Impact of Microfinance on Women Empowerment in Bangladesh

Assignment

Khondokar Sabera Hamid,

Master in Development Studies (MDS),

United International University, Dhaka, Bangladesh

Abstract:

Microfinance has evolved as a potent driver of financial inclusion in Bangladesh with much positive impact on poverty alleviation and other social development indicators. Despite massive success in terms of outreach, employment generation and empowerment of millions of poor, a large number of low-income poor people have remained excluded from the network of the financial services. The article examines achievements of microfinance industry in Bangladesh; its present challenges and prescribes policy measures to bring more unbanked poor people in the fold of financial services.Bangladesh is one of the high density countries of the world. 40% of its population lives below the poverty level of which rural women are poorer. The rise of the Micro Credit Institution in the global context is identified as an important phenomenon which has implication for the development prospects of the poor. Microfinance, a proven tool for empowering poor women by mitigating their extreme poverty to uplift them from vulnerable condition to some extent a better living atmosphere, has brought great changes in the women’s living standard, has created an individual identity for the moderate poor women in the society and has given a freedom to live the life according to their choice. The paper is designed to identify the role of microfinance and to analyze rural women’s economic empowerment as the outcome of microcredit interventions.

Key Words:Bangladesh, Microfinance, Microcredit, Women Empowerment.

Introduction: The unique feature of microfinance programme is that it focuses on women for development. There are more than ninety per cent women clients under this programme. The basic idea is to empower women by providing them financial assistance and allowing them to earn an independent income, contribute financially to their households and generate self-employment. This economic independence is expected to generate increased self-respect, self-esteem, self-confidence and other forms of empowerment for women participants of the programme. The process of empowerment of the beneficiaries of the programme is not automatic, but depends upon many factors. These factors may be abilities, environment, initiative and status of women as group.There is no dearth of studies which show that with the help of microfinance the status of a woman improves in the family; she earns greater respect in the family than before; she

participates in the decision-making and community meetings; and she gets freedom to move for the betterment of the micro-business. It may be due to the fact that women become able to contribute financially to the family. In fact, microfinance programme increases economic, social, and political empowerment. Microfinance programme may be an important programme but not a panacea to end all the problems that poor face. Hence, the programme beneficiaries must efficiently use the financial support to start small businesses that will help in uplifting standard of life and empowerment of women.

Background of the Study:

Access to financial institutions and to credit is a necessity when it comes to poverty reduction and development. Without access to financial services, it is often impossible for the poor to make the necessary investments to improve their situation. A large share of the poor in developing countries, like Bangladesh can be found in the rural areas, whereas the formal banking sector mostly locate their branches in urban areas.

The rural credit market can be divided into two main sectors: the formal credit sector and the informal credit market. The formal sector includes the governmental banks as well as the commercial banks. A special branch of the governmental banks are often specializing on agricultural loans and offering credit in poor rural areas. However these banks often lack the insight and knowledge of specific needs of the clients in these kinds of areas. This might for example regard repayments that consider time of harvest when setting up a repayment scheme, with limited installments before the crop has been sold. Even though the rural banks often offer loans with low interest rates, other costs regarding paper work and visits to the bank, might also be hindering factors for the poor to access credit.

Another important aspect of the formal banking sector is the demand for collateral. Many of the formal banks, also the rural branches, require some form of security such as property or asset, when issuing a loan- something most poor, for obvious reasons, cannot present to the banks. The formal bank’s demand for collateral is connected to the concepts of asymmetric information and adverse selection. Lending money to the poor borrower with no previous credit- history includes a risk for the banking institutions, as they do not have any information on the potential borrower and can thus not make a secure judgment of the riskiness of the borrower’s project or whether he or she is capable to repay the loan. Requirement of collateral can therefore compensate for the risk that the asymmetric information gives rise to. The existence of asymmetric information, adverse selection and the requirement of collateral force many of the rural poor to turn to the informal credit market to access credit. The informal

credit market consists of lenders, usually wealthier villagers, offering loans, often with extreme interest rates. Informal lenders do not have the same requirements on collateral as the formal banks: a small plot of land or labor is often accepted as security making it possible for the borrower to work off his or her debt. Obviously these informal loans includes a bigger risk for the borrower, but due to the difficulties in accessing credit from other formal sources, turning to the informal credit might be the only alternative.

Where the credit markets has failed to meet the poor’s’ need and inversely, where the poor fail to meet the credit market’s requirement, microfinance has been developed as a source of credit for the poor in developing countries. Through group lending techniques where the group jointly responsible for the management and repayment of each other’s loans, it has been possible for the poor, with no earlier credit history or collateral to access credit.

In recent years, women’s empowerment has been acknowledged as a key variable of development in less developed countries. Focusing on women’s empowerment in development is not only expected to benefit the women themselves, but is also believed to improve, through positive externalities of women’s empowerment are: higher education levels, higher awareness of health issues, lower fertility rates and higher political awareness- all of these being important positive factors for development. It has thus been recognized that the interrelation between women’s empowerment and development makes it difficult to proceed in one area without making corresponding changes in the other area, and also that neglecting women’s empowerment and hindering women from reaching their full potential is consequently hindering economic and political development.

A potentially effective way to empower women is through access to credit. Giving a woman access to credit increases her opportunities to reach a higher level of empowerment through the possibility to obtain her own source of income and create a sense of security.

Problem Statement: According to the World Bank’s gender statistics database, women have a higher unemployment rate than men in virtually every country. In general, women also make up the majority of the lower paid, unorganized informal sector of most economies. These statistics are used to justify giving priority and increasing women’s access to financial services on the grounds that women are relatively more disadvantaged than men.

Empowerment of women and gender equality are prerequisite for achieving political, social, economic, cultural and environmental security among people. (Beijing,1995). As it has been

cited earlier, access to credit is an important mechanism for reducing women’s poverty and to empower them. Both the Convention on the Elimination of Discrimination Against Women (CEDAW) and the Beijing Platform for Action (BPFA, 1995) address women’s access to financial resources. For example, BPFA includes thirty five references to enabling poor women to gain access to credit.As stated by Narayan (2002), in most poor countries, men’s domination of women is strongest within the household. Access to credit and participation in income-generating activities is assumed to strengthen women’s bargaining position within the household thereby allowing them to influence a greater number of strategic decisions. This study looks into microfinance institutions as contributing to women’s knowledge and self-confidence by widening their social networking. It also gives women the tools and skills they need to participate more effectively and successfully in formal politics and to informally influence decisions and policies that affect their lives. Generally, this study deals with the role of microfinance in creating employment and income opportunities to women and subsequently in empowering them to play an active role in the economic, political and socio-cultural sphere in the study area. The economic empowerment approach attributes women’s subordination to lack of economic power. It focuses on improving women’s control over material resources and strengthening women’s economic security. Women may work in a range of areas, including savings and credit training and skills development, new technologies or marketing as well as provide such supports as child care, health services, literary programs and legal education and aid. The consciousness raising approach asserts that women’s empowerment requires awareness of the complex factors causing women’s subordination.

Objectives of the Study: The study generally attempts to find out the impact of micro financing on empowerment of women particularly those in the rural areas.

Specific objectives

1. To identify various determinants of women empowerment.

2. To identify some of the microfinance products (facilities or interventions) and specific

packages available to small scale enterprises run by women in the rural areas.

3. To find out the impact of microfinance interventions/packages on the enterprises run by

women entrepreneurs.

4. To examine the impact that microfinance interventions/packages for women have had on

the families of these women.

The study mainly aims at assessing the extent to which microfinance contributes to women empowerment in economic, socio-cultural at household level, political, knowledge, self-confidence and use of time. The study was designed in such a way that comparison of clients’ empowerment levels before and after the intervention of microfinance is made.

Significance of the Study:

Due to the wide acknowledgement of women’s empowerment as a key for development, it is of interest to find out how women are empowered. The empowerment of women is one of crucial development issues. This is due to the fact that women appear to form the largest of the poor and vulnerable group. In this regards, microcredit program has been argued to be potentially effective for poverty alleviation and lifting the poor, particularly women, out of poverty. The impact of microcredit program, however, is not limited to improving income of poor women. What is more important is that microcredit program has received widespread recognition as a viable strategy for empowerment of women, i.e. greater capabilities, choices and freedom in decision making. The study seeks to examine the impact of microcredit program on women empowerment in Bangladesh.

Literature Review

Microfinance:

For commercial reasons financial services have historically been targeted to the richer proportion of society who have a greater capacity to repay loans and maintain savings. However the poor remain typically either un-served or offered inappropriate financial services. Poor farmers and landless laborers have extreme difficulty accessing financial services from conventional financial institutions such as commercial banks. To overcome these obstacles, a new approach to provide appropriate financial services to poorer clients has emerged in the past decades – this approach is called microfinance

Microfinance is the provision of a broad range of financial services such as – deposits, loans, payment services, money transfers and insurance products – to the poor and low-income

households, for their microenterprises and small businesses, to enable them to raise their income levels and improve their living standards.

According to Otero (1999, p.8) microfinance is

“The provision of financial services to low-income poor and very poor self-employed people”.

According to Ledgerwood (1999)

“These financial services generally include savings and credit but can also include other financial

services such as insurance and payment services.”

Schreiner and Colombet (2001, p.339) define microfinance as

“The attempt to improve access to small deposits and small loans for poor households

neglected by banks.”

Micro finance encompasses the provision of financial services and the management of small amount of money through a range of products and a system of intermediary functions that are targeted at low income clients. It includes loans, savings, insurance, transfer services and other financial products and services. It thus consists primarily of providing financial services, including savings, microcredit, micro-insurance, micro-leasing and transfers in relatively small transactions designed to be accessible to micro enterprises and low income households.The two main mechanisms for the delivery of financial services to such clients are: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

Characteristics and Features of Microfinance:

Characteristics Distinguishing Features

Type of client

Low Income Employment in informal sector; low wage

bracket Lack of physical collateral Closely interlinked household/business

activities

Lending Technology

Prompt approval and disbursement of micro loans

Lack of extensive loan records Collateral substitutes; group-based

guarantees Conditional access to further micro-credits Information-intensive character-based

lending linked to cash flow analysis and group-based borrower selection

Loan Portfolio Highly volatile Risk heavily dependent on portfolio

management skills

OrganizationalIdeology

Remote from/non-dependent on government Cost recovery objective vs. profit maximizing

InstitutionalStructure

Decentralized Insufficient external control and regulation Capital base is quasi-equity (grants, soft

loans) loans)

Microfinance gives access to financial and non-financial services to low-income people wishing to access money for starting or developing an income generation activity. As the name implies, the loans and savings of the individual poorer clients are small. Microfinance came into being from the recognition that micro-entrepreneurs and some poorer clients can be ‘bankable’, that is they can repay on time both the principal and interest, and also make savings provided financial services are tailored to suit their needs. Microfinance as a discipline has created financial products and services that are packaged in a way that enables low-income people to become clients of a banking intermediary.

Poorer people often require services in addition to credit access. They may also lack access to secure savings locations that provide interest on their savings, or they may not have access to relevant and timely information about markets beyond their immediate vicinity. Furthermore

they may not be aware of the range of financial services that would make running their business more productive.

Microfinance intermediaries can provide a variety of services for their clients. Such services include:

Credit Deposit Services (voluntary or compulsory) Insurance products (health, life, retirement, etc.) Credit cards Venture capital Business development services Hire-purchase for the poor

Microcredit:

Microcredit is a component of microfinance in that it involves providing credit to the poor, but microfinance also involves additional non-credit financial services such as savings, insurance, pensions and payment services.Micro credit is the extension of very small loans (micro loans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Micro credit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.Micro-credit is based on a separate set of principles which are distinguished from general financing or credit. Micro-credit emphasizes building capacity of a micro-entrepreneur, employment generation, trust building and help to the micro entrepreneur on initiation and during difficult times. Micro credit is a tool for socio-economic development. United Nations former Secretary General Kofi Annan comments Micro credit is a critical anti-poverty tool-a wise investment in human capital. When the poorest especially women receive credit, they become economic actors with power, power to improve not only their own lives but in a widening circle of impact, the lives of their family, their communities and their nations. Micro credit loan cycles are usually shorter than traditional commercial loans-typically six months to a year with payments plus interest, due weekly. Shorter loan cycles and weekly payments help the borrowers may current and not become overwhelmed by large payments.

Empowerment:

There is no consensus on the concept of empowerment. It may be because of the fact that different experts and different disciplines use this concept differently. A brief discussion will be presented here to clearly present the difference of opinion and making an understanding of the meaning of empowerment.The dictionary meaning of the word ‘empower’ is “to give power or authority to someone.” Thereafter, it begins to be used with an infinitive in a more general way meaning “to enable or permit.” Both of these uses survive today. The concept is extensively used in politics and psychology. Its modern use originated in the American civil rights movements during 1960 to 1980 which sought political empowerment for its followers. The concept was then taken up by the women’s movement, conservatives and social reformers.Empowerment is an intrinsic quality of a person, which cannot be bestowed by a third party. It is considered that an empowered person’s behavior undergoes a change.In a nutshell, empowerment is a process which enables one to gain power, authority and influence over others. In the literature published on the subject, the empowerment is considered to be matching with the following traits or capabilities:

Having decision-making power of one’s own

Having access to information and resources for taking proper decision

Having a range of options from which one can make choices (not just yes/no, either/or)

Ability to exercise assertiveness in collective decision-making

Having positive thinking about the ability to make change

Ability to learn skills for improving one’s personal or group power

Ability to change others’ perceptions by democratic means

Involving in the growth process and change that is never ending and self initiated.

Some of the experts explain the concept of empowerment as follows:

Wallerstein (1992) defined empowerment as “People assuming control and mastery over their own lives in the context of their social and political environment.”Some other researchers describe empowerment as a continuous, ongoing and interactive process that leads to enhancement of abilities and a wider scope for choice and action of an individual. Thus, empowerment leads to equity and well-being of the individual and the community.

Batliwala (1994) characterized empowerment as control over resources (both material and intellectual) and ideology, and an empowered person uses them according to his ideology or belief. It is a process of challenging existing power relations and of gaining greater control over the sources of power. The author has described that empowerment is the enhancement of power.

Rowlands (1997) explained empowerment as a process of enabling or authorizing an individual to think, behave, and take action and controlling work in an autonomous way. It involves some degree of personal development. Individuals become empowered when they obtain the right to determine choices in life and to influence the direction of change through the ability to gain control over material and non-material resources. The World Bank ‘Empowerment Source Book’ also defines empowerment in the same way.

Chambers (1997) defined empowerment “as an interactive process, it requires and implies developmental change in power relations and behavior within the community’s individuals and institutions. The power relations can, therefore, be analyzed under the institutional, professional and personal elements of the community.”

