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Grameen Bank and its sister organizations-Grameen Chek (Fabrics) and Grameen Krishi (Agricultural) Foundation not only are providing credit: They guide the landless families in Bangladesh for their total development. Dr. Kazi Abdur Rouf
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Grameen Bank and its sister organizations-Grameen Chek (Fabrics) and Grameen Krishi (Agricultural) Foundation not only are providing credit: They guide the landless families in Bangladesh for their total development Dr. Kazi Abdur Rouf Visiting Scholar, Comparative, Development and International Education Centre (CIDEC), University of Toronto and Associate Professor, Noble International University, USA. Paper Presented at the Noble International University Toronto Outreach Centre 720 Spadina Avenue ,Suite 403 Toronto. February 05, 2014
About the Paper This paper talks about Grameen Bank (GB), GrameenChek (Fabrics) (GC) and GrameenKrishi (Agricultural) Foundation (GKF) and their activities in Bangladesh Their program features, strategies and policies; GB is a micro financing organization; GrameenChek (GC) is a manufacturing handloom garments organization; GrameenKrishi (agricultural) Foundation (GKF) engages in agricultural activities, deep tube- wells agricultural irrigation management; They are all social businesses earn revenues from their services
Grameen social businesses agencies and their funding sources Their principles are cover their costs from their earnings, and run them ‘no loss’ basis; Grameen Bank and GrameenChek run their programs without receiving external funding; They are financially self-sufficient; GB and GC programs are designed by their own staff; However, GrameenKrishi Foundation receives start up grants from UNCDF, USAID and the Netherlands government; GKF programs are designed by the western irrigation management consultants hired by the donor agencies; Donors have prescribed programs to GKF without considering the local socio-economic, geo-agricultural and environmental factors; Every year a review mission appointed by the donors to review GKF activities; GKF ends up huge loss in 2002.
Strategies GB and GC have operated their programs from their own generated funds They develop their programs, policies and implementation strategies by using their in-house staff experience. Grammen Bank and GrameenChek are free from external consultants` pressure; However, GKF inception report and plan of action prepared by external consultants; Donors forced GKF to implement consultants’ plan of action.
Why study No study conducted on how GB and GC are successful and why GKF is unsuccessful in its operation; How these agencies helping people and empowering marginalized people in Bangladesh; What strategies, tools and monitoring devices they are using that help them to become national organizations in Bangladesh; This study could contribute to new knowledge of organizational development for social businesses agencies in Bangladesh and elsewhere.
Objectives of the Study To explore what strategies, policies and tools GB, GC and GKF use in implementing their programs in Bangladesh; To identify what steps they have taken to address the issue of poverty and to make them success; To examine if success, how they are successful; if not, why they are not successful.
Research Questions What are strategies, policies and tools GB, GC and GKF using in implementing their programs in Bangladesh?; What are steps they have taken to address the issue of poverty and make them success; and If they success, how they success; if not, why they are not successful.
Methodology The paper reflects author’s own working experience working with GB, GC and GKF; The paper contains secondary data from Grameen Bank, GrameenChek and GrameenKrishi Foundation (GKF); It also contains literature review.
Socio-economic condition and morale of the landless before Grameen Bank come in Nobody cared for the welfare or safety net of the poor and the destitute; They have been doing daily labour jobs generations after generations; Rich and village unethical people show adverse reaction; As poor women visit GB, rich people try to outcast poor people on the plea that these women have committed sin, lost their prestige and became anti-religious; Bank Assistants and Managers on the one hand and village money lenders and village unethical people on the other hand.
Grameen Bank: A ray of Hope Grameen Bank is the bank of the poor; Kofi Anan says,” Microfinance has proved its value, in many countries, as a weapon against poverty and hunger” (2005); Dedicated GB assistants, Bank Managers go to the villages to find out who are the poor people; Organizational structure and operation of GB makes borrowing and repayment convenient and easy for its clients; No rigid structural policies and monitoring devices; No outside consultants work in GB and GC; Landless people gradually picked up courage; They became conscious of their position; Poverty rate of Bangladesh is decreasing. Poverty rate is 31% in 2005 (Bangladesh Human Development Report (2006) which was 58% in 1981.
Development Theories Development theory, modernization theory, dependency theory, structural functional theory, Positivist theory, hegemonic state reproduction model, division of labour theory; Neo-liberalism theory , World system theory, Globalization theory , neo-institutionalism theory; Cultural borrowing theory , cultural domination theory, human capital development theory; Post-modernistic theory, Knowledge economy theory and reproduction theory; All are promoting capitalistic values, western ideologies/knowledge, culture and norms; Donor agents and donors’ officials/consultants carry these values through foreign aid threads; Andre Gunder Frank criticizes modernist approaches where he discovers it is a frame of metropolitan policy as maleficent; All these westernized theories led to vulnerability of third world countries as opposed to strengthening their economic and social development.
