Does Microcredit help the Poverty Eradication? An Evidence from Monga Region of Bangladesh

Posted on 14th Oct 2024 09:09:26 PM Geography and Environmental Studies


1.1 Background

For Bangladesh, poverty is a multi-dimensional phenomenon and is related with various issues. In 2004, according to BBS (2004) the incidence of poverty was estimated at 42.1 percent at national level, 43.3 percent in rural areas and 37.9 percent in urban areas. There are some regional variations in the incidence of poverty. It was found that 279 upazilas (61%) have normal distress, 81 have above average distress, 69 have high distress and 31 upazilas have very high distress due to poverty (UNICEF, 1987). 

Bangladesh is trying to be a developing country in spite of the burden of excessive population, overwhelming poverty, social inequality and socio-political corruption. Among the multi-dimensional socio-economic problems, Monga is an unwanted situation, which is creating an immense bar to reach an expected level of development. Severe poverty and shortage of food are the regular phenomenon in the Northern part of Bangladesh. This kind of situation, which appears especially in September to November or in Bangla month of Aswin and Kartik is the northern districts of Bangladesh is known as Monga. Monga or seasonal food insecurity is not a new topic in rural Bangladesh, but the topic started to each public interest in the last few years. Pushed by the media, it became the part of political and social debate among the government, opposition parties and also the non-government organization (NGO). Now, Monga has found its way into Bangladesh’s Poverty Reduction Strategy Paper. To the NGOs and other actors in the development process, Monga is now an important concern, for which they collect funds and implement programs. 

The new breed of NGOs in developing countries wholly depend upon western fund have links with the policies of the donor countries as now part of the globalization concept. The growth of such NGOs in Bangladesh has been spectacular since the mid-1970s. Since early 1980s, micro-credit operations started getting priority among the major NGOs and by 1990s it became the main focus of most of the sectors. Their models of poverty alleviation include group formation, target group approach, participatory development, and importantly micro-credit. Horizontal expansion as well as qualitative changes in composition characterized the last 30 years of their activities in Bangladesh. But question remains as to the efforts by the larger NGOs administering micro-credit or SME credits for more than two decades in terms of whether the beneficiaries have been able to take-off from their earlier positions to develop themselves to join in the mainstream economic development of the country! (Elahi & Ara, 2008). 

1.2 Problem Statement

According to the Human poverty Index (HPI) of 2003, the Monga prone districts have a higher poverty syndrome than other areas of Bangladesh. While the national average HPI is 42.7, the Monga prone districts have more than 50 HPI. It means that the Monga prone districts are more poverty ridden than other parts of Bangladesh (Elahi & Era, 2008). With 78 percent of Bangladesh’s people in poverty and 93.2 million people identified as poor, Bangladesh accounted for 7.2 percent of the world’s poor (UNDP, 1993). This proportion may have increased by 2007-2008. Despite government efforts and implementation of various programs over the last two decades poverty continues to be pervasive and overwhelming (GoB, 1995). Poverty is related with the rural-urban variation and 60 percent of the rural population could be living below the poverty line (Hye, 1996). These conditions are worse in northern part of Bangladesh which make the region most vulnerable. 

Since labour is one of the main resources of the agrarian sector of the economy, it is obvious that the progress of the agrarian economy can be attained by optimum utilization of the potentials of unemployed and underemployed people. As the amount of land is very limited compared to surplus labor, creation of self-employment in diversified non-farm activities in the rural sector is very much essential. And this can be achieved by providing monetary and technical supports to rural poor on easy terms. So a suitable financial network is a must for the creation of self-employment opportunity for the rural poor. But the banking sector of Bangladesh is fragile and inefficient in mobilizing financial savings, allocating them to productive uses and promoting discipline in economic activity (WB, 1997).

In the above circumstances, there is an urgent need for separate program for the rural poor to extend a wide variety of financial assistance to them. GB has been established to cater these needs. The main objectives of GB are to provide banking facilities to the poor segment of the country, to eliminate the exploitation of the village money-lenders and to create opportunities to self-employment for the vast unemployed and underemployed labour force by providing credit and other facilities (Uddin, 2000). 

