A News Bulletin of Palli Karma-Sahayak Foundation (PKSF)
Volume: XIV, No. II , July 2006

[Prime Minister Begum Khaleda Zia (sitting in the centre), PKSF Managing Director Dr Fakhruddin Ahmed (left) and Board Chairman Dr Wahiduddin Mahmud (right) are seen with the chief executives of the Best Partner Organisation Award winning MFIs. The chief executives are (Standing L-R) Mr Kazi Ashraful Hassan of SDC, Mr Iqbal Ahammed of Padakhep, Professor Hosne-Ara Begum of TMSS, Mr Rasel Ahmed Liton of SKS, and Mr Azadul Kabir Arzoo of Jagorani Chakra Foundation. The awards have been given marking the observance of the International Year of Microcredit 2005. ]

PKSF disbursed a record-high amount of loan totalling Tk. 6926 million (Figure–1) in Financial Year 2005-2006.

Figure–1 shows that the disbursement in FY 2005-2006 was substantially higher than that of any of the past fours years. It was 89 percent higher than that of Tk. 3660 million in FY 2004-2005, and more than double that of all other years.

Disbursement to Small and Medium POs

The record high disbursement in FY 2005-2006 was possible despite the fact that the disbursement to its three big partners was only Tk. 40 million in the fiscal year. The main beneficiaries of the increased loan disbursement were PKSF’s small and medium POs, who diversified and deepened their lending activities.

After the reduction in loan disbursement to the three large POs, net disbursement began declining substantially and fell to Tk. 236 million in FY 2004-2005. However, in FY 2005-2006, the net disbursement increased significantly from the previous year and reached Tk. 2550 million (Figure-2). It is expected that net disbursement will increase further in the upcoming FYs.

PKSF’s Ultra Poor Credit Programme has been intensified. As a result, disbursement to the ultra poor increased substantially to Tk. 1050 million (Figure-3) in FY 2005-2006; 61 percent higher than that of FY 2004-2005. PKSF programme covers about 0.5 million ultra poor, which is about 50 percent of the total ultra poor covered under the microcredit programme in the country. Some important features of PKSF’s ultra poor programme include:

a) The programme is focussed on the monga- affected areas.

b) The programme area covers the disadvantaged and marginal geographical areas such as the charlands and ‘haors’.

c) The programme beneficiaries include not only the economically disadvantaged but also the socially excluded ultra poor such as the sweepers, cobblers and sex-workers.

d) The ultra poor are supported with a consumption loan, if necessary.

e) The programme provides skill development and awareness building training to the ultra poor so that they can utilise the loan efficiently.

In order to support the progressive microcredit borrowers to undertake microenterprises which are more growth oriented and creating wage-employment, PKSF has geared up its efforts in FY 2005-2006. As a result, disbursement under this programme increased by 119 percent from Tk 383 million in FY 2004-2005 to Tk 838 million in FY 2005-2006
(Figure-4).

Seasonal Loans

PKSF during FY 2005-2006 has also given importance to support agriculture through the provision of seasonal loans for various farming activities including crop production, livestock and fisheries

Loan Disbursement Target For FY 2006-2007

PKSF has set a loan disbursement target of Tk 14000 million for FY 2006-2007 of which Tk 11263 million will be disbursed under the core programme and Tk 2737 million under different projects.

Panua Basphor, 65, an aged sweeper and mother of six sons and two daughters, faces severe poverty on a daily basis. She represents one of the many hardcore poor who are not only economically disadvantaged, but also socially marginalized. Panua was neglected even by humanitarian organisations. Her children’s access to school was denied.

Gram Bikash Kendra, a PKSF partner organisation, admitted Panua into its ultra poor microcredit programme and integrated her into mainstream society. She is implementing a project with the aid of microcredit to combat poverty and improve the economic condition of her family.