Page and Czuba (1999) explained that there are three basic components of empowerment - multi-dimensional, social and a process. It is multi-dimensional because it occurs within sociological, psychological, economic and other dimensions at various levels, such as individual, group and community. It is social because it occurs in relationship to others. It is a process as it may remain always ongoing without any final goal.According to Krishna (2003) empowerment means increasing the capacity of individuals or groups to make effective development and life choices and to transform these choices into desired actions and outcomes. It is by nature a process and/or outcome.

Kabeer (2001) defined empowerment as “the expansion in people's ability to make strategic life choices in a context where this ability was previously denied to them.” This definition contains two elements, (i) the idea of process, or change from a condition of disempowerment, and (ii) the idea of human agency and choice. This helps in distinguishing empowerment from other closely related concepts like women’s autonomy, gender equality, gender discrimination etc.

In short, empowerment is a process that allows one to gain knowledge, power, skill-sets and attitude needed to cope with the changing world and the circumstances in which one lives. Empowerment helps the person concerned to exploit the economic environment in increasing the productivity of self, family and the society on the whole.

Women Empowerment:

The World Bank has made gender mainstreaming a priority in development assistance. In a policy research report, World Bank (2001) identified both gender equality and women empowerment as development objectives and means to promote growth, reduce poverty and support better governance. In the literature available on women empowerment, some of the concepts like gender equality, female autonomy or women status etc. are referring to as either similar or different concepts.

As described by Kabeer (2001) there are two essential elements of women empowerment, i.e., process and agency. A process is defined as the series of events that produce gradual change. The process of women empowerment leads to expansion in their ability to have resources and to make strategic life choices. The agency element of women empowerment describes that women themselves are the significant actors in the process of change. It is the process through which choices are made. Empowerment cannot be offered by a third party rather it has to be claimed by those who would become empowered. Kabeer (1999) explained that women’s empowerment refers to the process by which those who have been denied the ability to make strategic life choices, acquire such ability. The ability to exercise choices incorporates three inter-related dimensions:Resources, which include access as well as future claims to both material and social resources; Agency, which includes the process of decision-making, negotiation, deception and manipulation; and Achievements, which refers to the well-being outcomes of choice.

Agency is a central concept used in a study by Sen (1999). Kabeer’s (2001) understanding of agency is mainly based upon Sen’s study. Agency is defined as an actor’s ability and involvement to make meaningful choices. It encompasses the ability to formulate strategic choices, to control resources and decisions that affect important life outcomes.

Different researchers have explained women empowerment by considering its different aspects. According to Pillai (1995), women empowerment is an active, multidimensional process which enables women to realize their full identity and powers in all spheres of life. Power is neither a commodity to be transacted nor can it be given away as alms. Power has to be acquired and once acquired it needs to be exercised, sustained and preserved.

The World Bank has also identified empowerment as one of the key constituent elements of poverty reduction, and as a primary development goal (Malhotra et.al, 2000). The promotion of women’s empowerment as a development goal is based on the dual argument that social justice is an important aspect of human welfare and is intrinsically worth pursuing. A similar

dual rationale for supporting women’s empowerment has been articulated in the policy statements put forth at several high level international conferences in the past decade e.g. (Beijing Platform for Action,1995), (Beijing +5 Declaration, 2000), and (CEDAW, 1979). However, no major development agency has developed a rigorous method for measuring and tracking changes in levels of empowerment. It is, therefore, difficult for the international development community to be confident that their efforts to empower women are succeeding (Malhotra et.al, 2000).The empowerment of women is essential for achieving the goals of sustainable development centered on human beings (Malhotra et.al, 2000). It also requires appropriate public polices to ensure that women enjoy all human rights and fundamental freedoms and participate fully and equally in all spheres of public life including decision making. Public policies to promote women’s economic potential and independence and their full and equal participation in development are also essential for women’s empowerment. Measures are also needed to ensure women’s equal access to education and to training and retraining.

Women’s empowerment should also reflect on their sexual and reproductive rights and health. An empowerment approach to women’s health emphasizes women’s individual sense of self worth connecting to the values they attach to their own health (linked to "power within") women’s individual decision making over access to health care ("power to") and women’s collective empowerment through organizing to make health services more accountable and to increase women’s choice decision making and control over their bodies ("power with") (Cheston and Kuhn, 2002).Furthermore, links between empowerment and health in general, and specifically for women are receiving growing recognition. Presentation made by WHO at the FourthWorld Conference on Women at Beijing states that the empowerment of women is a fundamental prerequisite for their health. This means promoting access for women to resources, education and employment and the protection and promotion of their human rights and fundamental freedoms so that they are enabled to make choices free from coercion or discrimination (WHO, 1995).

Stromquist (1995) wrote that empowerment includes both cognitive and psychological elements. It involves “women’s understanding of their conditions of subordination and the causes of such conditions at both micro and macro levels of society. It involves understanding the self and the need to make choices that may go against cultural and social expectations”.This means that the whole process of women empowerment requires the ability and active involvement of women themselves. If it does not include women as the agents of that change rather than merely as its recipients, it cannot be considered as empowerment. This implies that women empowerment is a ‘bottom up’ rather than ‘top down’ approach. Empowerment

cannot be injected from outside, rather it has to be acquired by the women through their active involvement in the development process. But it does not imply that all improvements in women position are brought about by women themselves only. Social and political environment is also considered to play an important role in the same. It is the responsibility of the governments and multilaterals to promote policies to set up such type of legal, political and economic environment which help women to have greater access to resources and promote gender equality.

In this way, women empowerment is a process of improvement in the existing status and abilities of women to make them able to lead their lives in an autonomous way. Women empowerment is a complicated and continuous process, which aims at changing the way of thinking of the whole society to ensure equal enjoyment of human rights for all. It is a continuous process of increasing the economic, social, political and psychological strengths.

The supporting agencies, social, political, cultural, financial etc., which are involved in uplifting the cause of women cannot claim that they have empowered women with their help. One cannot claim empowerment unless the intervening process involved women as agents of that change. Kumar and Paul (2007) wrote, “Development agencies cannot claim to empower women rather they can provide appropriate external support and intervention which can, however, be important to foster and support the process of empowerment, i.e., act as facilitators”.

Measuring Empowerment: Framework of dimensions and indicators of Women’s Empowerment:

Dimension Indicators

1. Economic Empowerment

1.1 Women access to employment1.2 Women contribution to household income1.3 Access to and control over household resources1.4 Participation in household financial decision-making1.5 Saving in bank account

2. Socio-cultural and Familial Empowerment

2.1 Women freedom and confidence of movement2.2 Visiting market for purchase of household goods2.3 Ability to raise voice against social exploitation2.4 Attitude towards the education of Children2.5 Getting help of other family members2.6 Participation in the general domestic matters

3. Political Empowerment

3.1 Exercising the right to vote3.2 Awareness of local, state level and national polity3.3 Participation in panchayat meetings3.4 Leadership quality

4. Education, Skill and Training Empowerment

4.1 Education and ability to read and write4.2 Having workable knowledge of calculations4.3 Maintaining records of financial transactions4.4 Understanding of basic banking process4.5 Read newspaper/view TV for general awareness4.6 Training for job

Microfinance and Women Empowerment:

Women – often marginalized women, especially among the poor – are the primary loan recipients of microfinance. Women are the gateway to household security, as they generally invest more in the welfare of the family than do men. This includes expenses for education, health care, clothing, shelter and household items. Women are also more conscientious savers to protect themselves and their family against times of crisis. Women are thus an appropriate target group for mitigating poverty and maximizing the social impact of development strategies.Seventy percent of the world’s poor are women. Yet traditionally women have been disadvantaged in access to credit and other financial services. Commercial banks often focus on men and formal businesses, neglecting the women who make up a large and growing segment of the informal economy.Microfinance on the other hand often targets women, in some cases exclusively. Female clients represent eighty-five percent of the poorest microfinance clients reached. Therefore, targeting women borrowers makes sense from a public policy standpoint. The business case for focusing on female clients is substantial, as women clients register higher repayment rates. They also contribute larger portions of their income to household consumption than their male counterparts. There is thus a strong business and public policy case for targeting female borrowers.Children of women microfinance borrowers also reap the benefits, as there is an increased likelihood of full-time school enrolment and lower drop-out rates. Studies show that new incomes generated from microenterprises are often first invested in children’s education, particularly benefiting girls. Households of microfinance clients appear to have better health practices and nutrition than other households.Women workers throughout the world contribute to the economic growth and sustainable livelihoods of their families and communities. Microfinance helps empower women from poor households to make this contribution. Microfinance — the provision of financial services to the poor in a sustainable manner — utilizes credit, savings and other products such as micro insurance to help families take advantage of income-generating activities and better cope with risk. Women particularly benefit from microfinance as many microfinance institutions (MFIs) target female clients.Microfinance services lead to women’s empowerment by positively influencing women’s decision-making power and enhancing their overall socio-economic status. Microfinance has the potential to make a significant contribution to gender equality and promote sustainable livelihoods and better working conditions for women.Women’s empowerment through microfinance is key for promoting the International Labor Organization’s (ILOs) Decent Work Agenda, which acknowledges the central role of work in people’s lives as a means for achieving equitable, inclusive and sustainable development. By increasing women’s access to financial services, microfinance ultimately contributes to ILO core values of greater gender equality and nondiscrimination.

Potential benefits of rural microfinance: Development spirals

The expansion of microfinance since the 1990s has significantly increased women’s access to facilities for small loans and savings. This increased access to microfinance has been seen as contributing not only to poverty reduction and financial sustainability, but also to a series of ‘development spirals’ of economic empowerment, increased well-being and social and political empowerment for women themselves, thereby addressing goals of gender equality and empowerment. Some of the dimensions, impacts and interrelation among the various spirals are shown in the figure.

First, increasing women’s access to microfinance services can lead to their economic empowerment (the linkages in the centre of the figure). Women’s roles in household financial management may improve, in some cases enabling them to access significant amounts of money in their own right for the first time. This might enable women to start their own economic activities, invest more in existing activities, acquire assets or raise their status in household economic activities through their visible capital contribution. Increased participation in economic activities may raise women’s incomes or their control of their own and household income. This, in turn, may enable them to increase longer-term investment in and productivity of their economic activities, as well as their engagement in the market.Second, increasing women’s access to microfinance can increase household wellbeing (the linkages on the left in the figure). This is partly the result of economic empowerment, but may occur even where women use microfinance services for the activities of other household members, for example husbands or children. Even where women are not directly engaged in income earning activities, channeling credit or savings options to households through women may enable them to play a more active role in intra household decision-making, decrease their own and household vulnerability, and increase investment in family welfare. This situation may benefit children through increasing expenditure on their nutrition and education, particularly for girls. It can also lead to improved well-being for women and enable them to bring about changes in gender inequalities in the household. It is also likely to benefit men as a result of the increased household income.

FinancialServices

Women’s

repayment and premiums

Third, a combination of women's increased economic activity and increased decision-making in the household can lead to wider social and political empowerment (the linkages on the right in the figure).Women, themselves, often value the opportunity to make a greater contribution to household well-being – giving them greater confidence and sense of self-worth.The positive effects on women’s confidence and skills, their expanded knowledge and the formation of support networks through group activity and market access can lead to enhanced status for all women in a community. In some societies where women’s mobility has been very circumscribed and women previously had little opportunity to meet women outside their immediate family, there have been very significant changes. Individual women who gain respect in their households may then act as role models for others, leading to a wider process of change in community perceptions and men’s increased willingness to accept change.Most microfinance providers can cite case studies of women who have benefited substantially from their services – both economically and socially. Some women who were very poor before

Women’s economic empowerment

Household wellbeing (Nutrition, Health, Literacy, Happiness) Women’s social and

political empowerment

Children’s well-being

Women’s Well-being

Increased income from

women’s activities

Increased investment

and productivity

Increased confidence and skills

Women’s

network and

mobility

Men’sWell-being Increased

control over income, assets and resources

Increased access to market

Power to challenge

and change gender relations

Increased household income

Women’sEconomic activity

Increased status and changing roles

PovertyReduction

EconomicGrowth

Women’s human rights

Women’s decision on financial management

entering the programme have started an economic activity with a loan and have built up savings, thereby improving their own and household well-being, as well as relationships in the household, and becoming more involved in local community activities. Some women and many women in some contexts, show enormous resourcefulness and initiative when provided with a loan or given the chance to save without interference from family members. Impact studies that differentiate by poverty level generally find benefits to be particularly significant for the ‘better-off poor’, who have some education and contacts on which to build in conducting a successful enterprise.

Finally, women’s economic empowerment at the individual level (the linkages across the bottom of the figure) can make potentially significant contributions at the macro level through increasing women’s visibility as agents of economic growth and their voices as economic actors in policy decisions. This, together with their greater ability to meet the needs of household wellbeing, in turn increases their effectiveness as agents of poverty reduction. Microfinance groups may take collective action to address gender inequalities within the community, including such issues as gender violence and access to resources and local decision-making.Higher-level organization may further reinforce these local changes, leading to wider movements for social and political change and promotion of women’s human rights at the macro level. Some NGOs have used microfinance strategically as an entry point for wider social and political mobilization of women around gender issues. Savings-and-credit groups have at times become the basis for mobilizing women’s political participation.

Moreover, these three dimensions of economic empowerment, well-being and social and political empowerment are potentially mutually reinforcing ‘virtuous spirals’, both for individual women and at the household, community and macro level.

Previous Studies on Women Empowerment through Microfinance:

There is plenty of literature about the impacts of microcredit, mostly in the form of case studies and evaluations of existing microcredit programs effect on income and

consumption. Most of these studies show some evidence that support a positive impact of microcredit on increasing the household income for borrowers. Hulme and Mosley (1996) wrote one of the most cited and earliest studies of microcredit and poverty alleviation. The authors employed a control group approach while looking at the changes in income for household’s villages served by microcredit programs and changes for similar households in non program villages. They conducted the survey in a number of countries including Bangladesh and Indonesia between 1988 and 1992. A positive impact was found on borrowers, both male and female, income with an average increase over the control group ranging from 10-12percent in Indonesia, to around 30percent in Bangladesh (Hulme and Mosley, 1996).

Bangladesh institute of Development studies (BIDS) and the World Bank conducted another early and significant empirical study in 1991 and 1992. A quasi-experimental household survey was conducted on 1,798 households, from 87 villages in rural Bangladesh. This survey has provided data for several analyses (for example Khandker and Pitt 1998).Khandker and Pitt (1998) focused their research on the following three major microfinance institutions: Grameen Bank, Bangladesh Rural Advancement Committee (BRAC), and Bangladesh Rural Development Boards (BRDB). Impact of microcredit on income was assessed using a double-difference approach between eligible and ineligible households and between microcredit program villages and non-program villages. After controlling for other factors, such as household characteristics, any remaining difference was attributed to the microcredit programs. The main conclusion drawn was that microcredit programs had a positive effect on household consumption, especially for female borrowers. On average, a loan of 100 taka to a female borrower allowed for a net consumption increase of 18 taka (Khandker and Pitt, 1998).