1.3 Rationale

Poverty is a great problem of Bangladesh from the very beginning. Micro-credit was started in 19th century in Bangladesh. BRDB gave micro-credit formal structure in 70s decade with the help of government management and patronization for eradicating poverty. The activities of micro-credit were mentionable to include the poor society into developing process through different projects. Later the modern concept of micro-credit was established through Grameen Bank in 1983. Dr. Mohammad Yunus established micro-credit as a development philosophy to make world free from poverty and more than thousands of micro-credit organizations started working in Bangladesh. In this process Bangladesh has become “The Breeding Centre of Micro-credit.” But the poverty level of Bangladesh is still remarkable and micro-credit program under questionable. So the aim of the study is to know how the people of grass root level of Monga affected region are benefited, are being benefited or will be benefited with available micro-credit provided by micro-credit program of Grameen Bank. 

1.4 Conceptual Framework

Micro-credit program of GB has taken place in Monga prone region. Mithapukur upazila is one of them. Micro-credit program of GB has done various activities by giving loan for different sectors such as Agriculture, Business, Education, Housing, cottage industry etc. It has both positive and negative impacts. 

1.5 Objectives

The general objective of the study is to know the role of micro-credit in the poverty eradication of the study area. 

The specific objectives are as follows: 

· To know the activities of micro-credit program of GB. 

· To analyze the changing socio- economic situation of the micro-credit stakeholders. 

· To represent recommendations in order to enhance effectiveness of micro-credit program of GB.  

1.6 Scope of the Study

The scope of the research is to discus how micro-credit program of GB plays role to eradicate poverty of the rural poor. Beside that, the study also discus what are the activities of micro-credit program of GB, people’s intention toward it, its uses and influences on livelihood of the stake-holder. Moreover changing socio-economic conditions of GB borrowers of the study area have been observed in this research and on the basis of findings the study has suggested to make GB program effective and to eradicate poverty. 

1.7 Limitations

There are some limitations in this research. The limitations of research are below: 

· Different governmental and non-governmental micro-credit organizations are working in Monga prone region. To identify the actual role of these organizations a whole study on them could be effective. But in the present study only micro-credit program of GB is considered. 

· In the study total Monga prone area was not observed. Only two villages of two union of Mithapukur upazila were selected as the study area. 

 

ABSTRACT
One of the most concerning socio-economic issues which has drawn attention of the economists, social scientists, environmentalists and policy makers in the last couple of decades is the ‘Monga’ syndrome which resulted in long term extreme poverty in many parts of Northern Bangladesh. The present study entitled “Does Microcredit help the Poverty Eradication? An Evidence from Monga Region of Bangladesh” is an empirical study by nature. In the study an attempt has been made to know the activities of Micro-credit program of GB, and its impact on changing socio-economic situation of the micro-credit stakeholders. Moreover, the study represents recommendations in order to enhance effectiveness of micro-credit. To conduct the study two villages of two union of Mithapukur upazila of Rangpur district were selected purposively. For this study GB members of each villages were selected as the respondent randomly and to collect data a detail questionnaire survey was carried out. On the other hand secondary data was collected from different sources such as official documents, articles, journals, books, newspapers etc. After collecting data various descriptive statistical methods like tabulation, percentage, average, pie and bar diagram have been used to analyze data. 

The research result indicates that micro-credit program of GB has both positive and negative impacts. Socio-economic condition of GB borrowers has improved some specific sectors such as income, expenditure, type of house, sanitation, ownership of household furniture etc. On the other hand changing condition of GB Borrowers in another sectors like land ownership, ownership of fishery, lighting facilities, medical facilities is not satisfactory.

 

