Download - BRAC Microfinance Program in Bangladesh and its International Replications A BRAC Presentation
BRAC Microfinance Program in Bangladesh and its International
Replications
A BRAC Presentation
July 9, 2007
Building Resources Across Communities
BRAC’s VisionBRAC’s Vision
Just, enlightened, healthy and democratic societies free from hunger, poverty, environmental
degradation and all forms of exploitation based on sex, religion
and ethnicity.
Overview of BRACOverview of BRAC- BRAC started in 1972 as a small relief and
rehabilitation effort to support Bangladeshi refugees returning home after declaration of independence in December 1971. It then stood for Bangladesh Rural Assistance Committee.
- By mid 70s, BRAC realized that more long term, sustained effort was needed for change the lives of the poor. The focus shifted from rehabilitation to development, and BRAC was renamed to stand for Bangladesh Rural Advancement Committee
Overview of BRAC Overview of BRAC (Cont.)(Cont.)
- BRAC today provides microfinance to over 6 million clients, offers primary education to over 1.52 million students through its 52,168 non-formal schools, and delivers essential health care to over 31 million people through a strong cadre of 68,000 health volunteers. It has full-time staff of over 42,000 in Bangladesh.
- BRAC’s budget in year 2006 was USD 339 million, over 70% of which was self-financed.
Overview of BRACOverview of BRAC- BRAC is committed towards using its
experience and expertise to work together to fight poverty around the world
- BRAC aims to do so by empowering the poor so that they can build sustainable capacities to fight poverty
- Today, BRAC stands for Building Resources Across Communities.
BRAC’s Main ProgramsBRAC’s Main Programs
- BRAC Development Program (BDP)
- BRAC Education Program (BEP)
- Health, Nutrition & Population Program (HNPP)
- BRAC Training Division (BTD)
- Research and Evaluation Division (RED)
- Support Programs and Enterprises
- Other related institutions: BRAC University, BRAC Bank
BRAC Development ProgramsBRAC Development Programs
- Microfinance
- Employment and Income Generation ( e.g.
poultry & livestock, fisheries, social forestry)
- Social Development, Human Rights & Legal
Services
- Health
- Education
The BRAC ApproachThe BRAC Approach
BRAC believes in holistic development approach and sees
microfinance as a powerful entry point that emerges from:
√ The social capital built by organizing the poor to form their own
groups through which they engage with BRAC and other formal
institutions.
√ The organizational/institutional capital that accrue in building its
ability to manage large scale microfinance.
√ The network capital built through large scale outreach of
microfinance constituting a network of producers and consumers
throughout the country.
Components of BRAC Microfinance ProgramComponents of BRAC Microfinance Program
Group Based Products:Poverty Alleviation (MF 1)Employment and Livelihood for Adolescents (MF 1)Economic Development (MF 2)
Individual Products:Micro Enterprise Loans (MF 3)Women Entrepreneur Development Program (MF 3)
Microfinance for the Extreme Poor:Challenging the Frontiers of Poverty Reduction –Targeting the Ultra Poor (CFPR-TUP)Income Generation for Vulnerable Group Development (IGVGD) – Collaborating with the government and WFP
Urban (20%) Rural (80%)
Better-off
Vulnerable Non-poor
Moderate Poor
Extreme Poor
Destitute
BRAC Microfinance ServicesBRAC Microfinance Services
IGVGD
CFPRP-TUP
MF 1
MF 2
MF 3
Group Dynamics and The Credit LadderGroup Dynamics and The Credit Ladder
√ Formation of Client Groups - Typically known as Village Organizations (VO)s
√ Capacity development, healthcare services and social awareness
√ Asset transfer, subsistence allowance for CFPR-TUP members
√ Input support for IGVGD members √ Savings and credit activities√ Graduation onto MF 2 √ Enterprise loans (Individual)
Financial Services for MF ClientsFinancial Services for MF Clients
1. Credit
√ General Loan
√ Loan for income generating projects
√ Housing Loan
√ Enterprise Loan
2. Savings
3. Death Benefit
Key Features of Loan ProductKey Features of Loan Product
- Micro Loans
√ Lending through group formation, namely Village Organizations (VO)
√ Loan Range: Tk.1,000 to 50,000 (US$15 to $700 )
√ Repayment through equal weekly installments
- Micro Enterprise Loans
√ Individual Lending between Tk 50,000 to Tk 300,000 (US$700 to $4,500)
√ Repayment through monthly installments
√ Service charge: 12.5% (Flat)
√ Emergency loans are also given at the time of disaster
2. Savings Products2. Savings Products
BRAC has four types of saving products:
√ Weekly personal savings for the VO
members
√ Compulsory savings deposit for VO
members
√ Monthly savings deposits
√ Term deposits
3. Death Benefit3. Death Benefit
Death Benefit policy for BRAC Microfinance group members:
√ Any poor village woman when she
becomes a group member is eligible to get
