Research Reports (2002): Economic Studies, Vol - XVIII

Permanent URI for this collectionhttps://hdl.handle.net/10361/12977

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Workshop proceedings of imp-act thematic group meeting on understanding the wider impacts of microfinance
(BRAC, 2002-03) Halder, Shantana R.
The proceedings brief the outcomes of the third Imp-Act thematic group meeting on understanding the wider impacts of micro finance (MF) as a part of the three-year Global Impact Assessment Project funded by Ford Foundation. The main objective of this thematic group meeting was deepening the understanding of issues around the direct and indirect impacts of MF services on clients and non-clients, their communities and the local and national economies. The proceeding summarizes findings of all the 17 papers presented by different authors coming from all over the world during the first two day sessions. The authors mainly shared experiences of different MF institutions working in Latin American, South Asian, African and Sub-Saharan countries and their impacts on the changes in socio-political and economic lives at micro, meso- and as well as macro levels. It is also documented all the issues raised during discussions, which have taken place after each and every presentation. There is a consensus in understanding that although it is now well established about the positive contribution of the sector in the development chain, for better understanding of MF impact at different levels there is a need for detailing out further certain issues on, for example, i. Group formation: Need for distinguishing between good/bad approaches; ii. Research should have appeal across disciplines for maximizing impact; iii. Need to think about strategy & methods; iv. Strategy & tactic's (research areas, international approach, dissemination); v. Studies on strategic partnership to provide credit plus plus; vi. Trend and implications of commercialization in MF; vii. Gender needs to be a core underlying theme in all analysis; viii. Financial services (product innovation, spreading and deepening coverage) ix. Need to focus on markets and multi market outcomes; x. Networking to maximize value added and xi. Gender as an agenda and also as a theme.
Working with the ultra poor: learnings from BRAC experiences
(BRAC, 2002-12) Halder, Shantana R.; Mosley, Paul
This paper describes BRAC experiences of working with the ultra poor over the last two · decades. The ultra poor is the poorest section among the population with a few or no asset base, highly vulnerable to any shocks and mainly depending on wage labour. The main causes of their poverty, especially in the rural areas, are poverty inheritance, loss of income earner and ill health. Although microfinance is targeted to the poor, the ultra poor lacking livelihood resources are reluctant to borrow credit with the fear of being overburdened. They need a critical push to uplift their initial endowment base to a certain level which is necessary for getting greater access to other resources and their productive utilization. The BRAC Income Generation for Vulnerable Group Development (IGVGD) follows that kind of approach for creating a missing links in the ladder that helps the poor to participate in the manifolds of the development process. IGVGD is an integrated package of food distribution, savings, micro-credit provision, social awareness-building and skill development training and essential health care interventions. Different study findings conducted within the county and outside indicate that IGVGD is very successful and also costeffective in reaching the ultra poor. But what is important to note that the female coming from male headed households can participate more fully in the IGVGD programmne activities and it is the men who use NGO credit and husbands' income are the primary source of installment payments. A quarter of the IGVGD women did not gain any long term benefits. The the female-headed households who lack resources were among those who could make less use of the services on offer and, therefore, return to their destitution after the end of food ration. That means there is a need to rethink further what fits better to this specific group of population. They need a critical push with a view to unleashing a process that would allow them to exit the poverty trap and attain a more selfsustaining livelihood. Challenging the frontiers of poverty (CFPR) is a special investment package of BRAC involves giving selected women and their families productive assets such as cows, small grocery shops, or poultry, specialized skill training on how to run a business with their asset, a stipend provision for the first few months, subsidized healthcare as well as social support and confidence building training. a new initiative of BRAC which There are also another 10% of the ultra poor who were excluded from IGVGD for being too old or disabled. It means IGVGD can not address the specific constraints of the most distressed women in Bangladesh.
