Microcredit Summit Campaign has just published its report for 2003. At the end of 2002, according to the Report, 2,572 microcredit institutions1 were reaching 67 million clients with a current loan, 41.6 million of whom were among the poorest (in the bottom half of those living below their country’s poverty line or below $1 a day) when they started with the program.

This year, data from 234 institutions were verified, representing 35.8 million of the poorest families or 86.2 percent of the poorest clients reported.

The growth from 26.8 million poorest clients at the end of 2001, to 41.6 million poorest clients at the end of 2002, represents a 55 percent growth over the year. The growth from 7.6 million poorest at the end of 1997 to 41.6 million poorest at the end of 2002, represents also a growth of 447 percent over the five-year period. In order to reach 100 million poorest by 2005, the Campaign needs to sustain a growth rate of 38 percent per year. Currently, it averaged just over 40 percent per year.

Growth from Institutions Reporting for the First Time and an Expanded Definition of Poorest

Each year the Campaign makes a concerted effort to include institutions that had not yet reported to the Campaign. In 2000, 22 percent of the growth came from institutions reporting for the first time. In 2001, 57.8 percent of the growth came from institutions reporting for the first time, although a significant portion of that growth came from the National Bank for Agriculture and Rural Development (NABARD), India, which had expanded dramatically over the previous four years.2 In this year’s report, covering 2002 data, 33.8 percent of growth came from institutions reporting for the first time.

Another factor contributing to growth was an expanded definition of the poorest. After extensive deliberation, the Microcredit Summit Campaign Executive Committee agreed to expand the Summit's definition of “poorest,” beginning with the Action Plans submitted in 2003. The expanded definition includes the original group (the poorest are the bottom half of those below their nation’s poverty line) and now includes any of the 240 million families who comprise the 1.2 billion people living in absolute poverty, on less than $1 a day adjusted for purchasing power parity (PPP).

Another weakness is in the current implementation. The best tools currently available—Participatory Wealth Ranking, the CASHPOR House Index, and CGAP’s more rigorous Poverty Assessment Tool — all measure relative poverty; they identify the poorest families in a neighborhood or village. These tools tell you which clients are in the bottom third of the community, but will not tell you where those clients stand in relation to absolute poverty. Because of the new U.S. law, the microfinance industry is now developing cost-effective tools that measure absolute poverty, identifying those families living on less than $1 a day.

The practical effect of the expanded definition of the poorest has been to include more families, while still focusing on those living in absolute poverty. These are the families in the developing world whose children die at the rate of some 29,000 a day. These are the families whose children comprise more than 100 million primary school aged children who have never been to any school. Expanding the definition of “poorest” and developing these new tools will fully align the Campaign with the global commitment to cut absolute poverty in half by 2015.

Table below shows progress of the Microcredit Summit Campaign over the last five years:

Extracted from the Microcredit Summit Campaign Report, 2003