BANKING AS A POVERTY ALLEVIATION TOOL
The total world population is 7.093 billion of them 1.29
billion do live with absolute poverty (PPP below $1.25). Around 4 million of
people die cause of starving and malnutrition and 25 million without
treatment/year. 100 million is homeless and further 100 million is hidden
homeless. Around 200 million is unemployed. Of them 75 million that is 13% of
the total figure is between the ages of 15 and 24 [IMF-2012]. If dramatic
changes are not happened in the world job markets and young jobless is remain
stable, its impact would be very devastative for the forthcoming world.
global peace & affluence in today's world stricken with hunger,
homelessness, diseases & woe, tremendous poverty has to be removed to
ensure the fundamental rights which include the rights of foods, cloths,
shelters, education and treatment. International aid, which is joke to the
impoverished, has deepened the problems rather than alleviate a bit. To pave
the way for first and foremost task is either to create direct employment or
create condition to create employments. Micro-credit banking, which on one hand
create direct employment and on the other hand patronize borrowers to create
small scale production lines or enterprises to create employments & bring
financial sustainability, is one of the most remarkable options to alleviate
& its impact on socio-economic lives
is a financial innovation that refers to various kinds of small loans &
financial services meant for the impoverished borrowers who are currently
operating businesses or aspiring to introduce businesses or simply unemployed
to introduce businesses or financial activities to improve living standard. The
borrowers of micro credit usually lack of collateral, steady employment &
variable credit history, thus fail to qualify for regular bank loan.
says the proverb, makes money. When you have got a little, it is often easy to
get more. The great difficulty is to get that little» -Adam Smith
income individuals are capable to lifting themselves out of poverty, if given
access to financial service»-Dr. Muhammad Yunus
the above concepts microcredit evolved first in 18th century and got momentum
only after the establishment of 'Grameen Bank' in Bangladesh by Prof. Muhammd Yunus
in 1976. As of 2013 microcredit activities are manipulated in about 50
countries around the world.
impact of microcredit on poverty alleviation is highly a debated
issue. Since its introduction, microcredit has not had very positive impact
rather has led many borrowers into debt trap or leading suicide or selling
2010 & Kathrin, 2012]. 1&2
conveyed by Wastover & Khandaker noticed that among six representatives,
five found no evidence that microfinance reduced poverty [Wastover &
Khandker, 2008]. 2
Hartman, the Journalist told about trapping in debt of a woman whom she met in
2012 Kurigram district in Bangladesh.
The rural women who were the borrower of microcredit told her about the brutal
methods of enforcing debt repayment, including the forced to sale of cattle,
house utensils and lands. In order to be able to repay loan, newly indebted men
and women even sold their kidneys, as discovered by the police in summer 2011. In order to repay
the loans children are dropped out of school to earn money and food
expenditures are cut down significantly.
Micro-credit doesn't work?
It is a
fact that microcredit borrowers, who don't have necessary requirement to
receive loan from the formal bank, are marginal and disadvantages inhabitants
of the society. They don't know how to receive loan, how to invest the capital
effectively for well return on investment, how to produce units and how to
marketing. Most often the money, borrowed by the micro-credit borrowers are
invested either in list profitable or non-profitable sectors fail to earn a
well return to repay the loans' capital [Milford,
2010 & Kathrin, 2012]. 1 &2
Suppose, if you somewhere meet
a man who is blind and deaf and direct him to go to a certain destination where
he will get proper maintenances, he will never reach the destination rather
lose the former shelter if you don't convey him to.
