Diatribe against NGOs

The burden of the Finance Minister's colourful language, gleaned from press reports, is that the non-governmental development organisations (NGOs) in Bangladesh are flaunting poverty of the people to donors to attract funds, using these funds to enrich themselves by charging usurious interest rates in the micro-credit programmes they manage. Look at their multi-storied sky-scrapers like the Rockefeller centre, their banks and their business enterprises. They educate a few poor children and take all credit, as if the government is doing nothing with its 100,000 schools. The government has also distributed small credits worth Taka two thousand crore.

"If poverty disappears, NGOs would be out of business," the Minister informed the Parliament. He said that the government has put in Taka 100 crore to create a foundation for small NGOs in order "to force NGOs to reduce their interest rates."

The honourable Finance Minister's statement is disingenuous and ill-informed; and coming from the most authoritative official source as a statement in the Parliament, is dangerous. It is dangerous, because the Minister's statement is more an expression of attitude and probably a political position, than a representation of facts.

It is difficult to offer a rebuttal to expressions of attitudes and mindsets. A few points, however, should be noted. The high "interest rates" for micro-credit have been a topic of much discussion in the Asian Regional Micro-Credit Summit held last month in Dhaka. It was evident that the "interest rate" included service charges for reaching out and giving out information and advice to the beneficiaries and not just interest as charged by a commercial bank, who cannot and do not serve the poor. There were ideas debated about how interest rates for the poor can be reduced through government credit policies and cooperation between government and micro-credit providers.

There is no dispute that micro-credit has made a difference in the lives of the poor in Bangladesh and elsewhere. It has now become, thanks to the pioneering work done in Bangladesh, an accepted strategy, in combination with other macro-economic and governance strategies, for fighting poverty. The micro-credit model developed in Bangladesh, now applauded and being replicated worldwide, has become an international movement, and has projected a positive image of Bangladesh.

A large part of the small-credit that the Minister took credit for as the government's work, has been distributed in collaboration with the NGOs, with capital channelled through the Palli Karma Shahayak Foundation (PKSF). The PKSF has been an effective mechanism for making available micro-credit funds to NGOs. It is a good example of government promoting and using NGO capabilities for fighting poverty. In fact, the proposal for the new foundation for small NGOs that the Minister mentioned came from the NGO community.

Most NGOs also have activities in education, health, sanitation and skill development. They are looking for ways to become self-reliant for carrying out their development activities, rather than being totally dependent on overseas donor grants. Hence, various entreprenurial activities of NGOs. These business activities support backward and forward linkages for livelihood and small credit operations of NGOs. Business activities of well-established NGOs also help to set ethical and public interest standards in business, because they pay their VTAs and other taxes and do not dodge laws and rules.

The Finance Minister's statement in the Parliament raises at least two serious policy questions about the government's real intentions about NGOs and its strategy for poverty reduction. The questions assume a special significance because of the diabolical law about controlling NGOs placed in the Parliament by the government last month, which was withdrawn (or postponed, as it was officially stated) in the face of public and media outcry.

1. Does the government really see an important role for NGOs in poverty alleviation and development activities, complementing and cooperating with public sector activities, without subjecting NGOs to bureucratic control at every step and making them answerable to government functionaries at various levels for their work?

2. Has the government retreated from its official Interim Poverty Reduction Strategy "to involve the NGOs/CBOs into a permanent collaborative framework with the government in all spheres of poverty and vulnerability reduction... not limited, as at present, to the traditional roles of delivery agents in the sphere of micro-credit and safety net"?

The statement in the Parliament , especially when it is by the Finance Minister, casts grave doubts about the real intention of the government regarding NGO development activities.

Dr Manzoor Ahmed is a researcher on education and development.