Role of NGOs in Poverty Reduction

Poverty is one of the important problems in our country. It creates other many problems for the people. In this situation, it is very much necessary to alleviate the poverty from Bangladesh. For poverty alleviation, different organizations, NGOs and associations have taken various effective programmes and steps. On the other hand government also has taken some plans and policies for poverty alleviation. In 2000-20001 fiscal year, government has declared a large amount of money for poverty alleviation and rural development now I would like to mention the following steps, programmes, plan and fiscal also should be followed for poverty alleviation Bangladesh.

•  At first, to decrease the population growth rate by giving proper training and facilities of health and family planning training center.

•  To ensure the equal distribution of resources which is available in the country.

•  To create the employment opportunities for the poor by expanding and establishing cottage and small-scale industries.

•  To remove the poverty, it is necessary to increase the productivity by using modern technology and skilled manpower.

• To create skilled manpower by providing proper training for the unskilled manpower.

•    We can reduce poverty through micro-credit facilities among the poor people.

•   All cultivable land can be converted into three-cropped land by means of irrigation.

•   To raise literacy rate by taking various programmes—Food for education programme, Compulsory primary education, adult education etc.

• Facilitate agriculture development through institutional support and expansion of irrigation.

• Increase basic physical infrastructure (roads, markets) in the rural area.

• Promote participation of women in development activities.

• Utilize the resource properly to reduce poverty.

• Remove the social corruption for poverty alleviation.

• Increase the awareness of poor people by teaching and proper training. 

• Various NGOs can play a vital role for poverty alleviation. So, we should take the opportunities of different projects and programmes of NGOs and association, such as--- Grameen Bank Prokalpa (GBP), Small Farmers credit project (SFCP) etc. 

• We can alleviate poverty by taking proper plan and utilization of resource

NGOs:

Microcredit Programmes

Over the years, Bangladesh has emerged as the pioneer in innovating and managing microcredit programmes for income/employment generation along with social programmes and support activities. Microcredit programmes have a wide network in the country involving both the Government agencies and the NGO sector. The Bangladesh Rural Development Board (BRDB) disbursed more than Tk. 17 billion as microcredit to 1.3 million beneficiaries during 1991-2000.17 There exist many other institutions which are involved in microcredit including the NGOs. The Palli Karma Sahayak Foundation (PKSF) is a Government financed institution which disbursed nearly Tk. 8 billion through NGOs till December 2000. The Grameen Bank’s cumulative disbursement of microcredit was Tk. 137 billion till December 2000. While comprehensive statistics are difficult to arrive at, available information show that different microfinance NGOs distributed more than Tk. 109 billion to 10 million borrowers till June 2000 (CDF 2001). The microcredit activities, in general, are economically efficient which generate a net surplus for the poor borrowers. These programmes also create positive impact on socioeconomic indicators including children’s schooling, nutrition, and fertility (Khandker 1998). What is impressive about microcredit is its massive expansion in recent years covering nearly half of the target households (usually defined as those having half an acre of land).

To bring the rural poor into mainstream of development, NGOS focuses on nstitution building as a strategy. NGOS believes that a common platform that is created and owned by the poor is a prerequisite through which the poor can make themselves count in the development process. The Village Organization (VO) is an association of the poor and the landless people who come together with the help of NGOS to try and improve their socioeconomic position. NGOS’s approach to social and economic development of the poor, especially women, involves four inter-related strategies: institution building, service delivery, social mobilization and public sector mobilization.

NGOS’s core approach and competency is the delivery of health, education, microfinance, and microenterprise services on a large scale to the rural poor, primarily women. NGOS decided to train local women to help deliver these services and organize local groups. As a result, NGOS’s service delivery contributes to building local leadership and local organizations.

As of December 2002, NGOS had organized its 3.53 million members into 113,756 VOs across the country. NGOS’s microfinance staff meet VOs once a week to discuss and facilitate credit operations, the social development staff meet VO members twice a month to discuss various socioeconomic and legal issues and the health staff meet with the VOs once a month to discuss health issues.

BRAC is a leading NGO in Bangladesh. The programmes of BRAC are as follows as an NGO Example.

