First Lady of South Africa Madam Zanele Mbeki thanked the organizers for inviting many Africans, including herself to the Asia-Pacific Regional Microcredit Summit. "As Africans we are here to learn from you, the Asians, who have shown us the way forward," Madam Mbeki said.

She appreciated the successive Bangladesh governments for developing the largest number and variety of poverty-focused microcredit innovations. Many countries, similarly challenged by poverty, have not been as innovative in strategies to address the problem of the poor people through empowerment in partnerships with civil society organizations, she said.

First Lady of South Africa Madam Zanele Mbeki giving her speech at the Opening Ceremony

Madam Mbeki said, Africa remained the poorest continent on the globe. All initiatives seeking to improve the livelihood of the poor and the poorest families of the world are of immense interest to us. The urgency for putting in place positive and effective interventions cannot be overstated because the gulf between the developed world and Africa is forever widening, especially in the advent of the digital divide and knowledge-based economies.

Madam Mbeki said that the New Partnership for Africa's Development (NEPAD), a pan-African economic development forum, sought for grounding all development initiatives in partnership with civil society initiatives, the private sector, local and regional governments, and South-South Co-operations as well as partnership with developed countries. NEPAD has identified access to credit, especially for women, as a critical intervention for the success of the program.

She said that the poor are credit worthy and they must have access to credit as a right, not as an act of charity. Poor people are a resource for national development if the government and the private sectors invest in them. When the society invests in its poor people, it achieves sustainable development for its communities.

She said the NEPAD proceeded keeping pace with the UN Millennium Development Goals of halving global poverty by 2015.

Madam Mbeki underscored the need for "smart partnership" among or between the governments, private sectors and civil society organizations for mutual development and poverty alleviation.

She also stressed the practice of the Bandung spirit for Afro-Asian solidarity for a better world for the peoples of the continents, where microcredit programs have an important role to play.

Dr. Wahiduddin Mahmud, Chairman, PKSF, Bangladesh

PKSF Chairman, Dr. Wahiduddin Mahmud, who chaired the opening session of the Summit, said that microcredit, although did not begin following any theory of text books, the economists, being impressed by the success of microcredit, are coming forward to see, with their new and newer models of economics, how microcredit worked.

Dr. Mahmud said, "The experience of microcredit challenges another dominant development thinking, namely, that attitudes and norms of behaviour in a society change, or new ones can emerge, only over a long period. It is amazing how amid widespread culture of loan default in the formal banking system in Bangladesh, near a hundred percent repayment rate of microcredit has now become part of the society's behavioural norm." Bangladesh's experience of microcredit shows that both group solidarity and loan repayment are habit forming, he observed.

Dr. Wahiduddin Mahmud giving his speech at the Opening Ceremony

Dr. Mahmud mentioned that the way microcredit interacts with socio-cultural norms and attitudes has much larger implications, and we need to better understand these interactions. The impact of microcredit is mainly assessed in terms of the income gains for the borrowing households. Yet, there is growing evidence of the beneficial impact of microcredit in the areas such as healthcare, family planning and schooling behavior, especially for female children, he added. In all these areas, Bangladesh has made remarkable progress over the past one and a half decades or so, Dr. Mahmud said.

This has also been a period of very rapid growth in the coverage of microcredit, he said, adding, "The links are not clear yet, but they seem to extend beyond household income gains to female empowerment and greater role of women in household decision making."

Dr. Mahmud observed, even in terms of the extent of the increase in the value of the UNDP Human Development Index during the 1990s, Bangladesh has been among the top performing countries, only behind China and Cape Verde. He assumed that among many other initiatives, microcredit also has a role for this positive turn of development.

Mr. Sam Daley Harris, Microcredit Campaign Director, Washington, D.C, USA

Speaking on the occasion, Microcredit Campaign Director, Mr. Sam Daley Harris recalled the pledges made by the pro-microcredit forces in Washington DC, seven years ago, when a nine-year campaign was launched to reach 100 million of the world’s poorest families, especially the women of those families, with credit for self-employment and other financial and business services by the end of 2005.

Mr. Harris said the goal was not set merely to see a dramatic increase in the number of clients reached, rather it was set to see a dramatic reduction in poverty. It (the goal) was not set merely to see financial services reach the unreached, rather to see a dramatic decrease in the scandal of global poverty and a dramatic increase in the number of families finding a dignified route out of poverty.

