to sort out poverty:
a chance from microcredit
International Seminar
9th and 10th of April, 2005 - Cairo
| Social Loan Tracking System |
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Opening Session |
Ambassador Ahmed Abu El-Kheir, Ministry of Insurance and Social Affairs
H.E. Antonio Badini, Ambassador of Italy, Dr Fathi Sa’ad, the Governor of Giza, General Hasan Hemada, Governor of Minia, Mr Antonio Vigilante, United Nation’s coordinator in Egypt and Mr Antonio Loche, Italian National Committee, ladies and gentlemen, it is a great honor for the Ministry of Insurance and Social Affairs to cooperate with the Italian Embassy under the supervision of his Excellency Ambassador Mr Antonio Badini to establish one of the most important projects which was subsided by Italy and which regards poverty alleviation.
This project stands out among the projects the Ministry has established in order to alleviate poverty. Its success was followed by another Italian subsidy, coming from the Debt Swap Program according to the plan of expanding PAP in three Governorates: Sohag, Assyout and Qena. The results that will be presented to you today will make you understand the activities carried out by the executors of this project in order to make it successful, and to revive the idea of establishing another project for poverty alleviation, since this issue has become top priority both at the national level and at the international level.
Now the Ministry is expanding with the project in the three Governorates. In general, the Italian cooperation with Egypt and with the Ministry in particular, has had a great impact on the relations between the two countries, especially when regarding this important social project. Poverty alleviation is also at the top of the agenda of international organizations; in fact it was one of the main issues of the declaration of Copenhagen on social development.
Moreover, this issue was the pushing point for many plans, particularly for those set up in Egypt until 2007.
Mr Antonio Loche, Italian Committee for 2005 International Year of Microcredit
Ladies and gentlemen, I came from Italy to bring you the greeting and appreciations from the Italian National Committee for the Year of Microcredit. I came to express not only the greetings, but mainly the strong appreciations for the Minister of Social Affairs, Mrs Ameena El-Guindi and to express my appreciations for General Hassan Hemada, Governor of Minia and Dr Fathi Sa’ad Governor of Giza, because the performance of the project has been successful, and in Italy we really appreciate this success, and mainly this year. In fact the General Secretary of the United Nations has defined 2005 as the International Year of Microcredit, and in Italy, as a member state of the UN, we have created a National Committee, to promote Microcredit in our country and in the world.
Microcredit has been designed as an instrument to promote economic growth and to support development in the world and this is the meaning of the International Year. Economic growth is important, but also the support of financial and social inclusion, one of the main goals of microcredit, may help reducing gaps among members of societies.
Social cohesion is a value for microcredit, which is a necessary valid tool to produce social solidity, to make societies stronger and to lead them to their full development. The Italian National Committee is represented by a member of the Government, Minister Mario Baccini, who, on this occasion, is conveying his great appreciations for the initiatives set up. In the next months the Italian National Committee for Microcredit will also promote some meetings with the European National Committees for Microcredit. As you know, almost each country in Europe has established a National Committee for Microcredit.
I also take the occasion to thank and to deeply appreciate our Italian Ambassador, Antonio Badini, for the role he has played as a guide and for his direct involvement that has enhanced the success of the Egyptian Poverty Alleviation Program.
I think all the initiatives taken develop in the direction of development, not only of economic growth and this way the Mediterranean region needs development to promote the growth of individuals by granting access to credit which at the same time produce social cohesion and social inclusion.
The model of the Italian Poverty Alleviation Program may be adopted in other areas of concern and by other actors in the Mediterranean region and, because of its success, I am sure it will.
Mr Antonio Vigilante, UNDP Country Representative
Thank you, all of you, I am really pleased to participate in this workshop today, which celebrates the International year of Microcredit and also the achievements of the Italian Cooperation Poverty Alleviation Program (PAP), a very successful project which has achieved impressive results in reducing poverty, in creating new job opportunities for the poor and in empowering civil society over the last seven years.
Yet this is another project proving that microcredit can change the lives of the poor, and that this is a powerful poverty alleviation tool. Therefore, we at the United Nations and those who operate in the area of microcredit do consider PAP as a best practice. As a matter of fact, this project not only provides the poor with financial services and economic security, but it also helps to increase household income. At the same time, the whole process also stimulates the local economy.
