COP22: Read Azeb Girmai, LDC Watch’s climate lead, from Ethiopia’s detailed assessment

COP 22 Marrakech, Morocco 7 – 18 , 2016

On the 7 November climate talks in Marrakech started with the 22nd session of the Conference of the Parties (COP 22); the 12th session of the conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP 12); the 45th session of the Subsidiary Body for Implementation (SBI 45); and the Subsidiary Body for Scientific and Technological Advice (SBSTA).

Unique for COP22 in Marrakech was the second session of the newly-established body: the Ad Hoc Working Group on the Paris Agreement (APA), following its first session in Bonn in May this year.

The Paris Agreement (PA) was signed in Paris last year, and due to its entering into force on 4 November, this year, another meeting also held its first session: the Conference of the Parties serving as the meeting of the Parties to the PA (CMA 1). (The PA came into force 30 days after 5 October this year, when the double threshold for entry into force of the agreement was achieved: 55 Parties to the Convention, accounting in total for at least an estimated 55% of the total global greenhouse gas emissions, deposited their instruments of ratification. To date 97 of the 197 Parties to the Convention have ratified the Paris Agreement).

Major elements addressed at COP22, Marrakech:

Marrakech “COP of Action “

Pre-2020 Action

Despite the PA’s early entry to force, the Doha Amendment of the Kyoto Protocol (KP) (where Parties agreed to give effect to the second commitment of the KP (2CP) for emissions’ reductions by 18%  below the 1990 levels by developed countries for the period 2013-202) has yet to come into effect.  COP 22 was held against the background of an urgent call for ratification. This is particularly urgent in the light of the UNEP’s latest report: Emissions Gap Report 2016 which says that the world is still heading for a temperature rise of 2.9 to 3.4 0C this century, even with “Paris pledges”. The report warns that in 2030, emissions will be 12 to 14 gigatonnes above levels needed to limit global warming to 20C.

Developing countries once again complained with disappointment about developed countries’ inaction to fulfill their pre-2020 commitment to ratify the Doha Amendment, which after four years has only been ratified by 73 countries and requires a further 144 countries to ratify the second amendment in order to come into effect. This failure is even more alarming in the month when the World Meteorological Organization (WMO) reported that preliminary data shows that 2016 is the hottest year on record with global temperature reaching approximately 1.20C above pre-industrial levels. More so, failure to take action pre-2020 can be detrimental to the ability to accomplish the post-2020 target of reducing global temperatures by less than 1.50C.

 

 

 

Means of Implementation pre-2020

Parties came to Marrakesh expecting to hold discussions on Paragraph 3 and 4 of Decision 1/C.P.19 relating to the 2013 Warsaw Agreement to accelerate the full implementation of the Bali Action Plan to provide support including finance, technology and capacity building to enhance developing countries’ ambition in the pre-2020 period.

During a facilitative dialogue on progress pre-2020 action and about providing the means of implementation, it was reported that registration of Nationally Appropriate Mitigation Actions (NAMAs) had increased by 35% with the largest percentage coming from LDCs and African countries. Yet, finance, technology transfer and capacity-building support at scale are not being sufficiently used. The Asian Development Bank Representative Preety Bhandari reported that of the 2015 climate budget of US$25 only 20% was allocated for adaptation, while 80% went to mitigation actions.

Similarly, in his presentation, the Chair of the LDCs Tosi Mpanu Mpanu underscored that the cost of adaptation in developing countries is much higher than mitigation, and the most recent adaptation cost is likely to be up to 2-3 times higher than current figures indicate.  The proposal for National Adaptation Plan of Actions (NAPAs) was agreed at COP 17 in Durban. However five years later developing countries, particularly LDCs, are still waiting for financial support to implement their NAPAs, which were finalised years ago. To date 32 NAPA implementation project proposals submitted by the LDCs that were technically cleared by the GEF secretariat are still waiting support from the LDC Fund (LDCF). So, at Marrakesh the LDC Chair emphatically urged developed countries to increase their support to the LDCF.

Adaptation

Developing countries; particularly vulnerable countries in the LDCs and SIDS, wanted the Parties at Marrakesh to focus on Action for Adaptation as a matter of urgency.  However, the outcome after the two weeks’ discussion has been very unsatisfactory.  At both the SBI and SBSTA sessions the Parties present expressed their worries on the budgetary implications of Adaptation. Most developing countries believe this is hampering action under the UN Convention and expect the same thing to happen under the PA.

