By Eliza Villarino, Devex
Although the practice can be traced back centuries, microfinance as we know it is commonly credited to the movement started by Nobel Peace Prize laureate Muhammad Yunus in the 1970s. And that movement continues to grow, as donors and civil society alike emphasize the importance of financial inclusion — or providing affordable financial services to the poor and disadvantaged sections of society — in the developing world.
There are three sources of microfinance services: formal institutions like rural banks and cooperatives, semiformal ones such as nongovernmental organizations, and informal groups including money lenders. Women and small entrepreneurs benefit the most from microfinance.
The biggest microfinance institution is BRAC in Bangladesh. The country’s Asian neighbors have also widely adopted the practice and play host to some of the world’s largest MFIs.
Devex ranked the top 10 MFIs in terms of staff size. The below list also includes information on active borrowers and gross loan portfolio. Check out the Devex jobs board for career opportunities with these and other groups.
Headquarters: Dhaka, Bangladesh
Staff size: 44,306
Number of borrowers (2011): more than 5 million
Gross loan portfolio: $646 million
2. Grameen Bank
Headquarters: Dhaka, Bangladesh
Staff size: 25,283
Number of borrowers (2011): more than 8.3 million
Gross loan portfolio: $939 million
Headquarters: Hyderabad, India
Staff size: 22,733
Number of borrowers (2011): more than 7.3 million
Gross loan portfolio: $925 million
Headquarters: Dhaka, Bangladesh
Staff size: 21,298
Number of borrowers (2011): more than 5 million
Gross loan portfolio: $531 million
Headquarters: Mexico City, Mexico
Staff size: 13,298
Number of borrowers (2011): 2.3 million
Gross loan portfolio: $840 million
Headquarters: Hyderabad, India
Staff size: 10,000
Number of borrowers (2011): more than 1.5 million
Gross loan portfolio: $281 million
Headquarters: Kolkata, India
Staff size: 9,754
Number of borrowers (2011): 3.8 million
Gross loan portfolio: $733 million
Headquarters: Hanoi, Vietnam
Staff size: 8,900
Number of borrowers (2011): 8.5 million
Gross loan portfolio: $4.9 billion
Headquarters: Hyderabad, India
Staff size: 8,328
Number of borrowers (2011): nearly 4.2 million
Gross loan portfolio: $778 million
Headquarters: Phnom Penh, Cambodia
Staff size: 7,340
Number of borrowers (2011): 272,300
Gross loan portfolio: $1 billion
DHAKA — Nobel prize winner Muhammad Yunus on Wednesday expressed fears that the bank he founded 30 years ago to put his concept of microfinance into practice would be taken over by the Bangladesh government.
Yunus has repeatedly clashed with Bangladeshi authorities and last year he was removed as head of the Grameen Bank, which is credited with lifting millions of people out of poverty through offering small “microfinance” loans.
The government set up a commission earlier this month to review the ownership of the bank and of 54 related social businesses that are still headed by Yunus.
“I believe without doubt that Grameen Bank’s future will be endangered if the government raises its role in the bank by changing its legal structure,” Yunus said in a statement.
“I am now extremely worried about the possibility of Grameen Bank being taken into government control. I fear even to anticipate the course that Grameen Bank will take if it is made a government institution.”
Yunus is seen as one of the world’s leading anti-poverty activists and his sacking from Grameen Bank, apparently on the orders of the government, sparked widespread international anger.
Three weeks ago, US Secretary of State Hillary Clinton heaped praise on Yunus during a visit to Dhaka and called for Grameen Bank’s work to not be undermined as it had helped millions of women.
Supporters say Yunus’s removal was due to envy from the government and came after Yunus previously hinted at joining politics to break a logjam in the country’s bitterly divided political system.
The government’s commission is expected to look into changing the structure of the profitable network of ventures that include Grameen Bank’s multi-billion-dollar stake in Grameenphone.
“Has Grameen Bank committed any major anomalies that required (the government) to set up this probe?,” said Yunus, who was jointly awarded the 2006 Nobel Peace Prize with the bank. “I am saddened at hearing the news.”
Yunus added that borrowers currently owned 97 percent of the bank with three percent owned by the government.
Microfinance loans, which have spread through the developing world, help bring self-sufficiency to many rural families by providing money from small business ventures.
