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           BRAC's Microfinance Canvas:
         Sustainable Financial Services and
                 Strategic Linkages




                                     Shabbir Ahmed Chowdhury*




75 Mohakhali
Dhaka1212, Bangladesh
Telephone # 9881265 Ext. 2300, 8824180, 8824051
Fax: 88-02-8826448
Email: development@brac.net

* Director, Microfonance, BRAC
This paper is presented in the AHRC Research Network meeting on Microfinance, 14-15 May 2009, University
Birmingham, UK
                                           Abstract

The poor are a diverse group with diverse livelihoods, needs and potential, which
change over time due to lifecycle, new opportunities and external shocks. This diverse
and dynamic reality of poor peoples’ lives forms the canvass within which BRAC
conceptualises and designs its repertoire of development programs, in which
microfinance is a core element. This paper through a few program experiences attempts
to reveal the conceptual innovativeness embedded in the way BRAC thinks and acts
about microfinance. It is not only ‘microfinance the tool’ that is a powerful poverty-
alleviating weapon, but also the institutional framework of microfinance that is created
in delivering microfinance. The extensive outreach, connection, knowledge and
network, that the microfinance institution and the people running it at all levels possess
and generate in their every day working engagements, is an extremely powerful asset in
the fight to overcome poverty. We are only beginning to harness the power embodied in
the institutional capital of microfinance institutions. This will be the second generation
challenge for all poverty focused microfinance institutions and Bangladesh will again
lead the way.




I. Our Microfinance Canvas
The poor have traditionally been denied access to the formal banking system, as they are unable
to provide collateral for loans and typically deal in small amounts of money. These results in
them having fewer opportunities to save, borrow, and invest. Moneylenders in the informal
credit markets charge very high interest rates which also restricts the poor people’s access to
credit. We believe that making credit, which can be invested in productive activities, universally
available is essential in reducing poverty. We hope to encourage the increase of income for the
poor through the setting up and expansion of income generating activities and micro-enterprises.

Our targeting strategy has been women, recognizing that they face problems by reason of their
gender as well as by reason of their poverty. An average Bangladeshi woman lives 2 years less
than the average man in a culture where from birth males get better care than females. Targeting
the poorest in villages, including organizing into solidarity and mutual support groups, together
with providing technical and financial services to widen opportunities remains our core
approach.

The poor are a diverse group with diverse livelihoods, needs and potential, which change over
time due to lifecycle, new opportunities and external shocks. This diverse and dynamic reality of
poor peoples’ lives forms the canvas within which BRAC conceptualises and designs its
repertoire of development programs, in which microfinance is a core element.

If we map the various poverty categories we obtain from the literature (WB/BBS) onto BRAC’s
different microfinance programs, we get a picture like the one below:


                                                                                                2
              Target group        Urban (20%)          Rural (80%)

              Better-off
              (27%)




                                            Progoti
                                                                      Unnoti
              Vulnerable
              non-poor
              (20%)


                                                               Dabi
              Moderate
              Poor (17%)



              Extreme Poor
              (31%)
                                                        IGVGD

                                                                             CFPRP/TUP


              Destitute (5%)
Note: IGVGD= Income Generation for Vulnerable Group Development; CFPRP/TUP= Challenging the
Frontiers of Poverty Reduction/Targeting the Ultra Poor; Progoti= Microenterprise Lending and Assistance;
Unnoti= Enterprise Development Program
              signifies vertical entry, and             signifies horizontal entry




Before moving onto describing some core dimensions of this framework, which I intend to do
through a few examples later in this paper, let me digress slightly—I promise that the digression
will only help locating BRAC’s microfinance imagination within a broader canvass. Marguerite
Robinson in her globally acclaimed book, ‘The Microfinance Revolution’, on page 21,shows an
interesting diagram through which she tries to define the microfinance market, more accurately,
the commercial financial services, which she distinguishes from what she terms, ‘subsidized
poverty alleviation programs’. Let me share this diagram with you.