Major elements under discussion:

  1. Agriculture: there was a call for adaptation to focus on agriculture, given its implication for food security and as it is a major economic sector for most developing countries, particularly LDCs. This was central to the discussion carried out by the Subsidiary Body for Scientific and Technological Advice (SBSTA), and a final decision was expected at Marrakech, after years of debate since it was initiated at COP 17 in Durban and discussed at two consecutive workshops in the last two years. A decision was expected on setting up a work programme on agriculture under the SBSTA, but the SBSTA failed to come to an agreement and the matter was deferred until the next SBSTA 46 session in May 2017. This was extremely disappointing for developing countries. They are eager to start work on this matter urgently and to trigger action to adapt the sector from the effects of climate change and to build the capacity of a multitude of small-scale farmers to help rescue their livelihood and ensure food security.
  2. Adaptation Fund – under the Ad Hoc Working Group on the Paris Agreement (APA), there was a lengthy discussion on whether the Adaptation Fund would serve the Paris Agreement or not. The Adaptation fund was initially set up under the Kyoto Protocol to be financed from the 2% levy of the CDM proceeds; however, the carbon market has collapsed, leaving the CDM devoid of funds. Although the Paris Agreement indicated that the Adaptation Fund would serve the PA, Parties were once again in a lengthy conflicting discussion.

 

Finally, after the CMA 2 at the COP on its 24th session it was decided that it should serve the PA.  In the mean-time the APA will start the necessary preparatory work on the Adaptation Fund to address the governance and institutional arrangements, safeguards and operating modalities for it to serve the PA. Parties are therefore requested to submit their views on the formalities by 31 March 2017. This worries developing countries, as it will hinder/slow down their adaptation action.

 

The Adaptation Fund’s financial gap was barely met by Germany, Italy, Sweden, and Walloon and Flemish regions of Belgium raising $81m. In addition, there is heightened concern in the light of the recent Adaptation Finance Gap Report which estimates that $56-73 billion is needed for adaptation in developing countries annually now, rising to $140-300B in just the coming 13 years.

All in all, adaptation in Marrakech was not well-served.  Developed countries said they were unable to raise public money, yet G7 countries and Australia, which are struggling to provide public money for adaptation of 3.4b/year are comfortable raising funds for subsidies and public finance to support oil, gas and coal production to the tune of $67b annually.

  1. Long term Climate finance – Discussion on long term finance has delivered no clear decision on the mobilisation and provision of scaled-up financial resources for developing countries – the one tangible element that was expected from Marrakech. There have been some small-scale wins: avoiding adopting the finance road map with its dodgy, unfair and incorrect accounting modalities; some seemingly-positive intentions such as the emphasis given to public finance for adaptation; the call for a balance between adaptation and mitigation and mention of scaling up adaptation finance.

Loss and Damage

One thing that can be seen as progress under the Loss and Damage discussion during COP was the agreement (after a long first week of lingering and tedious negotiation) on a series of technical processes that will help developing countries deal with impacts not addressed by planned adaptation.  The decision establishes a review of the Warsaw International Mechanism – the overall governing framework for the loss and damage discussion – and there was also agreement to produce a technical paper elaborating the sources of financial support for loss and damage.

Initiatives launched that might have implication in the LDCs

  1. The Renewable Energy and Energy Efficiency initiative (REEEI) in the LDCs
  2. The African Adaptation initiative (AAI)
  3. The African Renewable Energy Initiative (AREI)

These initiatives may have potential to engage LDCs as they all attempt to focus on small-scale climate actions.  There may be a need to assess the opportunity to tap into possible resources.

The Renewable Energy and Energy Efficiency Initiative for Sustainable Development (REEEI) launched on the last day of the conference announced that it intends to scale up the provision of renewable energy to LDCs, while promoting energy efficiency. This will particularly help rural development.  It will be working with exiting initiatives such as the AREI to help those countries which fall in the cracks between current frameworks.

There was a call for civil society to engage during a preliminary presentation of the AREI where I attended and gathered basic information. At the moment, the initiative is at an early stage but once it starts operating civil society engagement will be a major focus.

Equally, I attended the launch ceremony of the African Adaptation Initiative – still also at a preliminary stage. When it begins operations a major focus will be strengthening and supporting small-scale adaptation actions to access financial support.  This will require close follow-up to get engaged.

Public SDGs or Private GGs?

The SDGs have been re-branded as Global Goals (GGs) and the copyrighted by Project Everyone, a private company incorporated and registered in London, explains Barbara Adams.

On its own website (www.globalgoals.org), Project Everyone claims ownership of the 17 icons that it is popularizing, with active help from celebrities and the UN Secretariat itself, representing each of the 17 Goals that the heads of State and Government are endorsing this week as common objectives of humanity from here to the year 2030.

A political declaration by all UN Member States should be a global public good, available for everyone to use. But the small print of the Project Everyone website says that “all Content included on Our Site and the copyright and other intellectual property rights subsisting in that Content, unless specifically labelled otherwise, belongs to or has been licensed by Us”. That copyright protection clearly includes both the icons and the summary titles given to each of the goals.

The Global Goals website identifies Aviva, Getty Images, Pearson, Sawa, Standard Chartered and Unilever as “Founding Partners”. Some 60 other corporations and media are identified as “delivery partners” while 22 institutions are listed as NGOs and foundations. The Bill and Melinda Gates Foundation and the UN Foundation are the only foundations in that list, which includes many well known international NGOs (such as Oxfam, Amnesty and Save the Children) along with prominent UN agencies (e.g., UNDP, UNICEF, UN Women, UNESCO, UN Department of Public Information) that it curiously lists as NGOs.

From a media point of view, the strategy seems successful. The international press is already talking about the “Global Goals Summit” at the UN and the Global Goals (GGs) are treated as just a short and easier nickname for the Sustainable Development Goals (SDGs) which is their title in the official UN documents. In shortening the titles, the concept of “sustainable development” is completely lost.

But more is lost. In what seems justified as necessary simplification for communication purposes, some concepts key to achieve universal consensus are also lost: Goal 12 on “sustainable consumption and production patterns” is translated as “responsible consumption and production”. Goal 16, designed to “promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels” is transformed into “Peace and Justice, strong institutions”. Yes, UN jargon is tortuous sometimes, but if the word ‘inclusive’ was mentioned twice in the title, why replace it with ‘strong’? Does a call for ‘strong institutions’ ring the same bells as a call for ‘inclusive governance’?

Also, the much debated Goal 17, which deals with means of implementation and calls for revitalizing “the global partnership for sustainable development”, a partnership among rich and poor governments towards the common objective, is transformed into “Partnerships for the goals”, dropping mention of ‘means of implementation’ and making ‘partnership’ plural, so that now includes a variety of uneven and  loosely accountable associations with the private sector and ‘stakeholders’.

Of course any communicator is free to take a complex document and ‘translate’ it in ways that are understandable by their constituency. But this simplification is a misrepresentation of the SDGs themselves. UN senior officials not only allowed this to happen, but actively promoted it, using UN resources to network the icons and the UN’s official communication office is encouraging their use.

Do Member States know that they could be supporting a campaign that is not owned by the UN if they refer to the Global Goals instead of to the SDGs?

Are the many NGOs and celebrities that are supporting and sponsoring the Global Goals and related activities aware that this is a private initiative not a global public good? To be sure, it is important that everyone knows about the SDGs. A huge campaign with private sector support could be a realistic way of communicating the 17 goals to everyone. But these goals belong to the public and the UN should safeguard their use. And to over-simplify global challenges is not the purpose of the UN and misrepresents the delicate and politically complex balance that went into crafting the new Agenda for 2030 that the governments are approving today.

Much more than one letter is at stake in the choice between the SDGs or GGs

Paris Climate Change – a disaster for LDCs

Jan 2016: Most summaries of the Paris Summit on Climate Change (a.k.a. COP21) have reached a positive conclusion. However this bears little relation to what happened during the negotiations, the final Paris Agreement or its implications for climate change, particularly for developing countries, as Daphne Davies, Azeb Girmai and Prerna Bomzan explain.

