Canadian Foreign Minister Peter Mackay Sunday announced more than 40 million Canadian dollars (about 36 million U.S. dollars) to help microcredit projects in developing countries.

Mackay made the announcement in Halifax, an Atlantic port city, where about 2,000 people gathered for the start of the four-day Global Microcredit Summit.

Microcredit is a system of banking where institutions give small loans to people who do not qualify for a bank loan because they have no credit history.

MacKay said the Montreal-based Development international Desjardins, the Canadian Co-operative Association and Oxfam-Quebec would each receive funding to build on their respective microfinance programs.

In turn, the three non-governmental organizations are planning to help would-be entrepreneurs in Asia, Africa and Latin America.

Microfinance is an important tool that helps people lift themselves out of poverty and is especially useful for women in poor countries, Mackay said.

With these loans, people living in poverty can generate income for themselves, their families and their community, he said.

Recipients can be people living in extreme poverty who live on less than 1 U.S. dollar a day, or those who just do not qualify for credit.

The loans, ranging in value from thousands of dollars to as low as 50 dollars, can help entrepreneurs buy computers, sewing machines, a plot of land or even just a chicken to enable them to sell eggs.

The loans have low interest rates and are reported to have a high repayment rate of around 97 percent.

Source: Xinhua