                                                                                                            3
Income Level             Commercial financial services                                       Subsidized poverty
                                                                                             alleviation programs
                             Standard
                             commercial
                             bank loans
Lower middle                 and full
income                       range of
                             savings                                    Interest
                             services                                   bearing
                                                                        savings
                                                Commercial              accounts for
Economically                                    microloans              small savers
active poor


     Official poverty line                                                                      Poverty progs
                                                                                                for such
                                                                                                purposes as
                                                                                                food and water,
Extremely poor                                                                                  medicine, and
                                                                                                nutrition,
                                                                                                employment
                                                                                                generation,
                                                                                                skills training,
                                                                                                and relocation

Source: Robinson, M., May 2001, The Microfinance Revolution: Sustainable Finance for the Poor, The World Bank and
Open Society Institute, USA.

Marguerite’s diagram posits two sets of distinctions, which is worth noting. The first is the
distinction drawn between commercial microloans and interest bearing savings accounts.
Whereas, savings is shown to be an appropriate service for both lower middle income and
economically active poor, this is not the case for commercial microloans, which is not
appropriate even for the poorer among the so-called economically active poor. In other words,
the poorer you are, the less appropriate are microloans as financial services.

The second distinction is between commercial financial services and subsidized poverty
alleviation programs. It is subsidized poverty alleviation programs, which are appropriate for the
extreme poor and not financial services. The first distinction, i.e. credit is less appropriate the
poorer you are gives rise to a whole set of issues and debates which I will not focus here. Let me
spend some time with the second distinction centring on the extreme poor.

Indeed, the extreme poor, being excluded from a range of services and opportunities and facing
a complex structure of constraints, need approaches that rely more on protectional mechanisms
and these will have to be subsidized. That is obvious enough. What is more problematic,
however, is the conceptual separation between the agenda of microfinance and the appropriate

                                                                                                                    4
development interventions for the extreme poor. The debate is not really about whether
financial services is an appropriate service for the poorest, but rather what happens if the agenda
of addressing extreme poverty is eschewed from the microfinance imagination. BRAC as a
poverty focussed microfinance providing NGO has been and is grappling with this question and
though we do not have definite answers, we have some experiences to share. The core message
is one of hope---- there are clever mechanisms through which strategic linkages can be created
between what Marguerite calls, ‘subsidized poverty alleviation programs’ and ‘commercial
microfinance’, and there is no need to conceptually blind out the extreme poor from the
microfinance imagination.

Let me now move on to sharing with you some program experiences that illustrate BRAC’s
microfinance canvass that I have already presented diagrammatically. The first set of examples
demonstrates our experiences of building opportunity ladders for the extreme poor, those who
tend to be left out from conventional microfinance programs. The idea here is to design
subsidies in ways that provide a window of opportunity for the extreme poor. To strengthen the
initiatives of the extreme poor so that they can over a period of time build the capacities to
benefit from microfinance and other mainstream development programs. The second one is
another example of BRAC using microfinance combined with other interventions to provide a
new chance of new livelihoods to people facing sudden vulnerabilities. The third set of examples
illustrates how BRAC uses the knowledge embodied in its institutional networks to provide
financial services to new market segments.


2.     BRAC’s Experiences with Building Opportunity Ladders from Safety
       Nets: IGVGD and CFPR/TUP
BRAC long realized the difficulties of reaching and addressing the needs of the extreme poor
using conventional microfinance. But, instead of saying, ‘Oh, too bad, these extreme poor need
subsidized poverty alleviation programs before they can become fit for our services and let
others bother with that while we run commercial financial services’, the challenge for BRAC was
thinking of ways of including the extreme poor within its programs in a way that is cost-effective
and yet goes beyond transfers.

