The Global Microcredit Summit 2011: Presenting the Case for Micro Pensions

21-Dec-2011    A report on the fifth Global Microcredit Summit 2011, which took place between November 14 - 17 in Valladolid Spain.

Over the last decade the microfinance sector has seen an exponential growth. The number of poor families with a microloan has grown more than 18-fold from 7.6 million in 1997 to 137.5 million in 2010. Various speakers addressed these developments and the controversies that emerged from them. An estimated 2000 people participated in the summit, with the question how to get microfinance back on track as an often recurring theme.

WorldGranny director Caroline van Dullemen was present at the Global Microcredit Summit 2011 as a panelist for the conference workshop “When clients grow old”. It was the first time since it’s the beginning of the annual conference 5 years ago that a reference was made to the aging of microfinance clients.

In this particular workshop on older clients, reference was made to the importance of age in addressing client needs during their entire life cycle. Author of the paper was John Hatch, founder of FINCA International. In a personal introduction he told the participants he founded FINCA at the age of 44. Twenty-one years later (2006) he was FINCA’s first retiree. During that quarter-century it never once occurred to him, nor his colleagues, that older clients might require specialized loan, savings products, and other services; nor that failure to address these clients’ special needs could reverse decades of effort by them to lift their families out of poverty; or that lack of a pro-elderly strategy could jeopardize an Micro Finance institution’s (MFI) successful mission compliance.

But once retired himself, a host of new questions arose. How does an older client of an MFI manage his or her senior years? How does he/she survive without a pension, social security, significant savings, or health insurance? What does he/she do when his/her children move elsewhere, when subsistence contributions from those children disappear? If an older client is mostly dependent on the fragile income generated by his/her own microenterprise, how does he/she cope with a sudden illness, accident or death of a relative?

Besides Van Dullemen, the panel consisted of Reynold O. Walter; President, Regional Commission on Micropensions REDCAMIF and President of the Technical Committee on Micropension Projects in Central America, Alex Dimaculangan; President - CARD MRI Insurance Agency and Jack Kupferman; Attorney, NGO Committee on Ageing, USA. The first two men had experience with micro pensions. Mr. Walter was in the process of setting up a pension fund for MFI’s in Guatemala, Nicaragua and Honduras with the assistance of the Pension & Development Network. CARD has been running a micro pension scheme since more than half a decade, not without serious challenges.

Van Dullemen presented some figures on global aging and focused on the fact that women on average live longer, but have on average less access to finance and means of production. In her view, micro pensions or any other innovative forms of savings and insurance are a prerequisite for further socio-economic development. If not, the middle generation will be seriously hampered by the financial burden of their aging relatives.

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Central America: REDCAMIF

The P&D Network will provide technical support to REDCAMIF, a network of MFIs in Central America, which is piloting a micro pension project in Guatemala, Honduras and Nicaragua.
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