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Micro-credit Programmes of Different Ngos/mfis: a Comparative Study

Dr. Mohammad Amirul Islam
Professor
Department of Agricultural Statistics Bangladesh Agricultural University Mymensingh-2202, Bangladesh

Abstract/ Executive Summary:

The objective of this project is to develop a selection criterion to identify the efficient programme. A total of 406 members from the selected NGOs/MFIs operating micro-credit programmes in Dhaka, Mymensingh, Sherpur, Netrokona, Kishoreganj, Norshingdi, Sylhet and Lalmonirhat were interviewed. The data analyses reveal that the majority of the large amount of loans (above Tk.15000) was taken by GB members (33.7 percent). The respondents who knew the actual interest rate were more in BRAC (42.9 percent). Workers of GB ranked first in terms of field visit (24.9 percent). Request needed to get loan was the highest in BRAC (53.0 percent). The satisfaction level of respondents was more in GB and low in SSS. Poverty alleviation due to micro-credit was the highest among GB members (22.0 percent). Logistic regression analysis suggests that amount of loan taken, experience of poverty alleviation and NGO membership are three important determinants of satisfaction level on the micro-credit programme. A set of characteristics were chosen to find out the best performing micro-credit operating NGOs/MFIs. The data analysis suggests that TMSS is the best performing NGOs/MFIs. The successive NGOs/MFIs in order of rank are GB, SSS, PROSHIKA, BRAC and ASA, respectively.

Keywords: Micro-credit, Client’s perception, Efficiency of programme

Location: Mymensingh, Sherpur, Netrokona, Kishoreganj, Dhaka, Narshingdi, Sylhet and Lalmonirhat

Start Date: 00-07-2011

End Date: 00-06-2012

Program Area: Socio-economic and Policy

Non-commodity: Credit

Objectives:

To evaluate the clients’ views regarding the credit programs they are involved with and compare the results between different NGOs and
To identify the efficient micro-credit program through development of selection criterion.

Methodology:

Members of Bangladesh Rural Advancement Committee (BRAC), Grameen Bank, PROSHIKA, Association for Social Advancement (ASA), Society for Social Service (SSS) and Thengamara Mohila Sabuj Sangha (TMSS) were chosen for the study. Field work was conducted in different locations in Mymensingh, Sherpur, Netrokona, Kishoreganj, Dhaka, Narshingdi, Sylhet and Lalmonirhat where the selected NGOs/MFIs operate their micro-credit programmes. In these eight districts, twenty-seven villages were selected purposively and among these villages, 406 micro-credit clients were chosen randomly for the study (The survey was conducted during July 2011- June 2012. Binary Logistic Regression Model For a dichotomous dependent variable multiple linear regression modelling is not possible as the assumption that the dependent variable is continuous is violated. In such situation, binary logistic Regression model is a suitable alternative. Let Y be a dichotomous dependent variable, say client’s satisfaction with micro-credit programme taking values 1 and 0 and suppose that Y=1, if the client is satisfied and Y=0, otherwise. Also let X be an independent variable. by the logistic regression model . Comparison between NGOs and MFIs A set of characteristics were chosen to categorise the best performing NGO. These were i) if the clients knew actual interest rate, ii) visit by the NGO workers, iii) if any request was needed to get loan, iv) if the client thought that the loan was affordable, v) if the clients were satisfied, vi) if micro-credit brought any positive change in poverty situation, and vii) if the organogram of the NGO (as a proxy of operating cost) was simple/complex. Each of the NGOs was assigned with a score ranging from 1 to 6 for their ranks of performances for the characteristics considered. The lower the score the better the performance. The lowest aggregate score obtained by the NGO will identify the best performing NGO.

Source of Information: J. Bangladesh Agril. Univ. 10(2): 297–302, 2012, ISSN 1810-3030

Article Link (Online Journal):

Funding Source:

1. Government

Budget:

Total Budget (Tk.) :

Achievement/Findings:

This study evaluated the NGOs/MFIs in terms of their field management, clients’ perception and change of the poverty situation of the clients. This study set the criteria to find out the efficient micro-credit program and identified TMSS as the best performing NGO among the selected NGOs/MFIs. The respondents who knew the actual interest rate were more in BRAC (42.9 percent). Workers of GB ranked first in terms of field visit (24.9 percent). Request needed to get loan was the highest in BRAC (53.0 percent). The satisfaction level of respondents was more in GB and low in SSS. Poverty alleviation due to micro-credit was the highest among GB members (22.0 percent). Logistic regression analysis suggests that amount of loan taken, experience of poverty alleviation and NGO membership are three important determinants of satisfaction level on the micro-credit program. Though the study is not a nationally representative one, the findings can still be generalized and future policies may be formulated. Government can adopt the criteria suggested to identify efficient micro-credit program.

Knowledge Management: Journal