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Micro-finance

Microcredit Borrowers in Bangladesh Are Not Necessarily Trapped in Poverty and Debt as many contended in recent years

Shahid Khandker's picture

With spectacular growth of microfinance institutions (MFIs) in Bangladesh, there is a growing concern that borrowers might be borrowing from multiple sources and more than they are able to repay, and hence, they are trapped in poverty and debt.  Microfinance programs, operating in Bangladesh for more than two decades, have reached more than 10 million households in 2008, nearly half the rural population, with an annual disbursement close to US$1.8 billion and an outstanding balance of US$1.5 billion.  Multiple program membership has increased over the years: it was nonexistent in 1991/92, 11.9 percent in 1998/99 and 36 percent in 2010/11. 

However, a recent study shows that increased borrowing, even from multiple sources, has not lowered loan recovery rates. 

Also, another recent study observes that microcredit borrowers are not necessarily trapped in poverty and debt. This study analyzes data from a long panel survey over a 20-year period, and finds that although many participants have been with microcredit programs for many years they are not necessarily trapped in debt as the accrued assets due to borrowing outweigh accumulated debt for many borrowers.

A Tiny Spark Ignites a Powerful Blaze

Sabina Panth's picture

The idea of starting a grassroots women-to-women communication campaign dawned on me when I realized the power of aesthetic expressions in capturing the intangible impact of development interventions.   The beneficiaries of the Women’s Empowerment Project in rural Nepal used oral lore to articulate their impressions and experiences of their participation in the program through songs, dance and poetry.  And because the program interventions were rooted in basic literacy training, I helped translate the oral lore into written documents through the medium of a newsletter, where the program beneficiaries themselves became the suppliers and readers of the contents.  The newsletter proceeded to serve as a powerful grassroots network that brought together two- hundred and forty local organizations partners of the program and their hundred and twenty thousand clients across the country for horizontal learning.  The newsletter also proved to be an effective vertical medium for the program management to assess the impact of the program interventions beyond its set targets and indicators.