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CONTENTS

Acknowledgement 

Abstract 

Table of Contents 

List of Table 

List of Figures 

List of Abbreviation

Glossary

CHAPTER 1 : INTRODUCTION

1.1 Background

1.2 Problem Statement 

1.3 Rationale 

1.4 Conceptual Framework

1.5 Objectives

1.6 Scope of the Study

1.7 Limitations

CHAPTER 2 : LITERATURE REVIEW

2.1 Concept of Monga in Northern Part of Bangladesh

2.1.1 Causes of Monga

2.1.2 Period of Occurrence of Monga            

2.1.3 Victims of Monga

2.1.4 Impact of Monga

2.1.5 Some Specific Recommendation to Mitigate Monga

2.2 Poverty

2.3 Micro-credit

2.3.1 History of Micro-credit

2.3.2 Poverty and Micro-credit 

2.3.3 Micro-credit in the Developed World   

2.3.4 Role of Micro-credit in Developing Countries-a Recent Forbes Ranking 

2.3.5 Bangladesh’s Micro-credit 

2.4 Micro-credit program of Grameen Bank  

2.4.1 A short History of Grameen Bank 

2.4.2 Sixteen Decisions 

2.4.3 Method of Action 

2.4.4 Ten Indicators 

CHAPTER 3 : RESEARCH DESIGN AND METHODOLOGY

3.1 Research Types 

3.2 Research Design 

3.3 Selection of the Study Area 

3.4 Sampling Design and Procedure 

3.5 Sources of Data and Collection Methods 

3.5.1 Secondary data 

3.5.2 Primary data

3.6 Data Analysis Techniques 

3.6.1 Quantitative Analysis 

3.6.2 Mapping Techniques 

CHAPTER 4 : DATA INTERPRETATION AND FINDINGS 

4.1 General Information of GB Borrowers 

4.1.1 Age and Sex based Respondents 

4.1.2 Religion based Respondents 

4.1.3 Marital Status of Respondents 

4.1.4 Educational Qualification of Respondents 

4.1.5 Occupation of Respondents 

4.2 Information of Borrowers about Micro-credit of GB in the Study Area 

4.2.1 Duration of Involvement with GB’s Loan Program

4.2.2 Frequency of Receiving Loan 

4.2.3 Amount of Loan

4.2.4 Monthly Interest

4.2.5 Purpose of Receiving Loan

4.2.6 Use of Loan

4.2.7 Deposit by Using Loan

4.2.8. Regularity of Loan Repayment 

4.2.9 Causes of Irregular Paying 

4.2.10 Way of Paying the Installment 

4.2.11 Involvement with other NGOs 

4.2.12 Receiving Loan from other NGOs

4.2.13 Amount of Loan from other NGOs

4.2.14 Satisfaction Level 

4.2.15 Micro-credit System for Reducing Poverty

4.3 Changes of Socio-economic Condition of GB Borrowers: Before and At present 

4.3.1 Monthly Income 

4.3.2 Monthly Expenditure 

4.3.3 Type of House 

4.3.4 Land Ownership 

4.3.5 Ownership of Livestock 

4.3.6 Ownership of Fishery 

4.3.7 Ownership of Household Furniture 

4.3.8 Ownership of Household Goods and other Assets 

4.3.9 Use of Latrine 

4.3.10 Lighting Facility 

4.3.11 Source of Drinking water 

4.3.12 Medical Facilities 

4.3.13 Monthly Cost of Health Service 

4.3.14 Monthly Cost of Food Consumption

4.3.15 Monthly Cost of Education 

4.4 Information about Family of GB Borrowers 

4.4.1 Number of Family Members 

4.4.2 Educational Qualification of Family Members 

4.4.3 Occupation of Head of the Family 

4.5 Findings 

CHAPTER 5 : SUMMARY, RECOMMENDATIONS AND CONCLUSION 

5.1 Summary of the Study 

5.2 Recommendations

5.3 Conclusion 

References 

Appendices 

 

LIST OF TABLES 

1. Geographical indicators of the Monga prone upazilas of Rangpur District, 2001   

2. Causes of Monga

3. At a glance Mithapukur upazila

4. Age and Sex based Respondents

5. Religion based Respondents

6. Occupation of Respondents

7. Duration of Involvement with GB’s Loan program

8. Amount of Loan

9. Use of Loan 

10. Deposit by using Loan 

11. Causes of Irregular Paying 

12. Receiving Loan from other NGOs

13. Amount of Loan from other NGOs

14. Monthly Income 

15. Monthly Expenditure 

16. Type of House 

17. Land Ownership 

18. Ownership of Cow

19. Ownership of Goat

20. Ownership of Chicken

21. Ownership of Duck 

22. Ownership of Fishery 

23. Ownership of Household Furniture 

24. Ownership of Household Goods and Others Assets 

25. Use of Latrine

26. Lighting Facility 

27. Medical Facilities 

28. Monthly cost of Health Service 

29. Monthly cost of Food Consumption 

30. Monthly cost of Education 

 

