Katy Love

ANNEX 1: “The promising practices” case studies series BRAC Case Study
Context: a. Socioeconomic overview The ‘hardcore’ poor in rural Bangladesh suffer from food deficit, illiteracy, and lack of access to land. More here? b. Purpose of intervention BRAC’s Income Generation for Vulnerable Groups Development Program (IGVGD), creatively links a government safety net program, which provides food grain, with financial services to those women who have been traditionally deemed too risky by other MFIs or who have self-opted out. BRAC collaborates with the government and the World Food Program. The goal is to graduate women from the program to regular MFIs. Locally elected representatives select women to receive the food grain, and BRAC then selects 90% of those women (only excluding the handicapped) for participation in its program. c. Description of target group/clients/members Over ten years, BRAC has successfully targeted approximately one million hardcore poor, rural Bangladeshi women who have few or no economic opportunities. More on client group size? II. Description of methodology: a. Summary of design concepts: IGVGD works with the Government of Bangladesh’s subsidy program to provide the free food grain assistance for an 18-month period to impoverished, female-headed households. The food grain provides an incentive for the women to participate, and BRAC, then, provides skills training and savings and credit services. b. Process/steps in implementations: The three components of the program are the food grain subsidies, skills training, and financial services. Once receiving the food grain, women are trained in raising poultry and livestock, sericulture, or other income-generating activities for which there is a ready market. Women are required to attend weekly meetings and save US$0.50 a month, or more if they can. The first loan is given after training is complete, and weekly repayments begin immediately. Once the first loan is repaid, another loan is given, during which time the food grain program ends. When the second loan is repaid, women “graduates” can begin participating in normal MFIs. c. Methods of measuring results: Monitoring is an important component of the program and is continually carried out by the government, the World Food Program (WFP) and by BRAC itself, which is annually audited by WFP. The government monitors BRAC’s monthly reports and the WFP makes field visits to visit programs. May need more here. III. Results One study tracked one hundred IGVGD participants in ten locations at their program entrance in 1994, and again in 1996 and 1999 in order to evaluate program effectiveness. The year 1996 appeared to be the peak for participants, when women had just stopped receiving food grain but the loss had not yet registered, and they had received their second round of credit. I.

A majority of women did benefit from program participation; they were able to increase both income and asset ownership because of their ability to save and then reinvest earnings. Half of the women increased their ownership of clothing and shoes, and most ate three meals a day. Many noted an increase in self-confidence because of the improvement in their financial situation. In fact, overall, two thirds of the participants have “graduated” from destitute poverty to regular microfinance clients and have not required government aid. In the long run, one third of the women did not benefit from the program and again require government subsidies. Thus, a strong need for a safety net services continues to exist. IV. Resources required/cost to institution Because the Government of Bangladesh and the World Food Program provide the incentive of food grain (6,000 takas per woman), BRAC pays for the women’s training (725 takas per woman), and the gross total is 6,725 takas, or $135. V. Challenges/pitfalls/lessons learned One concern from participants was regarding the transition after the food grain subsidies ended. Most managed to receive and repay loans, although 25% of participants stated that they were unable recover once they lost the food grain and returned to absolute poverty. A concern for the organization is that of mixing financial and non-financial services. The subsidies should not be directly provided by the MFIs. However, BRAC is able to avoid this obstacle because the government already provides the assistance and a strong separation is necessary for the program’s success. Finally, risks like economic shocks, natural disasters and poultry diseases can be minimized by portfolio diversification. VI. Contact information/sources of information Other organizations like Jagorani Chakra and Care Bangladesh have also successfully linked financial services with government employment services. The BRAC case study was written by Syed Hashemi.

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