It is estimated that only a small percentage of the economically active poor in the world have access to and enjoy the basic financial services. With these words, I do not only mean credit but also savings, microinsurance and money transfer. To be able to reach the Millennium Development Goals, there is a consensus within the developing communities to go on bridging the gap between the supply and the demand of microfinance in a sustainable manner; this is why the UN has called for the dedication of these hopes to promote the building of inclusive financial sectors, so as to strengthen the powerful but often under- utilized initiative spirit of the poor.
Although Egypt has more than 30.000 active clients and has invested more than 60 million dollars in microloans, the percentage of market penetration does not exceed 20% of the estimated market demand, which ranges from 1.5 to 2 million people. This means there is a growing demand of microcredit usage. A new encouraging development has emerged in the microfinance sector in Egypt: the introduction of group lending mechanisms.
The percentage of female borrowers is attracting the donors’ interest and it is increasing together with the growing interest of commercial banks to meet the poor’s demands even when seen as "non bankable"; this means that something is actually changing in the microcredit policy and this change is practiced in Egypt. The Egyptian microfinance enterprise is still under development though also because there is lack of clarity in microcredit policies. In 2005, UNDP in Egypt together with the Central Bank of Egypt, particularly the Egyptian Bank Institute (EBI), started a microfinance initiative to develop the first "National strategy of microfinance in Egypt".
This project is aiming at defining a framework to increase the efficiency and effectiveness of concerted governmental, non-governmental and donor actions in this sector and this will be carried out by developing a shared vision which promotes the self-sustainable and commercial microfinance sector. The articulation of a "National policy and strategy and the development of an action plan" is taking place in coordination with the Social Fund for Development, which will provide a menu of priority activities for microfinance institutions in Egypt.
It is important to note that the needs of small and microenterprises are not limited to financial services, but also to equally important non-financial services. In fact, in Egypt, like in many other countries, these kinds of initiatives normally use traditional and simple technologies, are related only to the local market, and mainly produce uneven quality goods. In the long run these initiatives may end up with limiting the development of these enterprises themselves. Therefore, the non financial services that entrepreneurial communities need - such as information service, marketing services, strong and consulting technical systems - have to be provided in an integrated fashion together with microcredit services. This is precisely also what we are trying to do in the United Nations together, for instance, with such valuable partners as the Governors of Minia and Giza, who are with us today.
So today we are here to celebrate, but also to set up a discussion forum with all the actors involved in the development process so to increase our efforts to make sure that all the poor have access to fundamental mechanisms which help them overcome their status of poverty; I mean here not only the status related with income growth but also the one related with human growth. PAP is one of the proper tools, microcredit is a proper tool, so let’s continue to work together to make the maximum use of these possibilities.
Gen. Hassan Hemada, the Governor of Minia
Mrs Ameena El-Guindi, the Minister of Insurance and Social Affairs, H.E. Antonio Badini, the Ambassador of Italy, Dr Fathi Sa’ad, the Governor of Giza, Mr Antonio Loche, the Italian National Committee for the International Year of Microcredit, Mr Antonio Vigilante, United Nations Coordinator, ladies and gentlemen, I am very happy to take part in this Program.
I would like to thank the president of Italy for his cooperation with Egypt in accomplishing significant objectives by means public foundations, which are considered to be one of the most important fields on which Egypt is concentrating its efforts at the present.
In particular, we take into consideration that the role of the civil communities, through public foundations and business foundations, is aiming at supporting decentralization and highly democratic processes. As a matter of fact the civil community participate actively in facing problems and planning solutions so to be an effective participant in the process of decision taking.
This is what we believe in Minia and for this reason we have established an International Cooperation Administration, in order to facilitate the relationships between Donor countries and public foundations. We do so to try to abolish barriers, to involve the civil community, through public foundations, and to promote the active participation of learned people in the activities of the executive and public agencies. We aim also at supporting the analysis of problems and at limiting their effects. And this is to be considered a very important step in order to reach a comprehensive and sustainable development in all fields.
We have started working on this project since 2001 with 16 CDAs distributed in 5 administrative centers, and up to the end of March 2005 the project has been implemented by transferring 5,662,500 EGP. So far, the project has financed 18,044 initiatives for an estimated value of 3,321,600 EGP and a repayment rate of 100%. These data, of course, indicate the active cooperation among the donor country, Italy, the public foundations and the Ministry of Insurance and Social Affairs.
The project also enhanced the growth of sustainable job opportunities and gave the chance to many students to continue attending courses and schools. I think that the most positive result of these microloan projects is the active participation in improving the quality of life of entire families and especially of breadwinner women, so to reduce the girls’ and the boys’ dropping out of education. This result is also due to the establishment of an information center in the village where 2,300 young boys and girls work.
Social activities are fundamental for PAP and its functioning: PAP is first of all a poverty alleviation program aiming at improving the standard of living of the communities through microcredit. That is the reason why, whenever a loan is repaid, the money collected in the revolving fund is immediately re-used to finance families with difficulties: widows, bread winner women, poor people.
Thank you.
Dr Fathi Sa’ad, the Governor of Giza
Thank you. First, I am extending my greetings and appreciations to all the prominent attendants to the seminar. This is an occasion to celebrate the continuity and to mark the importance of the Egyptian - Italian cooperation.
Today we celebrate the efforts and we also celebrate the creative and productive cooperation between the two countries exerted at different levels. This project started in Giza in 1998, and at that time the Italian subsidy was about 6 million dollars, which were distributed to 12 public assemblies in 7 geographical regions in Giza. The aim of the project was not only the economical but also the social development.
Afterwards 19,625 projects have been financed in Giza for an overall amount of 4,200,412 EGP, and on this project many studies and researches, more than 3,000, have been set up together with training programs. The project has created 13,658 job opportunities and also it has also supported the achievement of qualifications required by the foundations working in the field, no matter if the qualifications required have been related to the knowledge of administrative or financial matters and to the skills in administrative or in language or computer fields and so on.
Finally I would to thank again, Mrs Ameena El-Guindi, the Minister of Insurance and Social Affairs, H.E. Antonio Badini, the Ambassador of Italy, and all those who have given their valid contribution to the success of this project.
Dr Talaat Abd El Malek, Ministry of International Cooperation
Good evening, I am sending my appreciations and happiness to all the attendants and I would like to extend the regret of Dr Fayza for not being here to attend this important event; in addition I am very pleased to have the honor to deliver the Minister’s remarks.
First of all, I look forward to receiving the summary of the seminars’ discussions as I am confident that there are many lessons to be learnt from the experience gained in this initiative, as well as from the others that will be reviewed during the seminar. The UN Declaration of the year 2005 as the International Year of Microcredit has a special significance, because it constitutes an important step in highlighting the substantial potential benefits of ensuring easier access through small and microenterprises to financial services that meet their needs. As we all know, this initiative goes beyond the credit system and extends to a wide range of financial and non financial services.
As many of us know the interest in dealing with the challenge in Egypt goes back 30 years or more, however, the past 12-15 years have witnessed increased attention and more intensive activities, that are now producing tangible results: as a matter of fact, we can record that an increasing part of the informal sector accounts for a substantial share of economic activities the country.
As Mr Antonio Loche said, there is more in microcredit than helping the poor for a better living; that tool is a means of social cohesion. Moreover it is estimated that not more than the 22 % of the total demand of financial services have been met at present, and the enormous gap between supply and demand calls for intensified and coordinated efforts by all concern, including the support from development partners.
In fact, we acknowledge the contribution made by our partners, including the Italian cooperation, the UNDP, the World Bank and USAID among others. Each partner has added experience that has enriched our knowledge base so to enhance coordination among partners and thus minimize duplication; in addition to this, we aim at expanding the geographic coverage of assistance and at improving its overall effects.
On the Egyptian side, significant progress has been made in recent years to modernize legal and regulatory reform issues, to institutionalize and strengthen policy matters and measures pertaining to microfinance. However, we do realize that more work is necessary on the three fronts, including the development of a more integrated and supportive policy framework
A positive note in your seminar is the blend of experiences brought together and the review of our local experiences on the part of our contributors like the Italian Cooperation, the Grameen Foundation, the Sanabel representatives and others.
These contributions will improve our understanding of what works, what does not work and how we can benefit from the best experiences. Two important lessons that have already been learned across many programs are: first, the need to strengthen the technical and managerial capabilities in projects and activities in this field; secondly, the need to put even more emphasis on equipping beneficiaries with the skills to manage their income generating activities. To end up, let me offer my sincere congratulations to all those involved in PAP, to our Italian partner, as well as to Her Excellency the Minister of Insurance and Social Services and the Governors of Giza and Minia for their constant support and encouragement. Their presence here today is a clear indication of their commitment to sustain the success of what has been achieved so far. Thank you.