DHAKA — Bangladesh on Wednesday set up a commission on the future of pioneering Microfinance institution Grameen Bank and 54 related businesses headed by Nobel laureate Muhammad Yunus.
Yunus was sacked as the head of Grameen Bank last year and the new commission is likely to raise fears about further interference in his anti-poverty work, which has earned plaudits around the world.
“The commission will review and recommend the regulatory institution and mechanism of Grameen Bank as to how to bring the bank under the purview of state regulatory agencies,” the government order said.
It will also review “institutions, companies and enterprises established by the Grameen Bank,” the order said, referring to the 54 offshoot businesses which Yunus still heads.
The move comes 10 days after US Secretary of State Hillary Clinton visited Bangladesh and threw her support behind Yunus and asked the government not to undermine Grameen Bank.
The commission was expected to look into the structure of the profitable network of ventures that include Grameen Bank’s multi-billion-dollar stake in Grameenphone.
Despite winning the 2006 Nobel Peace Prize, Yunus was removed from the helm of Grameen by the Bangladesh central bank in a move seen as engineered by an envious government.
Supporters say the step was retaliation after Yunus previously hinted at joining politics to break the logjam in a country bitterly divided for decades between two political parties.
His Microfinance model of giving small loans to help poor, often female, workers has been credited with lifting millions of people out of poverty around the world.
Yunus was in Paris and unavailable for comment, his representatives said.
From Triple Pundit
For those of us who follow microfinance news closely (I’m not the only one out there who gets “microfinance” Google alerts, right?) it’s been hard to see some of the trash talking about the industry in mainstream media in the last couple of years. Critics point to greed via excessive interest rates imposed on the poor, and inappropriate money collection methods by some MFIs, questioning whether microfinance is even effective. Andhra Pradesh and Grameen Bank have been in the news so much, they’re practically household names these days.
The negative publicity could certainly give a brand new, wide-eyed impact investor pause. But I’m beginning to realize that the bad publicity feeds an important system of checks and balances, helping expose harmful practices for the benefit of the entire microfinance industry.
Also, what I’ve learned so far from talking to experts in microfinance is that there are bad apples here, as in every other industry; nothing about microfinance is black and white; and poverty alleviation is exceptionally complicated.
One person I recently had the privilege of talking to is Sharlene Brown, National Director of Oikocredit USA, the issuer of my Fonkoze security on MicroPlace. (Fonkoze is Haiti’s largest microfinance institution.) I wanted to find out directly from her about Oikocredit’s due diligence process in selecting MFIs, the interest rates their MFIs are allowed to charge, and what kind of impact she’s seen.
By Hope Moses-Ashike, Business Day Online
Although the cashless policy of the Central Bank of Nigeria (CBN) poses some challenges to microfinance banks’ customers, operators see it as an opportunity. They believe that if the customers are able to embrace the initiative, it will bring about some level of fulfillment.
A lot of people have pondered how successful the cashless policy initiative would be in the rural areas considering the low level of education of the low income groups.
Sighting an example of how low income earners of Grameen Bank in Bangladesh were able to sign their name before collecting loans, Godwin Ehigiamusoe, managing director of Lift Above Poverty Organisation (LAPO) Microfinance Bank Limited said in Bangladesh, where the Grameen Bank started, one of the rules in the lending industry was that you needed to sign.
“It was quite difficult for the low income people to sign, but the Grameen Bank decided to make the process of signing as part of the training and so the very first four women were assisted to sign their names and eventually when they could do it, they had some sense of fulfillment of achievement and that is the way we see this cashless society.
“We are seeing the initiative not only from the challenge perspective. We are also seeing it as an opportunity, to see how we can through the process of training support this low income people get used to it. We see that there are obvious challenges there but we also believe that it will become part of our training for them, and we hope that the moment they do it effortlessly after the training, it will bring about some sense of fulfillment and achievement.”
Valentine Obi, managing director/CEO, eTranzact International Plc, a leading provider of mobile transaction services, defines cashless society as society where no one uses cash, all purchases being made by credit cards, charge cards, cheques or direct transfers from one account to another.
In other words, it refers to the widespread application of computer technology in the financial system.
According to him, in the western world today almost 97 percent of transactions are done without physical cash being exchanged and this has greatly reduced cost, corruption and money laundering. In Nigeria today it is the opposite – with the majority of transactions done with cash.
David Adelana, senior bank examiner, Other Financial Institutions Supervision Department (OFISD), had earlier said cashless and branchless banking were both routes to financial inclusiveness and inclusive development.