LIST OF FIGURES 

1. Conceptual framework of the study 

2. Relationship between existing 6 different cropping patterns and period of Monga in Northern Bangladesh 

3. Factors of poverty 

4. Poverty trap 

5. Organizational Chart of GB

6. Administrative Hierarchy of GB

7. Map of the Study Area 

8. Sampling Design and procedure 

9. Research Design

10. Marital Status of Respondents 

11. Educational Qualification of Respondents 

12. Frequency of Receiving Loan 

13. Purpose of Receiving Loan 

14. Regularity of Loan Repayment 

15. Way of paying the Installment

16. Involvement with other NGOs 

17. Satisfaction Level 

18. Micro-credit System for Reducing Poverty 

19. Numbers of Family Members 

20. Educational Qualification of Family Members  

21. Occupation of Head of the Family 

 

LIST OF ABBREVIATIONS

ADA                 Agriculture Debtors Act

ASA                  Association of Social Advancement

BARD               Bangladesh Academy for Rural Development

BBS                  Bangladesh Bureau of Statistics

BRAC               Bangladesh Rural Advancement Committee

BRDB               Bangladesh Rural Development Board

BRRI                Bangladesh Rice Research Institution

BUS                  Bahumukhi Unnayan Sangstha

CARE               Co-operation for American Relief Everywhere 

GB                   Grameen Bank

GIS                   Geographic Information System

GKF                  Grameen Krishi Foundation

GO/GOB          Government Organization/ Government of Bangladesh

HPI                   Human Poverty Index

IFAD                 International Fund for Agriculture

IFLA                 Israel Free Loan Association

IRDP                Integrated Rural Development programme

MLA                 Money Lenders Act

MRI                 Market Research Institute

NGO                Non-Governmental Organization 

OMS                Open Market Sale

PROSHIKA        Prashikhyan Shikha Karma (Training, Education, Work Program) 

RDRS               Rangpur Dinajpur Rural Service

RDT                 Rokeya, Diana and Teresa

SDF                  Social Development Foundation

SME                 Small and Medium Enterprises

SPSS                 Statistical Package for Social Scientist

TMSS               Thengamara Mohila Sabuj Sangha (Thengamara Women’s Green Association)

UNDP               United Nation Development Project

UNICEF            United Nations International Children’s Emergency Fund

USA                  United States of America

VGD                 Vulnerable Group Development

VGF                  Vulnerable Group Feeding

WB                  World Bank

 

GLOSSARY

Agrahayan : Bangla month (mid-November to mid-December).

Akhira : A river of Mithapukur upazila of Rongpur district. 

Aman : A variety of rice.

Ashwin : Bangla month (mid-September to mid-October).

Bayshakh : Bangla month (mid-April to mid-May).

Boro : A variety of rice. 

Chaitra : Bangla month (mid-March to mid-April) 

Char : Shoal/sandbar or Mid-river island (also some of alluvial deposits along the banks). 

Ghaghat : A river of Mithapukur upazial of Rangpur district.

Grameen (Bank) : Grameen means ‘rural’ or ‘village’ in Bangla language

Jamuneshwari : A river of Mithapukur upazila of Rangpur district.

Jobra : A village adjacent to Chittagong University.

Kartik : Bangla month (mid-October to mid-November).

Khash (land) : Without individual Ownership/newly emergent land generally held by the government. 

Monga : Monga is a Bangla word that means a famine-like situation, which appears especially in September through November or in Bangla months of Ashin and kartik people usually call the period as Mora kartik, meaning the months of death and disaster (Muhammad, 2006).  

Mouza : A Geographically defined land revenue with. It is also the lowest level administrative unit in Bangladesh. Seueral Mouzas comprise of union.  

Prakalpa : Project. 

Tangail : A district north of Dhaka, the capital city of Bangladesh. 

Union : A fourth level administrative unit usually consisting of 12 to 15 villages and/or several Monzas.

Upazila : A third level administrative unit consisting of several unions with an average population of around 20000. A number of Upazilas forms a Zila or District, the second level administrative unit. A number of Zilas form a division, the first level administrative unit. Bangladesh has composed of seven administrative divisions. 

Zemindar : The highest level of landlord.



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