2.1    IGVGD Program: Including Those Left Out
BRAC in 1985 approached the WFP, which was already providing a time bound food assistance
to the extreme poor living in vulnerable areas under its Vulnerable Group Feeding (VGF)
program, to implement a new linkage and sustainable model for the vulnerable group. The
IGVGD program was thus designed to link extremely vulnerable women to mainstream
development activities. Under this initiative, extreme poor women were organized into groups
and provided with skill development training in the various sectors that BRAC had expertise in.
In addition to training, the IGVGD women were also brought under the BRAC health services
and networks. During the period these extremely poor women received food transfers, a savings
scheme was developed and later small amounts of program credit was also provided so that the
training they received could be more meaningfully used for a more secure livelihood.

The whole program was focused on developing a systematic approach to take advantage of the
window of opportunity in the lives of these extreme poor women while they received the food

                                                                                                  5
transfers and the short-term security. To provide support so that they could stand on more solid
grounds once the transfer period was over. An independent study by WFP found that through
this strategic linkage, more than three quarters of those who receive the VGD card in every cycle
end up becoming regular clients of BRAC’s microfinance program. A study by CGAP found
that the subsidy per VGD women is about $135, which according to the paper, ‘[…] represents a
small subsidy, given the overwhelming majority of IGVGD women who graduate out of a need
for continuous handouts’. Needless to say the greater the proportion of the VGD women who
graduate to BRAC’s microfinance program and the better the quality of graduation, the more the
possibility that over a period of time this cost of subsidy is recouped.


2.2    CFPRP/TUP: Building More Solid Opportunity Ladders
The possibility of creating opportunity ladders from safety nets for those who are left behind by
conventional microfinance that BRAC’s IGVGD approach demonstrated made BRAC even
bolder in carrying out further experiments with this concept. We noticed that though for a great
majority the IGVGD approach lead to increasing their abilities to benefit from our regular
microfinance program, for a significant minority, this was not happening. More worryingly,
those that failed to ‘make it’ were among the poorest and most vulnerable. We were also at times
dissatisfied with the targeting carried out by the upazilla representatives who sometimes selected
based on political and other motives. More importantly, the VGD women often failed to get the
full benefits of the window of opportunity provided by the food transfer. This is because one
VGD card was often unofficially shared between two or more. Sometimes, VGD cards had to
be ‘bought’ and more often than not, this would mean advance selling of VGD cards to wheat
dealers to raise the money for the ‘payment’. We felt the need for a program where we would
have more control over the processes and one where the window of opportunity will be
specifically designed to build the solid ground for the extreme poor to move forward from.

From January 2001 we started a new experimental program with these challenges in mind, called
‘Challenging the Frontiers of Poverty Reduction: Targeting the Ultra Poor’, or CFPR/TUP, for
short. The core idea is similar to the IGVGD, though the elements are very different. There are
two broad strategies in TUP, one, ‘pushing down’ and the other ‘pushing out’. First, the
Program seeks to ‘push down’ the reach of development programs through specific targeting of
the ultra poor by using a careful targeting methodology that combines participatory approaches
with simple survey based tool. Secondly, it seeks to ‘push out’ the domain within which existing
poverty alleviation programs operate, by addressing dimensions of poverty that many
conventional approaches fail to address. Specifically, this involves a shift away from the
conventional service delivery mode of development programming to focusing on human capital,
and the structures and processes that disempower the poor, especially women, and constraint
their livelihood. It is an approach that puts social development, specifically a rights-based
approach to health and socio-political empowerment, at the heart of the agenda.

Program components in the ‘pushing down’ front include, a special investment program in the
form of a grant of assets/capital in kind and stipend, a skills development training program, a
program of essential health care and a social development program. The program covered
705,000 ultra poor during 2002-2006. The second phase from 207-2011 is covering another
860,300 ultra poor.