Foreign Aid Joel Samoff (2009) mentions foreign aid may function more often to extract than to deliver resources and services; Underdeveloped countries receiving foreign aid, but fire their development projects; Foreign aid does not make partnership between aid recipients and donors rather donors are influencing the aid recipients to follow their agenda; Aid recipients become dependent to donors because they need to accept donors’ terms of references; The unequal relationships between donors and aid recipients raise the issue of the effectiveness and consequences of external support are insignificant to aid partnership development; Here partnership is used simply to label; Foreign aid cannot play a generative role in national development.
Foreign Aid- continue 2 Rather foreign aid become challenging for the agencies to successfully implement the project (Arnove & Torres, 2007; Bray, 2003, 1999; Leys, 1995; Manion, 2012; Noveli, 2010; Samoff, 2009); It is because of the structure of the aid relationship with aid recipients; Rather many cases foreign aid agencies are coercive to aid receiving agencies (Bray, 2003; Leys, 1995; McLaughlin, 1987; Samoff, 2009; Warwick, 1980);.
Ownership Through ownership, local programs external support could be declined; However the question is does the development agenda reflect national and local needs, interests and preferences; However, donors, technical assistance agencies and aid recipients should have responsibility for creating open space for and listening to multiple voices; Unfortunately maximum donors are hegemonic and top-down role players in the game which has happened in GKF case.
GKF and Foreign Aid GKF develops its own action plan to run its 1500 deep tube farms in Bangladesh; However, donors’ push GKF to recruit external consultants to guide GKF staff; Donors withheld funds unless GKF agrees and recruits external and local consultants and accept their agenda; Consultants prepared plan of action and budget for GKF and forced GKF to implement their plan of action mentions in the Inception Mission; Consultants received 20% consultancy fee of the project budget; Donor consultants are hegemonic to GKF that hampers the GKF farming activities;
GB program implementation strategies, policies and tools Projection meeting: Area Manager and Zonal Manager high-lights the detailed objectives, ideas and programmers of Grameen Bank; At the start, Branch Manager works alone; Starts cliental group training in the villages; discuss objective of GB rules and regulations and credit system and savings; Formation of groups, centres, method of loan disbursement, duties and responsibilities as GB clients; Discuss 16 decisions programmes of Grameen Bank, establishments of Group Fund (GF) (after 2000, GF abolished), Children Welfare Fund, Special Savings Fund and Grameen Pension Scheme and their use at bad times; B clients exposes to disaster management, care of mother and children health (MCH), citizenship, how to signature, hygiene, nutrition, planned family, grow vegetables and animal husbandry
Implementation strategies-continue 2 Borrowers are organized into small homogenous groups; Organizing borrowers into primary groups of five numbers and federating 6 to 10 groups into centres; Group members select each other; Subjects relating to evaluation of loans proposals; Following recognition of groups, a member becomes eligible for credits Before a loan is sanctioned, Bank Assistants, Managers meet with the prospective borrowers; Loan sizes grow slowly, borrowers are the choosers; Approval of loan proposal and disbursement of loan; Branch Manager reviews different aspects of the loan proposal and forwards it to area office for loan approval; Area manager approves the loan. It takes maximum two days for loan approval.
Implementation strategies-continue 3 Bank goes to the clients’ doors; Loan facilities without collateral; utilization of loan by borrowers within 7 days; Repayments are broken down into small instalments; Bottom-up organizational structure of Grameen Bank; Group Fund, Grameen Pension Scheme (GPS), and other Funds are for the welbeing of clients; Intensive monitoring and information system (MIS), supervision and prompt response; Appropriate contextual strategies bring Grameen Bank success in Bangladesh.
Policies and Strategies of GB- continue-4 Bank Assistants in the centre meeting not only collect loans, but they spend more time on discussing 16 decisions for clients’ development; 98% female members/borrows of Grameen Bank; Every member of Grameen Bank has become owner of the bank through purchasing share; Out of 13 members of Board of Directors of the Bank, 9 are women members of the Board; All of them participate in decision making in policies, rules and regulations of the Bank.
Different sectors of GB loans Category % of the total Processing and Manufacturing 23.42% Agricultural and Forestry 15.61% Livestock and Fisheries 36.90% Services 1.59% Trading 16.27% Paddling 0.96% Shop keeping 4.46% Collective enterprises 0.82% Total 100% Members getting more opportunity to be associated with agricultural production; more than 50% loans go to for agricultural activities.
Role of Grameen Bank in facing calamity GB serves the following program during natural disasters and other crisis periods ; Transported the affected persons to shelters at flood free higher places; Distributed water purification tablets, dry foods like puffed rice, biscuit, saline packets at the shelters; Supplied carbolic acid and other indigenous medicines to protect them from snakes and poisonous insects; GB declared and postponed realization of loans and centre meetings during disaster periods; Establishe disaster fund and quickly supply medicine, ORS Saline, