Reducing Poverty by Improving Access to Credit

The basis for any long-term solution to poverty rests in a community’s ability to help those living in poverty raise their own incomes. Low-income Americans are capable and hard-working. What they lack is not initiative, but opportunity and access to credit. As one woman working to establish her small business in Colorado said to me, “Too many great ideas die in the parking lots of banks.”

Members of AEO know the importance of microenterprise. You have provided people across our country with opportunity — the opportunity to borrow small amounts of money and prove that all kinds of people are credit-worthy. You have given people the opportunity to gain technical knowledge to start small businesses or to bring some great ideas to life, and most important, to improve their own lives and the lives of their families.

In my travels throughout our country and around the world, I have seen first-hand the transforming effects small loans can have, especially for women and their families in both the developing and developed world. At the Grameen Bank in Bangladesh, I met a woman who used a small loan to buy a milk cow. After she paid off the loan with proceeds from the milk, she took out a loan for another cow. After repaying that loan, she decided it was time for her husband to help increase the family income. She took out a third loan to help him buy a rickshaw.

And I met a woman in Chile whose whole outlook on life was changed by the fact that someone took a risk and lent her money to buy a sewing machine. She said she felt like “a bird freed from its cage” when she received her first loan.

I became a believer in microenterprise years ago, when my husband was governor of Arkansas. We combined elements of the Grameen Bank and Chicago’s South Shore Bank to create the Good Faith Fund. It began to make the kind of investments in that state that we wanted to see throughout the country.

Whether it is for a milk cow in Bangladesh or for a computer in Chicago, women and men need help, encouragement — and credit — to make that first investment. Here in the United States, we are working to build up a micro-enterprise network. It is still very young, but already several hundred programs, most of them represented here today, have enabled tens of thousands of Americans to gain access to credit and training as well as something more fundamental: self-respect and self-sufficiency. Some of the people served by these programs are on welfare. And they just needed a little help — a jump start — to realize their own potential. But too often that jump-start is hard to come by.

Last year at the United Nations Fourth World Conference on Women, where I was privileged to represent our country, the United States made two commitments to further self-employment and micro-enterprise in the United States. First, the President established a new Presidential Awards program to honor outstanding and innovative programs that provide access to credit, training or technical assistance to microentrepeneurs and potential microentrepeneurs. Today, we are happy to announce the structure of these awards.

The President also directed the Treasury Department to coordinate microenterprise programs across a number of our federal agencies to help ensure that those programs are doing the job they were designed to do. Additionally, the United States will continue to support microenterprise in developing countries through USAID.

In today’s global economy, microenterprise development needs to become a key element in providing economic opportunity for women and men everywhere in the world. I now have the pleasure of introducing Treasury Secretary Robert Rubin, who will discuss the Administration’s initiatives and particularly the creation of the Presidential Awards for Excellence in Microenterprise development.

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