Banarjee, Duflo, Glennerster and Kinnan (2010) conducted a more recent study in 2009 in Hyderabad, the fifth largest city in India. The authors used a randomized evaluation approach were 52 of 104 villages around Hyderabad were randomly selected for opening of a Spandana microfinance branch.18 months after the introduction of microcredit in each area, a household survey was conducted in each village, in a total of 6850 households. The results show a significant impact on how many new businesses started as well as profitability of preexisting businesses in the villages that received microcredit (Banarjee etal. 2010).

As shown above, there seems to be some evidence that participation in microcredit programs has a positive effect on female income and consumption. There is, however, no real consensus among academics about the impact of microcredit on women’s empowerment. Existing literature suggests that participating in a microcredit program can be both empowering and disempowering. However, there seem to be a majority that believes that microcredit positively affects women’s empowerment. Hashemi, Schuler and Riley (1996) made one of the earliest

studies on microcredit and its effect on women empowerment in 1996. A longitudinal study was conducted on 1300 married women in Bangladesh between 1991 and 1994 by comparing participants of two different microcredit programs, Grameen Bank and BRAC, with a control group. The control group was divided into a group of women with access to the same banks and another group with no access to microcredit. Empowerment was assessed via a number of factors such as women’s mobility, ability to make purchase, ownership of assets, and political awareness. According to their definition of empowerment, they concluded that married women involved in a microcredit program were more empowered than the women who were not part of a microcredit program (Hashemi, etal., 1996).

Kabeer (2001) examined the relationship between microcredit and women empowerment by interviewing both female and male microcredit program participants in two areas in Bangladesh. She argues that conclusions about the impact of microcredit are reflected by the questions asked by the evaluator. On that basis, she suggest that women’s own testimonies would give a better picture of the empowerment level than a survey that only measures certain aspects of their behavior. The conclusion from her study is that women who received microcredit had a higher self-worth and better access to capital. Even if participating in a microcredit program in some cases led to a higher workload, the women think positively about their increased contribution to the household income. Furthermore, she finds that in many cases microcredit increased women’s decision-making ability within the household (Kabeer, 2001).

Health, nutrition, family planning, education etc. are the key areas of social aspects where MFIs concentrates to develop by means of offering microfinance. Chowdhury and Bhuiya (2004) assessed the impact of BRAC’s poverty alleviation program from a human well-being perspective where they examined seven dimensions of human well-being, such as increased income, improved women’s lives, control over fertility, sustainable environment, decreased mortality and increased nutritional status. They found that the project was leading to higher child survival rates, nutritional status, and improvement in the primary level of education. Children of BRAC members were suffering from less protein-energy, malnutrition than children of non-members. The rate of enrollment in school also higher than that of children of non-BRAC households and per capita calorie intake of clients was also significantly higher compare to non-members.

On the other hand, a study conducted by the World Bank (1995) in collaboration with the Bangladesh Institute of Development Studies, which showed that the Grameen Bank have been able to improve the welfare of participating households by increasing caloric intake and improving better nutritional status of children that enhanced the household’s capacity to

sustain their gains over time. A study carried out by the United Nations Population Fund and Research and Applications for Alternative Financing for Development (2006) in collaboration with microfinance institutions found a relationship between microfinance and social performance which was exemplified by the strong positive impact of microfinance ‘‘on women empowerment and a less verifiable impact on sexual and reproductive health’’. However, this impact was ‘‘strengthened with a positive impact on both empowerment and sexual and reproductive health’’ when microfinance was given in conjunction with health education services containing a component on HIV/AIDS, the study also found.

A study of Zohir in 2002 also shows that in case of income-earning assets, such as, poultry and livestock, positive impact of microcredit is quite evident. The findings of the study also clearly reveal that a higher percentage of microcredit borrowers among the eligible households' own poultry, goat/sheep and cows, when compared with the non-participants. Ownership of such assets as bicycles, hand tube well and rickshaw/van is more prevalent in microcredit programme villages, compared with the control villages. He showed that the microcredit borrowers have greater access to the land rental market, and thereby better ensure employment (on rented-infirm) and food security from their own production. The study also estimates about 26% of rice consumption by the land-poor households are met out of their own production (after sale).

Mamun (2013) provides a case study that gives a clear idea of how effective microcredit has been in bringing changes in rural areas by interviewing a random sample of 107 women borrowers under microcredit program in Bangladesh. The case study specifically looked into the effect of micro-credit on the education, health-care, women empowerment, asset base, and shelter/housing of the households. The study notes that microcredit plays an extremely crucial role in helping borrowers for their children’s education and in continuing their education further. The study also examines the impact of micro-credit on health, sanitation, and land ownership, changes in livestock rearing techniques, savings and a variety of issues related to women empowerment. The study comes to the conclusion that the impact that microcredit has on the lives of the studied households is clearly evident as well as overwhelmingly positive, but that an only commercial micro-credit approach is not going to bring out the desired result. A welfare approach with proper guideline with constant mentoring to use the money is equally important. Jeffery Sachs (2005) in a visit to a BRAC project was amazed to find that women he spoke to had only one or two children, when he was expecting them to have five or six as he had become accustomed to for Bangladeshi women. When he asked those with no or one child how many children they’d like to have, the majority replied two. He calls this a “demonstration of a change of outlook” (2005, p.14). He refers to a new spirit of women’s rights, independence and empowerment among clients, showing the positive empowerment effects the project has had on the women.

Among ultra-poor microfinance beneficiaries of different MFIs in Bangladesh, Alamgir (2006) found that though credit was the main attraction for joining MFIs, there had been significant improvement in asset building and positive impact of microcredit was also ‘manifested in better sanitary and health conditions and increased empowerment of women’ (Alamgir 2006, 102-106.)

A number of studies conducted in India have shown a positive relationship between access to microcredit and women empowerment (Bali Swain 2007; Holvoet, 2005 and Puhazhendi and Badatya, 2002). Bali Swain (2007) examined the effect of Self Help Groups (SHG), a group lending form of microcredit, on women empowerment in five Indian states. First, a household survey was performed on 805 women who were members of a SHG and on a control group with 156 women who did not have access to SHG or credit in 2000.Three years later, the same survey was performed on the same respondents as in 2000.The authors then compared the increase in empowerment for the treatment group and the control group between 2000 and 2003.Empowerment was measured by looking at the value of owned land, the value of owned assets, whether women were main income earners in the household, literate or not, whether engaged in wage labor or farm activity, and household income. They found a significant improvement from 2000 to 2003 for the SHG group, in contrast with the control group were there were no statistically significant improvements in empowerment (Bali Swain, 2007).

Holvoet (2005) conducted another study of two different microcredit programs in India in 2005.The microcredit participant’s household decision making ability was examined via a questionnaire. The microcredit programs examined were the Rural Development Program (IRDP) and the Tamil Nadu Women’s Development Program (TNWDP), which both have female and male borrowers. The survey was conducted on 497 women who received a loan between 1990 and 1991 from TNWDP, and 200 women who received a loan from TNWDP between 1993 and 1994.The sample also included 420 men and 180 women who received a loan from IDRP, leading to a total sample of 1297 respondents. Decision making ability was assessed via seven types of decisions; loan use, expenditures, money management, time and task allocation, family matters, agricultural business and the cottage industry. The findings suggest that microcredit has a positive effect on women’s decision making ability, but only when it comes to household decisions regarding loan use and not for household decisions regarding expenditures and family matters (Holvoet, 2005).

Badatya and Puhazhendi (2002) measured the effects of SHG program provided by the National Bank for Agriculture and Rural Development (NABARD) on women empowerment in 2002. They conducted a survey on 115 SHG women participants between 2000 and 2001 both before SHG

membership and during their membership. Empowerment was examined through questions on self confidence; decision making ability, communication skills and behavioral changes were each of these dimensions had 2 to 4 sub indicators. They found that, in general, members increased their self confidence as an effect of SHG membership. Also, positive effects regarding influence over financial decision making within the household, courage to protest, and mobility was a result of SHG membership (Badatya and Puhazhendi, 2002).

A study by Khan and Noreen (2012) on the role of microfinance in empowerment of women in the Bahawalpur district in Pakistan finds that access to credit through microfinance organizations has a positive impact on women’s empowerment and also that loan utilization by the woman herself is of importance. Khan and Noreen measure empowerment by the construction of an index from indicators of child health, education, selection of spouse of children, purchase of basic goods, and decision on the use of loan.Apart from credit-- access (measured in amount of loan), the study finds that age, education of‐ husband, and number of live sons, marital status, and father inherited assets are factors that have a positive effect on women’s empowerment. Based on these results, Khan and Noreen conclude that the women’s empowerment that emanates from microfinance can be increased by also increasing the amount of loans.

Showing concern over media reports and research studies on the impact of microfinance, six internationally notable microfinance practitioners Grameen Foundation, ACCION International, FINCA, Women’s World Banking Opportunity International and Unites recently came up with a common statement where they claim that many research studies and media reports have failed to portray the real impact of microfinance in reducing poverty, providing financial services to the poor and empowering them. In a joint statement published by ACCICON, they claim, ‘as microfinance practitioners, we have witnessed the positive impact of microfinance first-hand. For the last four decades, our work has regularly brought us face-to-face with clients–the majority of them women–in more than 40 countries across five continents’ and ‘for these clients, business loans from microfinance institutions open a world of opportunity previously closed to them by the formal financial sector. Loans enable them to buy tools and materials to start an income generating business and/or to increase the productivity of an existing business. Increased income generated from these businesses allows them to pay school fees to educate their children, stabilize food sources, and pay for other expenses that lead to the improvement of the health and well-being of their families.’ (ACCICON 2010, 1.)

Other studies indicating a positive relation between microfinance and empowerment include Kato and Kratzer (2013) and Pitt et al. (2006). Using both quantitative and qualitative data on women in three different regions in Tanzania, Kato and Kratzer (2013) examined how

participation in a microfinance program affected women’s control over savings and income generated from business, participation in household decision-making, household ownership of properties/assets, self-esteem, self-efficacy and mobility. The results indicate an increase in all of the areas above for members of a microfinance program compared to non-members. Pitt et al. (2006) use data from Bangladesh and measure empowerment as a latent variable that incorporates a number of indicators those proxy women’s autonomy, decision-making power as well as participation in household and societal decision-making. The findings of the study indicate that microfinance empowers women as participation in a microfinance program makes women take a greater role in household decision making, have greater access to financial resources, increase their social networks, increase their bargaining power compared to their husbands, as well as have a greater freedom of mobility.

In her study, Ackerly (1995) noted that underpinning most credit interventions in Bangladesh was an implicit model of the empowered woman: Empowered, the borrower wisely invests in a successful enterprise, her husband stops beating her, she sends her children to school, she improves the health and nutrition of her family, and she participates in major family decisions.

According to Dunn (2002) and Cohen, M. and Bourjorjee, D. (2003), Impact Assessment (IA) for microfinance can be carried out at three different levels i.e. household level, enterprise level and individual level.The impact assessment programmes should capture the changes in the household level due to microfinance programme. The household economic positions like income, expenditure, asset position, livelihood portfolio, etc. may be changed over time due to the increasing access of households to microfinance products and services. The psycho-social changes can be experienced at the household level i.e. change in literacy, migration, gender equality, health, social status, etc.In general, effective microfinance programmes bring a positive change in individual level. It develops managerial ability among the beneficiaries and increases status and position not only in the society but also in the house/family. The increase in capacity development due to microfinance programmes leads to a change in individual income level, expenditure pattern, living condition, literacy position, awareness, accessibility, equity and equality to the household and also in community assets, etc.Microfinance programmes influence microenterprise operations i.e. change in profits, scale of operations, diversifications, etc.

Despite the many studies that find microfinance to have a positive effect on women’s empowerment, there are also parts of the literature that are more skeptical. One of the most frequently cited studies is Goetz and Gupta (1996), a study on women participating in

microfinance programs in Bangladesh. They find that the men often control the loan given to the women. When it is time to repay the loan, the lack of control has a negative impact on women’s empowerment. Goetz and Gupta also suggest that, in some cases, the woman is in risk of being exposed to violence when asking the man for money to repay the loan.Salman Asim, having been based on his empirical research work in the urban slums of Lahore- Pakistan, claims that ‘participation in microcredit program has no effect on women's ‘say’ in all but one domain of household decisions, i.e. decisions regarding major household purchases.’ He also claims that the link between microcredit and women’s empowerment was found to be rather weak. (Asim 2008, 2.)

Johnson (2004, p.5) states that having women as key participants in microfinance projects does not automatically lead to empowerment; sometimes negative impacts can be witnessed. She refers to increased workloads, increased domestic violence and abuse. This leads her to ask a crucial question of whether targeting women is just an efficient way of getting credit into the household, since women are more likely than men to be available in the home, attend meetings, be manageable by field staff and take repayment more seriously, even if they do not invest or control the loan themselves? Or on the other hand, if such targeting is fully justified on the grounds of enhancing gender equity. She claims the answer is probably somewhere between the two alternatives. She argues that MFIs must analyze both the positive and negative impacts their interventions are having on women, and that MFIs need to work with men to help pave the way for a change in attitudes to women’s enhanced contribution to the household.

Country Overview: Bangladesh

Bangladesh, officially the People's Republic of Bangladesh is a country located on the fertile Bengal delta in South Asia. It is bordered by India to its west, north and east, by Burma to its south-east and by the Bay of Bengal to its south. The country is divided into seven administrative divisions and sixty-four districts. Dhaka is its capital and one of the world's largest cities. Bangladesh is also known as "the land of rivers".

Straddling the Tropic of Cancer, Bangladeshi climate is tropical with a mild winter from October to March, and a hot, humid summer from March to June.

The population of Bangladesh as of 15 March 2011 is 142.3 million (census 2011 result), much less than recent (2007–2010) estimates of Bangladesh's population ranging from 150 to 170 million and it is the populous nation in the world. In 1951, the population was 44 million. It is also the most densely populated large country in the world, and it ranks 11th in population density, when very small countries and city-states are included. Population density (people per sq. km) in Bangladesh was measured at 1174.33 in 2011, according to the World Bank.

