PRIME MINISTER'S SPEECH AT GLOBAL MICROCREDIT SUMMIT AT HALIFAX (CANADA)

Your Majesty The Queen of Spain

Mr. Peter MacKay,

Foreign Minister of Canada ,

Mr. Sam Daley-Haris,

Director, Micro-credit Summit Campaign, .

Dr. Mohammad Yunus,

Member, Campaign Executive Committee,

Excellencies,

Ladies and Gentlemen,

It gives me great pleasure to be in your midst today at the opening session of the Global Microcredit Summit. The Conference brings together many distinguished luminaries who will share their insights and experiences relating to microcredit and generate useful debate about the issues concerning this important sector.

The holding of this Conference synchronizes with the award of Nobel Peace Prize to Professor Yunus who has become a household word in the field of microcredit through his successful model of the Grameen Bank in Bangladesh . Professor Yunus has set a sterling example of a lifetime commitment to the service of the poorest of the poor in his country and through the resounding success of his model showed the way to the rest of the world where such interventions are needed. we are really honoured by his presence here and I am sure you will all join me in recognizing his lofty mission and give him a big hand. Worldwide recognition of his work has indeed generated a great deal of enthusiasm amongst the microfinance community and will certainly help in raising the profile of microfinance within the global development agenda.

Ladies and Gentlemen,

Before I share with you my views and perceptions on the subject of rnicrocredit and our own endeavours and experiences in this regard, let me express my appreciation for the contribution made by the Microcredit Summit Campaign since 1997. It is indeed encouraging that the core target of the first 9­ year campaign to reach hundred million of the world's poorest families with micro-credit for self-employment has been achieved. I also welcome the objective of this Summit to officially launch the campaign's extension to 2015 by which time it is hoped to ensure that 175 million of the world's poorest families, especially women, receive credit for self-employment.

Ladies and Gentlemen,

As you are aware, globalization is the keynote feature of the present age.

The new world order is characterized by economic integration. Buoyant expansion of global trade and capital flows as well as freer exchange of ideas and technology across the 'Nmld provide vast opportunities for growth but at time same time pose serious challenges in terms of widening inequality between rich and poor nations and creating islands of opulence amidst oceans of poverty. Within developing countries, vertical divisions by way of social inequities are nursing a sense of deprivation, while horizontal cleavages along ethnic, tribal and linguistic lines are sometimes a-source of unrest.

Despite gains from globalization, I/o/e continue to live in a world overwhelmed by multiple and complex challenges. War, illiteracy, poverty, pandemics, social injustice and intolerance still haunt us. Poverty in my view is the gravest challenge facing humanity at present. Poverty and social deprivation lie at the root of extremism. Extremism breeds in a festering sense of injustice and denial of economic opportunity. The world community has, therefore, a moral obligation to address the issue of poverty in all earnestness and work together with utmost sincerity and commitment to "find ways and means of creating employment and income generating opportunities for the poor segments of society.

This puts in perspective the pivotal importance or microcredit in poverty alleviation. Poverty is a complex and multi-dimensional phenomenon. The poor suffer from lack of income and assets; they have little or no access to basic human needs such as health and education; they are handicapped because of social exclusion and lack of voice. Multiple interventions are required to cause a dent into poverty. However, a lasting and sustainable poverty reduction strategy must focus on creating income generating avenues for the poor and disenfranchised, particularly women.

The critical role that the concept of 'access for poor to financial services' plays in reducing poverty is now much better appreciated by the world and providing greater access has become a key part of the international development agenda, including the Millennium Development Goals.

Ladies and Gentlemen,

The challenge for us now is to improve the coverage and outreach of microcredit to the majority of poor population. There is a need to adopt a holistic and inclusive strategy for promotion and spread of microcredit in countries with high poverty levels. Such a strategy, to be effective and sustainable, must rest on the following pillars:

Firstly, governments in developing countries must demonstrate a strong political commitment towards supporting microfinance as an integral tool of poverty alleviation programs.