Context – the 1992 United Nations Framework Convention on Climate Change ‘the Climate Convention’
The Rio Meeting in 1992 produced the United Nations Framework Convention on Climate Change – known as the Climate Convention, in which countries agreed to work together to limit global temperature increases and to cope with the impacts of climate change. This entered into force in 1994.
An important aspect of the Convention was Article 3: “parties should protect the climate system for the benefit of future and present generations of human kind on the basis of equity and in accordance with their common but differentiated responsibility and respective capabilities. Accordingly, developed countries should take the lead in combating climate change and the adverse effects thereof”.
A second aspect was ‘historical responsibility’, meaning that countries which have polluted most over time had to contribute most to preventing climate change, which explains why the US should do more than, for example, China.
Before the Summit began
A month before the Paris Summit a meeting was held in Bonn to finalise the text of the document to be negotiated in Paris. This was a tense meeting as the G77 (which now includes 130 countries) + China complained that the developed countries manipulated the text to ignore their concerns, so insisted that 14 extra pages were added to reflect them.
Finance was a continuing sore. Developing countries complained that they were not receiving the $100 billion per annum via the Green Climate Fund promised by developed countries, while developing countries insisted they had stuck to their pledges. Developing countries also wanted the text to include new finance above the annual $100 billion after 2020, and that is should be genuinely new, not reclassified from that already in overseas development (ODA) budgets.
In order to ensure a successful Summit in Paris the UNFCCC Secretariat had requested countries to submit their Intended Nationally-Determined Contributions (INDC)s in advance. INDCs are individual pledges of actions countries will take to reduce their emissions. As these are non-binding, and non-enforceable it was hoped that this would produce a more realistic outcome than setting an international emissions limit, which had proved unsuccessful at Kyoto, and had derailed the Copenhagen Climate Summit in 2009.
How events unfolded
The Summit opening on 30 November was addressed by Heads of State, giving a sense of purpose and a willingness to find solutions. Immediately following this, President Obama met a group of leaders from the Alliance of Small Island States, and declared he was an “island boy”, so understood their concerns about being submerged under rising sea levels if temperatures rose by 20C.
Also, as the meeting kicked off, Least Developed Countries (LDCs – the world’s 48 poorest countries) received a pledge of an additional $248 million to the LDC Fund (LDCF) from 11 North American and European countries for immediate climate adaptation projects: National Adaptation Program of Actions (NAPAS). However, as the LDC Chief Negotiator Giza Gaspar Martins pointed out, this was a drop in the ocean relative to the $5 billion needed for the 500 projects the LDCF had already identified, for which only $859 million had been found so far. Given developed countries’ poor record of fulfilling pledges to the Green Climate Fund, there is skepticism that this $248 million will ever arrive in full.
Cynics might surmise that Obama’s meeting with the small island states, and the pledge to LDCs were moves to sooth potentially difficult negotiations.
Reducing temperature rise to 1.50C
A major announcement during the Conference was that over 100 countries had formed ‘a coalition of ambition’ to take steps to reduce global warming to 1.50C, down from 20C, to save the poorest low-lying countries and islands.
However, as this pledge was not coupled with moves to revise INDCs, scientists at the meeting predicted that if all the countries stuck to their INDCs the temperature was likely to rise by between 2.70C and 3.70C.
Loss and Damage
An important element for developing countries was to get a mechanism anchored in the text, with a legally-binding financial facility, to address ‘loss and damage’ in countries affected by extreme weather and climate change. This would supply funds, technology support and capacity building and was in the draft text as Article 5: Loss and damage with ‘A process to develop approaches to address irreversible and permanent damage resulting from human-induced climate change ….with a view to completing this process within four years’.
The notion of Loss and Damage caused panic among developed countries which feared it could make them responsible for billions of dollars in compensation. A strong opponent was the US, whose lead negotiator Todd Stern described compensation and liability as a “line we can’t cross”. It is also understood that US and EU negotiators threatened to leave the negotiations if financial compensation was mentioned in the text.
Ways of conducting negotiations
A recurring refrain from the US during negotiations was that the text had to be such that the US (Republican-dominated) Congress would agree to it.
One aspect to remember is that negotiations between unequal partners also reflect on other negotiations and deals – small countries pushing for what is best for them in climate terms must take account of how this might impact on bilateral trade agreements with big trading partners.
For example, during the Summit there was talk of outspoken developing country delegates being removed by their governments. This has occurred before – for example, after the Warsaw meeting in 2013, when the Philippines chief negotiator Yeb Sano, who threatened to go on hunger strike at the slowness of negotiations, was removed from the negotiating team at the Lima meeting the following year.
The Paris Agreement – an assessment
Scrapping the spirit of the 1992 Climate Convention
Firstly, the spirit behind the 1992 Climate Convention, which cited the principles of ‘historical responsibility, equity and common but differentiated responsibilities and respective capabilities’ is no longer inherent in the Paris Agreement. The long-standing ‘polluter pays’ principle has been weakened. The wording of the early text of Article 2 of the Paris Agreement has been changed from ‘This Agreement will be implemented on the basis of equity and in accordance with the principle of common by differentiated responsibilities’ to the final text ‘…. implemented to reflect equity and the principle of common but differentiated responsibilities’.
Emissions
As noted above the much-trumpeted move to reduce emissions in order to keep temperature rises to 1.50C has no binding power – it is simply an expression of intent or ‘ambition’. Article 2 of the Paris Agreement states ‘This Agreement …. aims to strengthen the global response, including by…. holding the increase in the global average temperature to well below 20C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.50C’.
As mentioned above, country INDCs are likely to give rise to temperature levels over an average 30C. Studies show that at some parts of the globe temperature rises may be as high as 40C.
Even with this weak language relating to emissions, there was a last minute hitch. Just as the Agreement was to be presented at the end of the Summit. US negotiators noticed that Article 4.4 read ‘Developed country Parties ‘shall’ continue taking the lead by undertaking economy-wide absolute emission reduction targets’. They objected that they would be unable to get the document with ‘shall’ through Congress if it implied that developed countries take the lead in emissions reductions. Instead the word was changed to ‘should’, with the explanation that tired typists had made a typing error.
Finance
The financial aspects of the final document have also moved away from the principles of the Climate Convention that developed countries had a historical responsibility to provide finance to developing countries (LDCs and Africa). The final text changed from indicating that developed countries shall provide (financial) support to developing countries, to stating that developing countries need (financial) support.
Thus developed countries’ responsibility to provide finance or assist developing countries to undertake adaption for loss and damage has been replaced with an acknowledgment that developing countries’ need to access finance – including borrowing it on the money markets.
In earlier drafts of the Agreement the section on Adaptation had stated that ‘developed countries shall provide support to developing countries’. In the final version this is replaced by the phrase in 46.(a)‘Developed countries will take the necessary steps to facilitate the mobilization of support for adaptation in developing countries’.
Similarly, as expressed in the original text: ‘The mobilisation of climate finance [shall][should] be scaled up in … beyond previous efforts from $100 billion a year from 2020’, is downgraded to 53: ‘shall set a new collective qualified goal from a floor of $100 billion per year’.

