… don’t always pan out the way you would like. My original plan was to spend four months in Bangladesh with BRAC, gaining an understanding of micro finance (MF) in the country where the concept was developed. Alas, some things are beyond my control, so I am left with spending much less time than I had hoped, on the topic. Add in some difficulties I have encountered with visas, I will end up spending a total of two months in Bangladesh. A bit disappointing but it is what it is.
The positive outcome is, I will spend a month (July) travelling through Northern India – something I have always wanted to do. Visit family & friends in Australia and New Zealand during August. Return to Europe early September just in time to meet my sister Grace, joining her on the final 320km of the over 1000km-long Camino de Santiago in Spain. Kudos to Grace! It’s not everyone that tackles the Camino in one fell swoop (but she is a Coffey so that helps). Kudos also to my friend Barb who is walking the Camino as we speak. hats off to you ladies!
I am unsure my shortened visit to Bangladesh makes that much of a difference to be honest. I am never one to sit still, so have been pretty active, exploring MF in other ways. I’ve met a whole bunch of people with decades of experience in MF, not only in Bangladesh, but also in Eastern Europe, Africa and SE Asia, who have been more than happy to share their opinions of what works and what does not. Some of these folks are researchers but of late, I have met many who have worked on the ground with practical experience on a program implementation level.
Their opinions are based on their actual implementation experience at a grassroots level where each experience differs based on the cultures and norms of not only a given country, but also districts. I am also fortunate to have BRAC support me in seeing some of their MF programs and social enterprises in action in rural Bangladesh. Apparently the models they use do not change for urban programs and this seems to be the feedback I have got from the many people I have spoken to.
So what is the MF model that I observed thus far in Bangladesh?
- Crudely, loans are given to individuals who are members of an established group who have something in common (live in the same community, work in the same factory etc).
- Individuals are required to save a portion of their earnings, and also make both principle & interest loan payments on a regular basis, usually monthly.
- Interest rates are considerably lower than moneylenders and banks etc.
- Peer support (as opposed to peer pressure) is used to assist members to overcome any issues with their business and/or making payments.
- The group agrees to a set of promises which at BRAC, include things like taking pride in where they live (cleanliness of the village), treat boys & girls equally, send all kids to school, make regular loan payments, exercise family planning and many more promises (18 in total actually) .
- Always be present at the regular meetings.
Clearly much of this applies to both rural and urban groups, no adjustments need to be made it seems. For the social enterprises located in both rural and urban locations, the business ideas may differ but the concept and model remains the same. Social enterprises use business strategies for the betterment of the world we live in, rather than maximizing profits for investors. That is not to say they cannot be for-profit enterprises, it’s just any profit is ploughed back into the enterprise with the sole aim of improving the well-being of the people and environments it impacts.
With BRAC’s help, I traveled to a place called Manikgonj which is about 65km NE of Dhaka – it took us 3 hours to get there (traffic!) and 2.5 hours to get home (more traffic!). This trip was to give me a flavour of the breadth of activities BRAC is involved in, and how successful social enterprises provide the all important funding to run MF programs. The next few posts will focus on what I observed during this trip.