International Year of Microcredit 2005 Successfully Observed

The concept of microcredit, which was born in Bangladesh 30 years ago, has proved to be a powerful tool for poverty alleviation across the globe. Recognising the role of microcredit in poverty alleviation, the UN declared the year 2005 as the International Year of Microcredit. Like in many other countries of the world, the year was observed in Bangladesh in a befitting manner.

The Government of Bangladesh formed a national committee to observe the year with PKSF Managing Director as the convener of the committee and PKSF as the focal point for observance of the year in Bangladesh.

The programme for the observance of the year was started with the inaugural ceremony held on January 15, 2005 at the Bangladesh-China Friendship Conference Center and concluded with holding of a Khudrarin Mela (Microcredit Fair) on February 4-5, 2006 and giving awards to PKSF’s best parter organisations followed by a cultural show on February 5, 2006 at Dhaka Sheraton Hotel. The five best POs which were given awards are:

· Thengamara Mohila Sabuj Sangha (TMSS)

· Padakhep Manabik Unnayan Kendra

· Jagorani Chakra Foundation

· Samaj Kallyan Sangstha (SKS)

· Society Development Committee (SDC)

The microcredit programme was implemented with added thrust and enthusiasm all over the country by various organisations, including PKSF, throughout the year. Awareness-building programmes were also implemented at national and local levels to highlight various issues, including the poverty alleviation role of microcredit.

[Professor Muhammad Yunus, Managing Director of Grameen Bank, inaugurating the Microcredit Fair. Professor Wahiduddin Mahmud, Dr Fakhruddin Ahmed and Dr M.A. Hakim are also present.]

One of the most significant contributions of the year long campaign was the wide exposure of the microcredit programme. The awareness programmes helped clarify many issues surrounding microcredit and resulted in a better appreciation of the sector. The Microcredit Fair, in particular, drew enormous attention from a cross section of people, including civil society members, media personalities, academicians, policy makers and planners. PKSF is planning to arrange such fair in a larger form from this year.

Begum Khaleda Zia, the Honorable Prime Minister of the People’s Republic of Bangladesh, inaugurated the observance of the year and also attended the closing ceremony and cultural programme as the chief guest.

With the financial assistance of IFAD, the Palli Karma- Sahayak Foundation (PKSF) has started implementing the Microfinance and Technical Support Project in 13 districts in the south and northeast of Bangladesh. The goal of the project is to improve the livelihoods and food security of 276,000 poor households and to empower women by helping them adopt sustainable income-generating activities using improved techniques to raise livestock.

At least 25 percent of the project’s target groups are people who earn less than US$1 a day. To date, more than 46,000 such people have been identified, and more than 19,000 of them have received about US$1.5 million in the form of credit for the implementation of income-generating activities. About 6,300 project participants have received training and engaged in the livestock activities.

In rural Bangladesh, almost every housewife keeps and rears poultry or cattle, but they do not know about improved breeds, which are more profitable than the local ones. The project is promoting income-generating activities using improved poultry or cattle through which participants can earn more with less investment in a short time. The activities do not add to women’s workload and these are designed to be managed by women on their own. The project is providing technical support such as training, inputs and credit on a demand basis. The project coordination unit is closely monitoring the activities undertaken by these women and also assisting in marketing their products.

Mira, a 38-year-old participant from Sylhet (in northeast Bangladesh), has had a month of intensive training, arranged by the project coordination unit on the mini hatchery from the government Duck Farm. Here she learned how to hatch chicks and ducklings from fertile eggs using the rice husk mini hatchery technique – an improved indigenous method. She now earns an extra Tk. 4,000 to 5,000 (US$59 to 74) per month.

The dissemination of small-scale livestock technology at the grass-roots level has contributed to women’s empowerment and their increased participation in project activities and in decision-making. At the same time, increased consumption of livestock products has improved the nutritional status of poor families.

(The case study, written by Ms Jebun Nahar, project coordinator, MFTS project of PKSF, was published from Rome in the special issue of IFAD newsletter, Making a Difference in Asia and the Pacific, May/June 2006).