Bangladesh has the fourth largest Muslim population after Indonesia, Pakistan and India. Islam is the largest religion of Bangladesh, making up 90.4% of population. Hinduism makes up 8.2% of the population, Buddhism 0.7%, Christianity 0.6%, and others of 0.1% of the population.The majority of Muslims are Sunni, roughly 4% are non-denominational Muslims.31.5 percent of the populations were living under the national poverty line (i.e. earning less than one dollar per day) (World Bank, 2012). The country’s poverty has various dimensions, which are apparent in terms of inequality in income distribution, dramatic increases in the cost of living, malnutrition, unemployment and internal migration. The reasons for poverty include: lack of resources, good governance and infrastructure, high population rate as well as macroeconomic issues (such as high inflation rate (6.3% as of 2011) and limited employment opportunities), and natural disasters due to geographical and demographical characteristics, which make most of its low lying land prone to flood. Poverty is especially persistent in three areas: the north-west, which is affected by droughts and river erosion; the central northern region, which is subject to serious seasonal flooding that limits crop production; and the southern coastal zones, which are affected by soil salinity and cyclones.

However, some positive changes in the economy have been occurring since Bangladesh gained its independence in 1971. As demonstrated in the Figure, GDP per capita (expressed in constant 2005 international dollar that is, corrected for differences in purchasing power) has more than

Source: Bangladesh Maps and Satellite Images

doubled in Bangladesh from $677 (in 1980) to $1,488 (in 2010). For South Asia, GDP per capita (expressed in constant 2005 international dollar) has nearly tripled during the same time period (starting from $890 to slightly more than $2,800). Largely due to the nearly stagnation in Bangladesh’s GDP per capita during the 1980s, Bangladesh has fallen behind that of South Asia’s GDP per capita, while GDP per capita growth has been close to the South Asian average in the first ten years of this millennium (with an average growth rate of 4.3 percent for Bangladesh, compared to 5.1 percent for South Asia).

Figure: GDP per capita (expressed in constant 2005 international dollar that is, corrected for differences in purchasing power)

Bangladesh has maintained an impressive track record on growth and development. In the past decade, the economy has grown at nearly 6 percent per year, and human development went hand-in-hand with economic growth. Poverty dropped by nearly a third, coupled with increased life expectancy, literacy, and per capita food intake. More than 15 million Bangladeshis have moved out of poverty since 1992.

Looking at life expectancy, Bangladesh has basically caught up with South Asia by 1980, and has clearly overtaken South Asia since 1990. In Bangladesh, life expectancy at birth (combined for males and females) has increased from 41.9 years (in 1970) to 66.6 years (in 2010), while that of South Asia has increased from 48.7 years to only 65.3 years during the same time period.

Figure: Life expectancy at birth

Bangladesh has also made considerable progress in reducing maternal mortality. While the maternal mortality ratio was 870 deaths per 100,000 live births in 1990, in 2010 it decreased to 190. As Figure shows, today, Bangladesh has a lower maternal mortality rate than that of the average South Asian country, and the ratio is even below that of India. Bangladesh’s progress in increasing life expectancy and reducing maternal mortality are only two examples of Bangladesh’s overall progress in social development.

Figure: Maternal mortality ratio

Bangladesh aspires to be a middle-income country by 2021. This will require increasing GDP growth to 7.5 to 8 percent per year based on accelerated export and remittance growth. Both public and private investment will need to increase as well. Growth will also need to be more inclusive through creation of productive employment opportunities in the domestic economy. To sustain accelerated and inclusive growth, Bangladesh will need to manage the urbanization process more effectively, as well as prepare for adaptation to climate change impacts.

Becoming a middle-income country will require substantial efforts on many fronts. These include maintaining macroeconomic stability; strengthening revenue mobilization; tackling energy and infrastructure deficits; deepening financial-sector and external trade reforms; improving labor skills, economic governance, and urban management; and adapting to climate change. Bangladesh can become an export powerhouse, with its labor-intensive manufactured and service exports growing at double digits on a sustained basis, if it speeds up government decision-making.

Women’s Situation in Bangladesh:

Bangladesh has made important gains in the area of gender equality during the last decade. The government has made reforms with regards to violence against women; equal pay and maternity leave rights. Based on the available economic literature and anecdotal evidence, we show that women’s access to education played a key role in Bangladesh’s successful population transition. A tripartite effort by the government, Non-Government Organizations (NGOs) and donor agencies has been the key catalyst in educating the female population of Bangladesh. These efforts have also been extended to making healthcare more accessible for the women in the country.When it comes to access to employment and earnings, women find better opportunities in Bangladesh than many of their South Asian peers. This is largely due to, among other factors, the meteoric rise of microfinance industry in the country that generally offers easy access to credit for the poorest of the poor. Moreover, the labor-intensive apparel industry absorbs a

large number of young women. As a result, the labor force participation rate of women in Bangladesh is very high compared to most South Asian economies.Apart from economic factors, Bangladesh’s social and political institutions (such as courts, law and order, civil society, etc.) play a supportive role in protecting women’s rights. Empowerment of women is a global challenge since traditionally women have been marginalized and subjected under the control of men. About 70 percent of world’s poor are women (Khan & Noreen, 2012). Traditionally, women especially those in underdeveloped countries have been unable to readily participate in economic activity. This social obstacle does not only impede women’s integration in development but also make injustice towards women. But when Bangladesh is concerned, a modern Muslim dominating country where poor women having some kind of religion restrictions especially in rural areas are much more empowered than women of other developing countries. Women in Bangladesh have gained an international reputation for their excellent performance as microfinance beneficiaries in microfinance institutions. For this in 2006 Grameen Bank, a well renowned microfinance institution and its founder Dr. Mohammad Yunus have jointly been awarded Nobel Prize for peace. Some of the largest microfinance institutions of Bangladesh in the world –BRAC, Grameen Bank, ASA—provide access to finance to nearly 20 million poor people. With a population of 165 million of which 55 % are female and a density of 1127 person per square kilometer, Bangladesh is one of the most densely populated countries in the world. Poverty, landlessness, unemployment, malnutrition, rapid population growth and frequent natural disasters are the common endemic problems of the country. Apart from the problems, Bangladesh has some good news to discuss. Nobel laureate Professor Amarta Sen (2013) said ―Immunization rates in Bangladesh are at 96 percent; Bangladesh comprehensively overtakes India in most human development categories except per capita income; I think women’s agency made a big difference in Bangladesh.‖ Women got involved in family planning, immunization; health care early, those are helping Bangladesh to improve in some social indicators.Despite the recent progress, Bangladesh still has several areas where gender equality could be improved. First, women, especially in the rural areas, are rarely aware of their rights, making it more difficult to change traditional gender discriminating customs within society (The Asian Development Bank, 2001). Also, the United Nations estimated that 48percent of all the girls between 15 and 19 years of age in Bangladesh was either married, divorced or widowed in 2008 (UN,2008).Another gender equality area is women’s legal right to own and manage property. Despite women’s significant role in agriculture, social practices and traditional customs exclude women from direct access to land. It is often the case for women not to claim her share of the family property unless it is given willingly.

A brief history of microfinance in Bangladesh-

In 1971 Bangladesh emerged as an independent nation. The independence movement gave rise to a new generation of young activists who were keen on contributing to the reconstruction of this war-ravaged country. The new government and a myriad of aid agencies that arrived on the scene were unable to cope with the scale of destitution and non-governmental organizations emerged to meet the challenges.The early years of the NGO movement in Bangladesh focused on relief and rehabilitation with an emphasis on community development. However, by the mid-1970s, two of the NGOs that would subsequently expand in scale, BRAC and Proshika, found that ‘elite capture’ was a serious impediment to their development objectives. As a result, a separate focus on the poor through a ‘target-group’ approach was introduced. Moreover, an ideological debate within both these organizations began to brew, between those who favored ‘economic tools’ (credit, savings etc) to support poverty reduction and those who believed that social mobilization against existing injustices would suffice and financial services were unnecessary.

The Grameen Bank was started as an action research project in 1976, when a Chittagong University team led by economics professor Muhammad Yunus began to lend small amounts of money to poor households in a few nearby villages. Borrowers were mobilized in ‘peer groups’ composed of four or five individuals who were jointly responsible for each other’s repayment. Several of these small ‘peer monitoring groups’ were organized into a larger unit which would meet weekly with the primary purpose of repaying loan installments. The process of trial and error included combining males and females in the same credit group and then changing this to separate groups divided by gender. It also included forming ‘occupational groups’ but this was dropped in favor of village-based groups. The demand for loans grew rapidly and Professor Yunus enlisted the support of the Bangladesh Bank and commercial banks to provide the ‘Grameen Project’ – as it was then called – with resources. The success of this experimentation paved the way for the establishment of the Grameen Bank under a special ordinance in 1983.

In the early 1980s several NGOs experimented with different ways of delivering credit. One important mode tested was the efficacy of providing loans for group projects compared to offering loans to individuals with peer monitoring. The broad lesson was that the latter was more effective due to incentives and ‘free-rider’ problems compared with lending to a group. Hence by the late 1980s the predominant model became one of providing individual loans to a target group of poor households, with peer monitoring and strong MFI staff follow-up. The Association for Social Advancement (ASA) is a classic example of this shift. Its initial emphasis was on forming ‘peoples organizations’ mobilized for social action against oppression. It changed to the ‘target group’ approach and then toward the provision of financial services in the late 1980s. Now ASA is the fourth largest MFI in Bangladesh in terms of clients and its

unique low-cost credit delivery mechanism is being replicated in several other countries. ASA keeps paperwork requirements to a minimum, has decentralized most decision-making to the field and overall has a very lean operation.

The 1980s and early 1990s were also important in the development of management capacity within several of the large MFIs which allowed them to expand their microcredit programs. What is particularly interesting is that the development of the know-how and confidence to implement large programs arose, in some cases, from the experience of scaling-up programs not related to microcredit. For instance in the case of BRAC, the first major experience with a nationwide program came about when it implemented an oral rehydration program to combat diarrheal disease. Thirteen million women were trained to use a simple but effective rehydration solution and BRAC staff were paid based on how many of their trainees used and retained this knowledge.

The early 1990s was the period of rapid expansion of the Grameen-style microcredit approach (Ahmed 2003). The growth was fueled largely by a ‘franchising approach’ whereby new branches replicated the procedures and norms that prevailed in existing branches. The product that was offered to the client at the time was fairly narrow, focusing mainly on a standard microcredit package offered to all clients. The view was that it was easier to recruit new staff and train them quickly in a simple product during a phase when branches were opened at a rapid rate. This growth was clearly aided by the high population density and relative ethnic, social and cultural homogeneity in Bangladesh.

A notable shift that took place during this expansion phase was a greater emphasis on individual borrower accountability for loan repayment and less reliance on peer monitoring. Staff follow-up of loans became more rigorous and professional with the use of computerized Management Information Systems. Donor funds also contributed to expanding the revolving loan funds for MFIs during this expansion phase. Moreover this period saw the emergence of PKSF as a wholesale financing institution. Following this expansion, a geographical mapping of microfinance suggests that all districts in Bangladesh have microcredit services, though there are many smaller pockets with little or no coverage (e.g. Chittagong Hill Tracts). A closer look shows that there is somewhat greater coverage of poor households in the central and western districts. The south-east and pockets of the north-east are areas with room for more expansion (PKSF 2003).

Feedback from the field, academic research and international experience contributed to an increasing emphasis on providing diversified financial services for different groups of households from the mid 1990s onward. The benefits of a narrow focus on microcredit during

the ‘expansion phase’ was that it kept costs low, operations transparent and relatively straightforward management oversight. However, it became clear that the standard Grameen model of providing microcredit with fixed repayment schedules, with standard floors and ceilings on loans sizes, was not sufficient to meet the needs of the extreme poor or the ‘vulnerable non-poor’ group.

Moreover, existing g microcredit borrowers also required complementary financial and non-financial services. The standard practice for MFIs until the late 1990s was to collect compulsory weekly savings from their clients, holding the money as a de-facto lump sum ‘pension’ returned when a client left the organization. Access to these deposits was otherwise limited, which curtailed a potentially important source of consumption-smoothing. Recognizing these limitations an increasing number of MFIs in Bangladesh have introduced an open access current account scheme in addition to the fixed deposit scheme. Moreover, many MFIs have life insurance products whereby outstanding microcredit debts are written off and other benefits are paid following the death of a borrower. Non-credit services can also take the form of input supply, skill training and marketing support for micro-entrepreneurs. A complementary package to microcredit can also take the form of providing education for the children of borrowers. Grameen Bank for instance has a scholarship program for female secondary education and a student loan program for tertiary education. Similarly many MFIs have community health programs, legal literacy training and provide information on accessing local resources. Results from a survey of 310 NGOs conducted in 2003 shows that the typical NGO provides around four services but that almost all (92%) provide micro-credit as one of these services – the other common services are health, sanitation, education services that are provided by around half of the sampled NGOs (Gauri and Galef 2004).

MFIs began to experiment with catering to new niche markets as the traditional microcredit business became standardized (and horizontal expansion slowed) and required less attention. For instance several NGOs began providing larger loans to ‘graduate’ microcredit borrowers and in some cases to households who were not part of the microcredit system but which wanted a micro- enterprise loan. These loans typically range from 20,000 taka (around $320) to 200,000 taka ($3,200). Innovative solutions are also emerging to address the problem of access to finance for the small enterprise sector. For instance, BRAC established a separate financial institution, BRAC Bank that focuses on lending to the “smaller end” of the small enterprise sector, with loans averaging 400,000 taka.

Moreover, evaluation studies pointed out those extremely poor households were struggling to benefit from the standard microcredit model, even if they joined the programs. The main reasons were: (i) minimum loan floors for a first loan that sometimes exceeded their own

perceived needs, (ii) fixed weekly loan repayments could be difficult to commit to in light of sharp seasonality of income, (iii) other members of peer-monitored groups sometimes do not wish to guarantee loans for extremely poor households etc and (iv) residing in remote or depressed areas. Programs that have been developed to cater for these constraints include (i) introducing more flexible repayment schedules such as ASA’s Flexible Loan Program, (ii) lowering first loan floors so that amounts as small as 500 taka ($9) can be borrowed, (iii) Grameen’s program that offers zero interest loans to beggars, (iv) the Resource Integration Center’s program that specializes in offering loans to a specific vulnerable group - the elderly poor, (v) various programs that combine food aid with microcredit and training e.g. BRAC’s IGVGD program, and (vi) targeting remote areas through for instance ASA’s cost-effective mini-branch system and Integrated Development Foundations work in the Chittagong Hill Tracts.

State of Microcredit in Bangladesh:

In the backdrop of global ‘double-dip’ recession and over-indebtedness crisis in microcredit sector in several countries, Bangladesh’s microfinance sector shows strong resilience and continues to contribute towards enhancement of macroeconomic growth. Bangladesh microfinance sector is mature now and its assets constitute around 3 percent of GDP in 2011. Total outstanding loan of this sector (only licensed MFIs) has increased by 20.0 percent from BDT 145.0 billion in June 2010 to BDT 173.8 billion in June, 2011 disbursed among 20.7 million poor people, helping them to be self-employed and accelerating overall economic development process of the country. The total savings has also increased by 23.25 percent to BDT 63.3 billion in June 2011 compared to previous year from 26.1 million clients, over 93 percent of them are women.

