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Extending the Reach of Microcredit: a New Model for Poverty Alleviation Through Livelihood Mapping in Bangladesh

Khurshed Alam
Chief Executive
Bangladesh Institute of Social Research (BISR), Dhaka, Bangladesh

Abstract/ Executive Summary:

While microcredit has helped improve the living standards of many, it has failed to meet the needs of the poorest in society. This paper identifies the weakness of the microcredit model and suggests a new model to alleviate the poverty of those beyond the reach of traditional microcredit. This model matches beneficiaries with Income Generating Activities (IGAs), using a new form of livelihood mapping. The paper discusses how this new model has been applied to a project in the Bangladesh sub-district of Tala Upazila.

Keywords: Community Approach, Livelihood Mapping, Microcredit, Visible and Invisible Poverty, Grameen, Income Generating Activity (IGA)

Location: Tala Upazila, Satkhira District, Bangladesh.

Start Date:

End Date:

Program Area: Socio-economic and Policy

Non-commodity: Performance

Objectives:

To identify the weaknesses of the microcredit model, and
To pursue a viable livelihood within the competitive context of their local economies in Tala Upazila, at Satkhira District, Bangladesh.

Methodology:

This model matches beneficiaries with Income Generating Activities (IGAs), using a new form of livelihood mapping. The paper discusses how this new model has been applied to a project in the Bangladesh sub-district of Tala Upazila. The process was somewhat different for IGAs involving production. A list of locations was prepared where land, water, and forest-based IGAs were possible. There were many land-based IGAs. Water-based IGAs were limited to fish production, fish fry catching, crab Extending the Reach of Microcredit 87 production, duck rearing, etc. Forest-based IGAs included production activities based on the collection of different raw materials from the forest like honey, plants, leaves, straw, firewood, and so on. These IGAs were matched to localities accordingly. For example, the home-based production of mats from coconut fiber was linked to localities with many coconut groves. The production of mats, roofing and wall building from a type of soft vegetation called golpata (Nypa fruiticans) was listed as feasible in locations where it could be collected from the Sundarbans mangrove forest. The information linking IGAs to localities was used to produce two different types of maps. The first kind showed the localities where a particular IGA was feasible. The other type approached it from the opposite direction, showing the different types of IGAs possible at any particular location. This made it possible to present beneficiaries with a significantly larger range of possible IGAs. When the NGO Uttaran workers attempted to prepare an initial list of IGAs they could only come up with about 60–70. However, with the assistance of the author and these two types of maps, they could list as many as 300 IGAs. This was the significant advantage of the present livelihood spot mapping approach. Following this approach, millions of poor people can find viable livelihood niches in a populous country like Bangladesh. New IGAs can constantly be added to the specific list appropriate in a specific locality in consultation with the local people, including the poor people of the area who are from the target group.

Source of Information: Journal of Poverty Alleviation and International Development, 5(1), 2014

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The use of microcredit has been an effective tool for poverty alleviation in certain circumstances. In particular, it has benefited the section of the population that lacks sufficient collateral or income to access traditional bank finance, yet nevertheless has the wherewithal to engage in profitable activities if they are able to access credit. This microcredit model has significant benefits over a traditional charity model. However, microcredit has failed to alleviate the poverty of the bottom 10% of society that microcredit institutions consider non-creditworthy. Some organizations have fallen back on the charity model in order to address this need. In contrast, the present model extends the use of microcredit and IGA promotion to the poorest section of the population previously not served by the traditional microcredit models used by Grameen or other NGOs in Bangladesh. It does this by developing a new all-inclusive IGA approach that combines IGA livelihood mapping and other support with the extension of microcredit for IGA development. Although the implementation of this model is still at an early stage, its approaches extreme poverty with a clear rational, and provides a promising model with which to extend the benefits of microcredit to more of the hard to reach poorest 10% of the population.

Knowledge Management: Journal