According to him, microfinance bank is the only potentially relevant operating financial institution in these processes.
But under its current “health,” he said it may well concentrate on strengthening itself before delving into these processes.
The CBN explained that people were unbanked and were thus financially excluded because banks are not near them or the products are not suitable. Other reasons include poverty and illiteracy, high cost of services, no perceived need, esoteric nature of bank operations and products.
It added that better current operations or branchless banking can be leveraged to convert these into opportunities.
The Apex bank further said if and when microfinance banks stand on their feet, they should increase their share of the unbanked within their reach.
It urged them to take a strategic approach to branchless banking by asking the following questions, Can we do it (feasibility)? Should we do it (viability)? How do we go about it profitably and distinctively (strategy), and what are the operational imperatives?
By Patricia Patton, Care2
One of the largest micro-lenders in India, SKS Microfinance, is being investigated as a result of the deaths of 7 of its borrowers in Andhra Pradesh. The company has denied any involvement but its own external investigator has linked SKS employees to the deaths.
For many years, Grameen Bank was the micro-finance success case study. Grameen Bank started among poor women in India and was such a resounding success that there is a Grameen USA that has since been brought to Queens, NY. Women repaid their loans timely and thereby established a means to take care of their families while establishing credit worthiness for further loans. But the stories of SKS micro-lenders taking a hard position with borrowers experiencing difficulty in repaying their loans is not for the faint of heart.
The company’s own investigators report that a “SKS debt collector told a delinquent borrower to drown herself in a pond if she wanted her loan waived. The next day, she did. She left behind four children.”
Another story relates that:
[an] agent blocked a woman from bringing her young son, weak with diarrhea, to the hospital, demanding payment first. Other borrowers, who could not get any new loans until she paid, told her that if she wanted to die, they would bring her pesticide. An SKS staff member was there when she drank the poison. She survived.
Video also reportedly exists in which the daughter of another borrower talked to one investigator.
Rajyam was unable to pay off $2,400 owed to eight different companies. Employees of microfinance companies, including SKS, urged other borrowers to seize the family’s chairs, utensils and wardrobe and pawn them to make loan payments, her family told investigators. Unable to bear the insults and pressure of the crowd of borrowers who sat outside her home for hours to shame her, Rajyam drank pesticide on Sept. 16, 2010, and died, the family says.
These deaths join a high numbers of suicides by farmers in this state trapped in a cycle of debt and desperation. One expert who analyzed government statistics report 17,500 farmers per year killed themselves between 2002-2006. In Indian state Andhra Pradesh, 1,313 cases of suicide were reported between 2005-2007 because of the harsh circumstances associated with making a living. But the story with micro-credit borrowers is especially disturbing because it started off with such good intentions.
In this respect, the background of SKS Microfinance is quite interesting. The company began in 2005 and like Grameen was a non-profit microcredit organization that grew rapidly. By August of 2010, they’d gone public with a huge $350 million dollar offering and a lot of speculation among private investors, most of whom were not the borrowers. Shortly thereafter, media reports began to circulate that over-extended borrowers were killing themselves. It was so bad that the state of Andhra Pradesh passed a law to halt corporate abuses. Big firms like SKS fought back asking the courts to stop arresting their employees.
I can only imagine that the pressures of a public firm focused on the company’s bottom line and the need to answer to its investors rather than be strictly guided by a social mission could become fertile ground for abuse.
When Muhammad Yunus won a Nobel Peace Prize in 2006 for his work on microfinance with the Grameen Bank in Bangladesh, he would have been mortified to know that a version of his model would one day force his country’s poor into the organ trade. At the time, microfinance (particularly the practice of giving small loans to the unsalaried poor with low to no collateral) was revered for its ability to “do good while doing well.” In other words, it enabled people to escape poverty while turning a profit.
In 2010, microfinance euphoria was dampened when aggressive money collectors drove more than 30 Indian farmers to suicide to escape their debt. Although regulations followed that outlawed such practices, last summer’s revelations of Bangladeshis selling kidneys to pay off loans highlight deeper flaws in microfinance’s traditional approach, and show once again that giving loans to the poor sometimes just exacerbates their plight.
Fortunately, governments and microfinance institutions are taking steps to reform the industry and provide the impoverished with a variety of financial services, including savings options, which better meet their needs. These institutions’ ability to continue those improvements will not only determine microfinance’s future but the well-being of aspiring households around the world.
