Where Bangladesh leads the world
The success of private development organisations in Bangladesh, in my view, demonstrates one of the few areas where we have globally contributed to modern day social innovation and entrepreneurship. While the sector has its many critics -- politicians, fundamentalists, academics, business, donors, government; basing their criticisms on reason, ideology, power relations, violence, and envy among other factors -- the actual indicators point to the vital role played by non-government organisations (NGO) and micro finance institutions (MFI) in the country's development.
For example, micro-credit for the poor which accounts for over 5 per cent of private sector credit and estimated to have reached 37 per cent of all households, is shown to have positively impacted on household incomes, increased the probability of children going to school, and decreased consumption variability. NGO education programs have been more effective and efficient in reaching economically poorer children, particularly girls, with attendance and completion rates higher than government schools. In fact, Bangladesh is the only country in South Asia to have achieved gender equity in primary enrollment, in large part due to the role played by NGOs. NGO community-based health care has made health care more accessible, effected malnutrition and child survival, and led to higher use of family planning. The impact of NGOs, while impressive, nevertheless needs to be further spread and sustained.
The concept of the modern day NGO was probably first reflected in Article 71 of the UN Charter that provides for "consultation with non-governmental organisations." The terminology and notion of a third sector, however, only started gaining ground in the early seventies, largely in response to the widening disparities resulting from the "trickle down" theories of the fifties and sixties and the limitations of government in reaching resources to the poor. In Bangladesh too, NGO activities began in the seventies following the aftermath of the 1970 tidal cyclone and 1971 independence war. This is not to say that there weren't social initiatives prior to these events -- far from it. Take for example, the Baptist Missionary Society, said to have been established in 1794; or the establishment of the Kumudini Welfare Trust in 1944; or the pioneering work of individuals like Nawab Faizunnessa (education) and Dr. Mohammad Ibrahim (diabetes). In most instances, however, the approach was charity and relief oriented, and did not particularly resemble the NGOs of today.
The exception to this was perhaps the Comilla model, which began in 1959, under the leadership of the dynamic social scientist Akhter Hameed Khan. It was an influential example of "agricultural and rural development on the principle of people's participatory role at the grassroots level and cooperatives." Some of the assumptions of the model -- recognising villagers as having the best understanding of rural problems, approaching problems from their viewpoints, the capability of villagers in bringing about changes, and the importance of training, research and demonstration in promoting rural development -- are still reflected in the NGO literature and programs of today. While the Comilla model did not spread as successfully as subsequent social innovations, the principle of action and style of local analysis and problem solving developed from the experiments was a strong influence.
The NGO response to the man-made and natural disasters that afflicted Bangladesh in the first half of the seventies was initially limited to relief and rehabilitation. From the mid-seventies, there was a realisation that such an approach was at best a stop-gap solution, and not a very effective one at that. Hence, NGOs changed their strategy and started experimenting with integrated community development programs, borrowing significantly from the Comilla model. It was thought that the overall development of the community would lead to the development of poorer groups, but what had not been accounted for were structural constraints within rural societies that restricted benefits reaching the poor. Wealthier members led different groupings within the communities; and for the poor to access resources or gain some level of security meant that they had to align themselves with one group or another. The poor's disadvantage of income differentials and inability to accumulate wealth, coupled with the forced grouping, created dependency on richer groups who exploited the inherent power relations for their own gains. NGOs recognised that there needed to be specific focus on transforming the capacity of the poor if they were to challenge these structural inequalities and started targeting their development efforts only to the poorest groups.
The target group approach can be broadly categorised into two specific paradigms. On one end of the spectrum is the conscientisation model, based on the pedagogical approach of Paulo Freire, that suggests poverty results from or is sustained due to structural inequalities (e.g. lack of representation of the poor in power structures and/or access to resources) and can be challenged only if and when the poor mobilise and collectively take action. On the other end is the economic model, which views poverty being caused largely due to market imperfections such as unequal access to credit for the poor. Based in large part on the success of micro-credit, this approach focuses on activities geared towards improving the economic conditions of the target group. There are of course many NGOs who work combining both approaches, but overall the economic one dominates.
Interestingly, most NGOs in the seventies started with the more radical conscientisation model, but prioritised service provision in the eighties, contending that mobilisation was difficult without economic inputs, and this along with the group mechanism, laid the foundation for ultimately empowering the poor. While the conscientisation NGOs critiqued the credit argument as not weakening structural inequalities, they themselves toned down their rhetoric and actions. This was due to the backlash, at times violent, from the establishment along with the fear of losing licensing, withdrawal of government permission for external funding, and donor discomfort with the prevalent strategy.
The government's relation with NGOs is largely determined by the prevailing ideology and values of those in power along with the socio-political situation of the country. During the early years following independence, NGOs primarily focused on relief and rehabilitation, and as such the government did very little to restrict their growth. With the advent of military rule and accompanying religious influences, tensions arose with the government even attempting to restrict the activities of some church related NGOs. The consequence of this was the promulgation of the Foreign Donations (Voluntary Activities) Regulation Ordinance,1978 that made it mandatory for NGOs to register and get approval of the government prior to receiving foreign funding. The process was and still remains bureaucratic, and forces NGOs to negotiate in order to receive funding. A subsequent ordinance passed in 1982 made it even illegal to receive foreign air-tickets for travel abroad without permission. These steps were also reflective of the military rulers suspicion of NGOs being conduits for funding opposition parties and discomfort with the conscientisation model that advocated for challenging prevailing power structures. Hence, the argument that the paradigm shift discussed earlier was influenced by the very power structures that these organisations were meant to combat.
