Poverty Alleviation Effort in Bangladesh: Involvement of Selected Banks and Ngos

Topics: Poverty, Microfinance, Poverty threshold Pages: 24 (7672 words) Published: January 10, 2011
Poverty Alleviation Effort in Bangladesh: Involvement of Selected Banks and NGOs Munim Kumar Barai* Md. Liakat Hossain Moral*

Reduction of poverty has remained the most important national goal since the independence of Bangladesh. Though it was initially the sole responsibility of the government, banks, FIs and NGOs got themselves involved in the effort beginning from the late 1970s. Now their role has emerged as to be vital in the entire pursuit of poverty alleviation. Available statistics suggest a gradual reduction of poverty in Bangladesh over the years. Evidently, the participation of NGOs in health care, education, micro finance and other welfare activities has generated a kind of dynamism particularly in rural Bangladesh. But we follow a pattern of rise in inequality in the society in the 1980s and in the first part of 1990s. During the period, growth in urban inequality is more prominent than that of the rural area. Two factors might have played an important role in this regard. Along with the poverty alleviation activities of these institutions, an increasing use of modern farming methods may have led to an overall improvement of poverty position in the rural sector. On the other hand, negative fallouts of the globalisation measures might have affected the urban poverty.

Poverty has remained the most vital source of discomfort for the nation. A significant portion of the population in Bangladesh still lives under poverty. A provisional estimate for 2000 indicates that national index of poverty has come down to 44.3 percent out of which 20 percent of the population was hard core poor. * The authors are Assistant Professor, Leading University, Sylhet and Assistant General Manager, Computer Cell, Bangladesh Krishi Bank, Head Office, Dhaka respectively. They present the paper in their private capacity.


Bangladesh Jornal of Political Economy Vol. 17, No. 2

The government efforts to reduce poverty were mostly executed through various ministries and other organs. It involved various banks and development financial institutions (DFIs) under its ownership to fight poverty through providing credit since the 1970s. Credit or more precisely micro-credit is considered to be the first generation financial tool adopted by the banks and financial institutions (FIs) to aid government’s effort of poverty alleviation. The institutions that were instrumental to implement government’s poverty alleviation programs included Sonali Bank, a nationalized commercial bank (NCB), and Bangladesh Krishi Bank, a DFI, in the public sector. The acceptance of micro credit as a financial tool to fight poverty was promoted by the success of a model project run by the now famous Grameen Bank. The project was started as a “Grameen Bank Project” at village Jobra in the district of Chittagong in August 1976, though GB itself became operational as an independent financial institution in 1983. Since then, GB has emerged as the leading micro-finance institution (MFI) in the country and has adopted the motto slogan that the “poor are bankable” for its micro credit operations. The micro-credit concept popularised by Grameen Bank has got wider acceptability and nearly almost all NGOs have their own micro-credit programs in Bangladesh. The Credit Development Forum (CDF) which is a national network of microfinance NGOs gives an estimate that there are about 1200 MFNGOs operating micro-finance programs along with other development activities in the country. The CDF Statistics 2001 gives the estimate that upto June 2001, the total active members of the reported 601 NGOs were about 11.06 million. They had total net savings of Tk. 9590.70 million and their cumulative credit disbursement stood at Tk. 143,938.25 million. These were substantial amounts. Now the question comes – how far has the effort of the various organs of the government and NGOs been able to reduce poverty in the country? Dealing with the BBS data we find...

References: Source: Household Expenditure Survey, 1995-96, BBS.
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