Barely an hour after a minister's speech lamenting the debilitating effects of low education among the poor and extolling the government's efforts in combating poverty, a speaker at conference in Kuala Lumpur said it was precisely such myths that contribute to the perpetuation of poverty.

Managing director of microcredit financing body Amanah Ikhtiar Malaysia (AIM) Professor Sukor Kasim said one myth was that expensive poverty reduction programmes fail because the poor lack education and training and are therefore unable to escape poverty.

"People say that the poor need to be trained before they can undertake any income-generating activity, that the poor cannot save, and that they are in the habit of consuming everything," he said yesterday at the conference on 'Poverty in the Muslim World: Causes and Solutions'.

Ironically, said Sukor, AIM has proven that it is the more 'hopeless' cases of poverty that eventually emerge as successful and productive generators of income.

"To us, the poorer the households, the richer they are in income-generating survival skills, skills that are acquired from the school of life," he told foreign and local Muslim academics and government officials.

"It is in situations of illiteracy that our programme thrives. It is in such situations of powerlessness that our programme succeeds."

Direct assistance

By accurately targeting recipients of micro-credit assistance, configuring cost-effective packages to suit their individual circumstances, and going directly to the poor households, AIM has succeeded in reaching and helping 120,000 households out of poverty - or 50% of the nation's hardcore poor - as at this month.

In contrast, said Sukor, expensive poverty reduction programmes are often "hijacked" by cumbersome infrastructures and bureaucracies, and waylaid by the very social, political and economic barriers that allow poverty to persist. We go directly to the doorstep of the poor."

Dispelling doubts on the permanence of AIM's efforts and myths about the financial imprudence of the poor, Sukor said AIM members save a weekly national average of RM1 million.

"If people say the poor cannot save, our poor have RM70 million (in accumulated savings)," said Sukor.

This compares favourably to achievements under AIM's founding model, the Grameen Bank of Bangladesh, which has the equivalent of more than RM250 million in savings from its clients.

"Research has also shown that our borrowers spend more on education, more on savings, more on health. Women are more creditworthy."

Women's potential

Earlier, premier Abdullah Ahmad Badawi said Muslim governments should spend more on increasing the education levels of the poor so that they may "undertake higher-value economic activities and raise themselves out of poverty".

"The adult literacy rate in Arab states averages only 63.3% in 2002, which is unfortunately one of the lowest in the world. Equally worrying is the fact that almost two-thirds of the illiterate are women," Abdullah said in a speech read by Second Finance Minister Mohd Nor Yakcop.

"Given that women make up half the population, this suggests that a large proportion of human capital in the Muslim world is unable to undertake higher-value economic activities and contribute to economic development in a meaningful way."

Shattering the myth of poor unskilled and uneducated women being 'unbankable' and hopeless in poverty alleviation efforts, Sukor said the more "bankable and creditworthy" clients of AIM's services have in fact been poor and uneducated women.

Citing instances of women who had previously earned less than RM300 monthly for themselves and their families, Sukor said theys now rake in monthly earnings of RM1,500 to RM3,000.

"As a result, we ban men from our programme. We also found out that the more women are brought into (the programme), the better off the men!"

Sukor also said conventional and Islamic banks are guilty of perpetuating and worsening inequality and poverty by imposing conditions that are impossible for the poor to meet.

"If collateral alone can provide the basis for the banking business, then the society should, without any hesitation, mark out the banks as harmful engines for creating economic, social and political inequality by making the rich richer and the poor poorer."

He urged Islamic banks, in particular, to qualify as truly Islamic by studying the possibility of utilising the musharakah financial tool, under which creditors share the risks as well as profits of investing in programmes for the poor.

"Credit is a fundamental human right. You have to give this without collateral, without guarantors, without the threat of legal action," he added.

The two-day conference ends today.