brac microfinance program in bangladesh and its international replications a brac presentation

26
BRAC Microfinance Program in Bangladesh and its International Replications A BRAC Presentation July 9, 2007 Building Resources Across Communities

Upload: belle-parker

Post on 03-Jan-2016

40 views

Category:

Documents


4 download

DESCRIPTION

BRAC Microfinance Program in Bangladesh and its International Replications A BRAC Presentation July 9, 2007. Building Resources Across Communities. BRAC ’ s Vision. - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

BRAC Microfinance Program in Bangladesh and its International

Replications

A BRAC Presentation

July 9, 2007

Building Resources Across Communities

Page 2: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

   BRAC’s VisionBRAC’s Vision

Just, enlightened, healthy and democratic societies free from hunger, poverty, environmental

degradation and all forms of exploitation based on sex, religion

and ethnicity.

Page 3: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Overview of BRACOverview of BRAC- BRAC started in 1972 as a small relief and

rehabilitation effort to support Bangladeshi refugees returning home after declaration of independence in December 1971. It then stood for Bangladesh Rural Assistance Committee.

- By mid 70s, BRAC realized that more long term, sustained effort was needed for change the lives of the poor. The focus shifted from rehabilitation to development, and BRAC was renamed to stand for Bangladesh Rural Advancement Committee

Page 4: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Overview of BRAC Overview of BRAC (Cont.)(Cont.)

- BRAC today provides microfinance to over 6 million clients, offers primary education to over 1.52 million students through its 52,168 non-formal schools, and delivers essential health care to over 31 million people through a strong cadre of 68,000 health volunteers. It has full-time staff of over 42,000 in Bangladesh.

- BRAC’s budget in year 2006 was USD 339 million, over 70% of which was self-financed.

Page 5: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Overview of BRACOverview of BRAC- BRAC is committed towards using its

experience and expertise to work together to fight poverty around the world

- BRAC aims to do so by empowering the poor so that they can build sustainable capacities to fight poverty

- Today, BRAC stands for Building Resources Across Communities.

Page 6: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

BRAC’s Main ProgramsBRAC’s Main Programs

- BRAC Development Program (BDP)

- BRAC Education Program (BEP)

- Health, Nutrition & Population Program (HNPP)

- BRAC Training Division (BTD)

- Research and Evaluation Division (RED)

- Support Programs and Enterprises

- Other related institutions: BRAC University, BRAC Bank

Page 7: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

BRAC Development ProgramsBRAC Development Programs

- Microfinance

- Employment and Income Generation ( e.g.

poultry & livestock, fisheries, social forestry)

- Social Development, Human Rights & Legal

Services

- Health

- Education

Page 8: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

The BRAC ApproachThe BRAC Approach

BRAC believes in holistic development approach and sees

microfinance as a powerful entry point that emerges from:

√ The social capital built by organizing the poor to form their own

groups through which they engage with BRAC and other formal

institutions.

√ The organizational/institutional capital that accrue in building its

ability to manage large scale microfinance.

√ The network capital built through large scale outreach of

microfinance constituting a network of producers and consumers

throughout the country.

Page 9: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Components of BRAC Microfinance ProgramComponents of BRAC Microfinance Program

Group Based Products:Poverty Alleviation (MF 1)Employment and Livelihood for Adolescents (MF 1)Economic Development (MF 2)

Individual Products:Micro Enterprise Loans (MF 3)Women Entrepreneur Development Program (MF 3)

Microfinance for the Extreme Poor:Challenging the Frontiers of Poverty Reduction –Targeting the Ultra Poor (CFPR-TUP)Income Generation for Vulnerable Group Development (IGVGD) – Collaborating with the government and WFP

Page 10: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Urban (20%) Rural (80%)

Better-off

Vulnerable Non-poor

Moderate Poor

Extreme Poor

Destitute

BRAC Microfinance ServicesBRAC Microfinance Services

IGVGD

CFPRP-TUP

MF 1

MF 2

MF 3

Page 11: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Group Dynamics and The Credit LadderGroup Dynamics and The Credit Ladder

√ Formation of Client Groups - Typically known as Village Organizations (VO)s

√ Capacity development, healthcare services and social awareness

√ Asset transfer, subsistence allowance for CFPR-TUP members

√ Input support for IGVGD members √ Savings and credit activities√ Graduation onto MF 2 √ Enterprise loans (Individual)

Page 12: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Financial Services for MF ClientsFinancial Services for MF Clients

1. Credit

√ General Loan

√ Loan for income generating projects

√ Housing Loan

√ Enterprise Loan

2. Savings

3. Death Benefit

Page 13: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Key Features of Loan ProductKey Features of Loan Product

- Micro Loans

√ Lending through group formation, namely Village Organizations (VO)

√ Loan Range: Tk.1,000 to 50,000 (US$15 to $700 )

√ Repayment through equal weekly installments

- Micro Enterprise Loans

√ Individual Lending between Tk 50,000 to Tk 300,000 (US$700 to $4,500)

√ Repayment through monthly installments

√ Service charge: 12.5% (Flat)

√ Emergency loans are also given at the time of disaster

Page 14: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

2. Savings Products2. Savings Products

BRAC has four types of saving products:

√ Weekly personal savings for the VO

members

√ Compulsory savings deposit for VO

members

√ Monthly savings deposits

√ Term deposits

Page 15: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

3. Death Benefit3. Death Benefit

Death Benefit policy for BRAC Microfinance group members:

√ Any poor village woman when she

becomes a group member is eligible to get

this benefit

√ The group member does not need to pay

any premium for this

Page 16: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

BRAC Micro Finance Program in Bangladesh: BRAC Micro Finance Program in Bangladesh: At-A-Glance (May- 2007)At-A-Glance (May- 2007)

Inception of Micro Finance Program : 1974Districts Covered : 64 out of 64Total No. of Branch Offices : 3028Total No. of Village Organizations : 206,820Total Number of Members : 6.2 million Outstanding Borrowers : 5.3 million Outstanding Loan Amount : US$ 438.14 millionMembers’ Savings Balance : US$ 163.71 millionLoan Recovery Rate : 99%Cost per Unit of Dollar Lent : US$ 0.10

Page 17: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Credit Delivery ModelCredit Delivery Model√ BRAC uses Village Organization (VO) as a platform for

launching and implementing its various activities

√ VO is an association of poor, landless people that come together with the assistance of BRAC and try to improve their socio-economic position

 

√ Credit decisions are taken in weekly VO meetings 

√ BRAC considers three things before considering a loan application:

 

- Capacity of utilizing the loan money

- Types of business

- Profitability of the business

Page 18: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Loan Application, Processing and Loan Application, Processing and Disbursement ProcedureDisbursement Procedure

Loan Proposal

- Loan is proposed in a weekly VO meeting

- Formal Loan proposal is prepared by the respective program organizer (PO)

Loan Processing

- The accountant checks and verifies savings and credit records of the applicant by using a computer

- Loan proposal is forwarded to the manager at the same office

- Verified and approved by the manager

Disbursement

At the branch office, the accountant disburses the loan after the manager interviews the borrower

Page 19: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Installments and Savings Collection, Installments and Savings Collection, Documentation and Reporting ProcedureDocumentation and Reporting Procedure

Collection-Savings and loan installments are collected in weekly VO meetings

- PO makes entries in the collection sheet and updates the passbook, which is kept by the members

Documentation and Record

Keeping -PO compiles and submits the collection sheets to the accountant

-The accountant gives computer posting

- Computer print-outs are generated for the managers while required

Reporting- Daily back-ups are kept at the branch office

- Reports are sent to the branch and regional office on weekly basis

- Diskettes are sent to the Head office at the end of the month

- Data is entered into the central MIS system

Page 20: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

International Initiatives of BRAC International Initiatives of BRAC

- In late 2001, after the fall of Taliban regime, the new Afghan Government invited BRAC to work in Afghanistan.

- BRAC Afghanistan was set up in 2002 and today works in 24 out of 34 provinces in Afghanistan in the major fields of microfinance, health and education

- In 2005, BRAC responded to the Tsunami victims in Sri Lanka with relief and livelihood reconstruction support.

Page 21: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

BRAC International InitiativesBRAC International Initiatives

- With the aim of attaining the MDGs by working together with governments, civil society organizations in Africa, BRAC started its operations in Uganda and Tanzania in second half of 2006. BRAC also initiated microfinance program in Southern Sudan in early 2007.

- In late 2006, replications of TUP program through partnership in Haiti and in India (West Bengal) were launched.

Page 22: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

BRAC Micro Finance Program in Afghanistan: BRAC Micro Finance Program in Afghanistan: At-A-Glance (May- 2007)At-A-Glance (May- 2007)

Micro Finance Program Launched: 2002Provinces Covered : 22 out of 34Total No. of Branch Offices : 203Total No. of Village Organizations : 10,332Total Number of Members : 176,594Outstanding Borrowers : 143,651 Outstanding Loan Amount : US$ 69,169,612Members’ Savings Balance : US$ 5,266,444Loan Recovery Rate : 94.93%

Page 23: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

BRAC Micro Finance Program in Uganda: BRAC Micro Finance Program in Uganda: At-A-Glance (December - 2006)At-A-Glance (December - 2006)

Micro Finance Program Launched : 2006Districts Covered : 8Total No. of Branch Offices : 10Total No. of Village Organizations : 460Total Number of Members : 11,912Outstanding Borrowers : 5,808Outstanding Loan Amount : US$ 540,748Loan Recovery Rate : 100%

Page 24: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

BRAC Micro Finance Program in Tanzania: BRAC Micro Finance Program in Tanzania: At-A-Glance (May- 2007)At-A-Glance (May- 2007)

Micro Finance Program Launched : 2006Districts Covered : 5Total No. of Branch Offices : 10Total No. of Village Organizations : 307Total Number of Members : 8,033Outstanding Borrowers : 5,131 Outstanding Loan Amount : US$ 558,419Loan Recovery Rate : 100%

Page 25: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Some ChallengesSome Challenges

- Understanding the local context

- Different regulatory structures

- Inadequate banking network

- Gaining trust of local institutions and people

- Cultural differences and management of national staff

- Competition and competitors’ response to BRAC intervention

- Ensuring continuous flow of funding, high cost of fund and the issue of self-sufficiency and sustainability

Page 26: BRAC Microfinance Program in Bangladesh and its International Replications  A BRAC Presentation

Thank Thank YouYou