                                                                                                  6
The whole idea behind the CFPR/TUP approach is to enable the ultra poor develop new and
better options for sustainable livelihoods. And this requires:

       A combination of approaches --- promotional, such as asset grants, skills training and
        protective, such as stipends, health care services, etc.
       Attacking constraints at various levels --- household and the wider environments of
        institutions, structures and policies
       Working within a multi-agent framework, i.e. strengthening institutions of the poor that
        can leverage their own agency and poverty focused advocacy by institutions representing
        the poor, such as BRAC.

The CFPR/TUP approach challenges itself to deliver on all these fronts and the hope is that the
initial subsidy that this approach entails, which will be heavier than the IGVGD, will reap
benefits by building a solid base from which the extreme poor can build on from.

3.0 Serving different Market Niches
A lot of growth potential exists in the missing middle that can be facilitated through direct
financial services provision. The entrepreneurs in this segment of the market tend to be owner-
cum-operators, self-starters and innovative. Yet, they are typically underserved both by formal
banks and microfinance institutions, and this often constrains the scaling up of their enterprises.
The growth of such enterprises can have direct and indirect poverty-alleviating impacts through
job creation and spillover effects in the backward and forward linkages.

Good knowledge about this segment of the market is, however, necessary. Though some type of
formal collateral may be available from operators in this market, the legal processes that would
make this collateral effective may be extremely cumbersome. Forms of collective responsibility
through joint liability, which has been so creatively used by conventional microfinance in
replacing traditional forms of collateral, may not be very appropriate for this segment of the
market. These are some of the reasons for which the missing middle exists.

BRAC felt that given its strong local knowledge of the areas in which it operates and the
extensive local network it has in place, it could serve this missing middle market segment. In
1996, BRAC started the Micro Enterprise Lending and Assistance (MELA) Program (now
termed as Progoti) with the aim to provide larger loans to the more enterprising VO (Village
Organization) members as well as non VO micro entrepreneurs to develop their own business.
Progoti tries to stimulate the growth of small enterprise in the semi-urban and rural areas. The
loans, starting from Taka 50,000, are enterprise loans based on careful but rapid appraisal of the
enterprises. These loans are given to individual entrepreneurs and loans are repayable in monthly
installments with rebate possibilities in case of early repayment. By Dec. 2008, more than Taka
75 billion has been loaned to more than 800,000 entrepreneurs across the country with an on-
time repayment rate of 98 %. A carefully designed MIS provides entrepreneurs specific
information at regular intervals to enable rapid follow up and action.

The farm sector also suffers from a strong missing middle syndrome. BRAC has a good
knowledge of this market segment and the 'progressive operators' in this market through its
extensive network of the various sector programs. It makes use of this program knowledge to


                                                                                                  7
target areas with specific potential under a program launched in October 2002 called Enterprise
Development Program (EDP) now termed as Unnoti. These loans are farm enterprise loans for
farmers owning more than 100 decimals of cultivable land. Loans start from Taka 15,000
Members of this program form groups of up to 40 called Village Organizations (VOs) and VO
becomes functional once it has at least 10 members. Meetings are held weekly where members
save at the rate of Taka 20 per week. For loan repayment before maturity, a 'rebate is available.
By Dec. 2008, Unnoti had approximately 1.2 million members in more than 58,000 VOs with a
total disbursement of over Taka 34 billion. The goal of this program is to provide financial
services to meet specific needs of small and marginal farmers.

3.1 Addressing the issue of food insecurity: Soft Agricultural Loans and Loans for
Agricultural Inputs
The soaring cost of food is threatening millions of people in low income countries. World food
prices have more than double in recent times, the highest recorded level since 1990. Bangladesh
in a recent report of the United Nations Food and Agricultural Organization (FAO) as one of
the countries that will be the hardest hit due the increase in climate change related disasters and
changes in food consumption. The price of rice, the dominant staple in Bangladesh has doubled
in within the last year, and food security is considered the number one development problem
facing the country.

BRAC’s client groups of landless poor, marginal land owners and the rural non -farm operators
will be the worst affected, as they usually spend half their income on rice. With the ensuing food
insecurity crisis and the adverse affect of climate change on food production, BRAC has taken
the initiative to explore large scale opportunities for increasing crop production, and training
farmers and extension workers on innovative crop management technologies.
BRAC has been providing grace period in irrigation, agriculture, and fisheries sectors for a long
time. The special offer was provided in light with the fact that the output of the program does
not come immediately after giving the input. The duration of the loan depended on the
program’s requirement giving enough time for the participants to grow and be fruitful. Similarly,
interest free loans are also provided to them for the procurement of agricultural inputs and
materials.
Crop Diversification Loan was initiated by BRAC in collaboration with the Department of
Agriculture, GOB and Asian Development Bank for focusing on high value crop cultivation.
The project, being implemented in the northern districts is supporting nearly 100,000 small
farmers cultivate high value crop.
4.0     Addressing New Vulnerabilities:
Globalization opens up new opportunities as well as new risks. Those who lose out, especially
the poor are more often than not, left high and dry. In Bangladesh, no formal safety net exists
that would provide a chance for a new lease of life for the poor who lost out due to the
uncertainties created by the global market forces. BRAC has extensive coverage in the urban
slum areas of Dhaka through the BRAC Urban Program (BUP) offering a wide range of
development services, including microfinance.
4.1 BRAC’s Social Protection Package for Retrenched State Owned Enterprise Workers
The privatization of the large scale industries has resulted in retrenchment of a wide array of

                                                                                                    8
workers employed in these industries. Discontinuation of employment has led to economic and
social vulnerability of the workers and their dependents. This has posed as a challenging
situation for them and they are very much unsure of their future. This uncertainty has brought
various obstacles in future plans for these workers, especially regarding the optimum utilization
of their retrenchment benefit or golden-handshake money. They require proper guidance and
social support to get through this situation. At the same time, it is very important that these
workers are reemployed or get themselves involved in income generating activities. But given the
low level of education of these workers and the fact that they have a limited experience on a
particular sector has also limited their accessibility in the job market as well as new business
ventures.

Keeping all the above in mind, BRAC initiated SPPRW (with DFID’s Country Assistance Plan)
with the vision of enhancing the social and economic capabilities of redundant workers of State
Owned Enterprises (SOE) in a sustainable manner. The overall goal of this project is to enable
the retrenched workers to build, secure, and use their assets to improve their well being, reduce
their vulnerabilities and take advantage of new opportunities. The various components of this
project are:

            o   Counseling,
            o   Skill training,
            o   Savings and Credit,
            o   Education support for children,
            o   Health support,
            o   Job information bank

4.2 Employment and Livelihood for Adolescents (ELA)
In the rural areas, there is a limited opportunities for paid employment for young and adolescent
girls. Together with, illiteracy, malnutrition, social inequity, early marriage, divorce, dowry,
trafficking, etc. have all contributed to make adolescent girls insecure and helpless. ELA
commenced in 2000 with the aim of providing sustainable economic activities for female
adolescents and young women. The financial supports include savings and credit facilities up to
Tk. 20,000. Through economic activities such as micro-credit and savings, the program seeks to
increase the self sustainability of adolescent girls and women. A special loan component
involving goat rearing is directed towards female adolescents of secondary schools. The program
is carried out through small adolescent centers, where the members meet twice a week and
participate in different socializing activities. For the members’ future economic sustainability,
BRAC also arranges for tailor made trainings on income generation activities.

4.3 Disaster Rehabilitation
In a natural disaster prone country like ours, BRAC has various relief and rehabilitation activities
designed for times of natural calamities. Restructured disaster loans are provided for income
generation activities for the affected population for their future economic sustainability. At the
same time, the fact that we could also benefit from increasing the amount of disaster
preparedness throughout the organization, BRAC has established a permanent disaster
preparedness and climate change department. Since many disasters are also the outcome of
global climate change, our initiative will have a component related to community adaptation to
climate change.

