Fighting poverty with micro-credit
Through my visit I have seen that mutual trust is one of the basic factors that make a microfinance programme successful. A poor borrower, first of all, realises that the organisation lending money without any collateral has trusted her or him as a 'bankable' person. This has inspired her or him to repay this 'trust' through hard work and proper utilisation of the loan.
Village organisations which consist of poor, landless women are at the core of microfinance programme. Each village organisation includes eight to nine groups and each group consists of five members including the group leader. All members of a village organisation attend a meeting each week. The weekly meetings are not mere the place where members borrow without paying any collateral and borrowers repay their loans in 46 weekly instalments. In fact, the weekly meetings invigorate the sense of discipline, participation and accountability required for making a microfinance programme effective.
For all latest news, follow The Daily Star's Google News channel. At the beginning of each meeting the borrowers take an oath of improving their social, educational and hygienic conditions. Some of these to-be-achieved goals are family planning, no-dowry, education for children, cultivating kitchen garden and eating vegetables, drinking safe water and using sanitary latrine.
One of the special features of this microfinance programme is that it makes the borrowers develop a habit of saving. That is why, in addition to paying weekly instalments, each borrower is required to give a certain minimum amount of money to be saved. The leader of each group keeps the accounts of money borrowed, repaid and saved. The borrowers also receive a certain percent of interest on their savings.
Besides granting loans the organisation provides training and support to the borrowers for reaping maximum benefits of their engagement in different productive activities. For example, if a borrower aims at poultry farming, the organisation will train her to breed the birds properly and to vaccinate the chicks timely. It also provides support through backward linkages (such as providing quality day-old chicks) and forward linkages (such as linking the rural vegetable producers with new markets).
Female borrowers receive multifarious facilities provided by BRAC. One female member of each village organisation is trained to be a 'shastho sebika' (health worker). At each weekly meeting borrowers can have an interactive discussion about health problems with the 'shastho sebika.' Besides, each borrower can receive Tk 100 - Tk 200 worth of medical treatment free of cost. Each borrower is encouraged to plant trees and provided with two plants free of cost. A female borrower who is also a VGD (Vulnerable Group Development) card holder gets 30 kilograms of rice per month provided by the organisation.
By providing collateral-free loans, training and support to the marginalised poor, mainly women in the rural areas, the microfinance programme is boosting their inner confidence, making them engaged in income-generating activities and empowering them to improve their standard of living.