OTTAWA, Nov 13: Ottawa will provide $40 million in aid to help microcredit projects in developing countries, Foreign Minister Peter MacKay said on Sunday.

He made the announcement in Halifax where over 2,000 delegates, including Pakistani Prime Minister Shaukat Aziz and this year's Nobel Peace Prize winner, Mohammed Yunus of Bangladesh, gathered for the start of the four-day Global Microcredit Summit.

Mr Yunus has widely been recognised as a microcredit pioneer. Microcredit is a system of banking where institutions give small loans to people who don't qualify for a bank loan because they have no credit history or collateral.

Mr MacKay said it is an important tool that helps people lift themselves out of poverty and is especially useful for women in poor countries.

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

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

Mr MacKay said the Montreal-based Development International Desjardins, the Canadian Cooperative Association and Oxfam-Québec would each receive funding to build on their respective microfinance programmes.

In turn, they're planning to help would-be entrepreneurs in Asia, Africa and Latin America.