FSP NEWSLETTER

A Quarterly News Bulletin of FSP Project, PKSF
Issue No. 5 October-December 2003

Editorial

PKSF has been implementing the Financial Services for the Poorest Project (FSP) for the last one and a half year with the objective of providing financial services to the hardcore poor. The project's goal would supplement in a humble way the fulfillment of the Microcredit Summit Campaign's goal of reaching 100 million of the world's poorest families with credit by 2005.

Experiences gained over this short period of implementation show that the hardcore poor are also bankable and programs of lending to this group of clientele would be viable.

This issue of the news letter reports the progress made in respect of the project activities, the issues raised and recommendations made in a workshop held on October 20, 2003. This issue also includes studies conducted on the beneficiaries of the project.

FSP identified 30,000 hardcore poor
The project aims to reach 57,000 poorest households within three years. A person is entitled for membership if her/his earning is less than a dollar per day from sale of manual labor and her/his land possession is less than three decimals (One hundred decimals of land make one acre). The partner organizations strictly adhere to those selection criteria, in increasing the outreach. To date, the FSP has identified 30,000 beneficiaries including beggars, divorced and abandoned women, former sex-workers, marginal fishermen and disabled people.

Awareness training

'Awareness training' is provided to members who have not been involved in development programs before. To date, approximately 22,000 beneficiaries have received this training.

Savings mobilization

At the planning stage it was pointed out that one of the reasons of self-exclusion of the hardcore poor from the mainstream microcredit was their inability to deposit the mandatory weekly savings of Tk. 5.00 as their earning is inadequate and unstable. The weekly savings rule was made flexible for the hardcore poor, both in respect of amount and timing. As a result, in most cases, members are depositing savings ranging from Tk. 1.00 to Tk. 5.00. Moreover, failure to deposit in some weeks is also accepted. The members have voluntarily saved a total amount of Tk. 21.45 lac as of December 31, 2003 (Table-1).

Table-1: Progress of FSP Project till December 2003

Credit program

Loan has been issued to more than 16,000 beneficiaries. This number is 55% of the beneficiaries identified and 75% of those who received awareness training.

PKSF has disbursed Tk. 24 million as credit to the POs who in turn, have disbursed a higher amount of credit approximately Tk. 27 million to 16 thousand

borrowers. This has been done by revolving the credit fund and using the service charge earned on credit. A loan recovery rate of above 99% is being maintained since the beginning of the project. All these indicate that the hardcore poor are also bankable and the program would be viable. It would be possible to disburse a larger volume of loan if the current loan ceilings are raised. The loan ceilings have been kept purposively low in consideration of the beneficiaries' low repaying capacity. It is observed that seven POs, out of 19, are following different credit repayment schedule, grace period, and number of installments from their normal microcredit program. The remaining POs are following the principles of their mainstream credit programs and it has been found that the borrowers are able to utilize and repay the loan properly following the mainstream credit principles.

Social development programs

For enhancing the human and social capital of the beneficiaries, the POs are also implementing different social development programs by using their own resources and also donors' fund, where available. The social development program components consist of health and sanitation services, non-formal education, medical aids and environmental programs etc

(i) the progress of implementation of the various project components and the problems faced in the field by the POs; (ii) the distinguishing features of the credit delivery models practiced by the POs; (iii) launching of social development programs out of POs' own sources or from some other sources for the socio-economic upliftment of the hardcore poor; (iv) implementing skill training program for creating self-employment and wage-employment for the beneficiaries; and (v) determining the future courses of action in view of the experiences gained.

In his inaugural address Dr. Salehuddin Ahmed, Managing Director, PKSF mentioned that the FSP Project has special significance. The project's success in developing a suitable microcredit model for the hardcore poor would go a long way in changing the lot of the hardcore poor hitherto excluded from poverty alleviation programs. Dr. Ahmed emphasized on reaching the real ultra hardcore poor and on adoption of appropriate diversified implementation strategies for catering to the special needs of the hardcore poor.

The inaugural session was also addressed by Mr. Mosharraf Hossain Khan, Deputy Managing Director (OOSA), PKSF. He welcomed the guests and participants in the workshop and requested them to thoroughly review the performances and suggest measures for making the project a success.