TABLE-1: Basic Statistics of NGO-MFIs in Bangladesh (As of 30 June 2011)

Particulars June, 2008 June , 2009 June, 2010 June, 2011No. of Licensed NGO-MFIs

293 419 516 576

No of Branches 15,077 16,851 17,252 18,066

No. of Employees 98,896 107,175 109,597 111,828

No. of Clients (Million) 23.45 24.85 25.28 26.08

Total borrowers (Million)

17.79 18.89 19.21 20.65

Amount of Loan 134,680.96 143,134.03 145,022.66 1,73,797.60

Outstanding (Tk. Million )

Amount of Savings( Tk. Million)

47,386.19 50,610.04 51,362.93 63,304.44

Source: MRA-MIS Database-2011

Table 1 shows the overall trend of microfinance statistics in Bangladesh. This sector has created direct job opportunities for over 111,800 people; 80 percent of them are male and 20 percent are female. At the end of June 2011, the sector had outstanding loans of BDT 173.8 billion disbursed to 20.7 million borrowers, and had accumulated BDT 63.3 billion as savings from around 26.10 million clients – over 93 percent of them are women – through more than 18,000 branches, by 576 NGO-MFIs licensed by MRA.

TABLE-2: Size-Wise Loan Outstanding and Savings Compositions (As of 30 June 2011)Categories

Range of Borrowers

No of MFIs

No of Borrower

Total Loan Outstanding (BDT Million)

% of Total Outstanding

No of Savers

Total Savings (BDT Million)

% of Total Savings

Very Small

Up to 1000

85 63973 492.48 0.28 87660 192.20 0.30

1001-2000

177 244974 1566.68 0.90 351054 741.81 1.17

2001-6000

120 422745 2914.21 1.68 566864 1282.30 2.03

6001-10000

46 364848 2987.90 1.72 469938 1128.09 1.78

Small 10001-50000

103 2218532 19946.10 11.48 2861318 6738.03 10.64

Medium 50001- 23 1571226 13805.22 7.94 1875363 4713.86 7.45

100000

Large 100001-1000000

19 4600621 39483.64 22.72 5527971 14652.13 23.15

Very Large

1000001-Above

3 11162371

92601.36 53.58 14274780

33856.028

53.51

576 20649290

173797.60 100 26014948

63304.44 100

Source: MRA 2011

Table 2 shows the market scenario of NGO-MFIs in Bangladesh. The top three MFIs contribute 54 percent of total loan outstanding as well as savings of the microfinance sector in Bangladesh. Two of the largest MFIs, viz., BRAC & ASA, are each serving over five million borrowers. There are a few more developing fast. On the other hand the smallest 428 NGO-MFIs have contributed only 4 percent of total loan outstanding and 5 percent of total savings. Institutional concentration ratio is highly skewed in favor of large MFIs: just 22 institutions are in control of 76 percent of the market share while three largest organizations have control of over 50 percent in terms of both clients and total financial portfolios.

TABLE-3: Scenario of Micro Enterprise LoanNGO-MFIs Total

Number of Borrowers

% Total Loan Outstanding (Tk Million)

%

BRAC 249585 1.30 19128.64 11.27

ASA 140496 0.73 9194.57 5.42

Buro Bangladesh 4857 0.03 187.45 0.11

Jagoroni Chakra Foundation 15008 0.08 1067.96 0.63

Padakkhep Manobik Unnayan Kandra

8570 0.04 561.26 0.33

RDRS Bangladesh 3029 0.02 141.12 0.08

Shakti Foundation 3885 0.02 149.10 0.09

Society for Social Service 15552 0.08 1155.40 0.68

TMSS 8816 0.05 621.12 0.37

UDDIPAN 7310 0.04 663.40 0.39

Top 10 MFIs 457108 2.37 32870.01 19.37

Total 576 MFIs 617706 3.21 40059.84 23.60

Source: MRA 2011

Table 3 depicts the scenario of micro enterprise loan, i.e., loans above BDT 50,000, of different NGO-MFIs in Bangladesh. It is observed that micro enterprise loan outstanding is BDT 40 billion which is around 24 percent of total loan outstanding in which the top ten NGO-MFIs contributed around 19 percent. It also shows that BDT 40 billion is disbursed to around 6 lakh borrowers which are only 3 percent of total borrowers. The table expresses that only the top NGO-MFIs are capable to run micro enterprise loan.

Selected Indicators of NGO-MFIs in BangladeshIt is observed from table 4 that savings per member has been increasing over the years. In 2006 savings per member was Tk. 1,207 which stands at Tk.2495 in 2011 – an increase to more than double within the last five years. The loan outstanding per borrower also increased over the years and average growth rate of loan outstanding per borrower is around 17 percent in 2011 compared to the previous year. The loan outstanding per borrower has increased by more than 100 percent within the last five years. These two indicators, savings per member (average saving size) and outstanding loan per borrower (average loan size) increased over time perhaps due to the increase in the income level of the poor resulting in an increase in their need for higher amount of loans from the MFIs. The ratio between borrowers to clients (members) remained steady for the last few years, which is within 70 to 80 percent and the savings to outstanding loan ratio has also been stable from 2006 to 2011. Since the total number of branches of MFIs has increased at a much higher rate in 2011 compared to the previous year, the number of members and borrowers per branch has decreased. Substantial rate of increase in the sizes of loans per borrower and savings per member has resulted in a rise in the total loan outstanding and savings in the sector. Consequently outstanding loan and saving per branch has also increased. The loan outstanding amount per branch which was TK 8.42 million in 2010 has increased by 14.4 percent in 2011.

TABLE-4: Selected Indicators of NGO-MFIs in Bangladesh

Particulars June '06 June '07 June '08 June '09 June '10 June '11Savings per member (Tk.)

1,207.34 1,332.66 1,448.36 1,735.52 2,097.83 2494.49

Outstanding loan per borrower (Tk.)

4,377.11 5,048.38 5,614.55 6,188.01 7,558.92 8807.69

Borrower to client (member) ratio

75.1% 81.6% 81.2% 78.9% 78.0% 78.8%

Savings to Outstanding loan ratio

36.7% 32.3% 31.78% 35.5% 35.6% 35.9%

Borrower per Branch

1,413 1,484 1,496 1,036 1,115 1093.33

Member per Branch

1,883 1,817 1,843 1,312 1,429 1387.87

Outstanding loan per branch (Million Tk.)

6.19 7.49 8.4 6.41 8.42 9.63

Savings per Branch (Million Tk.)

2.27 2.42 2.67 2.28 2.99 3.46

Source: MRA-MIS-2011

Fund Composition of the Microfinance Sector in BangladeshWhile the fund composition of NGO-MFIs is changing, total fund has increased over time. In 2010, the growth was 10.49 percent, which further increased to 20.6 percent in 2011. Total fund in this sector was Tk. 152.3 billion in 2010 which rose to Tk.183.6 billion in 2011. Palli Karma Shahayak Foundation (PKSF), the micro finance wholesale funding agency, provides a large portion of loan fund at a subsidized rate which has increased from Tk. 24.48 billion in 2010 to Tk. 31.76 billion in 2011. Savings from the clients and surplus income from microcredit operations appeared as two major sources of fund for NGO-MFIs and are the main strength for their future growth. The clients’ savings has increased from 31.11 percent to 34.46 percent in 2011- an indicator suggesting that MRA Rules have a positive impact on savings collections.

TABLE-5: Selected Indicators of NGO-MFIs in Bangladesh

Source of Fund

Jun-08 Jun-09 Jun-10 Jun-11

(Million Tk.)

(%) (Million Tk.)

(%) (Million Tk.)

(%) (Million Tk.)

(%)

Clients' Savings

36,397.32 29.66

40,526.91 29.73

47,436.35 31.15

63295.88 34.46

Loan from PKSF

22,708.58 18.50

22,666.20 16.63

24,484.12 16.08

31767.84 17.30

Loan from Commercial Banks

23,487.03 19.13

23,896.37 17.53

23,006.41 15.11

23577.85 12.84

Donors' Fund

4,549.07 3.71 4,110.29 3.02 4,109.29 2.70 7008.37 3.82

Cumulative Surplus

31,170.02 25.39

36,261.74 26.60

42,339.27 27.80

50298.66 27.38

Other Funds

4,435.49 3.61 8,847.97 6.49 10,907.40 7.16 7727.32 4.21

Total 122,747.51

100 136,309.48

100 152,282.84

100 183675.92

100.00

Source: MRA-MIS-2011

It is observed that although the commercial banks are recently considered a potential source of fund of microfinance, their share of the total source of fund did not increase over the last three years. MRA has been putting in efforts to increase loans from commercial banks to the sector by introducing the banks to the NGO-MFIs. However, borrowing cost from commercial banks is very high – due to high interest rate charged and inflation – which discourages NGO-MFIs to avail this as a source of fund. Previously donor driven NGOs are now trying to rely more and more on local sources of fund with the decline in foreign funding, which stood at only 3.82 percent in June 2011 which is around 70 percent higher compared to previous year.Growth of Top NGO-MFIs in BangladeshFigure 1 shows the growth of cumulative disbursement of loans of the top NGO-MFIs in Bangladesh over the last 5 years. The total disbursement of BRAC and ASA is BDT 1000 billion as of June 2011. Although their total disbursement is overwhelmingly high but growth rate has reduced over the last four years. The total disbursement of most of the MFIs has increased during the last four years but yearly growth rate did not increase except for Shakti Foundation for Disadvantaged Women (SFDW)

Fig.Cumulative Loan Disbursement of the Top NGO-MFIs

Hypothesis of the Study:

General Hypothesis:

The main hypothesis stipulates that the microfinance contributes in women empowerment. Microfinance helps to enhance resource base of women and microfinance institutions can effectively act as a sub-system of local bodies and commercial banks for conferring inputs and services on the poor.

Specific Hypothesis:

Savings, credits and family self-sufficiency are among various determinants of women

empowerment.

Microcredit impacts the women development/promotion.

Women contribute in family empowerment through microfinance.

There is significant improvement in overall Economic and Social Empowerment Index of

MFI’s Members after joining the microfinance programme.

Data Collection:

Throughout the entire report, the effort will be involved to bring out the scenario regarding the effect of microfinance only in women empowerment. In this study, several secondary data were used for describing and demonstrating current profile of BRAC and Grameen Bank microfinance interventions. The secondary data were collected from different books of microfinance, journal articles, and official publications of different microfinance institutions, website, magazines, newspapers, published thesis papers of the scholars, published dissertation papers of the graduates etc.

Observation Acquired from Secondary Sources

In this study, several secondary data were also used for describing and demonstrating current profile of Grameen Bank and BRAC microfinance interventions.

A Study on Grameen Bank and BRAC in Women Empowerment:

Once the beginning of the microcredit programmes that mobilize and organize women at the grassroots levels and provide access to supportive services, the issue of women's empowerment started to constitute the cornerstone of any discussions on planned interventions for poverty alleviation.

Existing gender ratio in demographic structure of the country indicates that women comprise almost 50% of its total population, of whom almost 75% live in rural areas. Most of the women in rural Bangladesh treated as vulnerable and the poorest of the rural poor. In such a context, women must be involved in income-generating activities to promote economic growth and social transformation; otherwise, no development approach can get its real shape. Over the last two decades, a number of Non Government Organizations (NGOs) have been emerged in Bangladesh to support the rural poor women in the country by providing them with collateral free small loans. Alam and Miyagi (2004) essentially remark that microfinance creates income-generating activities, which are accounted as micro entrepreneurships. The NGOs in Bangladesh provide and organize various services to the rural women through micro credit programs, including social mobilization, health care, literacy and education, sanitation, water supply, agriculture, etc. Grameen Bank and BRAC (Bangladesh Rural Advancement Committee) are two of the most successful and the largest NGOs in Bangladesh that have created opportunities for the poor women to become micro entrepreneurs. The development of women’s micro entrepreneurship has brought changes in their lives.

Grameen Bank:

Grameen Bank Project was born in the village of Jobra, Bangladesh, in 1976. In 1983 it was transformed into a formal bank under a special law passed for its creation. It is owned by the poor borrowers of the bank who are mostly women. It works exclusively for them. Borrowers of Grameen Bank at present own 95 percent of the total equity of the bank. Remaining 5 per cent is owned by the government.

GB has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. GB provides credit to the poorest of the poor in rural Bangladesh without any collateral. At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable.In 2006, the Grameen Bank and Muhammad Yunus were jointly awarded the Nobel Peace prize. The organization is built around a group-based credit approach that utilizes peer-pressure within the group to ensure that the borrowers follow through with their payments. As stated earlier, the government of Bangladesh has fixed the flat interest rate that microfinance institutions can charge at 11percent.Grameen Bank’s flat interest rate is at 10percent, which is repaid via weekly installments (Grameen Bank, 2013a).

Grameen Bank Microfinance Program for Women:

It targets the poorest of the poor, with a particular emphasis on women, who receive 97 percent of the bank’s loans. Women traditionally had less access to financial alternatives of ordinary credit lines and incomes. They were seen to have an inequitable share of power in household decision making. Yunus and others have found that lending to women generates considerable secondary effects, including empowerment of a marginalized segment of society (Yunus and Jolis 1998), who share betterment of income with their children, unlike many men. The Grameen Bank has a total of 8.39 million active borrowers of whom 97percent are women. It operates via 2,567 branches in 81,386 villages in Bangladesh (Grameen Bank, 2013b).

Grameen Bank Historical Data

Year Number of Members Percentage of Women Members

1976 10 20

1977 70 14

1978 290 24

1979 2200 41

1980 14830 31

1981 24128 39

1982 30416 39

1983 58320 46

1984 121114 56

1985 171622 65

1986 234343 74

1987 339156 81

1988 490363 86

1989 662263 89

1990 869538 91

1991 1066426 92

1992 1424395 94

1993 1814916 941994 2013130 94

1995 2065661 94

1996 2059510 94

1997 2272503 95

1998 2368347 95

1999 2357083 95

2000 2378356 95

2001 2378601 95

2002 2483006 95

2003 3123802 95

2004 4059632 96

2005 5579399 96

2006 6908704 97

2007 7411229 97

2008 7670203 97

2009 7970616 97

2010 8340623 97

Table: Grameen Bank Historical Data (1976-2010)

19761979

19821985

19881991

19941997

20002003

20062009

0

20

40

60

80

100

120

percentage of female members

percentage of female members

Fig: Grameen Bank Historical Data (1976-2010)-percentage of female members

Total amount of loan disbursed by Grameen Bank, since inception, is Tk 684.13 billion (US $ 11.35 billion). Out of this, Tk 610.81 billion (US $ 10.11 billion) has been repaid. Current amount of outstanding loans stands at TK 73.32 billion (US $ 968.31 million). From November’10 to October'11) Grameen Bank disbursed Tk. 107.30 billion (US $ 1480.53 million). Monthly average loan disbursement over the past 12 month was Tk 8.94 billion (US $ 123.38 million).