Like the blind and deaf
microcredit borrowers will be dropped into debt trap or driven into loan cycle
if the borrowers are not apt patronized by the lender from credit receiving to
How Micro-credit will succeed?
reach its poverty alleviation goal, Microcredit policies are needed to be
implemented and managed effectively & services are needed to be designed to
meet the need of clients. Thereby not just only clients but also their family
and the wider community will be benefited.
loans are associated with an increase in assets, when borrowers are encouraged
to invest in low risk income generation activities and when very poor are
encouraged to save; the vulnerability of the poor people is reduced &
improved of the poverty situation [Hulen & Mosley, 1995]. 3
together with credit providing, proper patronization of borrowers by the lender
in the sectors including effective investment, producing units, marketing portfolios
could bring the desirable changes.
microcredit activities encourage and patronize borrowers to resolve easy
accessible regional raw materials into commercially valuable products, it will
be doubly effective. On one hand commercial production industry will be
established with huge economic potentiality and on the other hand commercial
raw material industry will be accomplished more effectively, those will bring
massive development for local, national and world economy.
of microcredit bank & invent strategies to create direct employment and
create condition to create employments patronizing microcredit borrowers to
create small scale production lines or enterprises by microcredit banking,
microcredit loan and other relevant entrepreneurial activities.
is to encourage and patronize borrowers to establish regional raw materials
based production industries. Moreover, other potential sectors where there are
rooms available to develop will also be promoted, e.g., poultry farming,
fisheries, milk processing, packaging & marketing etc.
sustainable development of a nation, education standard needed to be promoted
to create talented human capital, the nation will discover its own ways to
develop. For this prospect we'll establish preparatory & primary schools
with computer labs, internet access & libraries.
project will be manipulated by the name '' MPFW (Mission for Poverty Free World) Microcredit
Bank'' with the slogan ''Poverty Free World for Global Peace''
of manipulating the project's activities over the entire country all together,
we’ll divide the country into several regions according to the geographic
location. Every region will be divided into many small branches and developed the
branches one after another gradually.
branch will be selected and activities will be operated for numbers of years
till annihilating poverty and transforming the branch into self-dependable
& improving the quality of living.
to produce commercially valuable products by easy accessible regional raw
materials. So, we'll remark the regional raw materials of the region where
we'll initiate the project's activities and invent the most effective ways to
produce commercially valuable products.
select the borrowers & train them to be skilled producers or entrepreneurs.
Credit will be given to the borrowers to introduce small scale production lines
or enterprises when they will be sufficient skilled to go to the production
lines. We'll patronize them to marketing their products.
open & operate selling centers throughout the country by the brand name
''MPFW Bank's Green Product'' with the slogan ''Be Green to Save the Globe''.
buy the production from the producers (borrowers) & sell them in project's
run selling centers. The production will also be offered to other retailers who
are offering same products we are producing & offering. The producers are
also free to marketing their products.
Loan giving structure
will be paid back with 10% annual interest rate. Loan pay back will be started
after a month of their receiving loan as they will start receiving revenue from
their portfolios at that time. Total loan of a borrower will be paid back with
12 installments during a year. Borrowers also can open saving account in the bank
and deposit for the rainy day.
project will be implemented first in Bangladesh. Total population of Bangladesh is
180 million. Off them 50% is between the ages 14 & 30 years old and 55% is
unemployed. 40% of the population lives below the baseline of poverty
[$1.25/day, World Bank, est. 2012]. Off them 25% do live with extreme poverty
[$1/day, World Bank, est. 2012].
epidemic, famine and hardship of life are the common phenomenon in Bangladesh
though there are huge potentialities and lots of rooms to change through
promoting handicraft, SMEs and various forms of micro-industrial, small scale
commercial & entrepreneurial activities. Through microcredit banking,
microcredit loan & effective entrepreneurial activities, the project will
pick all of the potential sectors up into account to develop.
of initiate the project's activities over the entire contrary all together;
we'll divide the country into four regions (South-West, North-West, South-East & North-East) and initiate the ground
activities in the South-West region first. We'll divide the region (South-West)
into 2500 small branches and pick a branch up and manipulate the activities
till annihilation of poverty and promoting the standard of living. Then rest of
remark the regional raw materials of the reasons and take initiative to invent
the most effective ways to produce commercially valuable products by the
regional raw materials.