The workshop was held in four sessions including two working sessions. The first working session was chaired by Dr. M.A. Hakim, General Manager (Administration), PKSF. In this session, Dr. Helal Uddin Ahmed, Project Coordinator, FSP Project, presented a paper on Implementation of FSP Project in First Year: Problems, Solutions and Prospects. The session ended with open discussions by the participants on different issues addressed in the paper. This session was followed by a "group discussion session", where participants were divided into four groups for in-depth analysis and exchange of views on four selected key issues such as, problems in credit disbursement and recovery, providing social development services to the beneficiaries, identification of market oriented trades for skill development of the members, and setting future courses of action for smooth implementation of FSP Project. In the closing session, group representatives presented their group recommendations in presence of Dr. Salehuddin Ahmed, Managing Director, PKSF who wrapped up the discussions giving his concluding remarks and some suggestions for better implementation of the project. The recommendations agreed in the workshop were as below:

i. Emphasis should be given on selecting real ultra hardcore poor households. To this end, both individual and group-based approach should be adopted.

ii. The project should examine the proposal of increased loan size for the borrowers in different phases for undertaking different viable income generating activities.

iii. The POs should initiate social development programs for the beneficiaries out of POs' own resources or from elsewhere.

iv. The project should highlight the achievements and identify the distinguishing program features practiced by the POs. The FSP Project unit should also assess and document the performances of the POs in this regard and identify the best practices for developing a suitable microcredit model for the hardcore poor.

Progress at Field Level

The project has made a substantial progress in beneficiary selection, savings mobilization and disbursing credit to the beneficiaries. The upward trend of the curve (Figure-1) indicate that the project will be able to attain its target of reaching 57,000 poorest households with microcredit and other services.

The progress of implementation of other activities with the exception of credit component is also as per schedule (Table-2) To expedite the disbursement attempt is being made to reduce the time taken between mobilization of beneficiaries and disbursement of credit so that beneficiaries can start income-generating activities without delay.

Partner organizations such as ASPADA, ASOD, Desha, RIC and SSS have achieved most of the planned targets. They have fulfilled their targets of membership coverage. They are also successfully organizing awareness training. They have disbursed more than Tk. 1.5 million as credit and have always maintained a recovery rate of above 99% .

Table 2: Implementation status of FSP project till December 2003

Capacity Building Programs at PO level

A three- day long training program on "Project Implementation and Field Supervision" for FSP staff of Padakhep was held on 25 to 27 December, 2003 at Padakhep Head Office located in Dhaka. The main objective of this training was to improve the implementation and supervision capacity of FSP staff of Padakhep. The training topics included overview of FSP project, process and criteria for beneficiary selection, group formation and management, savings mobilization and management, borrower selection, scrutiny of loan proposal, loan sanction and disbursement, loan utilization and recovery procedure, monitoring and supervision of FSP program, integration of social development programs with FSP Project activities, early warning system and internal control system, default management, financial sustainability, accounting system, and IGA selection for wage-employment training were discussed.

Dr. Helal Uddin Ahmed, Project Coordinator of FSP; Mr. Akond Md Rafiqul Islam, AGM of PKSF; Mr. Jitendra Kumar Roy, Deputy Manager of PKSF; Mr. Abdullah Al Mamun, Quantitative Research Specialist, FSP Project; Mr. Md Lutfor Rahman, Assistant Manager of PKSF; Mr. A.K.M Zahirul Haque, Project Associate acted as trainers in the training course.

Case Study on Borrowers

To assess the impact of the project on the livelihood of the hardcore poor the FSP Project Unit conducted some case studies. Four of these cases are presented below:

Case - 1.

Beggar Sujira wants to give up begging

Desha, one of the 19 POs involved in FSP Project started FSP program in Bheramara, Kushtia in November 2002. Coming to learn from the project staff that Desha would deliver microcredit services to the ultra hardcore poor Sujira and some other poorest families of Moharajpur village became interested in FSP program and formed Kuasa Mohila Samity on May 12, 2003.

Sujira's father was a poor day labor whose income was inadequate for maintaining the family. At the age of 13 she married a twenty-five year old Mawla Baksha. Mawla Baksha had two decimals of homestead land where they live in a small hut made of mud wall and tin roof. They had a few household assets such as: one cot, one small almirrah, a broken chair, one clay pitcher, two aluminum plates and an earthen pot. The only bread earner of the family, Mawla Baksha became disabled ten years back. Since then Sujira had to take charge of the family. Sujira had a son who died of a mysterious disease seven years ago. Their daughter Fazila was married in 1987 to a mentally disabled person and she is now living in miseries.

Sujira maintains her family by begging from door to door. At the end of the day, she usually gets ½ Kg. of rice and a cash of Tk. 5.00 to Tk. 7.00. With this small income she finds it very difficult to meet both ends. The family needs not only rice but also pulse, edible oil and spice like onion, pepper, garlic, salt etc. for daily consumption. Often they take only one meal a day only. Occasionally, they can afford to buy some small fish. Sometimes their neighbors give them some fish or fish curry. But the situation gets worse during the lean season, especially during mid August to mid October when their neighbors themselves suffer from scarcity of food and cannot help others.