Projected disbursement for year 2011 is Tk 110.00 billion (US$ 1557.63 million), i.e. monthly disbursement of Tk 9.17 billion (US $ 129.80 million). End of the year outstanding loan is projected to be at Tk. 78.00 billion (US $ 1105 million).

Top 25 items in order of loan amounts for which member took loans during the year 2011 (January’11 - December’11) :

FOR FEMALE AMOUNT (ORDER DESCENDING)Serial Activity Name Female No Female Amount1 Rice/Paddy trading 636,406 7,693,442,8232 Grocery shop 371,682 7,654,724,6493 Milch cow 531,334 7,260,011,8184 Cow fattening 528,492 6,489,622,0305 Bamboo works 407,736 6,073,933,9716 Paddy cultivation 407,736 6,072,882,2307 Paddy husking 398,562 4,455,664,1258 Miscellaneous business 216,167 3,193,543,9209 Land lease 213,870 2,924,261,75910 Farming 240,187 2,744,607,28411 Vegetables cultivation 226,999 2,634,354,94512 Cane works 136,003 2,221,682,64413 Vegetables trading 140,935 1,967,415,62114 Stationery shop 109,327 1,750,552,78315 Agriculture equipments making 147,860 1,650,402,35316 Plantation 140,327 1,598,912,33717 Cloths trading 79,176 1,541,939,83118 Fish trading 100,365 1,528,974,02919 Bullock raising 117,935 1,480,442,83720 Pisciculture 88,361 1,345,733,44821 Pottery products 104,959 1,325,309,37122 Garments making 59,000 1,202,182,48123 Betelleaf cultivation 90,837 1,163,616,62824 Poultry raising 90,005 1,159,658,19725 Land cultivation 87,534 1,038,831,677

Micro Enterprise Loans

Many borrowers are moving ahead in businesses faster than others for many favorable reasons, such as, proximity to the market, presence of experienced male members in the family, etc. Grameen Bank provides larger loans, called micro-enterprise loans, for these fast moving members. There is no restriction on the loan size. So far 3,590923 members took micro-enterprise loans. A total of Tk 105.96 billion (US$ 1540.58 million) has been disbursed under this category of loans. Average loan size is Tk 29,507 (US $ 389.69).

Disbursement of Microenterprise Loans during January to December, 2011 (Listed under broad categories of business activities)

ItemsLandless (Male) Landless (Female) TotalNo.of Loans

Amount Loans

No.of Loans

Amount Loans

No.of Loans

Amount Loans

Processing & Manufacturing

6,257 223,385,337 174,852 5,891,103,792 181,109 6,114,489,129

Agriculture & Forestry 3,445 131,451,393 189,377 5,046,698,188 192,822 5,178,149,581

Livestock & Fisheries 3,214 117,681,936 196,755 5,139,031,674 199,969 5,256,713,610

Services 333 9,730,501 19,413 603,043,975 19,746 612,774,476Trading 5,147 241,679,248 212,746 6,962,906,512 217,893 7,204,585,760Peddling 159 9,903,430 14,926 320,067,561 15,085 329,970,991Shop keeping 4,729 219,724,515 117,856 4,589,870,610 122,585 4,809,595,125

Total : 23,284 953,556,360 925,925 28,552,722,312 949,209 29,506,278,67

2

Scholarship Programme for Members’ Children:

In order to facilitate better educational opportunities for the children of Grameen members, Grameen Bank launched a scholarship programme for talented students, in 1999.

To encourage schooling of Grameen children, Grameen Bank introduced scholarship programme, so that, children from the poor families stay in school, and complete in both academic and extracurricular activities. Priority is given to girls. At least 50% of the scholarship must go to girls and the remaining 50% will be given to both boys & girls based on overall performance.

Scholarships are given annually. Up to December, 2012 scholarships to the extent of BDT 309.01 million (USD 3.87 million) were offered to 189,962 students.

Scholarship: 1999-2012

Higher Education Loans:

The higher Education Loan Programme was introduced in 1997 for the children of Grameen families so that they can pursue education at the highest level. Since its inception, the programme has distributed 51,698 loans worth BDT 2945.40 million (USD 41.73 million). In 2012 alone, 1,521 students were sanctioned loans.

Higher Education Loan (Cumulative) as of December 2012:

No. of Female Students 11,962No. of Male Students 39,736Total : 51,698Amount Disbursed (Female) 770.94Amount Disbursed (Male) 2,174.47Total : 2,945.41

Categories Number Total Girls Boys Primary 16566 11454 28020Junior Secondary 23831 15845 39676Secondary 33289 28678 61967Higher Secondary 26745 23015 49760Cultural 7430 3109 10539Total: 107861 82101 189962

Village Phone Program: The bank has diversified among different applications of microcredit. In the Village Phone program, women entrepreneurs can start businesses to provide wireless payphone service in rural areas. This program earned the bank the 2004 Petersburg Prize worth EUR 100,000, for its contribution of Technology to Development. In the press release announcing the prize, the Development Gateway Foundation noted that through this program:

Grameen has created a new class of women entrepreneurs who have raised themselves from poverty. Moreover, it has improved the livelihoods of farmers and others who are provided access to critical market information and lifeline communications previously unattainable in some 28,000 villages of Bangladesh. More than 55,000 phones are currently in operation, with more than 80 million people benefiting from access to market information, news from relatives, and more.

The concept of Village Phone is an idea which caught people’s imagination. Grameen Bank members have entered the age of information technology by leasing and purchasing cellular phones. The mobile phones not only create a new business opportunity for the poor, but also bring access to information, market, health and other services to the remote rural areas of Bangladesh. This was a major innovation; placing modern cell phones in the hand of the woman from poorest households in remote villages, something that no telecom operator had dared to do in the past.

With Grameen Bank financing a Grameen Bank borrower buys a mobile phone to become the Telephone Lady of the village. She provides the telecommunication services to the village while earning profits for herself. By the end of 2012, there were about eight hundred forty one thousand village phone ladies who have together taken loans amounting to BDT 2.68 billion.

The demand of the Village Phone services is increasing day by day. During the year 2012 nearly 377,429 new phones were distributed. Grameen Bank, in collaboration with Grameen Telecom (The company which was incorporated as a not-for-profit venture under the companies act of 1994) has made a plan to finance nearly 205,000 new phones to its members during the next year. The additional income by selling telephone service and internet based facility through electronic recharge system (ERS, EDGE, /GPRS) of village phone ladies is almost double that of the national per capita income.

Struggling [Beggars] Members Programme:

To reach out to the beggars, Grameen Bank has taken up a special programme, called Struggling Members Programme which started from July 2002. Begging is the last resort for survival for a poor person, unless he/she turns towards crime or other forms of illegal activities. Among the beggars, there are disabled, blind, and retarded people, as well as old people with ill health.

The objective of the programme is to provide financial services to the beggars to help them find a dignified livelihood; send their children to school and to make them graduate into becoming regular Grameen Bank members. We wish to make sure that no one in the Grameen Bank villages has to beg for survival.

Basic features of the programme are:

Existing rules of Grameen Bank do not apply to beggar members; they make up their own rules.

All loans will be interest-free. Loans can be of a very long term, in order to make repayment installments very small. For example, for a loan to buy a quilt or a mosquito-net, many borrowers are paying BDT 2.00 (3.4 cents US) per week.

Beggar members are covered under life insurance and loan insurance programmes without incurring any cost.

Groups and Centers are being encouraged to become patrons of this type of members. Each member receives an identity badge with her picture and name, and Grameen Bank

logo.She can display this as she goes about her daily life, to let everybody know that she is a Grameen Bank member and this national institution stands behind her.

Members are not required to give up begging, but are encouraged to take up an additional income-generating activity like selling popular consumer items door to door, or at the place of begging.

As of 31st December, 2012 cumulative members under this programme reaches at 110,188 out of them 108,833 are women. All the zones have already come under this programme. By this time 2,567 branches of 266 areas have implemented the programme. So far BDT 165.37 million has been disbursed and BDT 136.27 million has already been repaid. The Struggle members’ saving balance stood BDT 8.77 million.

BRAC:

BRAC is as of November 2012 the largest non-governmental organization in the world, measured in the number of people it has helped. It was established in 1972.BRAC started its rural development program in 1986 and its rural credit program came into operation in 1990. Both programs cover four major activities:

1. Institution Building,2. Sector Programs,3. Credit Operations and4. Support Services.

BRAC currently serves 4.39 million Bangladeshi individuals, most of who are women, via 2,150 branch offices with microcredit (BRAC, 2013a). BRAC has a repayment rate of 99.36%.In 2013, BRAC held USD 373 million in savings for 5.6 million members, 90per cent of whom are women.

Different Types of Credit Extended by BRAC:

BRAC since its establishment in 1972 has been conducting various social welfare activities to generate income and employment of the poor people, including extending credit facilities to them. Overall credit facilities of BRAC can be classified into the following categories:

1. Simple Credit,2. Program Credit,3. House Loan,4. Enterprise Credit.

Simple Credit:

In this type of credit facilities only credit is supplied to the borrower. No technical assistance is provided. The borrower utilizes this credit according to his/her necessity. This credit is given is for one year and the credit is repayable in 46 weekly installments. No service charge is taken on this type of credit. The main feature of the credit is that the borrower himself is responsible for utilizing, investing and managing the credit. Simple credit is generally used in the following activities:

Small business Rice cultivation, Rickshaw/Van, Handloom etc.

Program Credit:This type of credit is extended for a specific program to the members of a village committee. The borrowers are provided with various technical and managerial assistance, in some cases they are also provided with various inputs necessary for implementing the program. The borrowers are required to pay service charge at a certain rate. This credit is also given for one year and repayable in 46 weekly installments. Following activities are considered suitable for program credit:

Fish cultivation, Sericulture, Poultry, Vegetable Cultivation, Housing program etc.

House Loan:This type of credit is given to build and repair house of the borrower. No service charge is taken and the credit is repayable within two years in 92 weekly installments. The features of this credit are as follows:

This credit is given only for house building/ repair purposes. Only outstanding borrowers can take this credit. This loan is not given anyone as the

first loan. Those borrowers who have taken other credit can qualify to receive this credit. That is only BRAC members can take this loan.

Members who have tin-shaded house will not be considered to receive this loan. If a borrower does not build or repair his/her house with this credit, it will be converted

to simple credit after three month from the date of this credit sanctioned. The borrower has to build a slab latrine as a part of this credit.

Enterprise Credit:This type of credit is given to the small entrepreneurs to start or expand new business. This credit is given for 12, 18 and 24 months period and is repayable in monthly installments.

A comparative picture of the above mentioned credit activities of BRAC are depicted in the table:

Types of Credit

Maturity Interest(flat rate)

Repayment Security Service Chare

Simple Credit 12 months 15% Weekly Installments

Not Required Not taken

Program Credit

12 months 15% Weekly Installments

Not Required Taken at a certain rate

House Loan 24 months 10% Weekly Installments

Not Required Not taken

Enterprise Credit

12, 18, 24 months

15% Monthly Required Valuation fee at 0.5%

Focus on empowering poor rural women:

From the beginning, BRAC has recognized that destitute rural women, while being the worst affected by poverty, can play a crucial role as agents of change. Rural women are placed in a vulnerable position as employment opportunities are limited and they lack health care services, receive less nutrition, and are less educated than their male counterparts. Also the growing number of female-headed households, as a result of the death of the male earner, divorce, desertion and male migration, has left many women at the helm of their households. With all these factors in mind, BRAC focuses mainly on rural women, giving priority to their needs, bringing about meaningful transformation in their lives by making small loans available to them for income generating activities.

BRAC Economic Development Programme provides the cornerstone for all of BRAC’s development work. It uses a participatory, peer supported and multi-sectoral strategy to offer poor rural women the skills and opportunity to achieve sustainable improvement in their livelihoods, and attain dignity and self-reliance. This programme covers microfinance, institution building, income generating activities and programme support enterprises.

VILLAGE ORGANISATION: Linkage to the Poor:

BRAC focuses on institution building to bring the rural poor into the mainstream of development. BRAC believes that a common platform created and owned by the poor themselves is a crucial prerequisite whereby the poor can make themselves count in the development process. The Village Organization (VO) is an association of poor, landless people who come together with the help of BRAC to improve their socio-economic position.The VO promotes a structured organization of the rural poor with particular emphasis on women’s participation. The main goal of the VO is to strengthen the capacity of the poor for sustainable development and enable the poor to participate in the national development process. The VO is also the link between rural people and BRAC. Service delivery, institution building, public sector mobilization, and wider social mobilization are the four key interrelated strategies of BRAC towards the social and economic development of the poor, especially women. The VO plays a central role and is often a starting point for all these strategies.BRAC’s core competency is the delivery of health, education, micro-finance, and micro-enterprise services on a large scale to poor rural women. BRAC has developed and trained local women to deliver these services and organized local groups to receive the services. VOs are also meant to develop the social capital of BRAC members. The groups gradually begin to address various social issues in the locality such as child marriage, polygamy, illegal divorce and domestic violence. BRAC’s microfinance staff meets VOs once a week to discuss and facilitate credit operations. The social development staff and health staff meet VO members twice a month and once a month accordingly to discuss various socio-economic, legal and heath issues.

BRAC Microfinance Program for Women: Lack of access to reliable financial services is an important constraint for the poor women in their efforts to lift themselves out of poverty. The goal of BRAC microfinance program is to provide banking and other services to the poor, which are specifically designed to meet their particular needs.

The objectives of the microfinance program are:

To make credit available to poor women, especially in rural areas. To provide credit at a reasonable price. To involve poor women in income generating activities through providing credit

provision. To promote economic development of the country by increasing the income level of

the rural poor. To operate self-sustaining credit activities.

98% of BRAC’s microfinance members are women and these members belong to 170,000 Village Organizations (VO) that BRAC has created to serve as a forum where the poor can collectively address the structural impediments to their development, receive credit, mobilize savings and build upon their social capital.

BRAC has two forms of microcredit. These are:1. Dabi and2. Progoti.

BRAC offers two different microfinance products: microloans (group-based, exclusively for women) and microenterprise loans (individual loans for both men and women) under two different schemes which are Dabi, and Progoti. Group based small loans are particularly designed for the lower end poor to assist them in undertaking income generating activities. Microenterprise loans are available for small entrepreneurs to offer scope for expanding their businesses and capital base.

