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Microfinance: harnessing enterprise to fight poverty PDF Print E-mail
This new report by the Globalisation Institute says that microfinance is not being taken seriously by the Department for International Development.

In October, it was announced that the Nobel Peace Prize would go to the founding father of microfinance, Dr Muhammad Yunus, who created the Grameen Bank in Bangladesh. However, microfinance remains tiny in Africa and receives scant support or encouragement from DFID.

The report criticises DFID's obsession with "big push" approaches to fighting poverty, arguing that enterprise-based solutions to poverty like microfinance might not sound as dramatic as the top down approaches that DFID favours, but that out on the ground, they are the ones that are working.

In order to get DFID to take microfinance seriously, the report calls for DFID to have a team focussing on microfinance, assessing what works on the ground, with a head reporting directly to the Secretary of State on a monthly basis.

It also calls for the Secretary of State for International Development to host an annual summit on microfinance in London, drawing together the leading figures in the world of microfinance and the major international banks, to encourage greater private funding of microfinance and to promote the exchange of expertise and best practice.

Both the Government and the Opposition are committed to increasing DFID's budget to 0.7% of GDP. The report says that a greater proportion of the DFID's increasing resources should be devoted to the support and promotion of microfinance, particularly in Africa where microfinance is yet to make to difference it is capable of.

However, while there is a role for initial help from DFID, in particular with technical assistance, the report says that microfinance institutions must be business-orientated and generate a return on capital so that they can be sustainable and expand to take on a greater number of clients.

The report also cautions against a "one size fits all" approach to microfinance. The Grameen model of microfinance cannot simply be copied to Africa and suggests that a network of Village Microfinance Banks, which are being established on a small scale in rural Kenya, could offer a better model for Africa.

According to Alex Singleton, Director-General of the Globalisation Institute: "Professor Muhammad Yunus and thousands of other creators of microfinance institutions globally have shown the power of enterprise-based solutions to poverty - solutions that help poor people lift themselves up the economic ladder. If DFID is to have a major role in fighting global poverty, it needs to start taking solutions like microfinance seriously."

The report is available here.
Water for Life PDF Print E-mail
Water for LifeCampaigners like the World Development Movement say water should not be sold for profit. But this report by Mischa Balen, a Labour Party activist, points out that private sector management and investment in water systems has actually been very successful, increasing access to water, cutting disease by introducing sewerage systems, and reducing prices for ordinary people. It says that groups like the World Development Movement are putting ideological purity before water purity. They choose, the report says, “not to compare private provision in reality with state provision in reality, but private provision in reality with a mythical, utopian state provision which does not exist in the real world.”

The report takes issue with the mistaken claim that poor countries are being forced to privatise their water systems by the British government, pointing out that DFID only provides help involving the private sector where developing countries have themselves asked for it. While campaigners claim they want developing countries to make their own choices, they campaign against the wishes of those countries’ democratically-elected governments who correctly recognise the value of bringing in private sector expertise and investment.

Download report (PDF). 

Trade Justice or Free Trade? PDF Print E-mail
A report published during Trade Justice Week 2005 argues that free trade, not 'trade justice', is the solution to world poverty. Trade Justice or Free trade? points out that countries that have followed 'trade justice' have stayed poor, while those - like Hong Kong - which have adopted free trade have become rich.

There is a human cost of changing jobs and switching production. But this human cost is much smaller than the human cost of not following free trade. For the world's poor, free trade - though challenging and disruptive to traditional ways of life - brings hope. Last year, it led to millions of people being lifted out of poverty in India alone. Certainly, there is a case for the poorest countries to be helped in adjusting when markets are opened for the first time, as in the case of ending the Multi-Fibre Agreement. But the cost of adjustment should not be used as an excuse to reject what - in the long run - is the real solution to poverty.

Download report (PDF).

2005 and Beyond: The Future of Trade, Development & International Institutions PDF Print E-mail
Razeen Sally - Europe's most senior trade economist - says the WTO is becoming ineffective. Hyperinflation of the membership has almost crippled decision-making. The WTO has become much too politicised, buffeted by external criticism and with deep internal fissures. 

In the report, he suggests what needs to happen to the WTO to get it back on track, but also argues that instead of relying on the WTO to lower protectionism, countries should follow a Nike strategy - they should "Just Do It!" Because getting rid of tariffs is good regardless of whether other countries do the same, we should liberalize anyway. Moreover, Dr Sally points out that the big successes in free trade are already coming "from below", rather than thanks to international institutions and agreements

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Green and Pleasant Land PDF Print E-mail
Green and Pleasant LandThe Prince of Wales' vision of a countryside producing high-value, organic food is the right one, according to this report. Green and Pleasant Land says that the CAP - rather than being the saviour of the countryside - has been an environmental disaster, creating pollution with no economic benefit, and requiring more chemicals and energy use than had market forces been allowed to run. By encouraging the pre-emptive use of antibiotics, it threatens to create antibiotic-resistant diseases. It imposes costs on taxpayers, consumers, other industries and the environment - for benefits described as "trivial".

The abolition of the CAP should be twinned with a one-off payment to farmers to help them adapt. But while there will be less farming, it is a myth that the end of CAP will be the end of the countryside. There will still be a market for British produce, but in largely high-priced, non-intensive produce.

Download report (PDF).