Mrs. Dewi Savitri Wahab
Permanent Mission of the Republic of Indonesia
on Agenda Item 24 (a) : “the Implementation of the Second United Nations Decade for the Eradication of Poverty (2008 – 2017)”
at the 29th Plenary Meeting of the 65th session of the General Assembly devoted to the consideration of the outcome of and follow-up to the International Year of Microcredit”
New York, 13 October 2010
Our meeting today takes on increased significance because it follows the search three weeks ago by the General Assembly for ways to accelerate achievement of the Millennium Development Goals.
Despite the multiple crises which have negatively impacted the global economy, leaders at the MDG Summit affirmed the need to achieve the goals by 2015 and bring an end to poverty. It was agreed that MDG 1, the eradication of poverty and hunger, remained the most critical challenge to development globally. Accomplishing that MDG will affect the attainment of most of the other MDGs.
Because of the capacity of microcredit and microfinance to create jobs and facilitate the business ambitions of the poor, the follow-up to the International Year of Microcredit (2005) represents a vital opportunity to successfully engage the challenge of poverty. The widespread use of such resources will therefore advance the MDG implementation process.
It is for that reason we have gathered here in this chamber today, to determine how best to maximize the use of microcredit and microfinance in poverty-reduction.
Contrary to expectations, the existing model of development does not always work as efficiently as it can to combat poverty. In fact, the current global financial and economic crisis points to imbalances resulting from operation of the model. There are too many have-nots.
Indeed, development experts have pointed out that development which perpetuates inequalities will prove neither sustainable nor worth sustaining in the long run.
A just and equitable distribution of national resources to promote economic growth and development will therefore, of necessity, respond to the special needs and problems facing the poor.
It was recognition of this fact that led to the declaration of 2005 as the International Year of Microcredit.
Not only has the year 2005 brought about increased public awareness and understanding of the social and economic value of microcredit and microfinance. The years following 2005 have amply demonstrated that the strategic use of microcredit by developing countries can lead to the achievement of many targets attached to the MDGs, especially job-creation.
Given the importance of microcredit and microfinance in achieving MDG targets, Indonesia would like to highlight some pertinent points to justify intensifying their use in poverty reduction.
Firstly, the poor must be given access to resources to overcome their severe deprivation.
With increased access to financial resources and services, the poor in developing regions have been known to satisfy the health and educational needs of their children. Others have been able to set up micro-enterprises and achieve some measure of financial independence.
To this end, governments must ensure the poor have better access to financial services. In addition, steps should be taken to promote financial literacy among the poor.
Secondly,the financial needs ofsmallholding farmers should not be ignored.
They must be guaranteed access to resources so that agricultural productivity can be boosted. The importance of agriculture to the real economy cannot be overstressed, more so in light of the recent food crisis that impacted many poor nations.
Thirdly, the use of microcredit and microfinance should be gender sensitive.
As agents of development whose needs are often overlooked, due care must be taken to ensure that microcredit reaches into the lives of poor women. The availability of resources must match their contributions to economic development.
Indonesia has its own microcredit success stories to share. Our nation is on a development path which stresses economic growth with equity and social justice for all. Our awareness that biases in national economic and social policies can contribute to poverty have led us to strengthen the country’s capacity to make maximum use of microfinance and microcredit.
Microfinance is disbursed through formal banking facilities, such as the People’s Bank of Indonesia (BRI) and through non-banking agencies which are managed by NGOs and self-help groups. These are important institutions because 98.5 per cent of Indonesia’s business sector can be categorized as micro-enterprises. These facilities have therefore helped to keep poverty in check.
One of the key programmes of our National Medium-Term Development Plan, 2010-2014 that has had an impact on the development of SMEs and cooperatives in Indonesia is the Credit for Smallholders or KUR. Indonesia is committed to expanding the coverage of KUR, beginning in 2011. In addition, the Government is also encouraging self-help groups and foundation such as MICRA foundation in enhancing the poor’s access to credit offered by Indonesia’s microfinance institutions.
Because of policies and programmes designed to combat poverty, Indonesia’s poverty rate fell from 16.7 per cent (or 36.1 million persons) in 2004 to 14.1 per cent (or 32.5 million persons) in March 2009. The goal is to reduce the poverty rate to 8-10 per cent by 2014.
Despite its successes, Indonesia recognizes that a great deal of work must be done to further reduce poverty through strategic use of the microfinance sector, which is only now growing in significance at the global level. For its part, Indonesia will focus on the legal and regulatory framework to improve the efficiency and effectiveness of its microfinance sector.
In light of this, as a Member State of the Group of 20, Indonesia welcomes the Group’s decision to foster an enabling policy and regulatory environment for innovative financial inclusion. At its summit in Toronto last June, the Group endorsed principles that will serve to increase the poor’s access to financial resources and services.
There are other tools that can be used to good effect, Mr. President. Indonesia believes that the UN Blue Book on building an inclusive financial sector for development provides the policy framework for countries to turn their microfinance commitments into concrete actions. Equally important, valuable successes should be replicated where conditions and circumstances permit. In this way, Member States will advance efforts aimed at achieving the goals set out by the International Year of Microcredit.
I thank you.
Permanent Mission of the Republic of Indonesia to the United Nations, New York
325 East 38th Street, New York, NY, 10016, USA
Tel: 1.212.972.8333, Fax: 1.212.972.9780 - www.indonesiamission-ny.org