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Microfinance Programs Help Poorest of the Poor

how microfinance helps the poor

At the parallel session, “Creating and Enhancing Assets of the Rural Poor,” Fazle Abed, founder and chairperson, BRAC. Bangladesh highlighted his 30 years of experience with microfinance programs. BRAC was started with a $30,000 USD grant, and funding has expanded as the programs have had great success. As the conference is about the poorest of the poor, he highlighted recent work with who he called the ultra poor (those who make less than $.35 USD a day). The ultra poor program is a two year program in which to stabilize credit for poor families. The cost for the program is $300, with $150 for asset transfer, and $150 for time with BRAC staff for assistance for the family. Families are provided with a portfolio of options in which to choose.

This program has been successful in helping the poorest climb the microfinance ladder, from ultra poor, to tolerable poor, to lending status. He said, “There is an entrepreneurial spirit in everyone,” and said that microfinance gives the

poor the opportunity to exercise this. In addition to microfinance programs in Bangladesh, he highlighted efforts in other countries. In the past year successful programs have been set up in Tanzania and Uganda. He identifies that there are three million potential borrowers in Tanzania. Abed made the point that only women are staff in Afghanistan, and he instituted the same policy for staff in the African countries. He plans to maintain a solely female staff as a way to get women employed as microfinance administrators.

The role of conditional cash transfer (CCT) programs was raised in the post-presentation discussion, and Abed believes CCT programs can better microfinance programs since CCT programs provide food or education. Therefore all microfinance funds can be spent on business, furthering the potential to move people out of poverty. The success of microfinance programs has been seen, but there is much progress that can be made if microfinance programs are made available to people in various countries, and at various levels of poverty.

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