The desperation caused by debt in Bangladesh makes the need for change even more urgent. When Selina Akter from Berendy village took out loans to start a vegetable farming business, she couldn’t have imagined what it would cost her to pay them back. When her business went through a bad streak, Ms. Akter was unable to meet the required payments and had to take additional loans from another microfinance nongovernmental organization. All told, she amassed 400,000 taka ($5,280) in debt.
As first reported by the GlobalPost in October 2011, to get out from under her loans, Akter had surgery. The 25-year old Bangladeshi received 220,000 taka ($2,676) for her kidney. To cover the rest of her loans, her husband, father-in-law and brother-in-law chipped in. By selling their kidneys. Experts estimate that the Akter family is just one of the many in Bangladesh who get caught up in a “web of loans,” with 250-300 people selling their organs each year for quick cash.
Although no one would deny that microfinance has helped countless entrepreneurial households find their way to self-sufficiency, it’s become clear that in some contexts loans – the traditional focus of microfinance institutions – are not appropriate interventions. As the World Bank’s Consultative Group to Assist the Poor puts it, “Microfinance is…inappropriate for the destitute…. Grants are a more efficient way to transfer resources to the destitute than are loans that many will not be able to repay.”
Even with households that are not destitute, studies show that loans are only helpful as part of a larger package of financial services that includes savings.
In the words of Nathanael Goldberg, director at Innovations for Poverty Action, “Randomized evaluations of microfinance are showing mixed results, with credit clearly not the panacea it has sometimes been made out to be, [and with] savings looking promising.” Last year’s data from this group and others show that the combination of credit and savings is more effective in helping poor households than credit alone.
Luckily, the microfinance industry has not turned a blind eye to this critique. The 2012 State of the Microcredit Summit report, issued ahead of this year’s annual conference in Madrid, states that to help microfinance “recover its soul,” these institutions should “encourage savings.”
Participants at the 2011 European Microfinance Week endorsed the “SMART” campaign, which has as one of its core client protection principles the “prevention of over-indebtedness.” And Mr. Yunus’s own Grameen Bank, more than 20 years after its founding, loosened its rules and allowed savings accounts for clients.
In addition, national governments are stepping up in to help provide financial services to the poor, especially savings accounts that are much less profitable for the private sector.
Earlier this year, Fiji began delivering all government payments to savings-linked bank accounts. In Peru, newly appointed Minister of Social Inclusion Carolina Trivelli announced that all recipients of public benefits will be provided with bank accounts to promote financial inclusion. Similarly, in 2011 Chile launched the “Chile Accounts” program to connect poor household to banks so that they can more easily use government benefits to build wealth.
The organ trade in Bangladesh existed before microfinance came on the scene, and it will likely continue as long as people are in desperate need of funds. At the same time, stories of Bangladeshis selling organs to pay off debt support the growing consensus that the poor are in need of many financial services, including savings, and that loans can harm as much as they help.
Hopefully, with the support of progressive and innovative governments, microfinance institutions will be able to better strike a balance between doing good and doing well.
Dhaka—In August, Bangladeshi police broke up a ring of human organ dealers operating in Joypurhat, a district in the north of the country. Investigators say that three local “brokers” preyed on a large pool of indebted farmers, who agreed to part with a kidney or a chunk of their liver for a couple thousand dollars—enough for them to pay down their debts. Mosammat Rebeca and her husband sold their kidneys to help pay back 180,000 taka ($2,358) owed to five separate lenders—a massive sum in a country where the per capita annual income hovers around $1,700. Rebeca’s husband was paid 135,000 taka ($1,768) for selling his kidney last year, but it wasn’t quite enough. “We were about 65,000 taka short, so I had to donate my kidney as well,” she told me in a recent interview.
Rural indebtedness is as old as the earth in South Asia, but what was notable in this case was its source. Instead of the usurious village moneylenders of old, many organ sellers say they were victims of a new, apparently virtuous, engine of economic empowerment—microfinance. While such micro-loan programs have been widely touted as a ladder out of poverty, they had become a crushing burden for many in Joypurhat, who spoke to me of entangling webs of debt and the aggressive tactics of NGO debt collectors. Indeed, stories like the ones I heard in Bangladesh speak to a larger backlash, both on the ground and in the academy, against the practice of offering micro-loans as a tool for international development. While the majority of microcredit institutions are doubtless well-intentioned, in many places an unregulated and overzealous lending market has led to rashes of personal indebtedness and desperation that are a far cry from the development outcomes originally envisioned by experts and donors.
