Microcredit. It is inextricably linked to the Grameen bank of Muhammad Yunus. But the commercial banking sector is also showing an interest.

By: Sharida Mohamedjoesoef

21 June, 2007 De Pers: Daily News (Netherlands) Dressed in an impeccable cream coloured linen suit, she is without doubt an elegant figure. Her melodious last name, a legacy of her Armenian father from Istanbul, only heightens this effect: Mary Ellen Iskenderian. She bade farewell to her top job at the World Bank and since September last year has been at the helm of Women's World Banking (WWB), an organisation that was founded over thirty years ago and can now boast an impressive network of microfinance institutions and commercial banks.

Mission: The relief of poverty in the world by the means of microfinance. It only takes a few minutes to realise why Mary Ellen is "Mrs Right" for this job. With her career, education and personality she epitomizes the ideal mix of warm idealism combined with a cool head for business. She was briefly in the Netherlands, hosting a conference together with the ministry of Foreign Affairs, on banking innovations with respect to microfinance, a form of financial service that is used by about 100 million of the world's poorest people.

It strikes me that the WWB is more inclined to use the term microfinance rather than microcredit. What precisely is the difference? "Microcredit, that is the small loans that we offer to poor people, is indeed used mostly, but we prefer microfinance as it is much broader. We promote the introduction of insurance, savings and housing products. We were pioneers but with the commercialisation of the sector, I want to be certain that in the future we can still play a relevant and active role."

Critics claim that microfinance is not reaching the very poor.

"That is probably true. Microfinance is not by definition targeted at the very poor but at that section of the population that choose entrepreneurship and wants to try and set up a business. This group is positioned as it were one tier above the very poor. At the same time this group of entrepreneurs forms an effective market, thereby lifting themselves and those people around them permanently out of poverty."

Despite the critics, the popularity of microfinance continues to grow. Why is that? "The current spotlight is for the most part due to Muhammad Yunus, the Bengal economist and banker who is seen as the founding father of microcredit, especially when he and his Grameen Bank won the Nobel Peace Prize last year. At the same time, more and more commercial capital is readily available. We are working together at the moment with 24 commercial banks, from Deutsche Bank and the Citigroups of this world to the local banks in developing countries."

Commercial banks interested in poor people? How come? "I believe that an increasing number of international financial institutions see microfinance as a means of honouring their social responsibilities. They are eager to be able to do good with their money. But there is of course also the business perspective: microfinance as a new market.

Your own ING recently dispatched two teams of volunteer experts to our network members in the Dominican Republic and Benin. The aim was to let our people there learn everything they could about the various aspects of the provision of financial services. Such expertise is much needed because microfinance institutions currently have an annual growth rate of between 70 and 100 percent. To be able to manage all of this we need much more knowledge in all areas, from human resources to IT."

You are in the Netherlands to talk to various parties about innovative microfinance. What does this mean in reality?

"Whenever people use the word innovation one immediately thinks of technology. That is undeniably part of the story, because if you want to reach more people you will inevitably end up in the IT sector. But innovation can also mean thinking about how we produce, market and distribute the product microfinance. Too often financial institutions do not really welcome their less affluent customers. That requires an inevitable mindshift. It is probably stating the obvious but our customer, irrespective of income, wants to be treated with respect." Read the online article