Microcredit And Poverty Reduction

Moni Begum's mini garments factory workers.

Moni Begum is a popular name to most households in many localities of Mymensingh town today. Seldom a social function or arbitration is held in these localities without her. She owns a mini garments factory with 10 stitching and embroidery machines; 20 poor and hardcore poor women work there in two shifts earning Tk 2000 to 3000 per month. She also owns a small chocolate manufacturing and selling outlet where five male employees earn Tk 3000 to 4000 per month. Moni Begum is both financially self-reliant and socially empowered now. And all this because of her proper utilisation of micro credit. She is a success story worthy of emulation by thousands of beneficiaries of micro credit system.
But 16/17 years ago Moni Begum very often had to pass her day without even a meal. In 1990 this often unfed often half-fed hapless poor woman organised a 20-member landless women's group at Purohitpara area of Mymensingh town. Initially their rate of weekly savings was only Tk 2 per head. She took first loan amounting to Tk 2000 from ASA in 1990 and with it started her enterprise of supplying panties and banyans for the new born to the Gyne Ward of Mymensingh Medical College.
She used to buy piece cloths from market and make the babywears herself. Next year she took a loan of Tk 4000 and started a small scale saree trade. She could sell 15 to 20 sarees per week moving from house to house in neighbourhood localities. This fetched her Tk 400 to 500 per week. Next year she took a loan of Tk 6000 and bought two sewing machines.
This gradual increment in the micro credit amount taken by Moni Begum and its progressive utilisation earned her trust and support of the providers. Obviously she took it by turn from the same organisation and repaid usually in time. Of late she has taken Tk 1,30,000 from ASA under small entrepreneur credit. Adding with it her savings of 16 years she has established her mini garments factory. And for marketing her products she has also opened a centre in the town in partnership with one of her relations. This too has cost her no insignificant investment.
Micro credit is playing its part in poverty reduction. Mymensingh has been marked as the most poor district by FAO (Food and Agriculture Organisation). The reasons for its being so have been identified as agrobased economy, amount of land much less than required for the population as well as only single crop land in the vast haor area and scarcity of permanent employment opportunities. However, with a view to reducing the scale of poverty in the district ASA alone has opened 96 branches covering all the thanas and brought about two lakh hardcore poor families under micro credit programme.
Grameen Bank, BRAC Proshika and other micro credit providers must have similar significant coverage and have been working to reduce poverty of their respective members. This must have helped thousands of poor and ultra poor families to cross over the poverty line and many among them to be self reliant like Moni Begum.
It is believed that through proper utilisation of micro credit amount it is no more a dream but just possibility for thousands of Moni Begums to stand on their own feet and with their projects help many others to overcome poverty.
One thing is significant in case of ASA that 96 per cent of its members pay installments regularly and its recovery rate is 98 per cent. In case of other providers also these rates are supposed to be similar. With such achievements and projections, micro-credit's poverty reduction potential stands out to be enormously impressive. What is needed is some dedication and integrity as shown by Moni Begum, because these are the virtues behind any success.

Md Enamul Huq is Executive Vice President, ASA.