PKSF continues to emphasise innovation of new loan products and more poor-friendly lending mechanisms to ensure that the microcredit programme is more dynamic and effective towards poverty alleviation. In this vein, in addition to its mainstream microcredit programme, PKSF has been implementing the following projects:

i) Financial Services for the Poorest (FSP),

ii) Microfinance and Technical Support (MFTS) Project,

iii) Second Participatory Livestock Development Project (PLDP-II),

iv) Microfinance for Marginal and Small Farmers Project (MFMSFP), and

v) Monga Mitigation Initiative Pilot Programme (MMIPP) in collaboration with the Social
Development Foundation (SDF).

The outcomes of the projects have been very encouraging and PKSF will take necessary steps to mainstream these experiences.

In addition to the above projects, PKSF has launched two more innovative programmes – PRIME and LIFT.

Programme Initiatives for Monga Eradication (PRIME) has been launched to create wage and self-employment opportunities throughout the year for the monga-affected families in the greater Rangpur district.

The project components will include:

i) Suitable microcredit service,

ii) Establishment of labor intensive small and cottage industries,

iii) Support services for the Monga affected families,

iv) Consumption loan,

v) Disaster mitigation loan,

vi) Investment in infrastructure building.

PRIME will be treated as a regular programme of PKSF to reduce the risks associated with seasonal disasters.

Primarily the loanable fund will come from the core fund of PKSF and other ongoing projects/ programmes funds and the Disaster Mitigation Fund. Other agencies will also be invited to participate or coordinate their programmes with PRIME. To this end, negotiations with SDF and the Shouhardo project, supported by Care Bangladesh, has already been completed.

PRIME will be started in greater Rangpur and may be replicated in other parts of Bangladesh with similar risks of seasonal disasters. Preference will be given to the areas with (a) high percentage of ultra poor, (b) charlands, (c) high vulnerability to disaster caused by river erosion and floods, and (d) lack of employment opportunities.

All of the above interventions/components will be implemented through the POs of PKSF.

Field experience has shown that, in certain areas, innovative experiments can bring about fundamental changes in microfinance services for the poor and positively impact on poverty alleviation. Some of PKSF’s partners and other organisations are interested in undertaking such innovative experiments but are constrained by a lack of funds. In this context, PKSF has decided to create a fund titled ‘Learning and Innovation Fund to Test New Ideas (LIFT)’ to support the creative ventures of PKSF partners and others.

The innovative activities will include commercial, social and technological ventures. Their successful implementation will create wage employment and/or help microcredit borrowers derive enhanced benefit from the existing activities.

Some features of these innovative activities:

a) They will be different from the conventional microcredit activities,

b) The microcredit borrowers must derive direct and indirect benefits from the activities,

c) The activities must be environment friendly,

d) The activities must be labour intensive and especially create job opportunities for the poor.

PKSF has created a fund of Tk. 100 million from its own resources to implement the programme and will provide funding to both POs and non-PO interested in and capable of implementing innovative activities. The funding will be provided in the following three modes:

a) Subsidised loan,

b) Grant and

c) Equity participations (at least 30% to be provided by the implementing organisation)

A project for the rehabilitation of non-motorised transport (NMT) pullers and poor owners of Dhaka City will be launched soon.

The implementation of the Government’s land transport policy in some areas of the Dhaka City, which progressively bans the use of NMT (including rickshaws) on major arterial roads, has caused a significant loss of income for the affected NMT pullers and poor owners.

PKSF has agreed to implement a project with IDA/GOB support to restore the livelihoods of the affected people to previous levels, at minimum, and achieve sustainable benefits. Training and credit will be provided to the affected in the Dhaka City. In feasible cases, the project will impart training and provide loans to those who prefer to be rehabilitated in their villages/home districts.

The two-year project, from September 2006 to August 2008, will support about 38000 affected NMT pullers and poor owners.

PKSF will design the project and implement it through a maximum of 15 existing POs having activities in the Dhaka City. PKSF may procure training and other technical services from institutions/ organisations other than the POs.