                                                                                                    9
5.0 Addressing the issues of Sustainability and Outreach:
Sustainability has many definitions. One definition is related to environmental sustainability,
others to economic, social, and political sustainability. In our eyes, the term means that benefits
flowing from a development program or project will be maintained after extern al interventions
or donor funding has ceased. Sustainability in these terms is dependent on the degree of self
reliance developed in targeted communities and on the social and political commitment in the
wider society to development programs that support the continuance of newly self reliant
communities. The need for sustainability is one of our core guiding principles.

Our first sustainability strategy is grounded in the idea of empowerment of the poor learned
through effective planning, implementation, monitoring, and evaluation of their own
development actions. The Village Organizations are the result of these strategies. The insistence
of group members’ own resource mobilization through compulsory weekly savings is an
important self reliance strategy that reduces our dependencies on external agencies.

Another strategy for sustainability has been to create a sustainable dynamic in various sub-
sectors. Our poultry program is a key example, where we have devised a self sustaining program
for vaccination of chicks to cut mortality. Instead of employing our own staff for the
vaccination, we trained a large number of women from our Village Organizations and provided
free vaccines to the trained vaccinators (free vaccines provided by Directorate of Poultry and
Livestock, GOB). These vaccinators provided vaccination services to the poultry rearers for a
fee which gave them a regular income and motivation to continue. This developed system is self
sustaining as BRAC neither provides the vaccines nor the vaccination. Similar examples are the
fisheries and livestock program, together with agricultural inputs where farmers are provided
with high yield seeds to gain the maximum production.

A third sustainability strategy has been to build effective linkages among various agencies and
organizations associated with rural development. These linkages form the political and economic
environment in which the poor and landless communities exist. The Village Organizations have
been linked to the food-for-work program so that the members understand how to utilize the
resources of the programs to contribute to economic projects of their own choice. The strategy
to build District wise Village Organization linkages will enhance the program participants’
capacity to bargain with and exert pressure in relevant agencies to enhance the availability of
required economic and social services.

We do not want to the benefits generated by our village interventions to depend on the
continuous presence or the availability of donor subsidies. We recognize that self reliant village
development interventions are likely to be sustained as long as they are based on locally
supported or linked into a supportive national development network backed by effective
infrastructural improvements. The field based managers actively engage with government
agencies to improve rural services and the senior management concentrate technical services to
overcome constraints and break bottlenecks in relevant economic sectors. We recognize and
acknowledge the fact that creating institutions large enough to provide essential services on a
sustained self financing basis is imperative and this has lead us establishing various Program
Support Enterprises to support various income generating activities undertaken by our program
participants.

                                                                                                  10
Our vision of sustainability is to develop programs on a sufficient scale to convince people at the
highest levels, that the national-level programs can be effectively designed and managed in the
interest of the poor. The support and sharing of resources with both, North and South, must
continue and should be effective and efficient.

Outreach in BRAC means expanding programs as rapidly as possible. We do not consider our
principle job is to build and demonstrate development models. Our essential job is to reach as
many rural poor as possible, and as fast as possible, with interventions that can positively change
their lives. We have learned (and still continue to) how to do rural development, and because we
have the structural base and resource capacity to expand rapidly, and more so there is such need.
Rapid and large scale outreach may not be appropriate for all development organizations, but in
the context of Bangladesh’s huge population and overriding needs, increased outreach is
essential. Rapid scale up always entails problems and risks, but the opportunity costs of not
scaling up are too great for the rural poor to bear.

The issue of outreach has been in our focus since our early days and our Outreach Program was
designed to treat the limits of what the landless poor could accomplish using only their own
resources or local resources that could be tapped through existing channels. An underlying
principle was that, Outreach should not give any economic assistance to the groups, thus forcing
the members to focus on ways in which they might mobilize existing resources, including their
own savings. The program combined functional education, training, savings, problem-solving
meetings, and logistics support to obtain inputs from the government agencies. Eventually Rural
Credit and Training Program (RCTP) was launched emphasizing on the growing awareness of
credit for the poor. The RCTP conducted the same activities of the Outreach, but in addition
provided credit opportunities to the VO members.