Developed countries’ reluctance to produce any additional finance over the $100 billion is indicated in the text. Original wording that ‘Developed country Parties shall provide ‘new’ or ‘additional’ financial resources to assist developing country Parties with respect to both mitigation and adaptation’ has been altered to 53: financial resources provided to developing countries should enhance the implementation of their policies…’

Loss and Damage
As for the section on Loss and Damage, this is downgraded to a toothless mechanism. Far from providing a basis for any liability or compensation, it goes so far as to explicitly say: 52: ‘Agrees that Article 8 of the Agreement does not involve or provide a basis for any liability or compensation’.
Conclusion
The Paris Agreement will open for signature in April 2016 and enter into force (and thus become fully effective) when it is ratified by 55 of the countries that produce at least 55% of the world’s greenhouse gas emissions.
So what of the outcome? On the positive side, we see a statement of intent signed by all 195 participating countries to work to reduce global warming. A major achievement after the failure to reach agreement at previous negotiations. Ironically, this was achieved at the same time as many of the signatories’ INDCs indicated an increase in coal and gas production.
On the negative side, things have got worse for the poorest developing countries. They see no real cuts in emissions from current levels, for which they are already experiencing the negative effects, such as sea level rises devastating their coastlines, and the sun turning their land into deserts. In addition, they will not see additional money to help them with adaption, nor funds to compensate the loss and damage to their lives and livelihoods.
An important question is whether these losses can be reversed during future negotiations, or whether this new text, with its deletions of equity (fairness) or historical responsibility, replaces the original Climate Convention.

Les pays développés doivent prendre conscience de l’impact du changement climatique sur les PMA

A la veille de la COP21 PMA Nouvelles s’est entretenu PMA Observatoire président Demba Dembélé de ses espoirs pour le Sommet.

PMA Nouvelles: Quel est le meilleur résultat que vous espérez de la conférence de Paris?

Demba Dembele : Que les pays industrialisés, Etats-Unis et Europe en tête, reconnaissent leurs responsabilités primordiales et répondent aux appels de l’Afrique pour mobiliser des fonds pour financer leur adaptation.

PN : Qu’est-ce que les ONG, y compris LDC Watch, devraient faire à la Conférence pour faire passer leur message?

