The Capital of Pro-Poor Microfinance

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Muhammad Yunus speaks with other participants at the 17th Microcredit Summit in Mexico

Bangladesh is known as the birthplace of modern microfinance, but many people see that as an old story. What is not as widely known is that Bangladesh continues to be the capital of pro-poor microfinance, a laboratory of innovation and integration focused on reaching clients in poverty and facilitating movement out of poverty.

Here are 4 reasons why Bangladesh still leads the industry:

1. The Yunus Centre Social Business Design Lab
The Yunus Centre holds Social Business Design Labs at least once a month where people present their social business ideas to potential funders (they are live streamed and available online). The funders are various Grameen Social Business Funds, and while some of the presenters are larger social business ideas, most of the Design Lab is dedicated to the ideas of Nobin Udyokta (young entrepreneurs), who are children of Grameen clients.

Each Design Lab presenter gets 5 minutes to present his or her project and 10 minutes to answer questions from the audience. At the end, the audience is broken up into groups and each groups meets with one of the presenters for half an hour to ask more in-depth questions. At the end, the groups report on whether or not they recommend the business for investment.

By the time they get to these presentations, the business owners have all worked closely with their investors in developing their business plans and preparing to answer questions. All of the businesses were recommended for funding.

Grameen phone ladies from 2007

Grameen phone ladies from 2007

What is interesting about this process is the generational evolution it shows in the development of the businesses and the sophistication of the finances. While Grameen Bank clients mostly ran basic livelihood projects with no accounting, these businesses run by their children have accounts, business plans, and investors.

2. UDDIPAN
UDDIPAN (United Development Initiatives for Programmed Actions) works in 37 of the 64 districts in Bangladesh. They serve 450,000 microfinance clients and 2,400,000 beneficiaries.

UDDIPAN’s vision is “To build an environmentally sound society without poverty, free of exploitation, oppression, injustice and discrimination where children, women and men live with dignity and capable to exercise their rights and will have access to and participation in the mainstream socio-economic, political and cultural processes.”

UDDIPAN photo

An UDDIPAN client looks after her cows. Photo credit: UDDIPAN

Uddipan has designed programs and products around the ultra poor, green energy, people with disabilities, and Islamic self-help groups. Here are some examples:

  • After doing a study that found high levels of child malnutrition, Uddipan educated their clients to provide house-to-house training in nutrition.
  • They run a tube well and toilet program with Water.org.
  • They provide primary health care services in 4 of their branches.
  • They have organized 2,400 imams to work for peace and against human trafficking.
  • They advocate on child rights and train their clients to avoid child labor.

3. TMSS
TMSS (Thengamara Mohila Sabuj Sangha) works in 20,000 villages in the country, serving 930,000 clients (800,000 with loans and savings and the rest with only savings). In 84 of their branches, TMSS also operates a clinic staffed by nurses and community doctors.

TMSS’ microfinance unit is called Health, Education and Microfinance (HEM), since all three activities are linked together in the microfinance delivery. HEM is only one part of the 14 domains that TMSS works in. They also run hospitals, medical training schools, other technical training schools, agricultural and fisheries projects, human rights projects and climate and environmental change programs.

All told, TMSS works with 4.7 million women organized in groups. Their motto is “Family development through women’s empowerment.”

4. Palli Karma-Sahayak Foundation (PKSF)
PKSF is a government supported apex funding unit in Bangladesh. In the past, it supported groups like Grameen, BRAC, and ASA, but these groups have graduated from their funding and PKSF is now focusing in the next tier of MFIs. PKSF currently funds about 60 MFIs.

PKSF Chair Qazzi Kholiquzzamn Ahmad has been a critic of microfinance as a stand-alone activity, but a strong proponent of microfinance linked with other human development services.

Key Elements of ENRICH. Source: http://bit.ly/PKSF-AHolisticApproach

Key Elements of ENRICH, which is short for “Enhancing Resources and Increasing Capacities of Poor Households towards Elimination of their Poverty.” Source: http://bit.ly/PKSF-AHolisticApproach

Under his leadership, PKSF has not only implemented agricultural value chain projects, but also the ENRICH program, which supports MFIs to integrate education, health, nutrition, water and sanitation, energy and climate change response into their programs. Four years after its inception, “ENRICH is flourishing into a model of sustainable poverty alleviation, continually seeking solutions to ameliorate the poverty situation in Bangladesh,” according to PKSF. Learn more.

In addition, PKSF operates the PRIME program (“Programmed Initiatives for Monga Eradication”), which supports MFIs in their work with the ultra poor by addressing food insecurity and seasonal hunger. DFID has recognized the PRIME program as their most effective poverty alleviation investment.