Wider impacts of microfinance institutions: towards defining the scope and methodology
(BRAC, 2002-09) Zohir, Sajjad; Matin, lmran
The theme of wider implications of microfinance institutions' interventions is a relatively uncharted territory, though the term is alluded to quite frequently. The interest in this theme has emerged out of a number of motivations. One important view underlying such motivation is that the total impact of microfinance intervention is being underestimated through the conventional impact studies. It is alleged that the latter do not take into account of the possible positive externalities on spheres beyond households and the subsequent feedback effects on both participant and non-participant households. This assumption, we argue, is driven a conceptualization of total impact consisting of two mutually exclusive impacts--- narrow and wide. Yet, we argue that, what is conventionally termed as 'narrow' impacts can be perceived as a reduced form expression, incorporating all secondary effects arising from households' (participants and non-participants) engagements with various market and non-market institutions. Analytically then, it becomes difficult to pursue the wider impact theme and yet recognize that individuals and households are the expected beneficiaries of all program interventions. The first section in this paper discusses this problem and posits two alternative approaches to define the scope of wider impacts. It is proposed that within a narrower perspective, one may examine individuals' /households' multi-dimensional engagements at meso and macro levels and assess the subsequent changes at these levels. This would be the logical first step towards assessing wider impacts. This is not to undermine the need to assess the feedback effects of 'wider' impacts on households, especially on the poor. However, as discussed in the following sections, a shift in focus away from households to meso/macro levels broadens the scope of wider impact theme. It allows exploring impact pathways and how these interact with wider structures---many such issues do not immediately lead back to households and are yet to be addressed seriously in the existing microfinance impact assessment literature...
To produce or not to produce: tackling the tobacco dilemma
(BRAC, 2002-04) Naher, Firdousi; Chowdhury, AMR
This study seeks to look into the economics of tobacco cultivation in Bangladesh. At tire macro level, tire importance of tobacco farming has been declining. However, a survey conducted on 300 tobacco farmers in 19 villages of Rangpur and Kushtia revealed the increasing importance of tobacco at the micro level with more-tlum a quarter of tire sample farmers joining tire rank of a tobacco farmer in tire past five years. The driving force behind this phenomenon has been the apparent profitability of growing this crop. Tobacco cultivation requires intensive labour and most farmers economise on the labour cost by using their own household labour. When the imputed value of this is taken into account, tobacco loses much of its profitability. Therefore, when weighed on a cost-benefit scale, tobacco often yields a lower economic profitability titan a number of other crops. Our study identified some of these crops as maize, potato, sugarcane, sunflower, cauliflower and tuberose. Most farmers seemed aware of the health and environmental hazards to tobacco but continued growing the crop because of overriding factors such as guaranteed market and ready cash (which is not tire case with most other crops). Even though tobacco is a good source of revenue for tire government, this industry cannot be promoted given its 'merit bad' character. Informing the farmers about tire true economies of tobacco, providing marketing facilities, introducing sustainable procurement drives at reasonable prices and enhancing tire storage capacity of alternate high value crops could act as catalysts for farmers to quit tobacco farming.
The impact of BRAC on poverty dynamics and poverty transition: results of panel data analysis
(BRAC, 2002-09) Halder, Shantana R.
This paper looks into the issue of economic graduation of the poor and tries to finding out the impact of BRAC's Rural Development Programme (RDP) on it. Economic graduation is defined by the upward mobility of the poor along the poverty-pyramid into non-poor status and the ability of the vulnerable non-poor to sustain their position. Here both the expenditure and perceptual methods are considered in defining poverty. For the analysis of impact a panel data set on 419 RDP members and 81 comparable non-RDP households collected twice in 1997 and 2001 were used. Results show that when poverty among non-RDP comparison households increased from 68% to 73%, it declined from 59% to 52% among RDP member households. Poverty gap also declined sharply among the latter group. Regarding poverty inequality a declining trend was observed for both of the groups. RDP made significant contribution in the upward mobility of the poor. The extreme poor RDP households did quite well in terms of upward mobility. Although the rate of overall downward mobility among RDP members was relatively less than the rate among comparison households, almost half of the RDP's initial non-poor slipped into poverty. Results of multivariate analysis show significant positive association of poverty graduation with households' initial wealth base and changes in village level infrastructure which indicate that for making significant change in the lives of the poor necessary steps should be taken for strengthening household's physical asset base and also for providing rural infrastructure.
