Micro-credit and NGOs

Aminur Rashid

THE global community, aid agencies, government and non-government sectors are trying to alleviate poverty through directing and redirecting their expertise and resources towards raising the living standards of the poor. Researchers and academicians are repeatedly focusing on the design of poverty-based developmental strategies. To best address acute problems many government and NGO initiatives have been implemented over the last couple of years. In addition to this, Bank-NGO collaboration to achieve possible results through development programmes for the masses is being carried out. A salient feature of many such targeted programmes is the provision of micro-credit for self-employment by various NGOs and as well as by a number of government agencies. This is now considered the core programme in all developmental efforts to fight against poverty. Almost 95 per cent of the micro-credit arena is serviced by Grameen Bank and NGOs like ASA, BRAC, PROSHIKA etc.Though the formal financial sector in Bangladesh has a large rural credit programme and some have initiated micro-credit programmes, for the most part, their rural credit programmes neither target the poor nor reach the poor. Moreover while targeting the poorest, the programme for rural work undertaken by the government only provide short-term support in gaining access to income and employment opportunities. These programmes have been inadequate in sustaining the productive means of the poor and thus have limited impact on permanent escape from poverty. In contrast, the experience of micro-credit programmes shows that the lack of access to affordable credit is a major constraint in self-employment. Providing credit and other organisational input to the poor can help them become self-employed on a sustainable basis in familiar income generating activities.Micro-credit programmes have already covered 25 million people through 5 million households. In spite of this, poverty alleviation programmes have not been complete as many hard-core poor are still out of reach of micro-credit programmes. Neither the government nor the NGOs' micro-credit programmes are able to cover them adequately. In this regard, though the NGOs' micro-credit programmes are being highly acclaimed by all quarters there is still room for their improvement.The concept of NGO micro-credit programmes in strengthening the poor in Bangladesh is a relatively recent phenomenon. As poverty varies from region to region and people to people in society, so do micro-credit programmes should adapt to meet region and people-specific needs, especially for the hard-core poor. It might be stated that a unitary set of NGO micro-credit operating rules and regulations is a prerequisite for inclusion of more hardcore poor in the micro-credit programme. Moreover, it might be said that the formulation of policies based on the characteristics of the hard-core poor might pave the way for more inclusion in micro-credit programmes. Finally, staff members especially at the field level may need better orientation regarding rules, which may help them achieve a more positive attitude towards selection of hard-core poor. Depending on the ability of the organisation to finance the cost of coverage, modification of existing structure may be considered by the policy-making body of the organisations concerned.

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