BRAC has continued to scale up more and more rapidly and continues to have the capacity to
manage effectively. We feel that if we continue to build support services at the same or faster
rate than our outreach, continued growth is possible.

6. Impact of BRAC Microfinance Program
At BRAC, we like to think of ourselves as a ‘learning organization’. A great deal of our learning
comes from our program experiences, and sharing of ideas and communicating with colleagues
at various levels of the organization. However, there is no substitute of careful research to
complement and focus our efforts. BRAC’s Research and Evaluation Division (RED) has been
working since early 1990s to develop a comprehensive Impact Assessment System (IAS). The
assessment of the programs not only gives BRAC the measurement of program success, but also
helps to evaluate impacts of the program in raising the socio-economic status of the participants
and to identify the pitfalls and challenges. The following findings on the impact of BRAC
Microfinance Program were reported in BRAC’s Impact Assessment Study II:

      Eighty percent of BRAC loan were used for productive investment, asset purchase and for
       housing. Only 3% of loans were used for household consumption.
      Since joining BRAC, nearly four percent of member household graduated from landlessness and
       shifted to different landholding groups.



                                                                                                  11
        About 45% of BRAC members are now themselves directly involved in any income generating
         activities. Before joining BRAC the percentage was only 28%.
        BRAC member households owned 50% higher net worth than non-BRAC members.
        BRAC member households had two times more savings than the comparison households.
         Average per capita calorie consumption and total food and nonfood expenditures were
         significantly higher for BRAC member households. Ratio of non-food to total expenditure was
         also higher for BRAC, which mainly increased with increase in the household income.
         BRAC members were found significantly better off than the comparison households in term of
         value of their dwelling places and per capita floor space utilization.

Level of education, adult literacy and primary school enrollment of the group members significantly
improved after joining BRAC.

7.0 Conclusion
The first example demonstrate our experience of building opportunity ladders for the extreme
poor, those who tend to be left out from the conventional microfinance programs. The idea
here is to
    - design subsidies in ways that provide a window of opportunity for the extreme poor
    - strengthen the initiatives of the extreme poor so that they can build the capacities to
         benefit from microfinance and other mainstream development programs.

The second one is an example of using microfinance combined with other interventions to
provide a new chance for building new livelihoods for the poor facing sudden vulnerabilities.

The third examples illustrate how BRAC uses the knowledge embodied in its institutional
networks to provide financial services to new market segments.
None of the Programs undertaken by BRAC has its own internal logic divorced from the
broader needs picture. The design and implementation strategies of each of the programs can be
understood only when viewed in relation to the whole complex of interlocking needs of the
village poor, and to the other programs that have been designed in response. As the histories of
various BRAC Programs have illustrated, to be a learning organization requires shared vision,
expertise, and flexibility from all concerned. Most important, to be characterized as successful,
learning strategies must result in effective activities that bring positive changes in the lives of the
program participants.
Another important findings from the illustration above is that it is not only 'microfinance the
tool' that is a powerful poverty-alleviating weapon, but also the institutional framework of
microfinance that is created in delivering microfinance. This is especially true in the context of
Bangladesh, which is home to so many successful microfinance providing institutions. The
extensive outreach, connection, knowledge and network, that the microfinance institution and
the people running it at all levels possess and generate in their every day working engagements,
are extremely powerful asset in the fight to overcome poverty. We are only beginning to harness
the power embodied in the institutional capital of microfinance institutions.
1. Part of this paper of the author was first published in Attacking Poverty with Microcredit edited by Mr. Salehuddin
Ahmed and M.A.Hakim, publisher The University Press Limited, First Published in 2004. ISBN 984 05 1692 2
2. This paper was compiled using various resources, including: Breaking the Cycle of Poverty by Catherine H. Lovell


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