THE PRACTICE OF OFFERING micro-loans as a tool for poverty alleviation has a long and multifaceted history, but most popular accounts begin with Mohammad Yunus’s decision to establish the Grameen Bank in 1976, handing out small loans to impoverished households in rural Bangladesh. In the view of Yunus and other early boosters, access to credit was directly linked to poverty reduction: Granting access to funds at reasonable interest rates would allow the poor to avoid the usurious rates of traditional moneylenders and use the funds to start small businesses and cottage enterprises. In addition, one of Grameen’s key innovations was to target its financial services at women, who bear a disproportionate burden of poverty and are thought to be more reliable financial clients than men. Given the chance, Yunus came to believe, Bangladesh’s rural women could form self-reinforcing networks of trust that would guard against defaults. In short, the poor could be made “bankable.”
Since then, microfinance institutions (MFIs) have revolutionized the field of development, and the global clients of these organizations number in the hundreds of millions. From a narrow focus on credit, MFIs have expanded to encompass a wide range of “micro” financial services, including savings accounts, insurance policies, and skills training programs. Yunus’s Grameen Bank has become an institutional behemoth supporting MFI operations on three continents and hawking everything from mobile phones and knitwear to software and business development plans. In awarding the 2006 Nobel Peace Prize to Yunus and Grameen, the Nobel committee stated that the bank had become “a source of ideas and models for the many institutions in the field of micro-credit that have sprung up around the world.”
But in recent years, microfinance has developed a macro-image problem. Anger has exploded in Andhra Pradesh, India, where journalists and politicians have linked MFIs, including SKS Microfinance, one of India’s largest, to dozens of rural suicides. Opposition came to a head there in October of 2010, when the state government approved an ordinance designed to prevent the “harassment” of small borrowers by debt collectors. Caught in Micro debt, a 2010 documentary by Norwegian journalist Tom Heinemann, turned the spotlight on Yunus and the Grameen Bank, accusing the Nobel laureate of tax evasion—an allegation that was partly used to justify Yunus’ removal as head of Grameen by the Bangladeshi government in March. (Yunus and his supporters deny the film’s allegations.)
Bangladeshi critics say that MFIs have simply acquired too much power and made far too many irresponsible loans, constituting an unregulated shadow state within the country which, far from alleviating poverty, has worsened the situation of the rural poor. “Microcredit is discrimination against the poor, it doesn’t empower. It’s total nonsense,” said Farhad Mazhar, the managing director of UBINIG, a Dhaka-based alternative development organization. According to unpublished research conducted by UBINIG, only around 8 percent of the micro-borrowers surveyed ended up using their loans to build wealth. Even then, Mazhar said, individual success owed more to pre-existing entrepreneurial skills and family support than to the credit itself. “Most of them became poorer,” Mazhar contends.
Skepticism of microfinance and its benefits, meanwhile, has migrated to the academy as well. Lamia Karim, an anthropologist at the University of Oregon and the author of Microfinance and Its Discontents, has questioned the claim that offering small loans directly to Bangladeshi women has been empowering. On the contrary, she has found women are often pressured to hand over loans to their husbands or male relatives. At the same time, microcredit agencies have created what she terms an “economy of shame,” in which the traditional role of women as bearers of “family honor” is used to leverage repayments—a key yardstick of MFIs’ success. (Grameen, for instance, proudly trumpets a loan recovery rate of close to 97 percent). To avoid the public shame of default, many women take out additional loans from different lenders, and quickly find themselves mired in a quicksand of debt.
A heavy emphasis on measuring loan recovery rates also tends to obscure whether borrowers are actually using the loans for productive activities, as opposed to mere survival. When it comes to quantifying the latter variable, one recent report commissioned by the United Kingdom’s Department for International Development and released in August concluded that “almost all impact evaluations of microfinance suffer from weak methodologies and inadequate data.” Given this vacuum of quality research, Maren Duvendack, a research fellow at the University of East Anglia and one of the report’s authors, says the verdict on microfinance is still out. “I’m surprised microfinance has been hyped up so much,” she told me, “because good impact evaluations are still pretty scarce.”