Microfinance Program

The microfinance program of BRAC is a tool for poverty alleviation and empowering the poor. Lack of access to the formal banking system deprives them of the facilities to borrow, save and invest in productive activities, and this is a major reason why poor people remain poor. The formal banking sector also requires collateral. Making credit available to the rural poor enables them to become involved in different income generating activities which, in turn, allows them to become economically self-reliant. Through this process BRAC’s microfinance program works to create a self-sustaining and reliable financial service program for the poor.

Credit

Credit is provided to its VO members to initiate different income generating activities. While loans for individual and joint activities do not require collateral, members must have some savings with BRAC before they are eligible for loans. Credit operations are carried out through a Revolving Loan Fund (RLF). This RLF consists of donors’ fund, members’ savings, Polli Karmo Shohayok Foundation (PKSF) loan and other loans. Loans realized from VO members are credited to and form part of the RLF for extending further credit. A 2% loan loss reserve is kept to cover the risk of bad debts and death. Regular borrowing and payments allow the borrower to take larger loans.

Key Features of Loan

- Loan range: US$ 17 (Tk.1,000) to US$ 345 (Tk. 20,000)
- Service Charge: 15%
- Repayment mechanism: Equal weekly installments
- Loan products: General loan, sector program loan, housing loan and emergency loans given at the time of disaster

In 2002, US$ 294 million (Tk. 1,707 crore) has been disbursed to 2.9 million borrowers with repayment rate of over 98%.

Savings

Savings is an important component of microfinance services. Experiences show that there is a positive correlation between savings and sustainable credit operation. From the member ’s point of view, savings represent an opportunity to save in small amounts to form a lump sum that earns interest. This is an opportunity that the formal market or regular financial institutions do not provide.

Micro Enterprise Lending and Assistance (MELA)

Micro Enterprise Lending and Assistance (MELA) program was launched in December 1996 to provide loan to small enterprises with growth potential. The objective of this program is to provide credit facilities and technical assistance to new and existing small businesses.

The characteristics of MELA loans are:

- Loan range: US$ 345 (Tk. 20,000) - US$ 3,448 (Tk. 200,000)
- Service Charge: 15%
- Repayment modality: Equal monthly installments
- Loan duration: 12 months, 18 months and 24 months
- Twenty different business sectors are supported by MELA loan

By the end of 2002, a total amount of US$ 48 million (Tk. 260 crore) was disbursed to 45,503 borrowers in 64 districts of Bangladesh with an average loan size of US$ 1,077 (Tk. 62,484).

Employment and Income Generation (EIG) Program

BRAC has learned that besides lack of access to finance, the two major constraints that have prevented the poor from improving their lives are the absence of self-employment opportunities and lack of skills to sustain those activities. BRAC realised that if different employment opportunities were created, along with sufficient training and refreshers for capacity development, the poor could be linked to the mainstream economy which would ultimately bring them out of poverty.

Activities approved for BRAC sectoral lending and other support enterprises can be classified under the following broad categories.

Poultry & Livestock Program
Approximately 70% of the rural landless women are directly or indirectly involved in traditional poultry rearing activities. The Poultry and Livestock Program is composed of several components: poultry and livestock extension program, poultry farms and hatcheries, feed mills and feed analysis laboratories, bull station and the disease diagnosis laboratories.

Till to date, 1.96 million people have been involved in this program.

The key persons under poultry and livestock extension program are i) Poultry and Livestock Extension Worker ii) Chick Rearer iii) Key Rearer iv) Cage Rearer v) Broiler Rearer vi) Egg Collector vii) Model Cow Rearer viii) Model Goat Rearer and ix) Artificial Inseminator.

Fisheries
The Fisheries Program, started in 1976, is now developed into one of the most promising and profitable EIG activities for rural women. The key components of the program are pond aquaculture, open water fisheries management, and fish and prawn hatchery.

BRAC aims to promote pond aquaculture by rural women to provide them with an additional source of income and improve their nutrition level thereby improving socioeconomic condition of the participants. BRAC provides training, undertakes production and distribution of quality fish spawn and prawn post larvae, extends credit assistance, and technical and marketing support. Till to date 47,421 acres of water-body have been brought under fish culture and 234,412 farmers are involved in fisheries program.