Microfinance Dabi:DABI (Microloans): These loans, which range from USD 100 – 1000, are given exclusively to individual women who are serviced in a group setting, namely the Village Organization (VO). Village Organizations (VOs) serve as platforms for various financial and non-financial development activities including savings, credit, health, education, social development and livelihood support. The VO acts as an informal guarantor by creating peer pressure for timely repayment. Borrowers repay through weekly installments and deposit savings during VO meetings, held every week in a borrower’s courtyard. Microloans are generally used for small operations in poultry, livestock, fruit and vegetable cultivation, handicrafts or rural trade.In 2013, USD 810 million was distributed in loans among four million borrowers.

Microfinance Progoti : PROGOTI (Microenterprise Loans): These loans, which range from USD 1000 to 10,000 are given to both male and female entrepreneurs to support and expand existing small enterprises which are too small to qualify for credit from commercial banks. Borrowers generally use microenterprise loans to finance shops and small-scale manufacturing activities and repay on a monthly basis. In 2013, a total of USD 668 million was distributed in Progoti loans among 300,000 borrowers.

Empowering Adolescent BRAC has developed a specialized microloan scheme to encourage the financial empowerment of adolescent girls, to help them continue their education and prepare for future financial responsibilities. Under this program, small loans, starting from USD 40, are coupled with savings facilities and livelihood training, to help girls start small home-based enterprises.

BRAC’s Employment and Livelihood for Adolescents (ELA) programme caters to girls and young women. The approach is two-pronged. The programme runs various courses in vocational skills and supports participants with credit as well as savings services. The idea is to help some 230,000 participants to start small home-based businesses to boost their families’ standard of living.

Rural Enterprise Project (REP):

As rapid population growth of Bangladesh is narrowing the scope of employment and income earning sectors, and thus new livelihoods are essential for reducing rural poverty. Rapid urbanization and globalization has opened new opportunities, but the poor may not be able to gain access to these opportunities. Realizing this, BRAC initiated the Rural Enterprise Project (REP) to encourage employment and income generation through entrepreneurship. REP was formed in 1985 to find and test new opportunities for rural development. The primary objective was to experiment with various income generating enterprises that can be owned and managed by rural landless women.REP mostly initiates BRAC’s non-farm activities. Some of BRAC’s most successful enterprises have emerged from testing carried out by this unit. In order to develop entrepreneurs among women, REP has created opportunities for them in non-farm activities such as iodized salt production, hybrid paddy cultivation, handmade paper production, garbage collection for

fertilizer production, garment waste processing etc. The major programmes under REP are Non-farm Enterprise Extension and Reinforcement (NEER) Programme and Micro Enterprise Development (MED) Programme.This programme has encouraged VO members to take non-traditional roles in creating and managing small enterprises like restaurants, grocery stores, tailoring, carpentry workshop and laundry. These initiatives were once tested successfully under REP. At present, NEER programme works separately to improve and expand those enterprises. The women-owned restaurants called Shuruchi (good taste) and women run grocery stores called Shuponno (quality goods) are two projects of NEER that deserve special mention. Major activities underNEER include: i) Shuruchi (Small Hotel) ii) Shupannya (Grocery Shop) iii) Shucharu (Laundry) iv) Shubesh (Tailoring) v) Api-Culture vi) Srijoni (Carpentry Shop).

BRAC Microcredit Program on Women Entrepreneurship: BRAC has been launching its micro credit program with a view to helping the rural poor women from its inception. BRAC has been advancing its micro credit to the poor rural women to generate income by creating self-employment in various sectors of economic life. BRAC has been able to create confidence among the rural women and keep positive impact upon the entrepreneurial development of women folk in rural Bangladesh.

PROGOTI (Microenterprise Loans), which are given to both male and female entrepreneurs to support and expand existing small enterprises.

BRAC’s programme offers a secure means of borrowing as a pose to local moneylenders often used by people from poor communities. Borrowers, most of whom are women, use the loans to engage in various income generating activities to build a livelihood for themselves and for their families.

The women Aarong employs are among the countries most disadvantaged. Through Aarong they have been offered a way out of destitution and degradation where before they had none. And the benefits that they receive extend well beyond simply the wages they earn for their products, since every single woman who works in Aarong-owned production facilities is also a beneficiary of BRAC’s multifaceted development programmes. As a support entity of BRAC, a significant portion of Aarongs earnings go directly into financing the NGO’s development programmes in healthcare, education as well as economic and social development.

BRAC enterprises strive to offer solutions to social problems and opportunities to poor women so that they can invest with confidence and create a road to self-reliance.

For example, Aarong today supports the lives and livelihoods of nearly sixty five thousand rural artisans and handicraft producers, 85% of whom are women. More than forty thousand of these women work directly for Aarong in its 13 production centers in Baniachong, Gorpara, Jamalpur, Jessore, Kushtia, Manikganj, Rajbari, Sherpur, and Pabna, Pollobi, Kurigram, Nilphamary, Jhenaidah and 653 subcentres spread across Bangladesh. Aarong Bangladesh has a long history of folk arts and crafts and women in village communities are especially familiar with these traditional techniques. Realizing the potential for generating incomes for poor rural women, we initiated Aarong in 1978 as a fair trade organization to sell and promote local arts and crafts.Twenty five thousand independent cooperative groups and traditional family-based artisans also market their crafts through Aarong. Potters, Brass Workers, Jewelers, Jute workers, Basket Weavers, Handloom Weavers, Silk Weavers, Wood Carvers, Leather workers and various artisans with specialized skills from all over the country come to Aarong for marketing and support services.

Integrated dairy Businesses:

In 1990, BRAC began making microloans to poor women who wanted to raise milk cattle. But when Sir Fazle Hasan Abed, founder of BRAC, met with one of the program’s borrowers, she revealed that she was having a hard time getting the milk to market, and that even when she could, she received only one-third of the price that milk sellers received in Dhaka, Bangladesh’s capital. As a result, BRAC initiated BRAC Dairy & Food Project (BDFP) in 1998 to serve as a market for dairy farmers throughout rural Bangladesh.

When BDFP first started, it produced 140,000 liters of milk per day. As of now, it has the processing capacity of 170,000 liters of milk per day engaging 1500 employees. Today, BDFP holds 22 percent of the national market share. It is also one of the largest BRAC enterprises, making profits of over BDT 220 million.

Poultry and Livestock:

In Bangladesh approximately 70% of landless rural women are directly or indirectly involved in poultry rearing activities. The Poultry and Livestock Programme is composed of several components: poultry and livestock extension programme, poultry farms and hatcheries, feed mills and feed analysis laboratories, bull station, and the disease diagnosis laboratories.The key people under the poultry and livestock extension programme are i) Poultry and Livestock Extension Workers ii) Chick Rearers iii) Key Rearers iv) Cage Rearers v) Broiler Rearers vi) Egg Collectors vii) Model Cow Rearers viii) Model Goat Rearers and ix) Artificial Inseminators.

BRAC started its livestock programme in 1983 to protect livestock from disease by developing skilled village level Para-veterinarians, and improving local cattle breeds by providing credit and appropriate technical support. These measures are expected to increase the productivity of the livestock sector, and provide a steady source of income for the landless. The government has taken up BRAC’s livestock development model for widespread implementation. The objectives of the poultry-livestock programme are to create employment opportunities and to increase the beneficiaries’ income within a short period of time.

Reaching the Most Poor Group through IGVGD Programme:

The Income Generation for Vulnerable Group Development (IGVGD) programme covers the poorest women who own no land, have little or no income, are widow and or divorced. The objective of the IGVGD programme is to alleviate poverty of the hard core poor by providing long-term sustainable income and employment opportunities through food assistance, training and access to credit facilities. Initiated in 1985 IGVGD is a collaborative programme involving three partners between Government of Bangladesh, World Food Programme and BRAC to serve the ultra poor. In 1985 BRAC approached the WFP for food assistance under its Vulnerable Group Feeding (VGF) programme to implement a new model for 750 VGF card holders. These women were organized into groups and provided with skill development training in the areas of poultry, sericulture, embroidery, health, nutrition and functional literacy. In addition to training, BRAC provided a package of basic health care services and intensive follow-up and supervision to the participants during the 24 months of WFP wheat transfers. The VGD cardholders receive a monthly ration of 30 kg of wheat per month for 24 months. With skill training, VGD women become eligible for credit support where no collateral is required.

The key features of VGD programme are:

The IGVGD program thus designed to link extreme poor vulnerable poor women to mainstream development activities.

Under this initiative extreme poor are organized into groups and provided with skill training in various sectors where BRAC has expertise.

They are also brought under BRAC health services and network During the time of food transfer a saving scheme was developed and later a small

amount of credit provided to them so that the training they received could be more meaningfully used for a more secured livelihood

The IGVGD program was focused on developing a systematic approach to take advantage of the windows of opportunity in the lives of the extreme poor while they received food transfer and short-term security.

To provide support on solid ground once the food transfer period is over.An independent study by the WFP found that through these strategic linkages more than three quarters of those who receive the IGVGD card in every cycle ends up becoming the regular clients of BRAC Micro Finance program.

Through IGVGD programme BRAC provides the following services:

Skill development training Credit support Technical assistance Essential health care Social development programme Training

Figure : BRAC Model for Development: IGVGD

The representatives of local government select the VGD cardholders and distribute the wheat while the rest of the programme is implemented by BRAC. At first VGD women are organized into village organizations (VO) with assistance from the BRAC PO-microfinance. Later these women receive training in various income generating activities. The Area Coordinator (AC) supervises the entire process. In each area there is a VGD PO to help the AC. Together they attend a monthly meeting with the Union VGD committee.

IGVGD Programme Participant Selection and VGD Card Distribution

Enrollment into VOs.

Graduation to BDP MF

Food Assistance:

(30 Kg wheat per month)

Credit Assistance

Training on:

Poultry and Livestock, Fisheries, Sericulture, Agriculture, Social Forestry, REP etc.

Collection of savings

Enterprise Development

Targeting the Ultra-Poor (TUP):

BRAC Annual Report 2010 reveals that Targeting the Ultra-Poor (TUP) program works closely with individuals and families to begin the process of livelihood strengthening, asset building and income generating activities, to create a pathway out of extreme poverty. They plan to reach 300,000 households and 1,500,000 people through their Ultra-Poor program by 2016.The following figure shows that 54,500 women are given with assets while 76,000 women received subsistence allowances and 76,000 women were given skill development training.

Assets Allowance Training0

10000

20000

30000

40000

50000

60000

70000

80000

Fig: Assets, Allowance & Training facilities given to women

Social development : In 1996, BRAC started a programme in collaboration with the Ain O Shalish Kendra (ASK) and Bangladesh National Women Leader’s Association (BNWLA) to empower women to protect themselves from social discrimination and exploitation of which dowry, rape, acid throwing, polygamy, domestic violence and oral divorce are common in rural Bangladeshi communities and to encourage and assist them to take action when their rights are infringed. The programme has two components: the Social Development component and the Human Rights and Legal Services component.

The Social Development component focuses on building human and socio-political assets of the poor – especially women – through microcredit programs, institution building, and awareness raising, training and collective social mobilization. The Human Rights and Legal Services component seeks to empower the poor by increasing their awareness of their rights (legal, human and social) and entitlements through participation in activities like the Popular Theatre

and through Human Rights and Legal Education (HRLE) classes arranged by BRAC for its Village Organization members. BRAC also offers external services such as access to lawyers or the police either through legal aid clinics, by helping women report cases at the local police station or when seeking medical care in the case of acid victims.

Gender Justice and Diversity:

BRAC has worked for decades to integrate gender justice into its programmes and eliminate gender inequality from the society. The gender justice and diversity programme (GJD) works simultaneously within the organization and with the communities. It strives for equality, diversity and inclusiveness within BRAC; improves gender relations and empowers women at the household level across many of BRAC’s programmes such as microcredit programs; and works to ensure that girls and boys are equitably nurtured to their full potential from pre-primary through secondary school. They also promote gender equality and work to prevent violence against women at the national level by influencing government policies and agendas, organizing public forums and events, and leveraging national and international alliances for gender justice.The number of community-based gender equality promoters has slightly increased from 10,200 in 2011, to 11,409 in 2012. However, these promoters have had a considerable influence in promoting gender equality, increasing women’s mobility and decision making in the household from 16,200 in 2011 to about 65,000 in 2012. Similarly, 32,090 students were reached through our interventions in 2012, an improvement from 2011, when we reached 28,800 students.

010000200003000040000500006000070000

20112012

Fig: Change in gender equality, decision making ability and awareness scenario in 2011 and 2012

Case Studies from Secondary Sources:

Case# 01:

Akhteri Begum Munni sits with a warm smile and her healthy little baby radiating success. Munni Akhter, along with her husband owns and runs Tumpa Biscuit Factory where they make ‘moa’, a local type of biscuit. It all began in 1988 when they used to make the biscuits by hand. In 2006 she joined our ‘Dabi’ scheme, through the Microfinance programme, and took out her first loan of 5,000 taka for materials for making biscuits. In 2008 she applied for our ‘Progoti’ scheme and was granted a loan of 100,000 taka to put towards machinery for her factory. She will soon take her last loan of 500, 000 taka to expand and invest in better, faster machinery. Today, her biscuit factory is continuously expanding to meet a high demand with a huge increase in production. Munni and her husband’s income has sky rocketed to 150,000 taka a month and now they are selling their biscuits across all of Bangladesh. They are hoping to expand to India and Burma. From making their biscuits by hand, they have expanded to beyond

anything they could have imagined, and believe this is just the start. Today they have not only established a factory but have created employment for 17 people. Munni says,“I have always had potential and dreamt of living a better life. BRAC has been a helping hand in achieving it”.

Case# 02:

Nargis is an artisan at one of BRAC’s numerous production centers around the country. She puts intricate hand embroidery on clothes that are sold at BRAC’s chain of trendy handicraft stores, Aarong. The wife of a landless farmer and mother of two school-going children, Nargis is in charge of managing her family’s finances. The regular income she receives from her job at the nearby production centre and the money brought in by her husband by working at others’ farms help to meet the day-to-day expenses of her family. However, every so often Nargis is inevitably faced with the need to make lump sum payments. It is during these times that her money-management skills are stretched to their limit.Under different circumstances, she could have accessed credit and savings facilities at any microfinance institution in the area. However, the hours at her job means that she is not able to regularly attend the group meetings microfinance institutions require, which limits her access to formal financial services. Thus, she would often borrow from relatives or neighbors, or be forced to borrow from one of the local informal money-lenders at times of crisis. That was until BRAC’s microfinance programme started a special scheme at Rajbari district’s Heuli Keutil production centre where she works, allowing Nargis and many others like her to do their transactions at their workplace. A few months ago, Nargis took a loan of BDT 12,000 from BRAC and used it to install an electricity connection in her house. Nargis has big plans for her son and daughter and is determined to give them a good education. They need electricity to study in the evenings, which is why it was so important for her to get a line installed.“Now, I can pay the installments on the loan from my income from the production centre, and I am saving some money with BRAC as well. After all, who knows when one of us will fall ill again, and we will need to spend money to buy medicine. The fact that a BRAC programme organizer comes to our production centre to collect our savings and loan installments has made it very convenient for us to access affordable financial service. It has also made me a more disciplined saver,’’ says Nargis. “If it was not for this scheme, I doubt I would have been able to save the BDT 10-12,000 necessary to get the electricity connection all on my own, but look how much it has changed our lives.”

