MFI as promoter of profitable self-employment
Thursday, 26 March 2009
Md. Mahbubur Rahman Bulbul
NOWADAYS a dairy farm is a very profitable business in Bangladesh. Such farms are changing lifestyle of a huge number of women, especially, those that want to become self-reliant in their life. In town or village, everywhere dairy farm is giving a very big financial support to everybody, because milk serves both as a food and as a profitable business opportunity. A strong financial support is needed to run a such a farm.
The public banking sector is reliable for this purpose. Especially, Bangladesh Krishi Bank is responsible for financial assistance to such a farm project for development. But their support is very poor. The picture is no better in the case of other banks. For this reason, microfinance institutions (MFIs) of Bangladesh have come to solve the liquidity crisis in this sector. A large number of MFIs are working in Bangladesh. Especially, they are operating micro-credit programmes in order to create a class of women or men micro-entrepreneurs for poverty alleviation.
Micro credit has created a class of micro entrepreneurs in Bangladesh and it is gratifying to find that women make up the largest section of such entrepreneurs. In Bangladesh, there are many successful shops, production houses and firms owned and managed by women. Some launch a business project to uplift their economic status, while others venture into the business arena to do 'something different' or 'something differently' and importantly, which are worthwhile for society.
Women entrepreneurs are making their presence felt in rural areas, too. Village women mainly start business in the struggle for survival, but with a little support from microfinance institutions (MFIs), non-government organisations (NGOs) and social welfare organisations, they can go beyond the subsistence level and make healthy profits from their thriving business activities. These women innovate and change the production function -- the fundamental attributes of an entrepreneur. Because they have modest resources, they are known as micro entrepreneurs; however, they discover new sources of supply of inputs and new markets, just like any other entrepreneurs.
There are big MFIs in Bangladesh which are playing a vital role for creating a large number of women micro entrepreneurs and empowerment of women by their micro finance assistance. Among them, ASA, BRAC, Grameen Bank, BURO, Jagoroni Chakro, TMSS, Shakti Foundation etc., are very popular and effective MFIs in Bangladesh.
ASA is the largest MFI in the world. Small Entrepreneurs Lending (SEL) and Agro-business Loans are the two programmes of MFI. It is a very effective and successful loan programme for building up women empowerment and women micro entrepreneurs in Bangladesh. Both men and women are greatly benefited from ASA's SEL and Agro-business loan programmes. Especially, a large number of women in Bangladesh are benefited and in this way they became self-sustainable by the financial assistance of ASA's SEL and Agro-business loan programmes.
Now in Bangladesh, ASA provides their microfinance programme to 8.5 million poor and helpless people through their 3800 branches. So, the total number of borrowers of ASA is 8.5 million. It is the highest in Bangladesh. Most of the borrowers are women. ASA's Agro-business loan product is for the small and emerging entrepreneurs. This loan product helps them run their business well along with creating employment opportunities for others, especially in the agriculture sector. This activity helps to face the unemployment challenges to some extent. ASA is giving a big financial support for the development of dairy, poultry, fisheries projects as well as for cultivation, plantations and so on. These are under its agro-business project. Women comprise the largest number of beneficiaries, we became self-sustaining with the help of ASA's SEL and agro-business loan programme.
The following case-study shows the successful and positive changes that ASA's women micro entrepreneurs experienced all over Bangladesh. According to the study, 55-year-old Mrs Hena Qader supports her 60-year-old husband, three kids by selling cow milk. Her husband's name is Abdul Qader. Her family has been living in east Kajipara of Mirpur for 35 years. She runs a big dairy farm at her own residence. Once, she was purely a housewife. But she turned herself into a model to others by earning a very good sum of money by selling different kinds of cow and milk from her well-established dairy project.
Her academic background is that she read up to class five. Their conjugal life was not happy at the initial stage. When she started her dairy project, she faced a financial crisis to run this project. Just then, she came in touch with ASA. Its local branch officials encouraged her to start a dairy project at her residence eight years ago. In the beginning, she borrowed Taka 15,000 from ASA's Mirpur branch office in 2001 as micro loan. Next time, she borrowed Takas 20,000 from ASA. She invested all of the money in her business. Hena Qader took the fourth cycle loan from ASA amounting Tk 30,000 to expand her business. After completing the fourth cycle small loan, she was graduated as a big loan member under agro-business loan of ASA in 2008. Lastly, she took one hundred thousand taka as agro-business loan to expand her project area. Now she is a successful owner of a big 'dairy project'. There are 12 Australian cows in her dairy farm. The price of each cow is a minimum of Taka 50,000 and or one hundred thousand takas. The prime source of her profit is selling of milk. Other businesses include purchasing and selling of cow. Both are largely profitable. Everyday she gets 20 litres milk from each cow. Totally, she gets 120 litres milk from her 12 cows. The price of per litre milk is Taka 40. On an average, per-day she sells 120 litres milk and total amount is Taka 4800. After meeting the costs of her business, she is left with a net monthly income of taka one hundred thousand. Now she is well an established and self-sustaining woman entrepreneur.