Out of the total project cost of US$ 15 million, US$ 7.75 million will be used for a microcredit revolving fund and US$ 6.67 million will be used for capacity building of microcredit borrowers, POs and PKSF.

The supervision and monitoring activities of PKSF have been further enhanced with the expansion and diversification of the microcredit programme.

During on-site monitoring visits, PKSF officers provide POs with hands-on technical advice to improve programme performance. A report about the findings of the visits is also prepared based on which follow-up actions are taken both at PKSF and PO levels.

[Dr Fakhruddin Ahmed visiting an integrated self-reliant project of Jagorani Chakra Foundation, a partner organisation in Jessore. Officials of Jagorani Chakra accompanying him.]

Along with the officers of the operations division and projects, the senior management staff has also increased its on-site monitoring visits. From January to June, the Managing Director, Dr Fakhruddin Ahmed, visited 23 organisations in different parts of the country. During the visits he talked to microcredit borrowers and PO staff including the chief executives. He also visited the microcredit-supported economic activities of the borrowers and the social development projects of the POs.

Deputy Managing Directors, Mr Mosharraf Hossain Khan and Ms Parveen Mahmud, and General Manager, Dr M.A. Hakim, also made a number of fields visits during the period. During these visits, their exchange of views with PO officials and borrowers helped better understanding of many issues and get inputs for strategic decisions.

Loan Disbursement to POs

Cumulative loan disbursement from PKSF to the POs was Tk 28282.83 million, as of May 31, 2006. The loan recovery rate from the POs to PKSF was 96.91 percent.

A summary of PKSF’s loan disbursement to the POs as of May 06 and a summary of loans outstanding is presented below:

* Mainstream Microcredit comprises: Rural Microcredit, Urban Microcredit, Hard Core Poor credit, Micro Enterprise Lending (MEL).

** Projects comprise PLDP=Participatory Livestock Development Project (PLDP-I), PLDP-II, TEIGP=Training, Employment and Income Generation Programme, IFADEP=Integrated Food Assisted Development Project, SRLP=Socio-Economic Rehabilitation Loan Programme, PAMFP=Poverty Alleviation Micro Finance Project, FSP=Financial Services for the Poorest, MFTS=Micro Finance and Technical Support, MEL=Micro Enterprise Lending, UP=Ultra Poor (UP) Programme, MFMSFP=Microfinance for Marginal and Small Farmers Project.

As of May 31, 2006, the POs - through the revolving loan fund received from PKSF - have disbursed Tk. 215133.89 million to 6.67 million borrowers, 90% of whom are women. The cumulative loan recovery rate from the borrowers to the POs was 98.99 percent.

Loans are given to POs at a nominal interest rate to purchase motorcycles, bicycles, computers, photocopiers, etc and to construct office-building-cum-training centres for their institutional development (ID).

Cumulative disbursement of this loan to POs was Tk. 137.02 million as of May 31, 2006.

PKSF is helping the POs to computerise their financial management system (FMS). As of May 2006 FMS software was installed in 106 POs to enable them to maintain their accounts information system (AIS) more efficiently.

Regional Workshop

PKSF organised six regional workshops with the POs between April and June 2006. Presided over by the PKSF Managing Director Dr Fakhruddin Ahmed the workshops were attended by 362 chief executives and credit coordinators of the POs. Mr Muhammad Hasan Khaled, Assistant General Manager, presented the working paper in all the workshops.

Deputy Managing Directors, Mr Mosharraf Hossain Khan and Ms Parveen Mahmud, and General Manager, Dr M. A. Hakim, attended the workshops by turn.

[Dr Fakhruddin Ahmed, Managing Director of PKSF (centre), presiding over the regional workshop at Khulna. Also present are Mr Mosharraf Hossain Khan, Deputy Managing Director and Mr Muhammad Hasan Khaled, Assistant General Manager of PKSF.]

