Coady Helping Canada Bring Microcredit to World’s Poor

From The Globe and Mail - Nov. 14, 2006
By Mary Coyle Director of the Coady International Institute

When this year’s Nobel Peace Prize was awarded to a Bangladeshi economist, Muhammad Yunus, and the Grameen Bank, for pioneering work in providing microcredit to the world’s poor, Canadians deserved to feel a certain national satisfaction.

Apart from Canada’s own long record of pioneering work in the field of microcredit, the Canadian International Development Agency (CIDA) was one of the institutions that provided early financial support to help Mr. Yunus launch the Grameen Bank more than 20 years ago.

Microfinance may not be the endeavour in which most Canadians see their national destiny. But Canada has played a notable role in the effort to provide credit and savings services so that the poorest of the world’s working poor can finance their own small businesses and lift themselves from poverty.

The pity of it is that while Canada is having a major impact in the developing countries of the world — Ottawa just pledged $40-million over the weekend to support microfinance projects in countries such as Sri Lanka, Afghanistan, Benin and Nicaragua — what Canadians and Canadian organizations have accomplished seems to have been under the radar at home.

Improbably, the first recorded impact of Canadian microfinance abroad came as a result of an American missionary visiting Jamaica in 1939, in the wake of mass riots and political upheaval in the colony as a result of low wages and wretched living conditions.

Rev. John Sullivan was influenced by the small Nova Scotian community of Antigonish, where Rev. Moses Coady, a professor at St. Francis Xavier University, had set up study groups for local people to learn about the social and economic power of co-operative organizations. They formed credit unions to provide savings and credit services.

It was the model of what became known as the Antigonish Movement that Father Sullivan took to Jamaica and virtually the entire Caribbean — one of Canada’s first forays into microfinance in the developing world. In those days, it was not called microfinance or microcredit, but that’s what it was.

Responding on campus to the demands from increasing numbers of community leaders from Africa, Asia and the Americas who arrived on their doorstep to learn the Antigonish route to creating self-reliant societies, staff from the Coady International Institute would also travel the world to help create credit unions and other microfinance institutions.

In its simplest terms, it was financial missionary work, identifying the poor not as potential recipients of charity, but treating them with respect and seeing them as drivers and owners of their own salvation.

Father Coady defined the goal as to “become masters of their own destiny.” Even before Father Coady began his work in Antigonish and abroad, Alphonse Desjardins founded the first caisse populaire, a credit union, in the town of Lévis, Que., because French-speaking Quebeckers were excluded from most financial services.

The Mouvement Desjardins also attracted international interest, and by the early 1960s an international training institute was established in Quebec. The next stage for Développement International Desjardins was direct technical assistance and investment in financial co-operatives in the developing world. For Alphonse Desjardins, as for Moses Coady, this was, in effect, financial missionary work. It was certainly not an exercise to enrich its members at the expense of the general public.

“Neither is it a loan company, seeking to make a profit at the expense of the unfortunate,” he wrote. “The Credit Union is nothing of the kind; it is an expression, in the field of economics, of a high social ideal.”

Both Father Coady and Mr. Desjardins might have been surprised about the developments in recent years that have amounted to the commercial approach to microfinance — again an approach pioneered by a Canadian, Martin Connell, and his organization Calmeadow. The first stage in the changing of attitudes was to establish that the poor could use credit well and repay their loans –put simply, that the poor are “bankable.” The next stage was to prove that microfinancial services could be provided on a profitable basis. From there, the next stage was obviously to demonstrate that microfinancial institutions could provide a commercial rate of return.

Proving that the alleviation of poverty is not incompatible with profitability helps to demonstrate that the commercial approach to microfinance is feasible. The result is that the road has been opened to reach greater and greater numbers of poor men and women in the developing world.

Oddly, although commercial banks are engaged in microfinance, there are few major international banks based in developed countries that have moved into microfinance.

One exception to this pattern is a particularly happy Canadian collaboration. Among Canada’s major chartered banks only the Bank of Nova Scotia has directly engaged in microfinance in the developing world. Scotiabank’s largest microfinance project is a joint endeavour in Jamaica, launched in 2002, with the Mennonite Economic Development Associates (MEDA), CIDA and the Kingston Restoration Company. Their goal was to strengthen the economic base of local entrepreneurs, particularly women in Jamaica’s capital, Kingston, by providing reliable and sustainable financial services.

Calmeadow put Canada on the microfinance map in 1992 for its lead role in creating the world’s first commercial microfinance bank, Banco Sol in Bolivia. Today, MEDA helps local organizations to become commercial financial institutions that are locally owned with international investors.

Whether taking a co-operative or commercial approach, the pioneering Canadian organizations and their partners are affecting millions of women and men in hard to reach neighbourhoods and villages in every corner of the world.

Perhaps the best measure of the microfinance revolution is the scale of its goals.

When the first Global Microcredit Summit met in 1997, its goal was to reach 100 million of the world’s poorest people by 2005. That goal has now been reached and the target for 2015 is 175 million.

So, it is fitting that this year’s Global Microcredit Summit is being held in Halifax, not far from Antigonish and just east of Lévis, where Canada’s commitment to microfinance was born.

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