Introduction
1.1
Growth
of Microfinance Industry in Bangladesh: Background to the Study
Back during late
1970s, when the Jobra experiment was underway under Professor
M. Yunus, the Dheki Rin Prokolpa was initiated by the Bangladesh
Bank in collaboration with the Swanirvar Bangladesh, and several
other pilot schemes were initiated by a handful of the NGOs who
were active then. At that time, it was difficult then to conceive
that these initiatives would lead to a major micro-credit movement,
which would make Bangladesh known to the rest of the world. Even
during the 1980s, in spite of Grameen Bank’s success, the main
discourse amongst development practitioners in Bangladesh centred
around the desirability of micro-credit program as opposed to
concientization. By 1990, unhindered experimentation in the fields
led to a quiet resolution of the debate and the country experienced
a massive expansion of micro-finance activities during the 1990s.
This is borne out by the figures on the time path of
Figure
1.1
Note: This captures only
those MFIs which responded to CDF query during their bi-annual
surveys.
Source: Compiled from CDF data.
Figure
1.2
Note:
Each unit along the horizontal axes is two years, except for
the last unit (between 12 & 13), which captures the difference
between 1996 and 1997.
Source: BIDS Census of 91 villages,
October-December 1997.
MFI expansion (see Figure 1.1), as
well as, by the expansion in membership in these MFIs (see Figure
1.2). This rapid expansion drew attention from all important quarters
– policymakers, academia and development practitioners – each
trying to grapple with the unfolding stream of issues and trying
to shape the course of the social and economic dynamics initiated
due to introduction of microcredit. With a view to meet the demand
for fund for re-lending by the development partners (NGO/MFIs),
and due to an urge to coordinate the flow of such fund to appropriate
use, the Palli Karma Sahayak Foundation (PKSF) came into being
in late 1990. Over the years, their share in the revolving loan
fund of the MFIs increased – from 9 percent in 1996 to 24 percent
in 1999 (see Table 1.1). It was therefore quite natural that PKSF
took keen interest in initiating a study on monitoring and evaluation
of the microcredit programs in Bangladesh. The present study is
an outcome of this initiative, supported by the World Bank. Bangladesh
Institute of Development Studies (BIDS) undertook the study during
1997-2000; and this report is the main volume, drawing upon a
number of other research papers and reports prepared over the
years.
Table 1.1
Source
of Revolving Loan Fund of MFIs (percentages of total)
|
Source
|
December,
1996
|
December,
1999
|
Member’s
savings
|
20.41
|
25.37
|
|
Service
charge
|
13.25
|
12.47
|
|
Foreign
donation
|
47.90
|
19.11
|
|
Local
bank
|
2.36
|
11.33
|
|
PKSF
|
9.47
|
23.81
|
|
Others
Of
which, own fund
Local donation
BRAC+Proshika+ASA
|
6.61
n.av.
(0.63)
n.av.
|
7.91
(3.79)
n.av.
(0.27)
|
|
Number
of MFIs included
|
351
|
534
|
|
Number
borrowing from PKSF
|
58
(16.52)
|
122
(22.85)
|
Note:
Figures in parentheses in the last row are percentages.
Source:
Compiled from CDF Statistics, different volumes.
Study
Objectives
The main objective of the BIDS study
was to monitor and evaluate poverty reduction efforts as well
as the cost effectiveness of various targeted micro-finance programs
being undertaken by the Partner Organizations (PO) of Palli Karma
Sahayak Foundation (PKSF). PKSF, as a financial intermediary,
finances its POs with a view to achieve the broad objective of
poverty reduction. Thus, program impacts on end users of the fund
had to be monitored and evaluated on a continued basis in order
to assess whether the project has desirable development impacts.
One primary task of the study was
to generate longitudinal data to monitor changes at four levels
- PO, village, household and member. For this purpose, 13 POs
were selected upon taking into consideration the diversity of
PO-level characteristics, particularly, of their program packaging.
These POs were chosen from the list of currently active partners
of PKSF (as of June 1997), with due consideration to regional
spread. From the areas where these selected POs are extending
PKSF loans (remaining confined to 1-3 thanas for each PO), a total
of 91 villages were selected for the study; and a panel data for
around 2640 households were to be generated through the benchmark
and subsequent mid-term and final surveys.
The study had a multi-dimensional
focus. At the level of impacts of microcredit, the primary focus
was on identifying factors at all four levels that cause variation
in the extent of impacts (positive or negative). Besides identifying
such factors, the study aimed at capturing gender dimensions
at the member level. Turnovers in NGO membership as well as
in borrowing from NGOs, reasons of non-participation, process
of graduation (or, failure to do so), nature of insecurities
and role of microcredit in mitigating them, were additional
aspects, which were looked into at the household levels. The
study also gathered information on current M&E practices
of the selected POs, which, along with review of existing studies,
provided inputs towards developing a set of “impact assessment”
indicators for future use by the POs. Furthermore, three POs,
from those selected for the study, were chosen for in-depth
case study. These case studies aimed at gaining insights into
the current practices in NGO-beneficiary relations and into
management practices within the POs.
1.3 Outline of
the Report
In its present form, the project report
is segmented into a number of volumes. A review of impact assessment
studies has already been submitted, while a manual
for monitoring and evaluation is produced as a separate volume.
The case studies on three selected POs are also being presented
as separate volumes.
A Census Report, following the household census in 91 villages,
and a Benchmark Report, following the first round of sample survey,
were also prepared. There had also been an interim report, following
the second round of sample survey, which addressed the impacts
of 1998 flood. The present report
addresses both monitoring and evaluation aspects of economic,
social and institutional issues. Chapter 2 describes the research
study and the methodology applied in the analyses of data. Chapter
3 unfolds the nature of participation in MFIs at member and household
levels, which are presented here as an output of continuous monitoring.
Chapters 4 and 5 address economic impacts of MFI participation.
Impacts on social well-being are addressed in chapter 6, while
Chapter 7 discusses empowerment of women. Poverty-credit interfaces
and the necessary conditions for graduation are discussed in Chapter
8; while Chapter 9 discusses some of the institutional aspects.
The report is concluded in Chapter 10 with a summary of major
findings and lessons for future.
