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10 Years of World Bank Support for Microcredit in Bangladesh
Since 1996, the World Bank has reached more than 6 million poor in Bangladesh through microfinance projects totaling US$260 million.
90% of micro-credit borrowers are women. Micro-credit borrowers have used the funds to start small grocery shops, set up trading activities, rear cattle and poultry, farm fish, and start up businesses such as tailoring, rickshaw pulling, paddy husking, among other activities. Micro-credit has significantly helped improve their lives:
Reaching the Poorest of the Poor In 2002, an innovative World Bank project, Financial Services for the Poorest, extended micro-credit to the poorest of the poor, who couldn’t qualify for conventional micro-credit programs (such as beggars, sex workers, or household help ). The project was initially piloted in 18 districts covering 20 Upazilas in Bangladesh, reaching 60,000 of the poorest people. Around 12,500 borrowers received job skills training to become gainfully employed. Most of them are now gainfully employed. The government replicated the project all over Bangladesh and as a result:
A Decade of World Bank-Supported Microfinance Projects in Bangladesh The first World Bank Poverty Alleviation Microfinance project (1996-2000) expanded the outreach of ongoing successful microfinance programs and enhanced the institutional and financial sustainability of Palli Karma-Sahayak Foundation (PKSF) and its Partner Organizations (POs). Palli Karma-Sahayak Foundation (PKSF) is an apex microfinance institution that reimburses microcredit loans of its Partner Organizations (POs) and their borrowers. Prior to Bank assistance in 1996, PKSF financed the microcredit activities of 124 POs through loans outstanding of Tk.459 million to 300,000 borrowers. Today, PKSF is financing 212 POs with loans outstanding of over Tk.10 billion to around 6 million borrowers. The PKSF Board includes leading personalities, such as Nobel Laureate Dr. Yunus. Moreover, Bank support to PKSF has helped leverage funds from IFAD, EU, ADB, USAID, and DFID. The Second Poverty Alleviation Microfinance project reached a greater number of poor people, diversified micro-credit to include the urban poor and microenterpreneurs, built sustainable institutional capacity of PKSF and its POs, and established a legal and regulatory and supervisory framework for non-government organizations and microfinance institutions. This project reached around 350,000 urban poor, and 60,000 microenterpreneurs who graduated from the regular rural microcredit programs. The average loan size has increased to Tk.7,800 signifying that bigger loans are made to repeat borrowers who are expanding their economic activities, increasing their incomes and improving their livelihoods. The impact of microcredit continues to grow as borrowers increase their loan amounts and as new borrowers take microcredit for the first time. Social indicators relating to health and education of microcredit borrowers also continue to improve as a result of continuing the microcredit programs. Given the project’s success, the Bank is processing a proposal for additional US$15 million to provide microcredit services to an underserved segment of the urban poor, mainly the rickshaw pullers affected by the ban on non-motorized transport on certain Dhaka roads. |
| Also see : Government Schemes, Mumbai Projects by Government |