DD : Elles doivent parler d’une seule voix, faire du lobby auprès de certains pays et organismes des Nations-Unies et surtout utiliser les médias pour mieux se faire entendre   PN : Quelle est la stratégie de LDC Watch sur le changement climatique en relation avec les économies émergentes?

DD : Demander aux pays émergents de soutenir les demandes des PMA et surtout de contribuer à leur demande de financement pour l’adaptation   PN : Qui devrait être responsable de l’utilisation de la finance par le fonds climatique – gouvernement national ou local ou des ONG?

DD : Pour la transparence, les trois entités devraient collaborer dans chaque pays

PN : Outre les questions financières, quelles sont les principales exigences non financières que les ONG des PMA demandent à la conférence de Paris?

DD: Que les pays développés prennent conscience de l’impact du changement climatique sur les économies des PMA et prennent des mesures efficaces et contraignantes pour atténuer cet impact

PN : Qu’est-ce que les gouvernements africains doivent faire pour s’adapter au changement climatique

DD: Les gouvernements doivent se tourner graduellement vers l’utilisation d’énergies renouvelables (énergie solaire, éolienne et hydraulique). Mais ils ont besoin de beaucoup de financements pour cela

Is the miracle of microfinance illusory?

S. Kulkami and Raghav Gaiha, (IPS) 13 September 2015: Mohammad Yunus, the founder of Grameen Bank in Bangladesh, transformed the lives of millions of poor women through unsecured micro loans or micro credit to self-help groups. Microcredit evolved into microfinance that also includes savings and basic forms of insurance and transfer mechanisms. Within a few years, microfinance became a global phenomenon. Although microfinance continues to grow, the enthusiasm for it shows signs of waning.
In recent years, there has been a great deal of scepticism regarding the “miracle” of microfinance. Critics have questioned whether the rhetoric has moved far ahead of the evidence, with some even suggesting that microfinance can spell the death of local economies. Meanwhile, its defenders present robust evidence to substantiate their claims that microfinance delivers enormous benefits. We argue that the miracle is largely intact but needs strengthening.

According to data from MIX, which tracks microfinance institutions (MFIs), there is a solid and growing base of microfinance providers, with a global loan portfolio amounting to US$ 81.5 billion in 2012 with an outreach of 91.4 million low income clients. Women make up 80 per cent of the clients of the world’s largest 34 microlenders. Yet half of the world’s adults still do not have accounts in financial institutions and 76 per cent of the poor are unbanked. When you add all this up, the case for vigorous expansion of financial inclusion in the SDGs is patently obvious.

Recent shift of the focus to financial sustainability raises serious concerns about dilution of the outreach of microfinance [for example, the number (breadth) and socioeconomic level (depth) of the clients served by MFIs.] That the trade-off exists is undeniable but little is known about its extent. It is often emphasised that large-scale outreach to the poor on a long term basis cannot be guaranteed if MFIs are not financially sustainable. Consequently, donors, policy makers, and other financiers of microfinance have shifted from subsidising MFIs towards financial sustainability and efficiency of these institutions.

Analysis of a large cross-section of countries reveals that MFIs providing mainly individual loans are more profitable, but the fraction of poor borrowers and of women in the loan portfolio is lower than in institutions that concentrate on group lending. Moreover, MFIs that provide individual loans increasingly focus on wealthier clients, a phenomenon that is often referred to as “mission drift,” while this is less so for the group-based MFIs. So the importance of institutional design in reducing the trade-off cannot be overlooked. Besides, sustainability is feasible without mission drift by reducing costs and gaining efficiency through innovative use of information and communication technology.

Research has documented that social networks help the diffusion of microfinance. A survey in Guatemala demonstrated that individuals imitate the choices made by other members of the same network – in this case a household’s access to credit was closely related to membership in a church network. In another example, a majority of representatives of financial institutions in India concurred that self-help groups (SHGs) were more likely to be successful in villages with a high density of social networks and associations.

Not only do SHGs benefit from the presence of networks, they themselves also contribute to trust, reciprocity and associational capital (such as through strengthening of local institutions). Moreover, presence of successful SHGs induces quicker formation of other SHGs at a much cheaper cost and the self-reinforcing process gathers momentum over time.

Group lending not only reduces transaction costs of small loans but also ensures high repayment rates. However, group liability may also impose a “cost.”

The incentive for group participants is to reduce the risk taken by their fellow members, since participants do not benefit from the upside of any risky investment, but are liable for the downside. As a result, members of a group may impose excessive risk aversion. Our analysis of selected Asian countries – especially India – offers insights.

