Microfinance

GLOBAL INVESTOR FOCUS
Microfinance—06
Editorial
The United Nations Organization has declared this year as the International
Year of Microcredit 2005. The objective of the initiative is to
make a noticeable contribution to reducing poverty over the next ten
years. Numerous loans of small sums of money should help the poor
to help themselves.
This idea was already successfully applied in the nineteenth century,
when Europe stood on the threshold between an agricultural and
industrial society. The notion of microcredit emerged out of consideration
for opening the door for small and microbusinesses to gain
access to capital in order to free themselves from poverty. The success
of this concept in Europe inspires confidence that herein lies one
of the keys to broadly underpinned economic growth in the emergingmarket
countries. The wealth of entrepreneurial imagination and the
ideas that people create in these countries – as well as the energy
that they expend to realize these ideas under adverse conditions – are
quite impressive, in our view. The resoluteness with which these individuals
work to enhance their standard of living can also be perceived
in their high level of morality, guiding them to promptly repay these
microloans – with interest.
The conservatively estimated demand for microcredit exceeds the
total amount of development aid provided by the Western world. Hence,
sustained development can only be achieved through private investment
in a sound economic system. Public-sector development aid is a prerequisite
for building up such a system, of which functioning microfinance
institutions and clearly regulated ownership rights are a part.
Among our wealthy clients, there is an increasing number of
investors who would like to invest some of their money in self-help
projects. These clients have an affinity for enterprising people in thirdworld
countries and feel the need to return something to society,
making a valuable contribution to bridge the great divide between rich
and poor.
Credit Suisse, together with partner banks, has founded the company
“responsAbility” and set up the corresponding responsAbility
Global Microfinance Fund to try and fulfill the needs of its clients in
this regard, thereby providing the requisite funding for microcredit.
Additional important details surrounding the microfinance theme
are available for investors in this debut issue of Global Investor
Focus – the first of a series that will in the future provide investors
with in-depth analysis of important longer-term investment themes.
Dr. Arthur Vayloyan
Member of the Executive Board of Credit Suisse Group
Head of Private Banking Switzerland