The aim of the workshops was to engage in consultation with POs to further improve the performance of microcredit programmes of PKSF and the POs. The specific objectives of the meetings were to (a) inform the POs of the diversified programmes of PKSF and share PKSF’s views on the microcredit programme; (b) seek POs’ views on potential strategies to make the current microcredit programme more dynamic; and (c) identify new programmes and determine ways to expand the programmes.

A workshop with POs was held at PKSF Bhaban to exchange views on different aspects of PKSF’s new initiatives, PRIME and LIFT.

A workshop was organised at TMSS, Bogra on May 3 to discuss the field level issues of implementation of PLDP-II.

Participation at Workshop Abroad

Deputy General Manager, Mr Golam Touhid, and MFTS Project Coordinator, Ms Jebun Nahar, attended an annual review workshop of IFAD funded projects in Bangkok, Thailand. Ms Jebun Nahar moderated a session on Improving Project Performance in the Workshop.

· Seventy-eight officers have attended a training course on making a business plan for MFIs. Mr Dewan H Alamgir, Managing Director of Enterprise Systems Limited, conducted the training in June.

[Officials of PKSF and POs attending a session of training course on the MFI business plan. ]

· Organised by the Bangladesh Society for Training and Development (BSTD), four officers attended a training course on TOT. One officer attended a course on management and human resource development, while another four were trained in participatory monitoring and evaluation, organised by IDSL, Dhaka.

· Mr Abdul Khaleque Miah, Assistant General Manager, and Mr AKM Nuruzzaman, Manager, received training on ‘Quality Training for MFIS’ at the Asian Institute of Management (AIM) in the Philippines. Mr Habibullah, Programme Associate, attended a training course on MIS for MFIs, jointly organised by Planet and Response Net, India.

· Under the MFTS project, nine PKSF officers and one officer from the Ministry of Finance participated in a training and exposure visit on livestock activities in Malaysia. Ms Jebun Nahar, Manager, also Project Coordinator , led the team.

From January to June 2006, PKSF provided training to 1556 PO staff through different courses. The trainees included 73 coordinators, 31 area managers, 394 managers, 17 branch accountants and 129 project accountants, 55 technical officers, 240 credit assistants and 884 field workers.

A total of 15,106 borrowers under different projects received training from PKSF from January to June 2006. Of them, 12,751 received training under second Participatory Livestock Development Project (PLDP-II) 2500 under (MFMSFP), 250 under Ultra Poor Programme and 55 under MFTS Project.

In collaboration with the Japan International Cooperation Agency (JICA), training was provided to 150 women entrepreneurs.

From January to June, 69 PO officials visited their fellow POs to share experiences about innovations on microcredit loan products.

· A two-member team from the Pakistan Poverty Alleviation Fund paid a visit to PKSF during January 22-30.

· The chairman and the members of the Board of Rural Microfinance Development Centre (RMDC) of Nepal, visited PKSF during February 19-24. The team made a field visit to Thengamara Mohila Sabuj Sangho (TMSS), a PO of PKSF.

· A four-member team from the Maldives government visited PKSF on March 9.

· A four-member team from the Central Aid Fund of Vietnam visited PKSF on April 9.

[Dr Fakhruddin Ahmed, Managing Director PKSF, exchanging views with the members of the Board of the Rural Microfinance Development Centre, Nepal]

A memorandum of understanding (MOU) for providing PKSF with checkwriter software for meeting day-to-day payments was signed with Citibank NA on June 15. Under the MOU, PKSF has the right to instruct the bank to issue pay orders—payable to Dhaka and Chittagong clearing zones—for any type of payments.

PKSF can also instruct the bank to issue demand drafts on corresponding branches of the bank in Dhaka and Chittagong districts.

The bank will arrange to provide PKSF with access to an online banking system and also work with the PKSF IT team to attempt integration between the PKSF ERP (Oracle) system and CitiDirect Online Banking Product.

