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 Sub Committee on Overseas Development 26/2/2009

Senator Mark Daly:  One of the major issues is the European Union’s trade policies which cause serious difficulty with the developing world because for every dollar in aid we give, our trade policies affect developing countries to the tune of $3. If one cannot export the food one produces, one can never escape poverty. I will raise an issue that is not quite related to the hunger task force but may be in the future. Yesterday I had the opportunity to meet a man named Cinay Nair from County Limerick. He spent ten years there, then went to Trinity College, Dublin and now works for the William J. Clinton Foundation. Next weekend he will travel to Mozambique to work on its micro-financing project to try to establish it on a national level. He said he was fearful that the credit crunch we had experienced was about to happen in the micro-financing world. That might seem curious and I found it very unusual.

In India, as in Africa, it is very difficult to distinguish between micro-financiers and moneylenders. One of the major problems with micro-financiers is that they are paid commission and they are lending recklessly, whether it is $20 or $100, to people who do not have a valid idea that will work but who are putting themselves into debt that will ultimately affect their families and their ability to feed themselves. That brings me to the point of the hunger task force. As Mr. Nair explains it, the micro-financing world is a juggernaut in that it will be difficult to stop it imploding. He is talking about a period of six, nine or 12 months when micro-financing might no longer happen but will explode in the same way as we have seen here on the news morning, noon and night. We experience it every day in Ireland. This is an underlying issue about which we are not hearing but which he expects to blow up relatively shortly.

I ask the Minister of State, through his good offices, to bring the issue to a more global level because if micro-financing is to go the way the world economy has gone, the hunger task force will have a serious challenge in nine to 12 months time when all the people mentioned who should not have been given the money are in trouble. We see it every day in America and Ireland. People were given money because micro-financiers were receiving commission and not being prudent in giving loans. The loan provider is happier giving more loans and receiving commission on each one, even if a proportion are defaulted on and the borrowers are in a situation they should not be in in terms of debt. It is a huge issue and the knock-on effect is hunger because the recipients of inappropriate loans will not be able to feed their families. Because Mr. Nair is from the William J. Clinton Foundation I have great respect for anything he says. He has done much research and used to work in banking. It seems he got out of it at the right time. It seems to be a juggernaut and there may be something we can do at UN level. Deflecting a juggernaut is not easy but we should examine the issue before it crashes. We have enough difficulties sorting out our financial problems without having to do it for microfinancing.