It is true that Bangladesh is an agriculture-based country. So, dairy project can be a most profitable and also a large area of operational activity in the agriculture sector of Bangladesh. For this reason, Asian Development Bank (ADB) has proposed to give financial assistance to our country through some big MFIs in Bangladesh to reduce the main problems in the agricultural sector and especially to give big financial support like this to dairy project. They have also taken an initiative to increase the production, collection, processing and marketing of profitable agricultural goods and in this process create employment opportunities for the rural people in Bangladesh.
For this purpose, ADB and the government Bangladesh have jointly allocated a big budget for implementing their new road-map for agro-based project. The name of that project is "Agro-Business Development Project'.
ADB has taken their joint initiative for development and positive changes in agriculture sector of Bangladesh through world famous MFI-ASA, BRAC and TMMS. The government has already sanctioned the required budget for loan disbursement in related projects. ASA has got Taka 100 million for disbursing loans through their respective branches from May 05, 2007.
At the primary stage, ASA has already completed their loan disbursement in related projects under their branches. The range of this loan amount is Taka 35,000 to 3, 50,000 for an entrepreneur on a project basis. The period of this loan is six months to three years. In the business sector, ASA contributes 70 per cent of their capital and entrepreneurs contribute the remaining 30 per cent of capital from at their own initiative.
ASA has made a target to create employment opportunities for 70 thousands people by giving loan to 28 thousands small agro-business development entrepreneurs. It is giving them all technical support for this purpose.
ASA will get allocation of revolving fund worth Taka 760 million from the government of Bangladesh and also from ADB for investment in this project. Those organisations which are engaged in this project for implementing the programme include the ministries of Agriculture, Finance, Planning Commission, Agro marketing under Finance Ministry, Eastern Bank and Basic Bank Ltd. and non-government organisations like ASA, BRAC and TMMS. The project area covers the whole of Bangladesh.
Total project period is between 2006 and 2010 and project expense is Taka 3.82 billion. Of this budget, total expenses for loan fund is Taka 2.15 billion. This loan is for the small and emerging entrepreneurs in the agriculture sector. This project will help them in running their business well along with creating employment opportunities for others, especially for the hardcore poor. This activity will help to face the challenges of unemployment to some extent.
The writer is serving in ASA
NOWADAYS a dairy farm is a very profitable business in Bangladesh. Such farms are changing lifestyle of a huge number of women, especially, those that want to become self-reliant in their life. In town or village, everywhere dairy farm is giving a very big financial support to everybody, because milk serves both as a food and as a profitable business opportunity. A strong financial support is needed to run a such a farm.
The public banking sector is reliable for this purpose. Especially, Bangladesh Krishi Bank is responsible for financial assistance to such a farm project for development. But their support is very poor. The picture is no better in the case of other banks. For this reason, microfinance institutions (MFIs) of Bangladesh have come to solve the liquidity crisis in this sector. A large number of MFIs are working in Bangladesh. Especially, they are operating micro-credit programmes in order to create a class of women or men micro-entrepreneurs for poverty alleviation.
Micro credit has created a class of micro entrepreneurs in Bangladesh and it is gratifying to find that women make up the largest section of such entrepreneurs. In Bangladesh, there are many successful shops, production houses and firms owned and managed by women. Some launch a business project to uplift their economic status, while others venture into the business arena to do 'something different' or 'something differently' and importantly, which are worthwhile for society.
Women entrepreneurs are making their presence felt in rural areas, too. Village women mainly start business in the struggle for survival, but with a little support from microfinance institutions (MFIs), non-government organisations (NGOs) and social welfare organisations, they can go beyond the subsistence level and make healthy profits from their thriving business activities. These women innovate and change the production function -- the fundamental attributes of an entrepreneur. Because they have modest resources, they are known as micro entrepreneurs; however, they discover new sources of supply of inputs and new markets, just like any other entrepreneurs.
There are big MFIs in Bangladesh which are playing a vital role for creating a large number of women micro entrepreneurs and empowerment of women by their micro finance assistance. Among them, ASA, BRAC, Grameen Bank, BURO, Jagoroni Chakro, TMSS, Shakti Foundation etc., are very popular and effective MFIs in Bangladesh.
ASA is the largest MFI in the world. Small Entrepreneurs Lending (SEL) and Agro-business Loans are the two programmes of MFI. It is a very effective and successful loan programme for building up women empowerment and women micro entrepreneurs in Bangladesh. Both men and women are greatly benefited from ASA's SEL and Agro-business loan programmes. Especially, a large number of women in Bangladesh are benefited and in this way they became self-sustainable by the financial assistance of ASA's SEL and Agro-business loan programmes.