This dearth of evidence can be explained partly by the challenges researchers face in isolating the effects of microfinance operations, but it also demonstrates a tendency for international donors to see what they wanted to see. Indeed, microfinance has a seductive logic on paper: Unlike the older “hand-out” model of international development, MFIs promised to be self-sustaining engines of micro-development, and Yunus—an urbane globetrotter backed by a strong lobby of international supporters—was the perfect salesman. “People were looking for some sort of silver bullet that alleviates poverty and empowers women, and they thought credit was the answer,” Duvendack said.
The ensuing explosion of popularity has arguably pushed aside developmental alternatives, including programs to boost agricultural productivity and skills training, that could have contributed to the fight against poverty. While admitting that access to credit is a handy tool, Mazhar of UBINIG argues that microfinance had been elevated into a shibboleth of market-based theories of development that encourages the withdrawal of the state from rural development in favor of the “village entrepreneur.” Taken on their own, MFIs have failed to alter the feudal economic structures in rural Bangladesh, something that can only be achieved by boosting agricultural productivity. “The machine that produces the poverty—you’re not trying to change it,” Mazhar said.
BUT IF MICROFINANCE has doubtless been oversold, other experts say the growing backlash is in danger of overcorrecting. Dean Karlan, an economist at Yale and the author of More Than Good Intentions: How a New Economics Is Helping to Solve Global Poverty, observed that much of the opposition has stemmed from an “irrational exuberance” about the importance of credit, but that microfinance can still offer the poor a range of valuable economic tools. In the course of his research, for instance, Karlan said many low-income clients had shown a strong interest in micro-savings accounts. “The fact is not everybody always needs a loan,” he said. “The microfinance community needs to be more client-focused, so to speak, and more focused on what people actually need.” The negative impacts of credit, meanwhile, could be partly ameliorated by giving micro-borrowers a means of taking action against over-zealous debt collectors, or establishing credit bureaus so lenders can prevent the poor from taking on too much debt. “The right answer is not to shut down the market,” Karlan said.
Of course, this won’t satisfy farmers in Joypurhat who sold their body parts to pay down mountains of micro-debt, but it does demonstrate a strong role for the state as an overseer and regulator of rural credit markets. Simply expecting that the invisible hands of microfinance will elevate the poor without outside safeguards is to court further misfortunes for those who can least afford them. Microfinance services should be part of a balanced diet of development, one that incorporates skills training and agricultural strategies. In this sense, the backlash might actually be a good thing for the industry, helping sheer away some of the exuberance that has led to such negative outcomes. Provided that the lessons of overreach are internalized, there’s even some reason to be cautiously optimistic. “It does work in certain contexts for certain people,” Duvendack said of microfinance, “and maybe that’s good enough.”
Sebastian Strangio is a journalist based in Phnom Penh, Cambodia, who reports widely on the Asia-Pacific.
A Barisal rickshaw-puller has taken his own life, buckling under heaps of micro-loans, his wife says.
Barely 20, Laiju Begum found her husband hanging from the ceiling on Saturday as she returned to their dingy rented room on Rokeya Azim Avenue in the city.
25-year old Yunus Sardar was son of one Seresta Ali.
Laiju said Yunus had borrowed Tk 70,000 from seven micro-credit agencies and a further Tk 20,000 from moneylenders against her name and he had become the guarantor.
Laiju told bdnews24.com that they had begun taking loans because Yunus wanted to drive an auto-rickshaw. The rickshaw was proving too much of an exertion for him.
At the end, his weekly instalments were Tk 2,010. “But more often than not, he couldn’t pay them,” says Laiju.
“The loan officers of the NGOs would often insult him.”
The agencies he had taken loans from include Grameen Bank, Islami Bank and ASA.
The widow said police had caught Yunus carrying the banned cough-syrup Phensidyl. “A fare had forced him to take the bottles when he had protested. But he was the one who got caught.”
Laiju ended up spending all the money to get him out of jail. “He had become anxious about how to make the instalments,” she said breaking down in tears.
Kaunia Police Station’s sub-inspector Abdur Rahman told bdnews24.com, “An unnatural death case has been lodged with the police station over the incident of suicide. The body has been handed over to the family on Sunday after autopsy.”
Tahmina Begum, a development worker of the Bangladesh Rural Development Board under Barisal Sadar sub-district, told bdnews24.com, “According to micro-credit regulations a recipient becomes ineligible for further credit from other agencies.”