Case# 03:

Chitra was only six months old when her father, Naresh Sarker, passed away leaving them literally in the lurch. Her distraught mother found herself thrown in the wilderness of widowhood barely three years into her marriage with Naresh. She could foresee a bleak future for her and her little girl in an environment not conducive for a widow, least of all a young widow. In desperation she, with little Chitra in tow, took refuge in her parents’ house. As ill luck would have it, her parents too were of small means. Chitra’s young but widowed mother did not relish the prospect of becoming a permanent burden on her parents. She braced herself to fight the odds to eke out a modest living for her and little Chitra. She began her struggle by enrolling herself as a member in 45/ M Centre of Grameen Bank’s Komarganj Nababganj Branch under Narayanganj Zone. With loans from GB in phases she took up embroidery alongside rearing of mulching cow. The modest income from the sale of milk and embroidery work has sustained her for nearly a decade and half.

Despite the financial hardships that plagued their lives almost on a daily basis, poor Chitra developed a strong eagerness to study from an early age. With assistance from her teachers in the school, she pursued her studies and came out with flying colours in every examination. Her talent and hard work were rewarded when she got a scholarship in the Junior Scholarship examination. However, she faced the grim prospect of dropping out of the school due to financial constraints. Recognizing her talents and future potential, Grameen Bank’s Komarganj Nababganj Branch, threw in a helping hand to continue her studies. At the behest of the Branch she was awarded a scholarship by the GB Head Office as the best student at the Lower Secondary level. She was overwhelmed with joy when she heard this news; a few drops of tears of joy trickled down the cheeks of her elated mother too. It also strengthened Chitra’s resolve to carry on her studies with renewed zeal. As of now, Chitra has been nurturing a big dream to become a doctor to rid free of the shackles of poverty and to serve the society at large. Grameen Bank is proud to stand by her with financial and moral support and wishes her success to realize her dream.

Case# 04:

Hosneara is the name of an ill fated woman. Nobody chronicles the birth of her kind but she conjectured that she was born in 1971. Hosneara grew up in the midst of extreme poverty and had no opportunity to receive even a minimum of education. Her emaciated look and financial

constraints of her father turned out to be another negative factor to find someone to marry her. In desperation, her father married her off to an old man of 70. It was not long before her husband turned her away from his house. She did not find any welcoming hand in her father’s home too. Fate had inevitably thrown her in the undignified world of beggars.

Not long thereafter she heard about the Grameen Bank’s scheme for what the Bank called ‘struggling members’. She joined the scheme in 2004 at the North Shuhilpur branch in B’Baria. To a beggar, accustomed to counting bits and pieces and small changes, BDT 500 interest free loan provided by the branch was a big amount. The repayment terms were set to suit her convenience and capacity. She used the money to peddle betel leaves and other small items while carrying on with her old profession of begging. She also invested some money for rearing ducks and chickens. The income from these little ventures made her conscious of the indignity of begging. As ill luck it would have it, a sudden flood washed away her small business. After the flood Hosneara rebuilt her business of peddling. In the meantime, she repaid her loan and collected a new loan from the Bank. She crowned her relentless struggle by giving up the ignominious profession of begging. Poverty has not still altogether left Hosneara but she draws satisfaction that she no longer carries the stigma of a beggar. She can now walk with her head high.

Case# 05:

Fuljan Beowa epitomizes the plight of countless poverty stricken widows in Bangladesh who live on the edge of perpetual penury and deprivation. Forsaken by her offspring, she took to begging as a last resort to eke out a bare living. Not that she, now aged more than 70 years, considered begging as a dignified profession but there was nothing else she could do to keep her body and soul together.

The turning point in her life came when, in 2006, she enlisted herself as a ‘Struggling Member’ of the Grameen Bank Ghorashal Jhenaidah Branch, Centre No.21/M of Miakundu village and started the dream of giving up the profession of begging. She drew several installments of loans from the Bank under the Bank’s special scheme for interest free loans for the beggars. She used the money to peddle bread and betel nuts and betel leaves alongside begging. Gradually, she could give up begging and shifted to rearing a small herd of 5 goats in addition to plying her trade in bread and betel leaves and nuts. When the field staff of Bank visited her modest thatched house they found her tending the goats with care and attention like a surrogate mother. Her life in fact now centers round these little critters. They not only give her company

but provide the strength and inspiration to play out the remaining part of her desolate and mundane existence.

GB has not made Fuljan Beowa rich but its assistance has given her an opportunity to erase the stigma of beggar that bedeviled her life for a long time. When the GB personnel visited her she minced no words to express her sincere gratitude to the GB for the assistance to rescue her from the abyss in which fate had thrown her at this old age. She profusely showered her blessings on the GB and prayed for its continued success to provide succor to the destitute people like her.

Case# 06:

The story of Hira Mia, who is currently studying in Rangpur Medical College for the MBBS degree, is not yet a story of rags to riches but he can certainly look forward to join an elite profession in the not too distant future

Although born to an impoverished family drawing its sustenance from the meagre income of his father engaged in a lowly profession of carpentry, Hira Mia showed signs of talent in the school. He earned the affection of his teachers who provided guidance in his studies. He secured GPA 5 Grade in the SSC examination but the family did not have the wherewithal to send him to a reputable college. However, help came in the shape of moral and financial support from Grameen Bank. His mother, Fuljan Begum, was a member in Centre 25/M of GB’s Durkuti Lalmonirhat Branch. The Manager and other people in the Branch not only provided encouragement but also arranged a scholarship on a monthly basis for his education. Hira Mia lived up to their expectation and secured GPA 5 in the Higher Secondary examination.

The successes achieved by Hira fuelled the aspirations of his parents to send him to a medical college. He also succeeded to gain admission in Rangpur Medical College but did not have the money to defray the expenses in the college. GB once again came to his rescue with a loan under its program for higher education.

Hira realize that he is on course to overcome poverty only because of the generous assistance of Grameen Bank. He, however, does not wish to bask in the glory that a medical degree brings but wants to realize his cherished dream of serving the ailing humanity belonging to the underprivileged sections of the society.

Findings:

1. At first from the above analysis it is proved that the microfinance beneficiaries specially the

targeted women have been encouraged a lot by the microfinance institutions working in the

research area through the MFI’s innovative approach to motivate the rural backward

women who had earlier nothing or had no courage to change their life style to make them

economically to some extent solvent, self-confident.

2. It is found that the beneficiaries have expressed their satisfaction in respect of their income

that increased and changed financial condition in the family level after joining microfinance

institutions.

1. It is seen that most of the respondents could take decision on using micro-credit. They

expressed that their husband gave importance of their opinion, so they can take a little

decision on using micro credit.

2. As a densely populated country in the world where 80 percent people having minimum

education level live in village, microfinance institutions have made a good attempt to make

them conscious to use tube well water for drinking and contraceptive for avoiding

unplanned extended family.

3. It is found that microfinance improved the literacy level of rural women improved

awareness on children education to high level of respondents.

4. It is noticed that all the respondents agreed that micro finance brought courage and self

confidence and improved their skill and self worthiness.

5. Our study on BRAC microcredit clients found that fewer members suffered from severe

malnutrition than non-clients and the extent of severe malnutrition declined significantly

while the clients stayed with BRAC. Average per capita calorie consumption and total food

and non-food expenditure are significantly higher for BRAC member households. Ratio of

non-food to total expenditure is also higher for BRAC, which mainly increases with increase

in the household income. BRAC members are 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 enrolment of the group

members has significantly improved after joining BRAC.

6. There was a moderate increase of income, enhanced savings, undertaking income

generating activities, reduced dependency on money lenders, ability to deal with the

financial crisis and women moved independently to other places without the support of

male members of the family.

Problems being Faced by Microfinance Programs in Bangladesh:

Microfinance is the provision of financial services (Loans, savings, insurance) to people on a small scale, such as businesses with low or moderate incomes. Despite good intentions, microfinance still has several hurdles to cross over:

1. Multiple borrowing or overlapping: Overlapping or multiple borrowing by an individual borrower or household is considered as an alarming issue or problem, according to the respondents.

2. Misuse of credit by borrowers: As in most of the cases MFIs do not review what is the borrower doing with the money borrowed. Misuse or unproductive use of credit is a usual practice.

3. Lack of innovation: From almost the beginning till today almost every MFI follow Grameen Model of micro financing.

4. Severe lack of training and education: The research and training capability of MRA is poor. MFIs are facing many emerging issues to meet the present and future challenges.

5. Reaching economically backward region: MFIs/ NGOs could not effectively reach the people of economically backward regions of the country. As a result, MFIs showed poor performance in economically backward areas.

6. Higher interest rate: High cost involved in small loan transactions for Microcredit providers. Higher interest rate is a financial disadvantage of microfinance.

7. Less attention to ultra poor: Micro financing is to deal with poor, so does it. But there are not much significant interventions for the ultra poor segment.

8. Lack of capital: Although the microfinance sector has reported an impressive growth, there is a lack of capital for some of the microfinance institution in the country.

9. Insufficient repayment time by the microfinance institution to the borrower: Most of the micro-loans are given for the start of micro-enterprises for a short Period and the loan would have to be rapid from the cash flows generated from the business.

10. Regulation and supervision: The MRA is now the sole watchdog of vast microfinance market of the country. As a new organization it is growing day by day. The present capacity of this regulatory organization seems to be insufficient in terms of manpower, resource base and geographical concentration (only in Dhaka).

11. Major obstacles of women’s micro entrepreneurship: Microfinance has an important impact on the lives of the poor women in Bangladesh; however, they have been encountering some problems in conducting their micro enterprises. Successful

entrepreneurship depends on good communication and access to new information. Interaction with other businesspersons can help to initiate proper strategy and prevent misguidance. The study explores the following important problems of micro entrepreneurship in rural Bangladesh:

• Exercise of patriarchal norms and values

• Social customs and religious beliefs

• Lack of education among large number of rural women

• Lack of communication and entrepreneurial skills of the rural women

• Less opportunity to access to market

• Lack of infrastructural facilities for marketing products

• Inadequate access to micro credit service for the extreme poor

Recommendations:

Microfinance institutions have been viewed as an important tool in poverty alleviation. It is an important sector which would improve the living conditions of the poor and lead to the development of the country. Some of the issues are hinted below:

1. Higher operational costs are the major reason for the higher interest rates of the MFIs. The operational costs could be reduced by the use of technology.

2. The microfinance institution should ensure that the loans are given for useful purpose which would earn a living for the household and not for uneconomic purpose.

3. To enhance the outreach in remote area and provide fast services to existing customers, MFIs need cost effective mode. In this case, mobile financial services are the best options. MFIs may establish partnerships with mobile phone operators and banks to reach the unbanked low income people.

4. Rate of interest should be decreased. The interest rate is high as compared to that of commercial banks. NGOs charge such interest rate to cover operational cost with a view to achieving sustainability and attracting huge commercial funds into microfinance industry by improving the technology model used by microfinance institutions.

5. Central Data Base should be provided. NGOs must have a central data base covering major data, which will ensure accountability and transparency in microfinance operation.

6. Multiple borrowing or overlapping should be restricted by the borrowers. Central data base will remove the overlapping problems.

7. Research and training program should be extended. To meet the present and the future challenges it is necessary to strengthen research and training capability of NGOs.

8. An independent arrangement should be made to develop association between local MFIs and international MFIs.

9. Loud and clear message should be communicated to the people to adopted MFIs services because rate of return is greater than traditional banks.

10. Reasonable funds by Government and State Bank of Bangladesh should allocate for microfinance programmed, specifically for the poor needy and business oriented women.

11. Gender discrimination should be removed through the legislation and level play opportunity in employment and microfinance should be given to women.

12. A policy should be frame to have an access and control over physical and financial assets like credit, innovation and technology.

13. Effective initiative should be taken to eradicate all types of internal and external violence against female.

14. Managers should have adequate knowledge about multiple performance criteria.

15. Continuing search for customer-friendly products, innovations, and cost-effective operational strategies must be ongoing for greater impact and sustainability of microfinance programs.

16. Governmental and non-governmental organizations need to take more initiatives to increase women’s participation in the credit-based small businesses. Women should have easy access to loans, suitable business and the market. They should also be provided with

basic education and training to create awareness, increase knowledge on business and the market, build capabilities and to promote business environment and facilities for them.

Conclusion:

The main cause of poverty in Bangladesh is the lack of productive employment opportunities for the huge number of unemployed and under employed work force which is tremendously increasing and posing serious problems for the country. Nearly half of the populations in Bangladesh are women and most of them are living in the rural area of the country. They need to have engaged in income generating activities. So creating self-employment for women in the rural areas can play a vital role in reducing the rural unemployment and acute poverty. It can be made through micro credit which will empower them too. The micro credit program has benefited the poor women in more than one way. These programs enhanced their security giving them access to assets and rights and augmented their self-respect providing them choice and independence. Micro credit has enabled the poor women to undertake diversified economic activities which generate flow of stable income round the year and thus has strengthened survival strategy of the poor women. With micro credit, the poor households now own assets can use to meet contingencies without having to sacrifice their independence, security and peace of mind by getting into debt.Micro credit program has also empowered the beneficiaries by raising their social consciousness which is reflected among others in their increased participation in local government elections and social mobilization activities. Participation also has a beneficial effect on women’s welfare since it increases their total employment time by reducing their other work responsibilities. Participation of women in micro credit program has also increased their mobility.In spite of having such positive impact of micro credit on poverty alleviation and women’s empowerment, the overall condition of the poor women in rural Bangladesh is not at a satisfactory level. The credit institutions are not much care about the extreme poor. Moreover, there exists a number of other problems, including the exercise of patriarchal norms, values and social customs; lack of education and business skills of the women; less opportunities to access to the market and lack of infrastructural facilities that hinder the women’s micro entrepreneurship in rural Bangladesh. Therefore, the study suggests that governmental and non-governmental organizations need to take more initiatives to increase women’s participation in the credit-based small businesses. Women should have easy access to loans, suitable business and the market. They should also be provided with basic education and training to create awareness, increase knowledge on business and the market, build capabilities and to promote business environment and facilities for them.

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