Remarks by Dr. Sonya Sultan

Let me begin by telling you a little bit about BRAC. BRAC started in 1972 as a relief organization but, then, moved very quickly to take up a sustainable development approach. It has always followed a microcredit plus approach so, in addition to the microfinance program, we have a health care program that provides preventive, curative and health awareness services to over 30 million people in Bangladesh. We have a non-formal, primary education [division] that currently runs 34,000 schools, and we have had 2.1 million students graduate from these schools so far. We have a social development program that supports institution building of the poor, and social mobilization advocacy. We also have microenterprise support services that include vocational training, technical support and assistance, access and linkages to markets and import supplies. And, finally, we have a research and evaluation division that helps us keep in touch with the changing realities of poverty dynamics in Bangladesh. To give you a sense of the scale of our programs….At present, we are covering all 64 districts in Bangladesh. We have a total of 60,000 staff, out of which 30,000 work full-time. And all our finances are regularly audited by the international firm, Ernst&Young as well as other international institutions like the Shorebank. A little bit more about our microfinance program: At the moment, we have 3.5 million clients, 50 percent of those fall in the extreme poor group at the time of joining. And, this is using the definition of people in the bottom half below the poverty line. And, they're also all well below the $1 a day international measure. So far, the program has disbursed $1.64 billion. Our portfolio-at-risk is 5 percent, despite the large scale of the program, and we are very proud to say that we are able to generate 15 percent surplus from interest and fees.

I would like to move on to discuss some of the challenges that BRAC has identified. I will begin with a theme that's been discussed already this morning-reaching the ultra poor… while we have a very successful, thriving, innovative microfinance industry in Bangladesh, we are also aware-through several impact assessment studies-that we are not always able to reach the bottom of this target population-the poorest among the ultra poor. And, perhaps, there is a need to tailor some of the products and move away from traditional microfinance products to actually reach this target group and also, then, to ensure that we can generate sustainable livelihoods through them. …The ultra poor we are talking about-and, I've personally been involved in selecting this group-they often involve women with chronic food deficits; women and men who have to beg for a living, who have to send children to work, who have no access to sanitation or drinking water, who have to squat on other people's land, and they're often people who have an income of 20 cents, 30 cents or 40 cents per day. And, even that is not on a sustainable basis. So, here we are really talking about the absolute poorest in the world. And, I would say they are "destitute" by international standards.

BRAC's experience working in this field has suggested that, perhaps, there's a need for a new strategy. And, the strategy we have taken up is to develop programs that combine social protection strategies with income promotion. So, in some ways, we have taken the sustainability issue and turned it on its head and sort of said, "We want to develop programs with people who traditionally have only been seen as relief recipients and work with them in ways that are cost-effective and that will enable [them] to generate sustainable livelihoods for the future. So, the idea behind this is that we want to build the capacity of the ultra poor and, for this group, we feel that there is a need for an initial safety net provision that will enable them to fully utilize services such as microfinance and help them access other mainstream development services and programs.

I will give you an example of a successful program where we have actually used this strategy. This is a bit of a tongue twister: It's called the IGVGD program, and it means Income Generation for Vulnerable Group Development. Now, this is a program that initially was started by the government of Bangladesh and the World Food Programme as a relief program. It involved wheat rations, hand-outs. And, it was called the Vulnerable Group Feeding Program. BRAC then got involved with this program and added a component which involved vocational training in certain sectors like poultry and livestock rearing small business and provided them with small loans which often start as low as $17.

Through this program, we found that it was able to help these women move from a situation where they depended on relief or the assistance of other community members to a stage where they could generate an income in a sustainable manner. The fact that this can also be scaled up is shown by the fact that, until the end of 2000, we had been able to involve 1.5 million participants in Bangladesh. And, among these, two-thirds graduate onto mainstream microfinance programs, and the figures that you see in the action plan about the number of ultra poor that we are working with include a lot of these women. And, more importantly, we find that on graduation the income amongst this group is equivalent in value to the food subsidy they were given during the previous 18 months.

I will, then, move on to the second challenge that we've identified. And, although everybody here has been discussing empowerment of poor people . . . of women, BRAC's findings have very much shown that simply focusing on economic well-being and economic empowerment is not enough. We feel there is a need for additional input, such as social development, health . . . and that these are just as crucial in order to ensure overall sociopolitical empowerment. Even in the case of economic empowerment, we find that poor women often reach a glass ceiling if certain social constraints are not addressed and that, even for long-term economic improvement, there is very much a need to address the wider sociopolitical issues. So, in this field, we've also set up various programs, such as setting up legal connects and setting up and helping strengthen people's institutions at the grassroots level so that they can make demands at the local level for better services and access to resources. We've been carrying out a lot of advocacy and awareness raising work.

Moving on to the third challenge we've identified: We'd like to argue at BRAC that the success of microfinance programs shouldn't just be measured in terms of giving out loans and making sure they come back on time. If we keep our people focus and poverty focus, then we need to ensure that the loans we give out help poor people escape from a cycle of low productivity and low returns. We want to ensure that our members are able to make a substantial profit and escape poverty by participating in our program. And, for that, we think—just as microfinance services are crucial, other business support services are equally important, and they are equally deprived in those sectors. There's a need for various backwards and forward linkages and support services such as access to timely inputs, access to new technology, linkages with markets. Often, production is not the problem; it's marketing that's more of an issue. In this field, we have set up several microenterprise development support services in certain sectors.

….Are we making people move out of poverty, and how successfully are we doing that? And, comparing data from our second impact assessment study in '96 and our third impact assessment study in 2000, we have found that BRAC interventions have a significant impact in increasing the upward mobility of the poor whether it's from extreme poor to moderate poor or from moderate poor to non-poor. And, we also have a significant impact in reducing downward mobility. In the same time period that we were carrying out these impact assessment studies, we found that, in comparison, households with similar socioeconomic background but no NGO membership, there's a significant increase in poverty. So, we are also very proud of the fact that we have been able to halt some of the downward mobility and reduce the vulnerability of the households we are working with.

Continue to Questions and Answers