He termed the sustainable microfinance for the poor the most powerful tool to provide a dignified route out of poverty for hundreds of millions of those living below US$1 a day adjusted for purchasing power parity.

The Microcredit Campaign Director said, over the 30 years the microcredit practitioners, whose innovations are transformational, have turned the formal banking system upside down. When banks lent to the rich, microfinance institutions lent to the poor; when banks lent to men, the NGOs lent to women; when banks required collateral, microcredit loans are collateral free; when banks required a lot of paperwork, microcredit loans were illiterate friendly; when clients had to come to the bank, microcredit practitioners went to the clients.

Mr. Harris said, now it is the time to turn third world development upside down. He said the commitment to make sure that the very poor are not left out to a challenge for microcredit only, but also a challenge for health, a challenge for education and a challenge for other areas of development.

M. Saifur Rahman, Hon’ble Minister for Finance and Planning, Bangladesh

Hon’ble Minister for Finance and Planning, Government of the Peoples’ Republic of Bangladesh Mr. M. Saifur Rahman hoped that through the meeting the participants will be able to exchange ideas, formulate policies, devise new ways and means that would reduce poverty at a faster rate than before. The outcome of the Summit will help meet the Microcredit Summit Campaign goals of reaching hundred millions of the world's poorest families with credit facilities for generating self-employment and business activities by 2005, he added.

He termed poverty alleviation "the overarching socio-economic development goals" of the government of Bangladesh, for which they adopted strategies to eradicate poverty in all its dimensions. The strategies are achieving high growth with equity, emphasizing human development and impact-target program to address the special needs of the poor, particularly women.

Microcredit program has to be integrated with macro economic policies to create employment opportunities and generate income for the poor. Along with credit, other institutional marketing outputs and technological supports will be needed to bring the poor out of poverty. Mr. Rahman emphasized sound socio-economic policies for the development of microcredit program. He stressed the need for a strong linkage between the micro-approach and the mainstream economic policies. Scaling up of credit in the sector may be a strategy in this regard. For visible contribution to the economy, the scaling up of the credit limit, and support to the small and medium enterprises are necessary. Such enterprises did not have sufficient access to credit and other institutional sources. To meet this demand, the government set up PKSF as an apex financing and capacity building organisation in 1990, to provide support to the microcredit institutions across the country.

Mr. Saifur Rahman giving his address at the Opening Ceremony

The finance minister said, "to enable Palli Karma-Sahayak Foundation to provide service to its partner organizations, our government will continue its financial support for PKSF." Thirteen departments of the government are also involved in microcredit program. Recently the government decided to reduce the interest rate of these programs to make them more affordable to the poor, he said.

Along with credit, the poor also need education, nutrition and other services for the overall improvement of their condition. Therefore, the government has revised its policies and strategies. The implementation of these will help reduce poverty and achieve the millennium development goals, he added.

Mr. Rahman also mentioned the challenges of the sector and underscored the necessity of accountability, a facilitating regulatory framework, and norms, which will serve the interest of all stakeholders and will be user-friendly as well.

He also said through achieving management skill, the microcredit institutions could be cost-effective and reduce the interest rate charged from the poor borrowers.

"Liberation from poverty in all its dimensions in the final analysis lies in generating pro-poor, pro-equity, pro-women, pro-environment economic growth for which we all are working", Mr. Saifur Rahman concluded.

Her Majesty Queen Sofia of Spain

Her Majesty Queen Sofia of Spain termed Bangladesh "the birth place of microcredit" and said the spirit of solidarity contained in the first loan of a small amount (a few dollars), which was given to a young girl in village Jobra of Bangladesh to buy bamboo for making and selling her own chairs, has reached us today unchanged in its essence, while greatly multiplied in its successful results.

In her deliberations, she revisited the Washington Summit, held seven years back, and recalled the objectives that Summit set for the future. From her personal observation she said, the Microcredit Summit has been turned into a Summit of justice and solidarity, what she prophesied in Washington in 1997. She said, in microcredit, "We have managed to reinforce two concepts closely linked to the microcredit idea: the feeling of self-esteem experienced by its beneficiaries and their increased sense of responsibility towards their families and the society they live in".

Nowadays, in many countries, with remarkable levels of well-being and wealth, microcredit, turned into microfinance, is also an outstanding financial instrument to unite and integrate those people in need, Queen Sofia observed.

"In Spain, it has caught on deeply and broadly. That is why my country's government has assigned US$280 million in the last five years to fight against poverty, especially in Latin America, by means of granting three hundred thousand micro credits to small business, mostly run by women," Queen Sofia added.

She mentioned that Spain is using microcredit as an important strategic aim of its cooperation for development policy.

Her Majesty Queen Sofia delivering her speech at the Opening Ceremony

Queen Sofia also mentioned that microcredit policies in Spain are also beginning to succeed in lessening the problems that emerged due to illegal migration, and increasing number of social outcastes. To this end, Official Credit Institute, a financial instrument for carrying out the economic policies of the government, has started a credit line worth eighteen million Euros in the first year. Those credits are available to women, immigrants, the disabled, the long-term unemployed, and people over 45 and one-parent families, with very favourable financing conditions. As no personal guarantee or reference is required, there are no commission or intermediary charges, and interest rates are charged. The level of unpaid loans remains below three per cent.

The Queen said the small rate of defaulters, similar to that of many other financial organizations who grant microcredit in order to fight poverty in developing countries, reinforces the excellence of microcredit in general, regardless of the place and circumstances where it is applied.

Begum Khaleda Zia, Hon’ble Prime Minister,
Government of the People's Republic of Bangladesh

The Hon’ble Prime Minister Begum Khaleda Zia said, "Microcredit has originated in Bangladesh. Today it has crossed our national boundary and has become a global program for poverty alleviation". She said Bangladesh was able to innovate some new poverty alleviation models, of which the most outstanding was microcredit. The microcredit program in Bangladesh got an institutional shape when the government established Grameen Bank. Later, PKSF, also set up by the government, further expanded microcredit programs through many NGOs. These organizations also offer relevant training to the borrowers. All these have had a positive impact on poverty alleviation, she added.

Hon’ble Prime Minister Begum Khaleda Zia inaugurating APRMS

About her government's policy, she mentioned that the highest importance has been given to poverty alleviation, for which 50 per cent of the annual development budget has been allocated. The government's Interim Poverty Reduction Strategy Paper (IPRSP) has also highlighted the importance of microcredit in poverty alleviation.

Begum Khaleda Zia said about 68 million poor families around the world today are benefiting from microcredit and the target is to reach 100 million by 2005. The world today has a major task of reducing poverty. Of the world's 6 billion people, 2.8 billion live on less than 2 dollar a day and 1.2 billion people live on less than 1 dollar a day. Of the 1.2 billion people, 500 million live in South Asia and 300 million in Africa.

The Prime Minister mentioned that many more are yet to be covered by the microcredit programs. "Most importantly, many microcredit poor borrowers are yet to graduate out of poverty. The empowerment of women is yet to attain a high level,” She said. Microfinance initiatives all around the world including Bangladesh need sustainability, Begum Zia continued.

The Prime Minister said, "I am glad to know that the Dhaka Summit will look into these aspects and address the emerging concerns. I hope the Summit will deliberate on how to bring all the poor under microcredit programs, free the poor from the curse of poverty and hasten the process of empowering the women.”

Hon’ble Ministers and other distinguished Guests at the Opening Ceremony

She urged the participants to devise ways and means to ensure that the poor can be self-reliant by utilizing microcredit in a proper and planned manner, to ensure that the savings of the borrowers are properly utilized for improving their standard of living, to think whether the present interest rate can be brought down. In order to address such issues and promote smooth operation of microcredit, the Prime Minister spoke about the initiatives of her government to set up a facilitating regulatory framework.

The Prime Minister said, in Bangladesh the government agencies and PKSF are now trying to encourage microcredit borrowers to become dynamic entrepreneurs. She said, “For that reason we are promoting micro and small enterprises."

While concluding her speech, the Prime Minister assured her government's full support to the microcredit movement in Bangladesh and around the globe and hoped that the recommendations of the Summit will greatly help in meeting the challenges of the microcredit movement.

She also expressed her firm belief that microcredit will play a significant role in eradicating poverty, consistent with the Millennium Development Goals of reducing poverty by half by the year 2015.

The Prime Minister congratulated PKSF and Microcredit Summit Campaign for organizing the Summit in Dhaka, and extended her special thanks to Her Majesty Queen Sofia of Spain and First Lady Madam Zanele Mbeki of South Africa, for gracing the Microcredit Summit in Dhaka by their presence.

Prime Minister Begum Khaleda Zia, Her Majesty Queen Sofia and Distinguished Guests exchanging pleasantries after the inaugural of APRMS