Unheard Voice suggests a new paradigm of microcredit: “The agenda of development through microcredit should move from ‘microcredit-as-the-goal model’ to ‘microcredit-as-the-means model.’ The latter essentially looks at microcredit as the means to other development goals that can generate long-term economic growth.”
rezwan bhi….i know micro credit has got its negatives but despite all those bounces, i actually found something to talk about
Micro credit helping urban poor
Faizul Khan Tanim
Hosna Ara’s, life in 1999, with three children and a husband to feed, was not easy. She lived in Kazi Para in the Mirpur area. The future looked bleak with a hand to mouth situation.
But today she is one of the most successful in a group of 15 equally poor women from her area.
What was the magic that caused this transformation?
Hosna Ara described the renaissance that gave her hope to move on. This was when she was introduced to the magic of microfinance.
“I was introduced to this group of 15 women who said that workers from a local non government organisation (NGO) — Thengamara Mohila Sabuj Sangha (TMSS) — visited them and explained that the NGO could grant a small loan to help the women start a business which could fetch them a fixed income every week,” she said.
“I obtained a loan of Tk 4,000 within four weeks of my introduction and bought a rickshaw,” she added.
Today, she is one of the success stories of the NGO, owning eight rickshaws that yield Tk 400 a day.
“My greatest achievement is that my eldest daughter had the chance of proper schooling and is now appearing for the secondary school certificate (SSC) examination and our living conditions have improved,” Hosna Ara said as tears of joy swelled in her eyes.
Micro credit provides small loans for self-employment, which in turn can make a difference in the life of a poor woman and her family, according to most NGOs.
NGO sources said that micro credit programmes target poor people without any assets and almost 95 percent of them are awarded to women, mostly collateral-free.
The borrowers are usually a group of 15 to 20 people from slums and areas inhabited by the extremely poor. The group meets regularly with records of financial transactions in the presence of the entire group to ensure transparency.
They discuss the amount invested, the output and final profit and calculate the interest that has to be paid back to the NGO officials, who attend the meeting for constant monitoring.
Once the first loan is successfully paid, the NGOs provide repeater loans of larger amounts.
The repeater feature encourages developing individuals and almost 95 percent of the women, who take these loans, pay back the amount on time along with the interest,” said an NGO official.
According to the Credit and Development Forum (CDF) that specialises in microfinance NGOs micro credit system started in Dhaka in the early 90s.
CDF sources said that out of the 25 lakh poor eligible to avail microfinance from NGOs only around 15 lakh are availing this facility.
A K M Nurul Islam, chief of Capacity Building Services said there are almost 30 NGOs giving micro credit in Dhaka.
Both CDF and NGO sources said that ASA, Proshika, Shakti Foundation, Manabik Shahajya Sangstha (MSS), World Concern, Brac are a few of the popular houses giving micro credit to poor.
Donor organisations for the NGOs are the World Bank and the money is channelled mainly through the Palli Karma-Sahayak Foundation (PKSF).
Sonali, Janata, Agrani, Bank Asia, Basic Bank and a few other private banks have started providing funds for microfinance.
Banks provide 12 percent of the loan funds, donor agencies put in 10 percent, NGO’s chip in 30 percent, while 30 percent come in from PKSF. The balance 18 percent comes from personal funds of the specific NGO members
Most women who receive these loans agree that more and more people from villages migrate to Dhaka, hoping that the capital will provide them with food and shelter, but end up worse, as these people are not aware of the city traits.
Manager of TMSS Mirpur branch, Shahidul Islam said: “These borrowers should be given proper training. Initial training could include sessions where the women will be taught how and where to utilize the money.”
These women start on sectors like poultry, handicraft, needlework, shop keeping and more.
Jahanara Panna, a successful women entrepreneur in Dhaka now and a role model in her group, started with a loan of Tk 10,000 from ASA in 2001.
Her future too was uncertain. Then one day with the loan she received bought sewing machines and started embroidery work for boutiques and fashion houses.
Today, she has 10 sewing machines and 10 employees and makes a profit of almost Tk 15,000 a month.
“We need a good owner of a boutique who will pay for orders executed in time. My biggest incentive is the discount on interest I get on repeater loans when I repay the NGO loan instalments on time,” said Panna. “This is very encouraging”, she added.