Even though NGOs continue to be viewed with suspicion, partly due to their own actions, they have at times been able to counter these pressures quite effectively. The government has also valued their collaboration in a number of areas such as family planning and health, education, and more recently micro-credit. The present day tension can also be attributed to an ever-growing discord between the fundamentalist lobby and the predominantly secular NGO community. The secular nature of the NGO sector is particularly significant considering Bangladesh's portrayal of itself as a moderate Muslim multi-party democracy in a post 9/11 world order. There are instances of the government's representatives highlighting the success of micro-credit or the gender parity in primary enrollment -- achievements that may not have been possible if NGOs had not focused their attention to working with women and children.
Successful social models, unlike their business counterparts, do not often spread rapidly once developed. NGOs were recognised for their localised innovations and good practices, but going to scale was not their forte. By the 1990s, however, this did not hold true anymore for a group of organisations in Bangladesh that were impressive by any standard, based on the sheer number of people they directly reached.
For example, it is estimated that micro-credit reaches around sixty percent of poor households, with 14.34 million active borrowers being serviced by MFIs. The sector is dominated by three NGOs (BRAC, Asa, and Proshika) and one specialised bank (Grameen Bank) that account for over 85 per cent of active borrowers and over 90 per cent of the $1.35 billion total outstanding loan portfolio. In the field of education, NGO primary schools with around 2 million students account for approximately 10 per cent of currently enrolled students. Of these, BRAC alone accounts for over 1.5 million students in 31,000 schools, 66 per cent of whom are girls from poor families. Moreover, the 1995-2000 period saw the proportion of rural communities with at least one NGO program almost doubling and the average number of NGO programs trebling.
While different authors have attributed various factors to the scaling up of development programs in Bangladesh, I believe four factors stand out as key to understanding this phenomenon. First, the charismatic and visionary leadership of our largest development institutions was integral to convincing skeptical audiences regarding the potential of their models along with building motivated and dedicated teams. There are few social entrepreneurs anywhere in the league of Professor Yunus or Mr. Abed, with the former being the first ever Bangladeshi citizen to be nominated for the Nobel Prize.
Second, the sector welcomed and encouraged competition towards improving service delivery and product choice for the poor. It shared strategies and ideas with other organizations and provided technical inputs and capacity building for those interested in replicating. Third, the sector took calculated risks, focused on continuous innovation, and learnt from mistakes to further refine and standardise their models. Fourth, organisations understood the importance of investing in human resources and developing systems for greater accountability (e.g. internal controls, audits, computerization).
The successful expansion of micro-finance, in particular, fuelled both the increase in expenditure as well as the decrease in donor dependency of developmental organisations. Access to finances that were not controlled by donors or other agencies allowed NGOs greater freedom. Hence, one witnessed the larger institutions establishing commercial ventures to tap the markets and use the derived profits for their social programs. This strategy was of course not without its detractors.
Businesses complained of the lack of a level playing field and accused NGOs of using their non-profit status to avoid taxation.
There was a public interest litigation filed by an academic challenging Brac's establishment of a commercial bank. Others, including some working within the sector, argued that NGOs lacked the know-how for business and that these ventures would distort the social mission. While there may be some merit in these arguments, a number of issues need to be recognised.
First, the revised tax rules do not automatically allow tax exemption for NGOs if they have profit making ventures, and the trend is to separate the business operations from the social sector programs. Second, globally there is an increasing blurring of the boundaries between the social and private sectors with strategies being transplanted and adapted from one another. Third, the commercial ventures have contributed to making developmental organisations more sustainable while innovating business models that affect the lives of the poor. For example, Grameen-phone has been instrumental in reaching telecommunication services to rural areas.
The failure of state and market solutions in dealing with important social problems created the space for NGOs to operate in. Additionally, endemic corruption in poorer countries led to donors searching for alternate channels to direct their aid. NGOs, in countries like Bangladesh, offered this alternate channel and greatly benefited from their support. Some of them are now sophisticated, multi-million dollar institutions with large employee bases and extensive reach. Yet, they too suffer from two important weaknesses that are reflective of the sector as a whole.
Firstly, NGO organisational governance is not particularly well developed with issues such as board representation and responsibilities, separation of board from management, succession planning and so forth neglected. While part of this can be attributed to limitations within most of the existing legislation and agencies responsible for oversight, a major consideration is the influence of NGO founders and their possible resistance to addressing these issues. With the sector soon gearing up for transition to the next generation of leaders, this is an area that needs attention.
Secondly, certain social problems have been difficult to crack and NGOs need to make stronger efforts at addressing those. For example, the failure to reduce neo-natal mortality, or the continuing presence of monga each year, or the inability to effectively reach the extreme poor. It is expected that the next generation of NGO leaders, inspired by the dynamic leadership of their first generation counterparts who paved the way for social entrepreneurship to be a powerful force in our nation's development, will be up for this challenge.
Safi Khan works in social development.