Economic uplift of the ultra poor

Nur Banu, aged 35, can possibly hit headlines of newspapers on her heroic economic performance. Hers is a tale of how she graduated from ultra poor status to a moderate poor in her village in only two years.  It may sound a miracle from a pessimist's point of view but it happened really on the ground.
The 'glorious' graduation is owed mainly to the Special Targeting of Ultra Poor (STUP) project. It is a project innovated by the Bangladesh Rural Advancement Committee (BRAC), the largest NGO (non-governmental organisation) in the world. The project aims at giving an amount of money as grants to the ultra poor to accumulate assets so that they could generate income over time. But since the money so transferred could be used for consumption other than asset accumulation as the poorest usually do, the programme also provides a leverage. The allocation provides Tk 160 each week for meeting consumption needs and Tk 50 to buy 'masur dal' for meeting nutritional requirements. This way the system runs for 14 weeks. The ultra poor get cash in hand for nine weeks and the rest is saved in their accounts.
Nur Banu of our story was ultra poor until she was selected for the STUP. The identification of an ultra poor in a village in rural Bangladesh does not take any rigorous research. They are mostly landless remaining in a 'hunger' situation almost all the year round. They are ill-clothed, engaged as maid servants or in road maintenance/ construction works. They serve as agricultural wage labourers and are socially treated as 'untouchables'. Most importantly, they are housed in ramshackle huts made of straw as a poet had once ruefully said: Amar vanga ghorer vanga chala vanga berar fake, Obak Josna ghore dhuika hath baraia dake (Moonlight peeps through the broken walls and broken roof of my broken house  and calls me).
Banu of Char Shibir Kuti Colony Para - 10 km from Lalmonirhat  sadar - passed through the same syndromes since her birth.  As she talked to this writer, she said she was married at the age of 11 to Shafi shaheb.  "Why is the epithet 'shaheb' ?", she was asked politely. "Because he looks like shaheb", replied Banu chewing betel leaf and showing a bit of shyness.
Our conversation goes on and the pathetic scene unfolds. One day her husband - reportedly a graduate - went to 'dazzling' Dhaka in search of a job but remained missing for about a year. People around suspected that her husband might have deserted her. To add salt to the injury, the news spread that her husband had another wife. Social stigma apart, poverty of Banu deepened with her little son. There was no other earning member in the household. Parents were too poor to help her. Under these circumstances, Banu fell from the frying pan to the fire. And as we all know, women in such a pitiable condition often fall prey to 'human vultures' roaming around the village.
Fortunately Banu could escape the ordeal. The STUP of the BRAC, after a rigorous qualitative assessment based on villagers' perception of economic ranking, selected her as a suitable candidate to be on board.  To this effect, she was provided with Tk 7,000 as grant equally divided for buying goods for a grocery shop and animals for rearing.  She had a grocery shop earlier but the husband cheated her by selling it to grab the money. The BRAC's field staff found her comparative advantage and decided to help with a grocery shop. They took her to Lalmonirhat to purchase various items as per her choice. Banu said it was her first visit to Lalmonirhat. However, out of Tk 7,000 grant money, the BRAC also arranged to buy for her two goats worth Tk 3,500.
Transfer of commodities and animals apparently turned a new leaf in her life ridden with poverty. When the number of goats reached 10 as time went by, she sold some of them to buy a cow. Her sale proceeds from the shop amounted to Tk 1,000 daily and her shop was having goods worth Tk 10,000. Taking advice from the BRAC, she also possessed 10 decimals of land by way of mortgage. The land now produces food for the family. Her son now reads in class one and she gives him Tk 50 daily.  She also has a few goats, a few chickens and ducks and two cows at her disposal at the moment.  In the meantime, she repaired the house, went for sanitary latrine and pure drinking water. When all were going well and to the surprise of her and all in the vicinity, the missing husband re-appeared during the turnaround time - empty-handed. People suspected that he was back again to grab her money. But like a typical village woman, Banu still believes that her husband is after a job to meet the needs of the family. It could be learnt later that he was again missing for some time.
Banu is now a very busy village woman, sometimes pouring tea for sale in the flask to take to the shop, looking after livestock and poultry, going to the field to fetch paddy or taking care of the kid. Over the last two years, as she reports, her economic condition and food intake have improved greatly. So has the housing condition and social status. She has now a few sources of income plus a few assets that she accumulated over two years. Banu is now poor but not ultra poor as she used to be.
By and large, the graduation of Banu from the status of an ultra poor to that of a moderately poor provides positive lessons for us. First, transfer of assets is necessary but not sufficient for economic uplift of the ultra poor. This means that asset transfer must accompany grants to ease consumption constraint. Second, the extreme poor need asset as well as advice. In this case, frequent advice from the BRAC staff to the woman about potential windows of opportunities possibly paved the way for her graduation. Third, assets should be prescribed in tune with the client's comparative advantage. This calls for consultations for purchase of materials. Fourth, market access and opportunities are important even for the extreme poor. Banu is blessed with a good infrastructure in and around her household. Fifth, small household size, health condition of the working member and hard work help the graduation. And finally, pre-project training and strict monitoring every week in the post-project phase over utilisation of funds appear as a sine qua non for paving the way for graduation.
Banu is now all set to access micro-credit. Given her present status, it is unlikely that she would spend all the credit money for consumption only. The training she was given, the financial discipline that she was taught and the market opportunities that she experienced over the last two years might help her to be pushed above the moderate poverty line that she is faced with now.
Banu's school-going son will also be educated enough to get a job that will sustain her march forward.
Thus we see a breakthrough made for Banu by the BRAC. But all that starts well may not end well. Major shocks might disrupt her journey towards a better future. First, the Dharala river erosion could sweep away her homestead and thus may put her in peril again. Second, the husband could deceive her again to take away the whole income. And third, a slowdown in economic growth could reduce her earnings. After all, Banu's livelihood is now linked to the market.
The writer is Professor of Economics at Jahangirnagar University.
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