[Managing Director Dr Fakhruddin Ahmed (centre) during a MOU signing ceremony with Citibank NA. From (L-R) Mr Mamun Rashid, the Citigroup Country Officer, Bangladesh (second),Ms Parveen Mahmud, Deputy Managing Director (fourth), Dr M.A. Hakim, General Manager (last) and Mr Abdul Khaleque Miah, Assistant General Manager (standing behind), of PKSF are also present.]

Ms Parveen Mahmud, Deputy Managing Director and Dr M.A Hakim, General Manager of PKSF and Vice-President and Head, Financial Institutions, Mr Mahbubur Rahman, and Vice President and Head, Global Transaction Services, Mr Rashed Masood, of the bank, signed the MOU on behalf of their respective organisations.

PKSF Managing Director, Dr Fakhruddin Ahmed and Citigroup Country Officer Bangladesh, Mr Mamun Rashid, were present on the occasion.

PKSF signed a MOU with the South Asia Enterprise Development Facility (SEDF) for formulating a credit scoring model and related activities. The MOU was signed on 25 June, 2006 by Dr M.A Hakim, General Manager of PKSF and Mr Andrew McRobert, Programme Manager of SEDF on behalf of their respective organisations.

· Ms Kamrunnahar joined PKSF as Assistant Manager (Research) on February 08, 2006;

· Ms Afia Nargis joined PKSF as Training Officer under the Financial Services for the Poorest (FSP) project on March 19, 2006;

· Md Afazul Islam joined PKSF as Microenterprise Specialist on February 14, 2006; and

· Dr Md Faizullah joined PKSF as a part-time physician on March 01, 2006.

The Institute of Microfinance (InM) has been registered under the Societies Registration Act of 1860. The institute has been established to strengthen and promote research, training and the overall development of the microfinance sector.

The first meeting of the Governing Body of InM was held on April 13, 2006. Professor Wahiduddin Mahmud, Chairman of InM, presided over the meeting.

Between January and June 2006, seven MFIs were accepted as new POs. A brief profile of the organisations is presented below:

The organisation was established in 1995 as a voluntary organisation in Jessore and was registered with the Department of Social Services in 1998 and accepted as a PO of PKSF at the 138th meeting of the Board of Governors. General Secretary, Mr Zahid Hasan, is the chief executive of the organisation.

Assistance for the Livelihood of the Origins (ALO), a development organisation, was established in 1997 in Khagrachari and was registered with the Department of Social Services in 1998 and accepted as a PO under the Pre-PKSF wing at the 138th meeting of the Board. General Secretary, Mr Arun Kanti Chakma, is the chief executive of the organisation.

Ensure Development Activities for Vulnerable Underprivileged Rural People (ENDEAVOUR), a development organisation, was registered with the Department of Social Services on 24 August 1994 and was accepted as a Pre-PKSF PO at the 127th meeting of the Board. The organisation was upgraded as a full PO at the 138th meeting of the Board. Mr Khalilur Rahman Chowdhury is the chief executive of the organisation.

The organisation was established in 2001 as a voluntary organisation in Dhaka and was registered with the Department of Social Services the same year. The organisation was accepted as a PO at the 136th meeting of the Board. Mr Md Rafiqul Islam is the chief executive of the organisation.

“AVA” (Association for Village Advancement), a development organisation, was established in 2004 as a voluntary organisation in Natore and was registered with the Department of Social Services the same year. The organisation was accepted as a PO at the 137th meeting of the Board. Mr Mokhlechur Rahman is the chief executive of the organisation.

The organisation was established in 2002 as a voluntary organisation in Dhaka and was registered with the Joint Stock Company on 13 March 2002. The organisation was accepted as a PO at the 138th meeting of the Board. Ms Umme Roman Akhter is the chief executive of the organisation.

The organisation was established in 2001 as a voluntary organisation in Rajshahi and was registered under the Department of Social Services on 29 December, 1999. The organisation was accepted as a PO at the 139th meeting of the Board. Mr Mohsin Ali is the chief executive of the organisation.