As the Nobel Committee prepares to award the Nobel Peace Prize to Muhammad Yunus and the Grameen Bank, we are all reminded again of the important role microenterprises can play in economic development and poverty reduction. In this era of globalisation, we face the dual development challenges of generating economic growth and reducing poverty.
The United States has long supported the extraordinary work of Dr Yunus. In 1965, as a young economist, Dr Yunus received a Fulbright Scholarship from the Department of State to study Economics at Vanderbilt University. Microenterprise development has been an important component of US foreign assistance for over 30 years. The United States has supported micro and small enterprises (MSEs) through assistance programmes that provide access to financial and business services; facilitate participation in markets and enable the poor to participate in business development. Around the globe, the US is the leading bilateral donor for microenterprise development, which includes microfinance. Last year we provided $211 million in microenterprise assistance. These funds have acted as a catalyst for additional funding by banks, other private sources, and multilateral institutions, thereby making more resources available for sound business initiatives by the world’s poorest citizens.
The United States Agency for International Development (USAID), the primary civilian foreign assistance agency of the US government, provides microenterprise funding for more than 3.8 million entrepreneurs and households throughout the world. USAID accomplishes this assistance in a variety of ways by supporting NGOs, credit union networks and financial institutions. Microfinance projects particularly assist women in developing countries, who have traditionally limited access to conventional financing. They also allow MSEs to take advantage of the benefits of globalisation through increased export opportunities.
As MSEs expand and integrate into the formal economies of their countries, they empower and transform the lives of the world’s poor, both women and men, create more jobs and higher incomes, contribute to economic growth and strengthen democratic societies. Announcing the award, the Norwegian Nobel Committee stated, “Every single individual on earth has both the potential and the right to a decent life. Across cultures and civilisations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development.”
The Nobel Prize is recognition of the key role microfinance plays in alleviating poverty and empowering citizens. As the Nobel Committee noted in its announcement, “Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Microcredit is one such means. Bottom up development from the grassroots level also serves to advance democracy and human rights.” Muhammad Yunus and Grameen Bank have helped create the enabling conditions for economic and social development from below. We salute them for their efforts to alleviate poverty and promote prosperity through innovative microfinancing and we look forward to working cooperatively with Dr Yunus and the microfinance community in the future.
Dan Sullivan is United States Assistant Secretary of Economic and Business Affairs