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Why Some Poor Women in Bangladesh Do Not Opt for Micro-credit?

M. A. Khatun
Department of Agricultural Statistics, Sylhet Agricultural University, Sylhet, Bangladesh and

S. Majumder
Department of Agricultural Statistics, Bangladesh Agricultural UniversityMymensingh-2202, Bangladesh

M. A. Islam
Department of Agricultural Statistics, Bangladesh Agricultural UniversityMymensingh-2202, Bangladesh

Abstract/ Executive Summary:

Despite many positive impacts of micro-credit, some studies found that micro-credits are not reaching the extreme poor. This study is designed to find out the major causes why rural women do not join micro-credit programme. The present study conducted case studies on ten dropped out members, three non-NGO/MFI members and five NGO/MFI officials. The important causes for dropout are high interest rate, poor management of loan money by clients, management of default cases by NGO/MFI officials, starting time of repayments of instalment, improper utilization of loan money, husband’s unacceptable interference, lack of training to utilise the money and difficulty in getting large amount of loan. On the other hand, worry of failure to repay the instalment, unwillingness to take loan and husband’s opposition are the main reasons for non-membership of micro-credit programmes. Tough membership criteria set by the NGOs/MFIs restricts the access to micro-credit option for many of the poor families. Though some NGOs/MFIs have some programmes to support the ultra poor, the coverage is limited. One important hurdle to overcome is the psychological poverty. There are many poor people who are not motivated to get involved in the process despite many NGOs/MFIs are operating at their doorsteps. Appropriate actions are needed to increase the coverage of the micro-credit programme to fight against poverty. NGOs/MFIs should focus not only on the profit but also on the true achievement in poverty alleviation.

Keywords: Micro-credit, Poverty, Dropout, Non-members

Location: Lalmonirhat

Start Date: 00-04-2011

End Date:

Program Area: Socio-economic and Policy

Non-commodity: Credit

Objectives:

To find out the major causes why rural women do not join micro-credit programme

To find out the major causes why some rural women do not opt for micro-credit programme and will offer new dimension to solve this problems

Methodology:

The study conducted case studies on ten dropped out members, three non-NGO/MFI members and five NGO/MFI officials. The information was collected by the first author herself during the month April, 2011 from Lalmonirhat district of Bangladesh. The study was done to know the reason of dropout from dropout members of NGO/MFIs and the reasons of not being engaged with NGO/MFI activities from non- NGO/MFI members. All the information were recorded and translated into English. Five branch managers from five respective NGOs/MFIs (ASA, BRAC, GB, PROSHIKA and TMSS) were asked some questions and the answers were recorded properly.

Source of Information: J. Bangladesh Agril. Univ. 11(2): 285–292, 2013, ISSN 1810-3030

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

Poverty is mostly a phenomenon of developing countries where access to resources is very limited for the people, particularly those living in extreme poverty. The government and the people of Bangladesh should join hands to meet the poverty problem right at this moment. Some non-government organizations (NGOs) on approval of the GoB have started rural development programme to help the distressed people and to alleviate poverty from Bangladesh but some problems have been emerged. The effectiveness of microfinance institutions in poverty alleviation is still in questions and creates some debate on their activities. From the respondents’ perspective the reasons of drop out from any NGO were small amount of loan, burden of old debt, taking loan for their husbands and not repaying the instalment properly, etc. So, pragmatically NGOs are expected to revise and re-organize amount-setting procedure and at the same time notice how the clients are using the money and what purpose they are using it for. There should be partnership based activities on the part of the NGOs. Loan disbursement should not be the sole target of any NGOs. In this study, it was recorded that most of the NGOs/MFIs had no programme for the beggars and the people affected by disasters. So each of the NGO should take appropriate programme(s) considering the beggars and the people affected by disasters and should try to improve their poverty situations which ultimately reduce the poverty situation in Bangladesh. NGOs/MFIs set some criteria for new clients e.g., to have income source, permanent residence, and to be married, etc. These criteria restrict many of the ultra poor and exclude from the NGOs’/MFIs’ programme. On the other hand, there are some people who have negative attitude towards micro-credit and some other do not find any motivation to opt for micro-credit or other mean to overcome their poverty. We may term such poverty as ‘psychological poverty’. There is little effort to address such type of poverty. There should be integrated effort to motivate these groups of people, so that they are mentally ready for changing their situation.

Knowledge Management: Journal