• by Soraya Rodriguez Ramos
• Monday, November 14, 2011
• Inter Press Service

Microcredit has reached a turning point in recent years: the sector is undergoing a major reevaluation of its objectives, and there is a raging theoretical and practical debate over its effects. The dramatic cases of nonpayment and arrears that have appeared in the media in recent months demonstrate that microcredit programmes that are badly run or fail to adequately calibrate risk can become an obstacle to emerging from poverty, writes Soraya Rodriguez Ramos, Secretary of State for International Cooperation and President of the Spanish Agency for International Cooperation for Development.

In this analysis, the author writes that, according to recent studies, microcredit always has a positive impact when it is tied to public policies to advance social cohesion and poverty reduction -like access to education and health care- functioning institutions, and an economic infrastructure that can generate real opportunities in employment.

Another factor is the evolution of the microfinance sector, which has gone from being led entirely by NGOs and cooperatives to involvement with new entities that can offer more services, including microinsurance and microsavings, mobile banks, while becoming more sophisticated in attracting resources from venture capital funds or through issuing bonds.

The Fifth World Microcredit Forum aspires to provide access to basic financial services for some 175 million families, the world's poorest, and especially to the women, and to raise the income of the world's poorest 100 million families above a dollar per day between 1990 and 2015. If we can make progress towards these objectives, the Valladolid meeting to be held from November 14-17.will be a success.

(*) Soraya Rodriguez Ramos is Secretary of State for International Cooperation and President of the Spanish Agency for International Cooperation for Development.

© Inter Press Service (2011) — All Rights Reserved. Original source: Inter Press Service

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