Secondly, it must be understood that provision of finance is a necessary but not a sufficient condition of reducing poverty. The easy and adequate availability of funds should be coupled with programmes to impart technical and vocational skills to the poor in order to enable them to use the money for sustainable income generation. Similarly complementarities between microfinance and other elements of poverty alleviation strategies such as social services, infrastructure and capacity building should be clearly recognized and built into the programme. That is how microfinance can change the lives of people and win their minds and hearts.

Thirdly, the successful delivery of microcredit requires the involvement of multiple actors and institutions - public agencies, private sector, community organizations, rural support programmes, civil society - to facilitate social mobilization and to ensure its outreach to the target group.

Fourthly, there is a need to secure commitments at the global level with governments and multilateral institutions to ensure fiscal, macroeconomic and regulatory frameworks that support the growth of microfinance.

Lastly, microfinance should be mainstreamed into the "financial sector as a commercially viable proposition. This would ensure the participation of the private sector and provide capital for meeting the requirements of a huge market for microfinance services.

Ladies and Gentlemen,

The strategic framework for development of microcredit as a powerful tool of poverty reduction that I have unfolded before you is based upon our own experience in fighting poverty in Pakistan .

Since 2000 we have successfully implemented a macroeconomic stabilization programme and wide-ranging structural reforms, which have put the economy back on the track of sustainable growth and poverty alleviation. We are now one of the fastest growing economies in the region and hope to sustain, a high growth trajectory of 6 to 8%. Our poverty reduction strategy has brought down the number of people below the poverty line from 34.5% in 2001 to 23.9% in 2005. In other words, 13 million people have been lifted out of poverty in just four years.

In order to ensure that the benefits of economic growth reach all sections of population and all regions of the country, our government has implemented a Poverty Reduction Strategy built upon four pillars. These include accelerating growth, investment in human development, promoting self-employment through microfinance, and social safety nets for the most vulnerable groups.

Conscious of the importance of microfinancefor poverty alleviation, our government has established strong foundations of microfinance in the formal sector along with extending support to civil society institutions. Khushhali Bank was set up as the first specialized microfinance institution in 2000. In 2001, a new law, namely the Microfinance Institutions Ordinance was promulgated to provide a separate regulatory framework for microcredit institutions. As a result,

during the last five years, four specialized microfinance banks have been established at district level.

We have adopted a variety of institutional models to increase the coverage and outreach of microcredit to the poor. To give you a few examples, the Pakistan Poverty Alleviation Fund has been working since 1999 as a wholesale organization for credit disbursement. Secondly, integrated vehicles such as rural support pogrammes combining microfinance with other activities have been introduced. Thirdly, some commercial banks and leasing companies are also providing lines of credit for microfinance. Lastly, we are encouraging the private sector to come forward and the regulatory role of the central bank is that of a policy maker, enabler and facilitator. Our policy framework promotes public-private partnerships and private sector initiatives.

These initiatives have led to positive outcomes as evidenced by substantial growth in the microfinance sector in Pakistan over the last six years. This growth has been witnessed on all fronts and is evidenced by increase in the number of microfinance players, entry of greenfield microfinance banks, entry of commercial banks, diversification of products, manifold increases in the number of borrowers and development of distribution networks as conduits for income generation, particularly for women, landless farmers and workers without assets.

We are combining microcredit with skill development and social mobilization as a comprehensive strategy to enable the poor to make the best use of borrowed resources. We are developing a technical education and vocational training system to produce 0.95 million skilled work force annually by 2010. An umbrella organization has bee created to act as a policy formulator, facilitator, standards provider and monitor at the national level. Strong linkages are being developed between technical education and industry. Skill development of the female and the poor is being accorded the highest priority. Ladies and Gentlemen,

In conclusion, let me say that we have to learn from each other. We have to share our insights and experiences. We have to adopt the best practices which have shown good results. Of course, each country has its own specific conditions and circumstances and has to adopt solutions accordingly. However, fighting poverty requires a common platform and concerted action by the world community. All countries, rich and poor, developed and developing, industrialized or emerging, have to join this battle. We have to pool our energies and resources to rid the world of poverty, hunger, disease and deprivation. That indeed is the surest approach to create a stable and secure world, a safer and happier world for our present and future generations.