What a week I had, just a fantastic experience!! This was a BRAC organized field trip to immerse a few visitors to BRAC in all things microfinance. Our group was made up of:
- Jarrod, an Aussie from Sydney currently studying in Cambridge UK, conducting research for his PhD. The topic is the decisions made regarding the placement of microfinance branches in Bangladesh.
- Francisco is from Chile studying for his Masters in Berlin and is currently interning at BRAC Microfinance.
- Isabel is English-Bangladeshi who has just started a communications role at BRAC Microfinance.
- Fabia is Bangladeshi who just started an Executive Assistant role at BRAC Microfinance.
- And then there was me.
It was a group from a wide range of backgrounds and experience, which ended up being a really good thing, as our knowledge and understanding certainly benefited from the breadth of questions asked. We took a local bus to the BRAC Learning Centre (BLC) which is located between the city of Mymensingh and the town of Shombhugonj, about 120km north of Dhaka – just under a 5-hour journey. The roads were not too bad, it was the traffic getting out of Dhaka that delayed us despite it being a Friday – a holy day when the traffic should be less.
BRAC has a network of over 25 learning centres scattered around Bangladesh. Training of their staff and allowing them to bond together outside the work environment is key to the success of BRAC. There were just under 200 of us at the Mymensingh BLC last week, from a variety of their programs: Gender Equality, Legal Empowerment, Education, Health, the Social Innovation Lab, training for Cooks for other BLCs and besides us, a class of 25 new Program Officers from Microfinance. A busy place for sure. We checked into our shared accommodation (Isabel and I got an AC room – yay!), had dinner and an early night before our day started at 7.30am the following morning.
There are three programs under BRAC’s Microfinance Division, we saw the Dabi program and Progoti program in depth, we did not really get to see the Migration program. Check out this link for details but basically, the programs can be explained as follows:
Dabi: women only members, village groups, very small loans to allow the family make a living – buy a rickshaw for the husband to work, buy land to grow vegetables to sell at the market, buy a cow to sell milk/make curd (yogurt) … really just very small loans that are for a one year period, and are paid back via weekly payments made of a loan component and a savings component. A new member has to have two other members recommend them to join the village group and there is much assessment done by BRAC to ensure the new member is a good addition. The new member has to commit to a savings program for at least 6 mths before applying for a loan.
Most loans are provided if BRAC can see the member has the ability to repay the loan. Default rates stand at about 1% and these are mostly for genuine reasons such as one family we visited who have only 2000 taka ($28 CAD) to pay off their loan, yet with their son needing an operation and husband sick, this loan may well be referred to the Village Committee who will cover the final payment – very much a last resort.
Btw, BRAC are piloting a Health Loan Program where individuals can take out a no-interest loan to pay for health expenses. This program will be assessed in April 2015 to see if it should be expanded to other regions.
Progoti: working capital loans for small to medium sized enterprises, primarily men, loans given on an individual basis for business such as fisheries, trading stores (electronic goods, clothes stores, shoe stores, saree stores etc). These loans are also for a one year duration but there is no savings component. Default rates stand at about 2-3% and are mainly due to cashflow issues rather than the business going bad.
It struck me as we met many of the Progoti members, there is a greater need for financial literacy training for this group. Many of them cross their fingers when opening up a business, very little market research is done …. so I am unsure if there is a need or if I am bringing my CYBF training to Bangladesh. The default rate is low afterall.
Both programs charge what works out to be 15% interest, about 12% cheaper than loans from a mainstream bank. The default rate is really really low. The culture of the Bangladeshi people forces them to repay all loans, so the concept of someone not paying does not really exist. And of course there is the shame factor – your family & neighbours will know you have not paid off your loan – this is leveraged to ‘encourage’ late payers to pay up. Privacy is non-existent, the whole village knows what everyone is doing, what the problems are so no one is really surprised when BRAC comes calling, looking for a loan payment. I took a ton of photos as usual, and I have put many of them on Facebook so check them out (you do not have to be on Facebook to take a look). I have added a few for the blog too – scroll down!
- Dabi Program at Chorkai Village in Mymensingh District
- Dabi Program at Horipur Village in Mymensingh District
- Dabi Program at Shobjipara Village in Mymensingh District
- Progoti Program at Shombhugonj Town in Mymensingh District
- Progoti Program Fisheries Visit in Mymensingh District
- Youth Program at Jamipur Village in Mymensingh District
- Video of prize-winning dancer, dancing a traditional dance from Jamipur Village
- Video of Snake Dance at Jamipur Village