this benefit
√ The group member does not need to pay
any premium for this
BRAC Micro Finance Program in Bangladesh: BRAC Micro Finance Program in Bangladesh: At-A-Glance (May- 2007)At-A-Glance (May- 2007)
Inception of Micro Finance Program : 1974Districts Covered : 64 out of 64Total No. of Branch Offices : 3028Total No. of Village Organizations : 206,820Total Number of Members : 6.2 million Outstanding Borrowers : 5.3 million Outstanding Loan Amount : US$ 438.14 millionMembers’ Savings Balance : US$ 163.71 millionLoan Recovery Rate : 99%Cost per Unit of Dollar Lent : US$ 0.10
Credit Delivery ModelCredit Delivery Model√ BRAC uses Village Organization (VO) as a platform for
launching and implementing its various activities
√ VO is an association of poor, landless people that come together with the assistance of BRAC and try to improve their socio-economic position
√ Credit decisions are taken in weekly VO meetings
√ BRAC considers three things before considering a loan application:
- Capacity of utilizing the loan money
- Types of business
- Profitability of the business
Loan Application, Processing and Loan Application, Processing and Disbursement ProcedureDisbursement Procedure
Loan Proposal
- Loan is proposed in a weekly VO meeting
- Formal Loan proposal is prepared by the respective program organizer (PO)
Loan Processing
- The accountant checks and verifies savings and credit records of the applicant by using a computer
- Loan proposal is forwarded to the manager at the same office
- Verified and approved by the manager
Disbursement
At the branch office, the accountant disburses the loan after the manager interviews the borrower
Installments and Savings Collection, Installments and Savings Collection, Documentation and Reporting ProcedureDocumentation and Reporting Procedure
Collection-Savings and loan installments are collected in weekly VO meetings
- PO makes entries in the collection sheet and updates the passbook, which is kept by the members
Documentation and Record
Keeping -PO compiles and submits the collection sheets to the accountant
-The accountant gives computer posting
- Computer print-outs are generated for the managers while required
Reporting- Daily back-ups are kept at the branch office
- Reports are sent to the branch and regional office on weekly basis
- Diskettes are sent to the Head office at the end of the month
- Data is entered into the central MIS system
International Initiatives of BRAC International Initiatives of BRAC
- In late 2001, after the fall of Taliban regime, the new Afghan Government invited BRAC to work in Afghanistan.
- BRAC Afghanistan was set up in 2002 and today works in 24 out of 34 provinces in Afghanistan in the major fields of microfinance, health and education
- In 2005, BRAC responded to the Tsunami victims in Sri Lanka with relief and livelihood reconstruction support.
BRAC International InitiativesBRAC International Initiatives
- With the aim of attaining the MDGs by working together with governments, civil society organizations in Africa, BRAC started its operations in Uganda and Tanzania in second half of 2006. BRAC also initiated microfinance program in Southern Sudan in early 2007.
- In late 2006, replications of TUP program through partnership in Haiti and in India (West Bengal) were launched.
BRAC Micro Finance Program in Afghanistan: BRAC Micro Finance Program in Afghanistan: At-A-Glance (May- 2007)At-A-Glance (May- 2007)
Micro Finance Program Launched: 2002Provinces Covered : 22 out of 34Total No. of Branch Offices : 203Total No. of Village Organizations : 10,332Total Number of Members : 176,594Outstanding Borrowers : 143,651 Outstanding Loan Amount : US$ 69,169,612Members’ Savings Balance : US$ 5,266,444Loan Recovery Rate : 94.93%
BRAC Micro Finance Program in Uganda: BRAC Micro Finance Program in Uganda: At-A-Glance (December - 2006)At-A-Glance (December - 2006)
Micro Finance Program Launched : 2006Districts Covered : 8Total No. of Branch Offices : 10Total No. of Village Organizations : 460Total Number of Members : 11,912Outstanding Borrowers : 5,808Outstanding Loan Amount : US$ 540,748Loan Recovery Rate : 100%
BRAC Micro Finance Program in Tanzania: BRAC Micro Finance Program in Tanzania: At-A-Glance (May- 2007)At-A-Glance (May- 2007)
Micro Finance Program Launched : 2006Districts Covered : 5Total No. of Branch Offices : 10Total No. of Village Organizations : 307Total Number of Members : 8,033Outstanding Borrowers : 5,131 Outstanding Loan Amount : US$ 558,419Loan Recovery Rate : 100%
Some ChallengesSome Challenges
- Understanding the local context
- Different regulatory structures
- Inadequate banking network
- Gaining trust of local institutions and people
- Cultural differences and management of national staff
- Competition and competitors’ response to BRAC intervention
- Ensuring continuous flow of funding, high cost of fund and the issue of self-sufficiency and sustainability
Thank Thank YouYou