Sujira has become a member of a samity under FSP. Generally, she deposits Tk. 2.00 in a week with the samity. Sometimes she can manage to save more. She has saved Tk. 55.00 by now. Sujira attends weekly meetings and receives the useful lessons in the meeting such as, the benefit of cleanliness, safe drinking water, nutritional there are fourteen members in their Samity and among them seven members have taken loan. Sujira could not even dream of getting loan from any institutional or non-institutional source. She had doubt about her ability to repay the loan. After attending the awareness training and some weekly meetings organized by Desha, Sujira got an idea about how to use loan in productive ways and to make repayment. On July 25, 2003 Sujira applied to Desha for a loan of Tk 1000.00 which she got within 15 days. Sujira bought two layer-hens with Tk 200.00 and two black goats with Tk 800.00. By selling eggs she earned Tk. 90.00 in six weeks. She wants to give up begging soon.

Case – 2

Former Sex Worker Amena Begum Wants a Graceful Death
As a former sex worker, Amena Begum has struggled to find employment. Recently employed as a maid, Amena joined a credit and savings group organized by Karmajibi Kalyan Sangstha (KKS),

partner organization of PKSF in Rajbari, with other former sex-workers.Amena Begum depositsTk. 2.00 each week and has accumulated a balance of Tk. 114.00 She has received awareness training from KKS. Recently Amena Begum received a Tk. 1500.00 loan and invested in a small business selling "sari" to brothels. Profits from this business have been invested in five ducks and six hens. Amena has plans to expand her business with future loans.

Case – 3

Wife of a poor fisherman, Eakun Nahar dreams for a better future

Eakun Nahar, wife of a poor fisherman lives in coastal area of Moheshkhali Upazila of Cox's Bazar. She lives in a dam constructed to protect coastal people from tidal wave. Married early in life, Eakun now has two children. Her husband earns a meager amount by fishing in the sea. Eakun always anxiously awaits her husband's return from fishing while he fishes in the deep turbulent sea. Once in the past she ran a business of rice selling within her community, but due to lack of capital, she had to abandon the business. She was therefore, trying to get credit from some source. But no one came forward to cater to her credit needs. Even no microcredit organizations around came to her help as she was not considered credit worthy.

Eakun finally came to know that Resource Integration Centre (RIC), an NGO working in Moheshkhali, was running a project for the destitute people, particularly for those who are vulnerable to poverty. She has joined a RIC samity named Ghatibhanga Uttar Para Mohila Samity with the hope of getting credit. She has been selected leader of the samity. She saves whatever amount she can afford to save. She has taken a loan amounting to Tk. 2000.00 With this money, she has started again her rice trading. She goes to the market herself for buying rice. Her neighbors are her customers. Eakun now desires to expand her business for increasing the amount of profit. She is now thinking of sending her two daughters to school.

Case – 4

Rakhain woman, Maten Sing restarts weaving works

Maten Sing, a Rakhain woman who lives in Moheshkhali Upazila of Cox's Bazar District, has restarted her weaving activity after getting credit from FSP Project. Maten has three children. Her husband is a day laborer and earns, on average Tk. 1200.00 per month. RIC, a partner organization of PKSF has helped them to rebuild their house when it was damaged by a severe tidal wave in 1991. The Rakhain families live in a small area of khas land owned by government. Most of the families there live on weaving. Maten was also engaged in weaving before, but insufficient capital and hard competition from mechanized weaving forced her to abandon this traditional weaving.

After joining a RIC samity under FSP Project she has got awareness training, and has learnt about group disciplines of microcredit program. In the past, the Rakhain community, particularly the poorest households, remained excluded from development programs, and even from different social functions. Now she has access to credit and she feels that she can do something collectively. RIC has come to help her with a loan of Tk. 2000.00 for restoring weaving business. Now Maten is making bags and other cloths and selling those in the district town of Cox's Bazar. Maten now earns a little more than before and hopes to get higher amount of loan in future to run her business in a larger scale. She thinks that her income together with her husband's will bring significant change in the family's living conditions.

Field Visit

Ms. Monisha Biswas, Qualitative Research Specialist visited the FSP samities under KKS in Goalanda, Rajbari from December 1 to 4, 2003. Dr. Helal Uddin Ahmed, Project Coordinator, FSP Project, PKSF joined her on the December 3, 2003. They visited seven samities formed with hawkers, railway porters, people of char areas, former sex workers of Dowlatdia brothel, etc. They encouraged the KKS authorities to give emphasis on integration of social development activities with the financial services provided from the project. KKS has also been requested to work intensively on building human capital of the hardcore poor.

Mr. Kh. Munir Hasan, MIS Officer visited the working area of Prodipan at Dangdhara union of Jamalpur district from 8 to 11 November 2003 to observe the project activities there. Mr. Hasan assessed the loan demand of beneficiaries' and their expectations from the FSP Project. He talked with the group members who are not involved in any IGAs and suggested that they should establish small businesses to enhance their income.