I am very happy to be here today to open this important seminar on microcredit, sharing the honor with Dr Ameena El-Guindi, the Minister of Insurance and Social Affairs, and with all the attendants. Thanks for your very hard work; we can testify that the model that we have established could be a model and an example for the International community. I want to say to all of you that you are very clever; therefore be proud of your success, you honored your country and your friends who trusted you.
Today we celebrate the conclusion of the bilateral implementation of the Program which from now on will be completely managed by our Egyptian friends. To all of you, I wish to express both mine and my Country‘s appreciation. At the same time, I also confirm that Italy intends to continue on working together in the path of development, because we are convinced that microcredit is a very valuable tool for self-fulfillment and also as a very valid mechanism in poverty alleviation.
The initiative of the Secretary General of the United Nations of declaring 2005 the International Year of Microcredit, is, in my opinion, very appropriate, and I fully share what has been said by Dr Vigilante, who is the resident coordinator of the UN in Egypt, and by Dr Loche, who is the secretary of the Italian Committee for the International Year of Microcredit. I am confident that this seminar will provide us with all the necessary informative details on the "revolution" of microcredit and microfinance, and how they have been implemented by the Italian cooperation in Egypt through the Poverty Alleviation and Employment Generation Program.
On my side I would like to share with you some considerations based on what I have seen during my field visits to Minia and Giza Governorates, where I managed to notice remarkable progress in implementing the Poverty Alleviation Program.
PAP started in the Governorates of Giza and Minia, and immediately revealed to be successful and proved that a new process of participation and involvement of the entire community in managing the microcredit resources has started. All the beneficiaries I have met are becoming actors in their community through this process which promotes a very effective interaction between local authorities, local institutions and civil society.
I am sure that the Governorates of Minia and Giza will achieve remarkable and successive goals in implementing the future programs on microcredit.
Thank you.
I am very pleased to be here today with the distinguished attendants and guests. We are here to celebrate an important issue, which is poverty alleviation, and the fruitful results achieved by PAP.
I will talk about the efforts exerted to alleviate poverty, the fight of which is considered to be a big challenge in a period, like ours, of great economic changes in all the countries in the world. The issue of the poverty alleviation was at the top of the document passed at the UN Copenhagen Conference in 1995. After that, the Summit of New York, in 2000 issued the objectives of the millennium and among them poverty alleviation was set at the top; this indicates that it is a significant matter for all societies, especially in the fields of equal opportunities, in achieving relative justice and in acquiring skills and abilities which constitute the so-called Human Development.
Under this strategic framework, many Egyptian Ministries have set up many programs to support poor people’s development: for example, by helping poor households - a program adopted by Nasser Social Bank, which particularly deal with the poor and the low-income people, and also by supporting small projects and microloans in the different governorates. In addition, there is a project supported by the Government regarding youth housing which aims at providing young people with housing at low cost price, or through a cooperative loan.
In brief, the issue of poverty is first priority in the Egyptian plans, and is related to all the stages of social dimension, and is also related to all the economical reforms. According with the overall strategic framework, there is a strong and close cooperation with the International Agencies, and common efforts usually show a great impact on achieving effective policies. Among these, PAP is one of the programs supported by the Ministry of Insurance and Social Affaires, through the help of the Italian Cooperation, and this has had a huge impact on local communities especially through its related social activities.
Another advantage involved in this project is the self-sustainability of the CDAs, which operate according to a logic of independence from grants and assistance. All these show the advantages linked to the project, and I believe that these inputs on which the project depends are paving the way to continue in the future.
I would also like to take the opportunity of raising an issue which is rather relevant for the subject and which is the participation of civil community agents like public foundations, the private sector and the government, together with the international community. Recently, in Egypt, a controversial issue has emerged and concerns the international cooperation with the local assemblies: as a matter of fact, international actors tend to support local communities and I consider this a positive attitude.
We know that public foundations are vital, because directly engaged with society; they have the power to recognize the real needs of the local community and for this reason we are supporting the strategic attitude of dealing with the local assemblies.
Besides, the role of the Ministry of the Social Affairs is not limited to the supervision of these public assemblies, but also is to that of being a supporter and an active participant in the activities of the assemblies.
Thank you all for your productive and fruitful help, and I am presenting special thanks to the Governors, to the administration staff, and to all those who are engaged in the field in all the regions. |