The Government of Canada recognizes the importance of microcredit as a mechanism to help people, and especially very poor women, find a pathway out of poverty and to achieve dignity and self-sufficiency. CIDA has long been active in microenterprise/microfinance, ME/MF, development, and early on, supported institutions which are now regarded as leaders and innovators in the field.
The Microcredit Summit held in Washington D.C. in February 1997 pledged participants to reach 100 million of the poorest families with credit by 2005. The hon. member mentions $1.7 million spent by CIDA in microcredit programs. We believe that this figure may have been taken from an article in La Presse by the hon. Minister for International Cooperation and Minister responsible for Francophonie in October 1997. The article actually refers to 1.7 million people, a calculation of the number of people CIDA as a bilateral donor would be expected to reach in the Microcredit Summit's campaign.
In fact, CIDA already would surpass this objective. But more importantly, as the minister's article also pointed out, the spirit of the summit lies not in detailed accounting, but in ensuring that we work together to create the structure, systems and viable institutions that can provide the services that are needed by people struggling to get out of poverty. CIDA, through membership in the Microcredit Summit, the Consultative Group to Assist the Poorest CGAP, and other networks, is actively engaged in improving the quality of its microfinance programming and its collaboration with partners.
We do, however, acknowledge that we have shortcomings in our information on the amounts and breakdown of our support in this field. CIDA is not alone in lacking precise information. The microfinance industry is young, and the donor community is still in the process of agreeing on common definitions on what we are measuring. It is important to emphasize that donors' support is not always just directed at microcredit. For example, CIDA supports savings co-operatives. We also support policy change to create an institutional and regulatory environment that allows microfinance institutions to work effectively, and that allows businesses of all sizes to prosper. We support integrated programs in which credit is just one part. Our experience tells us that microcredit can be an even more powerful tool if complementary policies and systems are in place: adequate health care, good basic education, roads and infrastructure.
CIDA supports about 100 projects addressing microfinance/microenterprises in developing countries in Africa, Asia and the Americas. Our support for microfinance has three principal routes: bilateral projects, partnerships with non-governmental organizations NGOs, and contributions to multilateral organizations. As part of our institutional action plan, we will be developing an inventory of projects for each bilateral branch. These will be made available to all interested parties when completed. We are working closely with CGAP, a microfinance facility based at the World Bank on standard definitions, in order to ensure that donors' reporting is reliable and comparable.
In the longer term, the information renewal process currently under way in the agency will help us to get more timely and detailed pictures of the agency's activities in this and other areas. We recognize that our efforts to strengthen the overall quality of programming in microfinance requires that we have better information, where our resources are being spent.
CIDA also has been active in learning how to reach the poorest of the poor, understand their needs, and recognize and respect cultural, ethnic and religious diversity when designing and delivering services. While there are frequent claims that microfinance reaches the poorest, the evidence available goes both ways. Indeed, there are practitioners who believe that in some contexts, the poor may benefit from microfinance, but the poorest would be better off if they did not take on the debt represented by microcredit, and instead were reached by other interventions. Canada is chairing the CGAP Working Group on Poverty Yardsticks and Measurement Tools, which is seeking to refine our methods for having microfinance reach the poorest of the poor. Achieving this is a major challenge for the industry as a whole. Even if we can do so, it will not be the answer to all our problems. The roots of poverty are far too entrenched and complex to be overcome by any single development technique or strategy. The poor need access to many other things, and we need to recognize which interventions can be most catalytic for poverty reduction in given circumstances.
In addition to the issues raised in this question there is another vital point that must be added: While the amount of resources going to microcredit is important, the issue of quantity must not obscure the more important concerns surrounding quality. This more than any other point is the key shortcoming to just using numbers to represent achievements in programming. On this, there are two further issues that need to be mentioned:
(a) Absorptive capacity. Many microfinance practitioners feel that there is limited ability of microfinance institutions in the developing world to absorb significant quantities of new finance. Therefore, while the Microcredit Summit is to be commended for bringing attention to microcredit to a wider audience, it must be emphasized that we need to be cautious about pressuring our partners to expand their activities. We see that one key strategic role for CIDA in the field of microfinance is to strengthen viable institutions which already exist, helping them on the road to further success. Our second role is to fund innovative activities in the hopes that the lessons learned will contribute to advancing the frontiers of this field.
(b) Best practices and industry standards. The microfinance industry has been focusing a great deal of attention in developing guidelines for both sustainability and outreach of microfinance institutions. CGAP, mentioned earlier, is a key mechanism for donor collaboration on best practices. Canada has played an active role on CGAP, whose primary goals are to strengthen the quality of programming in microfinance and to improve donor coordination. Most donors, including the World Bank, still need further efforts to bring their microfinance portfolios up to these standards. CIDA is actively pursuing this quality issue in our own programming.