Microfinance in the Brahmaputra-Jamuna chars: the context, the providers and way forward
(BRAC, 2002-03) Marin, Imran; Hassan, M. Emrul; Maniruzzaman, Md.
Informal financial sources dominate the financial landscape of the char areas in ways distinct from the mainland areas of rural Bangladesh. Microfinance in the char areas has not even scratched the surface of the first and basic microfinance challenge - outreach. However, the challenges of expanding outreach and developing innovative products and delivery mechanisms go hand is hand in the char areas, in a way that is distinct from the general mainland rural Bangladesh. This is because investments in a core product and methodology experimentation that works, for the most part, in mainland rural Bangladesh w<1s already undertaken by Grameen and other microfinance pioneers, such as BRAC and ASA. This is not the case for the char areas. Good microfinancing in the char areas would involve significant investment in building knowledge and capacity. High chances of selection and frequent seasonal migration are two important features of char dwellers' livelihood. Incomings into the household is usually much less regular than it is on the mainland and a large proportion of income come in lumps from seasonal migration. Livestock earning is the most regular among the common sources from which char dwellers derive their income. However, poor price, lack of timely and cost effective veterinary sen·ices, livestock fodder and safety problems during flood periods, etc. pose significant challenges to this important sector for the char dwellers. Opportunities to engage in activities that will smoothen the income flow is restricted by difficulties of market access and general decline in the adjoining mainland....
Combining targeting methodologies for better targeting of the extreme poor: some preliminary findings from BRAC's CFPR/TUP programme
(BRAC, 2002-09) Matin, Imran; Halder, Shantana R.
Since January 2002, BRAC has started a new program targeted at the extreme poor, called, 'Challenging the Frontiers of Poverty Reduction: Targeting the Ultra Poor' (CFPR/TUP). This Programme seeks to challenge the frontiers of poverty reduction by addressing two key limitations of much poverty reduction interventions to date. First, the Programme seeks to 'push down' the reach of development programmes through specific targeting of the ultra poor who have suffered relative neglect in most development programme interventions to date. Secondly, it seeks to 'push out' the domain within which existing approaches operate, by addressing dimensions of poverty that many conventional approaches fail to address. Specifically, this involves a shift away from the conventional service delivery mode of development programming to focussing on human capital, and the structures and processes that disempower the poor, especially women, and constraint their livelihood. It is an approach that puts social development, specifically a rights-based approach to health and socio-political empowerment, at the heart of the agenda. This paper has two objectives. The first is an introduction of the new BRAC Programme that aims to experiment with a different type of approach to attacking extreme poverty. More specifically, the focus in this paper is to introduce the targeting methodology used in this Programme. The underlying theme of both the CFPR/TUP Programme and the targeting methodology it used is an acknowledgment of the power and strength of combining methods and approaches and thereby leveraging each other. The Programme for instance combines promotion and protection oriented mechanisms to attacking poverty and uses this mix at various levels acknowledging the idea that the structures that create and reproduce poverty work at multiple levels. Similarly, the targeting approach used in the Programme also combines various targeting methodologies and knowledge streams about who the extreme poor are and where they live. The second objective of this paper is to use Programme data emerging out of the targeting exercise to undertake preliminary exploration of questions of effectiveness of the approach used. The combining of various targeting approaches and drawing from different streams of knowledge has been the main innovativeness of the targeting methodology used in the CFPR/TUP programme. The close correspondence between community perception of the variables distinguishing the extreme poor from the other wealth groups and what the Programme developed based on reading of existing poverty profile literature of Bangladesh points to the maturity and evolution of formal, more academic knowledge on poverty profile in being able to capture the categories and descriptions used by poor people themselves. This is encouraging. What is needed now is moving beyond more grounded poverty profile to more grounded understanding of the various mechanisms through which poverty persists for some and not for others and what can be done about it. However, the big differences between the two closely ranked groups of the poor-the extreme poor and those just above, also suggest that there is a structural break, rather than a continuum in terms of deprivation of opportunities, security and empowerment that is differentiating the extreme poor from others. It is through a better understanding of the various dimensions, dynamics and interlinkages of these structural breaks can we design the most effective strategies and programmatic approaches for this group.