and bamboos are available and cheap in the selected branch like most of the
areas of Bangladesh,
we'll produce shoes, vanity bags, and shopping bags by jute and jute's garments
thereafter and souvenir, toys and household products by bamboos. If the area is
surrounded by grasses, we'll introduce dairy firming and small scale dairy
products industries. If the area is surrounded by water, we'll go to fisheries
and poultry farming. If the area possesses no physical resources but mud, we'll
produce attractive souvenirs, ornaments and households things by mud.
half of the total workforces of Bangladesh
but 85% of them are unemployed. Keeping a vast population unemployed,
sustainable development of a nation can't be expected. So target is to empower
the women through involving them in financial activities.
ground activities of the project will be initiated on 1st of March 2014 from
the village Jaduboyra, a branch in South-West region of the project's planned
is to transform the village Jaduboyra as a poverty free self-dependable village
is a village of 4sq. Kilometers & 6124 inhabitants. Among them 500 are
students, 20 government employees, 50 in NGOs & other sectors, 800 are farmers
and vast majority of 1660 are unemployed. The total workforces are 2530 of them
98% are marginal farmers.
most of the rural inhabitants of Bangladesh duelers of the village
Joduboyra cultivate their lands yield crops and live on it around the year. But
agriculture in Bangladesh
completely depends on natural climate. If weather is hostile, for example,
drought, heavy rainfall or flood, either crops are destroyed or cultivation of
land is not commenced in time, hardship of living is started.
year 'Monga', a seasonal food crisis, snatch numbers of lives of the village
during the months December-January that is when farms are not cultivated and
inhabitants don't have work at hands or other alternative to survive.
of the areas of Bangladesh,
arable lands of the area are very fertile for jute. Every year farmers
cultivate jute but they don't get sufficient market value of it.
huge livestock including lactescent are also physical asset of the area. Inhabitants
use milk of their cows either for household purposes or sell it in the
villages' markets at very cheap price.
village Jaduboyra is thrived with jute like most of the areas of Bangladesh,
primarily, we'll produce summer & winter shoes, shopping bags and vanity
bags by jute and research to produce more innovative products to keep up pace
with global demand through project's R&D center.
we'll launch other entrepreneurial activities including poultry farming,
fisheries and milk processing, packaging and marketing for rapid and
establish necessary numbers of preparatory and primary schools with up-to-date
curriculum. Educational institutions would be accomplished with computer labs,
internet access and libraries.
couple of years (from 2013- 2015) the village Jaduboyra, the first targeted
branch, will be changed for poverty free self-dependable village & standard
of living. By the time five preparatory schools and a high school, five
fisheries and five poultry firms will come under full operation. 500 direct
jobs will be created through banking and other entrepreneurial activities.
Further 500 small scale production lines, which will create employments for
another 1200 employees. 1700 families will come out from the tremendous
poverty. Poverty will be removed and massive changes will be brought in
socio-economic living then activities of the project will be extended to other
branches with the same massage and mission.
banking is one of the most useful components to alleviate the world poverty.
But it doesn't work it-self. Effective strategies and proper implementation is
indispensible to bring the desirable consequences.
Hartmann:"Erlцsen kann uns nur der Tod" ("Only Death Can Save
Us"),Frankfurter Rundschau, 30 August 2012
Bateman (2010-09-01). "The illusion of poverty reduction". Red Pepper magazine.
3. Wastover & Khandker.
(2008). The social inpact of microcredit, journal of international
development. Vol. 16, issue 3, Wastover & Khandker. (2008). The wider impact of BRAC poverty alleviation program in Bangladesh.
Journal of International Pp. 95-110; April 2004.
4. Litterfield &
Hoshemi (2003). Assessment of the role of microcredit in
development of social capital. Doctoral dissertation.
Lund University centre for Asian students.