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News: November 2006

Working to Eradicate Poverty through Microcredit

Dr. Muhammad Yunus with Melanie Howard and Professor KerrMelanie Howard and Professor Kerr met
Muhammad Yunus, 2006 Nobel Peace Prize
Laureate, at the 2006 Microcredit Summit.

Eradicating poverty worldwide often seems like an impossible task. Statistics show that about half the world -- nearly three billion people -- live on less than two dollars a day.

But, Professor Janet Kerr, (Founder and Executive Director of the Geoffrey H. Palmer Center for Entrepreneurship & the Law) and Melanie Howard (Director of the Palmer Center) are taking steps to help the poorest of poor on a global scale.

"One of our initiatives at the Palmer Center is to develop programs in social entrepreneurship; we quickly recognized that social entrepreneurship generally, and microcredit specifically, fit within the School of Law's overall mission, which is 'Purpose, Service and Leadership'," says Professor Kerr. Thus, Kerr and Howard attended 2006 Global Microcredit Summit in Halifax, Nova Scotia from November 12-15.

The Summit's roots go back to February 1997, when the RESULTS Educational Fund convened the Microcredit Summit, launching a nine-year campaign 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. This historic event, held in Washington, D.C., brought together over 2,900 delegates from 137 countries.

Continuing on the success of the 1997 Summit, the Microcredit Summit Campaign has relentlessly pursued its goal, through a series of annual meetings attended by more than 10,000 delegates from over 140 countries, always maintaining a steadfast commitment to the Summit's four core themes: 1) reaching the poorest; 2) reaching and empowering women; 3) building financially self-sufficient institutions; and 4) ensuring a positive, measurable impact on the lives of the clients and their families.

The 2006 Summit was attended by more than 2,000 delegates from over one hundred countries. Keynote speakers included: Her Majesty, Queen Sofia of Spain, President Manuel Zelaya of Honduras, Pakistani Prime Minister Shaukat Aziz, and 2006 Nobel Peace Prize Laureate Muhammad Yunus. In his keynote address at the Summit, Dr. Yunus reiterated his belief that the right to credit should be a basic human right.

Dr. Yunus is the founder of Grameen Bank, which, "as of May 2006, [has] reached more than 6.61 million borrowers, 97 percent of whom are women." Dr. Yunus accomplished this great feat by, in a sense, thinking small: the first loan he made was only $27. Since its founding over 20 years ago, Grameen (which literally means "village") Bank has disbursed approximately $5.72 billion in micro-loans, averaging under $100 per loan, and maintained a repayment rate close to 99%.

Professor Kerr and Ms. Howard were fortunate enough to meet Dr. Yunus, and to hear his perspective on the role that lawyers can play in creating environments conducive to "banking for the poor." Of Yunus, Howard says, "He had a humble and gracious air about him. Eradicating poverty is his life's work; now the world is paying attention to it."

Dr. Muhammad YunusMuhammad Yunus, 2006 Nobel Peace Prize Laureate
and founder of Grameen Bank, presents a gift to
Her Majesty, Queen Sofia of Spain, who wears on
her left shoulder a piece of cloth she purchased in
Bangladesh from a woman who was a recipient of
a Grameen microloan.

Professor Kerr and Ms. Howard also met with Anne Hastings, Director of Fonkoze, "The Shoulder-to-Shoulder Foundation," as translated from the Haitian Creole acronym. With over 90,000 depositors and 30,000 active borrowers, Fonkoze is the largest micro-finance institution operating in Haiti, which is currently the poorest country in the Western Hemisphere. Howard was recently appointed to the Board of Directors of Fonkoze, USA, and both Kerr and Howard plan to visit Fonkoze's operations in Haiti during the next six months.

Pepperdine School of Law, through the Palmer Center, was the only law school delegate at the 2006 Summit, and the only law school (of approximately twelve education institutions) to submit an Institutional Action Plan, delineating its commitment to the goals of the Summit through the implementation of specific programs.

Among the Palmer Center's current initiatives in social entrepreneurship are: developing microfinance implements for Latin America, the Caribbean, and Asia; sponsoring the inaugural Graziadio Case Competition, which focused on ethics and social responsibility as critical components of a balanced business strategy; establishing a student Social Entrepreneurship Committee within the Palmer Center; funding student fellowships for work in microcredit and social entrepreneurship; and working through the Pepperdine University Chapter of Net Impact, a global organization with a mission to improve the world by strengthening new leaders who are using the power of business to make a positive net social, environmental, and economic impact.

In addition, at this year's Annual School of Law Dinner on February 3, 2007, the Palmer Center will be announcing a new award for Social Entrepreneur of the Year.

Microcredit is changing lives on a global scale. As of December 31, 2005, over 3,000 microcredit institutions were reported reaching over 113 million clients, almost 82 million of whom were among the poorest when they took their first loan. Of these poorest clients, 84.2 percent, or nearly 69 million, were women.

According to Yunus biographer, David Bornstein, the progress of the Microcredit Summit Campaign "represents one of the few times that a major development promise is going to be fulfilled -- and remarkably close to schedule."

In addition to marking the culmination of the first phase of the campaign, November's Global Microcredit Summit 2006 officially launched its extension to 2015 with two new goals: 1) working to ensure that 175 million of the world's poorest families, especially the women of those families, are receiving credit for self-employment and other financial and business services by the end of 2015, and 2) working to ensure that 100 million of the world's poorest families move from below US$1 a day adjusted for purchasing power parity (PPP) to above US$1 a day adjusted for PPP by the end of 2015. In addition, Bangladesh announced at the Summit that it plans to introduce a resolution in the United Nations General Assembly calling on the international community to work towards the goals of the Microcredit Summit Campaign.

Howard says she came away from the summit feeling encouraged. "Eradicating poverty may seem like an unattainable goal, but the campaign proves that it can be done."

Portions of this story come from the Microcredit Conference Web site.