“The borrower must have a permanent address, too.”
Samanwita Samaj Unnayan Sangstha executive director Anwar Zahid told bdnews24.com that the loan applicants often conceal information. “But the field workers are also negligent sometimes.” He said that the management system needs improvement.
Laiju said they borrowed Tk 8,000 from Grameen Bank, Tk 10,000 from Islami Bank, Tk 8,000 from ASA, Tk 11,000 from Chetana Mahila Unnayan Sangstha, Tk 13,000 from Samanwito Samaj Unnayan Sangstha, Tk 10,000 from Hilful Fuzul Samaj Kalyan Sangstha and Tk 10,000 from the Organisation of Social and Economic Development (OSED) this year saying that he would raise chickens.
Yunus also borrowed from individuals with interest rates as high as 180 percent. Laiju said his monthly instalment for a Tk 6,000 loan was Tk 900. She said they had borrowed another Tk 10,000 from relatives.
She could not hold back her tears thinking of how she had found her husband on Saturday after she had made her daily round of the house where she works as a domestic aid. The neighbours had come running when they heard her cry out.
One of them told bdnews24.com that the NGOs give loans without checking the borrower’s ability to repay.
She said, other than his debt, Yunus did not have other problems. He could not make the instalments from just pulling rickshaws.
Laiju had told the NGO loan officers that she would repay every penny. “I will put together every little bit as I work in the houses and repay their loans. I told them so.”
Officials from ASA, one of the agencies that had given her a loan, took away the documents after they heard about suicide, said Laiju.
Nazrul Islam, district manager for ASA, told bdnews24.com, “Yunus used to pay his instalments regularly. He still owes us Tk 1,400 but we will write it off.”
Regarding his workers bringing back all the loan documents from Laiju, he said, “He has some Tk 800-900 saved with us, and we need the documents to give those savings to their next of kin.”
He said although the loans are registered against one person, both the husband and wife are responsible for paying back. “But we write it off whenever one of them dies.”
A woman of about 50, Laiju’s neighbour, had been listening to her speaking to this bdnews24.com correspondent. She appeared to become agitated all of a sudden. “They never check the recipient’s ability. Why did they have to go and given this boy these loans? Now you see, they have killed him with their micro-credit.”
By Ebele Orakpo, Vanguard
WHen Professor Mohammad Yunus founded the first microfinance bank (MFB) called Grameen Bank in Bangladesh, his aim was to eradicate poverty by empowering the rural poor through loans. The first principle of microfinance banking is that the bank should go to the people.
At the last Impact Conference series organised by the First Bank of Nigeria where Professor Yunus delivered a keynote address, he noted that what we have in Nigeria is not microfinance banking but micro commercial banking.
This deviation from the original principle was probably what caused the near total collapse of microfinance banking in Nigeria. Micro-finance banking was introduced to provide a platform for the under-banked segment of the economy that may not be able to meet the stringent requirements of the conventional banks. It was incorporated into the Nigerian financial system as a way of alleviating poverty. It was to promote entrepreneurship through micro lending especially to the poor and economically disenfranchised.
In a bid to stem the tide and also debunk recent assertions that Micro-finance banking has failed in Nigeria, the Association of Micro-Finance Banks, Lagos Island Chapter is embarking on a campaign to showcase their achievements. The first in the series of events is slated for November 24 at the Southern Sun Hotel, Ikoyi, Lagos at 8am.
The campaign, according to a Press release by the organisers, has as theme: Micro-finance is Working and incorporates a series of strategic events that will showcase the contributions of MFBs on Lagos Island to the socio-economic development of the country.
The organisers noted that “Micro-finance banks encounter an overwhelming array of regulatory constraints which the CBN can address in their policy reform work. MFBs as presently constituted, are less inclined to engage in policy advocacy work because they lack resources, experience and cohesion.
“The association has, in spite of numerous challenges, recorded considerable success even as they struggle to grow in an uneven playing field and increasingly stifling environment. However, there are challenges that increasingly threaten to erode these successes and inhibit future growth.”
According to the release, the event will feature interactive sessions combining presentations, field reports, future plans, as well as real life cases from experts and practitioners.
“The events which will seek to highlight the importance and role of MFBs in a cashless economy, will also strive to convince industry regulators, stakeholders and other participants of the strategic and indispensable importance of MFBs in the quest for poverty eradication