Social Forestry
The social forestry program is being implemented since 1988 to make the people aware of the necessity of planting trees and to increase the number and variety of trees not only to meet the basic needs such as timber, fuel and fruit but also to restore the ecological balance. The program components are horticulture nursery, grafting nursery and agro-forestry. One of the objectives of the program is to encourage people to plant trees throughout the country.

At present there are 73,508 agro and social forestry farmers.

Agriculture
The agricultural extension activities can be broadly categorized into vegetable cultivation and crop diversification (rice, maize, wheat, cotton, sunflower). This program has been undertaken to increase the nutrition and income levels of the households by increasing agricultural production of VO members through technology transfer. Under this program VO members, who have less than 0.5 acres of land in each area, receive training, technical support, inputs like HYV and hybrid seeds, fertilizers, and have access to BRAC’s microfinance to obtain the resources for investing in farming. Interested small farmers, who have land between 0.5 and 3 acres, also receive training and technical support.

Crop diversification contributes to increased agricultural productivity. Besides maize and wheat, which are used for poultry feed, rice, cotton, onion, mustard and sunflower cultivation are also being undertaken.

By December 2002, there were 157,280 vegetable growers brining 67,114 acres of land under vegetable cultivation and 1,169.37 MT of seeds have been distributed.

Sericulture
Sericulture is a labor intensive agro-industry. Sericulture Program links the rural producers with urban markets. The main components of the program are:

a) mulberry cultivation (roadside, homestead and bush),
b) silkworm rearing,
c) reeling and weaving, and
d) marketing.

Besides, there are other components of the sericulture program, which include silk Seed Production Centre and Sericulture Resource Centre (SRC). At present, BRAC is operating 8 Silk Seed Production Centres, 6 Sericulture Resource Centres, and 3 Reeling Centres.

The Sericulture Resource Centre provides practical training to the rearers on mulberry cultivation and silkworm rearing. In 2002, there were 7,407 silkworm rearers and 1.4 million Disease Free Laying (DFL) have been distributed.

Vegetable Export Program

Poor farmers require better skills and knowledge of modern agriculture practices. They also need assistance to obtain a fair price for their produce. BRAC Vegetable Export Program seeks to link the poor Bangladeshi farmers with international markets to bridge the gap between the local producers and the international consumers, in addition to introduction of technical training and modern agricultural inputs. BRAC started this program in 1997-98 with particular focus on vegetables that have high demand in the European markets and could be grown in Bangladesh. In the first year, 27 tons of beans were exported successfully to England, France, Belgium and Holland and in 1999, 26 tons of fresh potatoes were exported to Singapore.

BRAC has exported 621 tons of fresh vegetables and 350 tons of potatoes in 2002 to the wholesalers and supermarkets in England, France, Germany, the Netherlands, Belgium and Italy in Europe, and the UAE, Bahrain, Singapore, Malaysia and Hong Kong in Asia. In addition to French beans, Broccoli and Green chilli, demand oriented new items have been selected with the total export target of 800 tons of fresh vegetables and 1000 tons of potatoes for the year 2003.

Rural Enterprise Project (REP)

As the scope of employment and income earning sectors are limited, new livelihood opportunities are essential for reducing rural poverty. Moreover, many traditional livelihoods are becoming marginal and new opportunities are opening up with growing urbanization and globalization. However, the poor may not be able to gain from these opportunities without support. This realization led BRAC to initiate the Rural Enterprise Project (REP), to encourage employment and income generation through entrepreneurship. The project is involved in innovating non-traditional activities and introducing them to the program participants. REP was formed in 1985 to find and test new opportunities for rural development. The primary objective was to experiment with various income generating enterprises that can be owned and managed by rural landless women.

One significant change that took place in REP was the inclusion of a new unit called Non-farm Enterprises Extension and Reinforcement (NEER) to intensify the non-farm job creation program. The objective is to create employment in the non-farm sector for rural women and BRAC School graduates to make them self-employed. The present women owned and run projects under NEER program are:

Till 2002, a total of 9,410 restaurants, 30,675 grocery stores, 5,468 laundries, 13,418 tailoring shops and 3,637 other micro enterprises were operated by women members throughout the country.