Now in Bangladesh, ASA provides their microfinance programme to 8.5 million poor and helpless people through their 3800 branches. So, the total number of borrowers of ASA is 8.5 million. It is the highest in Bangladesh. Most of the borrowers are women. ASA's Agro-business loan product is for the small and emerging entrepreneurs. This loan product helps them run their business well along with creating employment opportunities for others, especially in the agriculture sector. This activity helps to face the unemployment challenges to some extent. ASA is giving a big financial support for the development of dairy, poultry, fisheries projects as well as for cultivation, plantations and so on. These are under its agro-business project. Women comprise the largest number of beneficiaries, we became self-sustaining with the help of ASA's SEL and agro-business loan programme.
The following case-study shows the successful and positive changes that ASA's women micro entrepreneurs experienced all over Bangladesh. According to the study, 55-year-old Mrs Hena Qader supports her 60-year-old husband, three kids by selling cow milk. Her husband's name is Abdul Qader. Her family has been living in east Kajipara of Mirpur for 35 years. She runs a big dairy farm at her own residence. Once, she was purely a housewife. But she turned herself into a model to others by earning a very good sum of money by selling different kinds of cow and milk from her well-established dairy project.
Her academic background is that she read up to class five. Their conjugal life was not happy at the initial stage. When she started her dairy project, she faced a financial crisis to run this project. Just then, she came in touch with ASA. Its local branch officials encouraged her to start a dairy project at her residence eight years ago. In the beginning, she borrowed Taka 15,000 from ASA's Mirpur branch office in 2001 as micro loan. Next time, she borrowed Takas 20,000 from ASA. She invested all of the money in her business. Hena Qader took the fourth cycle loan from ASA amounting Tk 30,000 to expand her business. After completing the fourth cycle small loan, she was graduated as a big loan member under agro-business loan of ASA in 2008. Lastly, she took one hundred thousand taka as agro-business loan to expand her project area. Now she is a successful owner of a big 'dairy project'. There are 12 Australian cows in her dairy farm. The price of each cow is a minimum of Taka 50,000 and or one hundred thousand takas. The prime source of her profit is selling of milk. Other businesses include purchasing and selling of cow. Both are largely profitable. Everyday she gets 20 litres milk from each cow. Totally, she gets 120 litres milk from her 12 cows. The price of per litre milk is Taka 40. On an average, per-day she sells 120 litres milk and total amount is Taka 4800. After meeting the costs of her business, she is left with a net monthly income of taka one hundred thousand. Now she is well an established and self-sustaining woman entrepreneur.
It is true that Bangladesh is an agriculture-based country. So, dairy project can be a most profitable and also a large area of operational activity in the agriculture sector of Bangladesh. For this reason, Asian Development Bank (ADB) has proposed to give financial assistance to our country through some big MFIs in Bangladesh to reduce the main problems in the agricultural sector and especially to give big financial support like this to dairy project. They have also taken an initiative to increase the production, collection, processing and marketing of profitable agricultural goods and in this process create employment opportunities for the rural people in Bangladesh.
For this purpose, ADB and the government Bangladesh have jointly allocated a big budget for implementing their new road-map for agro-based project. The name of that project is "Agro-Business Development Project'.
ADB has taken their joint initiative for development and positive changes in agriculture sector of Bangladesh through world famous MFI-ASA, BRAC and TMMS. The government has already sanctioned the required budget for loan disbursement in related projects. ASA has got Taka 100 million for disbursing loans through their respective branches from May 05, 2007.
At the primary stage, ASA has already completed their loan disbursement in related projects under their branches. The range of this loan amount is Taka 35,000 to 3, 50,000 for an entrepreneur on a project basis. The period of this loan is six months to three years. In the business sector, ASA contributes 70 per cent of their capital and entrepreneurs contribute the remaining 30 per cent of capital from at their own initiative.
ASA has made a target to create employment opportunities for 70 thousands people by giving loan to 28 thousands small agro-business development entrepreneurs. It is giving them all technical support for this purpose.
ASA will get allocation of revolving fund worth Taka 760 million from the government of Bangladesh and also from ADB for investment in this project. Those organisations which are engaged in this project for implementing the programme include the ministries of Agriculture, Finance, Planning Commission, Agro marketing under Finance Ministry, Eastern Bank and Basic Bank Ltd. and non-government organisations like ASA, BRAC and TMMS. The project area covers the whole of Bangladesh.
Total project period is between 2006 and 2010 and project expense is Taka 3.82 billion. Of this budget, total expenses for loan fund is Taka 2.15 billion. This loan is for the small and emerging entrepreneurs in the agriculture sector. This project will help them in running their business well along with creating employment opportunities for others, especially for the hardcore poor. This activity will help to face the challenges of unemployment to some extent.
The writer is serving in ASA