Drawing upon Indian evidence, assortative matching into poor and rich groups was reported by about 71 per cent of members of SHGs.

Few believed that the poor were excluded because of high interest rates and/or stringency of financial discipline. However, remoteness of villages, absence of functioning local institutions and lack of awareness of benefits of group lending were identified as major impediments in covering larger segments of the poor – especially by representatives of financial institutions.

A cross-country analysis establishes robustly that gross loan portfolio (GLP) of MFIs benefits not just the poor but also the poorest. In other words, GLP of MFIs is negatively associated with the incidence, depth, and severity of poverty. Hence sustained flows to MFIs may help avert accentuation of poverty as a consequence of the slow and faltering recovery of the global economy.

Much of micro evidence (such as that which is gathered at the household level) on poverty reduction is mixed. A striking case is that of Bangladesh, where the impact in some studies is positive and large, while in others the impact has been insignificant or weak. In Peru, it is the “better-off” rather than the core poor who benefit most from microfinance. By contrast, there is a substantial positive effect on a multi-dimensional welfare indicator in India. In China, while microfinance is welfare enhancing, the main beneficiaries are the non-poor. Experimental evidence for Thailand, the Philippines and India (Hyderabad slums) suggests that the (relatively) affluent benefit more.

An important insight for Bangladesh and elsewhere is that the exit from poverty requires longer-term participation. Household entrepreneurs require time to achieve productive efficiency or to earn higher returns from self-employment activities. Since existing members of microcredit generally obtain larger amounts, MFIs should be encouraged to offer larger loans sooner rather than later.

Before the 2004 Tsunami in Sri Lanka, access to microfinance helped income convergence among the borrowers – a process that was disrupted by this natural disaster. However, microfinance loans after the Tsunami helped in reducing the income gap between those who were hit by it and others who were not. This process of recovery was fast. There is thus strong evidence for the effectiveness of microfinance as a recovery tool.

Women in higher loan cycles of Kashf’s microfinance programme in Pakistan experienced a significant increase in empowerment compared to their counterparts in the first loan cycle. Being in a higher loan cycle affects the ability of a female borrower to decide how to use the loan. Microlending thus leads to higher financial empowerment. Besides, there was social empowerment as mobility restrictions were much fewer among them.

A detailed analysis for India has a much broader focus on women’s empowerment and offers a positive role of microfinance. A large majority of SHG participants themselves reported that they had gained self-confidence, greater respect within the family, a more assertive role in family decision-making, a more important role in children’s health and education and that there was a reduction in domestic violence. In the broader community sphere, however, a considerably lower share of respondents gave a positive response.

But these indices of empowerment do not reveal the “costs.” Higher incomes and a broadening of spheres of activities entailed greater responsibilities for women and extra hours of work. In the absence of reallocation of domestic responsibilities, some of the welfare gains from extra incomes earned were partly offset by longer hours of work.

In conclusion, while the miracle of microfinance has eroded somewhat with financial sustainability overriding social goals, there are ample grounds for optimism about recreating it.

Thida Khus: Putting women in the driving seat in Cambodia

Women in Cambodia have been making strenuous efforts to overcome local opposition to promote women and support girls’ secondary education as a way of putting development goals into action[i]. They are calling on outside help to make this happen.

staff_01-150x150As Thida Khus, Chair of the Cambodian Committee to Promote Women in Politics (CPWP), explains, when we met her in Phnom Penh, “When we started work to get more women involved in decision-making at the national and local levels in the early 2000s the men in the political parties used scare tactics to convince us that politics was not for women. They said a woman’s place was in the home, and women didn’t understand how politics worked. There were also some women who thought their role was to do the backroom work to support the men in political parties”.

As well as chairing the CPWP, Thida is currently the Executive Director of SILAKA, an organisation which offers training to strengthen NGOs and individuals as a way of building up national structures and promoting peace in the country.

Gender equality embedded in Cambodian history

“People also accused us of importing Western ideas about gender equality”, she said. “So we dug out our history and language and found that Cambodia had been a matriarchal society – between the first and sixth centuries, you had to be female to be a ruler. We pointed out that at that time we were prosperous socially and economically and wanted to go back to our roots, so men stopped saying that we were bringing in Western Ideas”.