BRAC's microfinance canvass: financial services and strategic linkages
(BRAC, 2002-12) Matin, Imran; Alam, Amiul
The poor are a diverse group with diverse livelihoods, needs and potential, which change over time due to lifecycle, new opportunities and external shocks. This diverse and dynamic reality of poor peoples' lives forms the canvass within which BRAC conceptualizes and designs its repertoire of development programs, in which microfinance is a core element. This paper through a few program experiences attempts to reveal the conceptual innovativeness embedded in the way BRAC thinks and acts about microfinance. It is not only 'microfinance the tool' that is a powerful poverty-alleviating weapon, but also the institutional framework of microfinance that is created in delivering microfinance. The extensive outreach, connection, knowledge and network, that the microfinance institution and the people running it at all levels possess and generate in their every day working engagements, is an extremely powerful asset in the fight to overcome poverty. We are only beginning to harness the power embodied in the institutional capital of microfinance institutions. This will be the second generation challenge for all poverty focused microfinance institutions and Bangladesh can again lead the way.
Asset-ing the extreme poor: experiences and lessons from a BRAC project
(BRAC, 2002-05) Marin, Imran; Begum, Shamim Ara
The Jamalpur Flood Rehabilitation Project (JFRP) was designed to provide flood rehabilitation to women who were not targeted in the previous ECHO/NOVIB/BRAC flood rehabilitation project of 1998/1999, in which, mainly BRAC group members received flood rehabilitation inputs. In response to the 1998 flood, many donors funded NGOs which delivered rehabilitation inputs to their own members. This was a concern as the extreme poor, who suffer the most damaging losses in any natural disaster, tend to be under represented in the NGO membership profile. This project was designed to assist very poor women who were not associated with NGOs and thus were left out of the 1998 flood rehabilitation programs. The objective of the project was to provide rehabilitation assistance to poor women through a range of assets with a view to push them towards self-sustenance and to link them with existing development programs. The project aimed to involve 3400 hard-core poor women in income-generating activities and employment enabling them to earn a living and recover damages incurred due to floods. This research was carried out during a time when the project was about a year old. Thus, impact assessment was not the idea behind this work. It was designed to address two broad themes: (1) targeting effectiveness and (2) asset specific issues, such as preliminary ideas of benefits received, challenges faced and future possibilities. For the first theme, the project used a set of targeting indicators on which information was collected through survey questionnaire. In addition to this, we asked some basic questions related to poverty dynamics around two assets-- homestead land and crop land. We developed separate sections for each asset focussing on benefits, challenges and future possibilities. We find that this project has been very effective in targeting the extreme poor. This success is commendable as it involved the development of good indicators, based on a synthesis of poverty literature and programmatic knowledge gleaned from considerable BRAC experiences dealing with poverty. One recurrent theme that emerges in this paper is that the real challenge in providing the critical push in the lives of the extreme poor involves bringing about critical changes in the agencies of the extreme poor. This has to be achieved at the individual level and also at deeper and intermediate levels affecting the reproduction of the poverty trap. Ensuring the economical/technical aspects of asset returns and its viability are not sufficient in themselves, changes will have to be made in the settings in which the extreme poor conduct their lives.

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