“I see the goal of the Microcredit Summit as an important step along the path we have laid out for DFID It is important to remind people that the Microcredit Summit Campaign is about more than just credit—it's about savings, too. Taken together they make an important contribution to enhancing poor people's access to income and employment; stimulating more equitable, pro-poor growth; reducing poor people's vulnerability; and promoting women and their status within the family and the wider community. ”– Clare Short   “The biggest and most pressing challenge the world faces today is the elimination of poverty. My foreword to the 1997 White Paper, which is a formal declaration of U.K. government policy, emphasizes that our policies are ... about ensuring that the poorest people in the world benefit as we move toward a new global society. . . . But to succeed we need to

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For if we are able 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 2005, and we are able to do so with a keen eye on best practices, then we will have taken a big step towards reducing world poverty by half by 2015.

More than access to credit alone, we believe that easy access to reliable savings facilities offers effective income security for poorer people. Microfinance contributes towards an enterprise culture in which individuals feel more confident to improve their own livelihoods and less need to rely on the government to provide financial support, thus freeing up resources for essential services such as health care and education.

DFID supports the provision of financial services, technical skills and information, and the creation of a conducive economic and legislative environment for the microenterprise sector. The majority of DFID's funds in this sector are currently given as grants towards institutional capacity building, operational costs, loan funds, and technical assistance for training and systems development. The current commitments to microfinance programs and projects total approximately £50 million (US$80 million). Let me underscore the importance I attach to the Microcredit Summit's core themes. Improving the ability of microfinance to reach the poorest is one of the core themes of DFID's enterprise development strategy. In the great majority of programs DFID supports, the majority of first-time borrowers are in the bottom 50 percent below the poverty line. While our commitment to the poorest is clear, we strive to enable the full spectrum of the poor to access financial services. This includes not only the poorest of the poor, but also those with the potential to move above the poverty line by growing their enterprises, thus providing increased demand for the services of the poorest.

The majority—perhaps 70 percent—of the world's poorest people are women. We believe that targeting women with microcredit makes sense both for empowerment and efficiency reasons. Targeting women as a general principle, however, is not sufficient to guarantee their empowerment. Possible effects on gender relations have to be considered in the design stage of a project, which is best achieved by giving future clients a full participatory role from the very beginning. We support specific and focused initiatives to enhance women's empowerment in our own programs and in our work with relevant national and multilateral organizations.

The need to become financially sustainable in the long-term underpins all DFID-funded support activities for microfinance institutions (MFIs). For example, DFID is the main donor for UGAFODE in Uganda, with which we entered into an agreement for a two-year project to scaleup operational cost-recovery. The local NGO, which started lending to micro and small enterprises through solidarity groups in 1995, has a credible plan for achieving financial sustainability in the medium-term. By investing in a relatively young and small institution, DFID hopes to assist UGAFODE to develop into an independent and efficient financial institution capable of funding its own growth. Only by achieving full financial sustainability will MFIs continue to gain access to the funding they need to maximize their outreach to the poor.

Impact assessment is vital to ensure that poor people are benefitting from the programs. Again, I applaud the Microcredit Summit's efforts to identify and disseminate cost-effective tools for measuring impact. We encourage institutions to set quantifiable targets for poverty reduction, and to measure progress towards these." 

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