The CPWP, which was set up in the early 2000s called on SILAKA to run training workshops to help candidates run for local elections, and raise awareness about the positive role that women play in politics. As a result the number of women running for office at the commune level increased from 16% in 2002 to 21% in 2007, and those elected from 8% to 15%, but more recently the CPWP has found it hard to crack the nut of reaching the target of women making up 25% of commune councillors.

Its programme is ambitious, as CPWP is campaigning for equal numbers of men and women elected, as laid down in the Cambodian Constitution. It believes that you should aim high – if you ask for parity, you are more likely to get 30%, but if your target is 30%, then you will get 20%.

Another hurdle is political corruption. In a system where votes are cast for party lists not individuals, prospective candidates pay to be ranked higher on the list. To combat this the CPWP is advocating for a ‘zipper system’ (man-woman-man-woman) to ensure that 50% of the candidates are women.

Women politicians could change the political priorities from military to public services

The Committee has been doubling its efforts through public forums, where the public is informed about the importance of getting more women in power. Thida is optimistic that having more women in the driving seat would herald a change in political direction “Yes, currently the government prioritises military spending as they fear external threats. However, people don’t want their taxes used to buy arms, to go to war with our neighbours. Cambodian women know better than anyone else about the effects of war, this is very fresh in our minds”, she said (referring to the US bombing, which allowed the rise of the brutal Khmer Rouge regime and the following years of conflict).

“Women want the money to be used to improve public services. Many of them had to raise their children on their own as their men were all killed. We can’t defeat our neighbours with military might. We have to use the law to defeat Thailand or Vietnam. They only way for us to defend our territories is to strengthen the people inside through the rule of law – but outside countries benefit by selling us arms, helicopters, bullets and tanks.. “

When I suggested that the first female British Prime Minister Margaret Thatcher had a reputation as a warmonger, Thida retorted sharply: “I’m not talking about Margaret Thatcher, I’m talking about Cambodia, which is very different. Besides, I’ve heard that she was not sensitive to other women, as she took a masculine approach”

Support from donors, like-minded organisations and governments

The women of Cambodia need the support of bodies outside Cambodia. First, they want to link up with like-minded organisations, in the region and internationally for support and to share experiences and ideas. Secondly, they realise that outside pressure is needed to push the government to strengthen the democratic institutions.

“There must be more accountability – you have to get the government to be accountable to people, and you need to strengthen the people to demand this. We need real indicators for accountability and for gender justice, so people have access to their rights and aren’t sold as slaves” says Thida. “Donors must insist that there is more political accountability, which will also help stem the tide of corruption”, she urged.

Getting more girls into secondary education

One reason for the dearth of women in politics is the lack of decent education for girls, which leaves them without the skills or confidence to enter politics. So a crucial target of the Millennium Development Goals and the future Sustainable Development Goals is getting more girls into secondary education. While girls’ enrolment at primary level is very high and level with boys – up to 98% according to the World Bank; for secondary education this falls to around 17% in some areas.

This is partly because of the view that girls do not need education and partly because of problems with the education system. Many people complain that it is weak, corrupt and inefficient. As teachers’ salaries are very low, they supplement these by offering children in their classes additional ‘private classes’ and selling them educational materials.

There is also an urban/rural divide, with better secondary education in the cities, as a result, there is a higher drop-out rate in the countryside. This is particularly acute for girls, where the lack of secondary education has resulted in many going to Singapore and Malaysia, (approximately 30,000) as domestic workers. In Malaysia there have been complaints about their being subject to abuse and having their passports confiscated by their employers, leaving them vulnerable to arrest, without any means of proving their legal status. In addition many young women go to Thailand to work in the sex industry or the fishing industry.

Forming coalitions to get the Sustainable Development Goals to work for women

Women in Cambodia believe that a stand-alone goal on gender equality, women’s rights and women’s empowerment within the SDGs is needed to address these issues. At the same time strong mechanisms are needed to support women to enter politics, and to get more government accountability to improve education to help young women.

In current SDG discussions there are proposals for private companies to offer support for some of the initiatives. Thida hopes they will form coalitions with donors, foundations and with the Cambodian government to support measures to get more women into politics and more girls into secondary education. These targets should be monitored with the use of gender-equality indicators. Only in this way will the lot of women and girls improve in this war-torn country.

This article is reproduced with permission from www.devex.com

[i] Millennium Development Goal 3: Promote gender equality and women’s empowerment, including a target on education and additional indicators on women’s employment and political representation.

Sustainable Development Goal 5: Achieve gender equality and empower all women and girls.

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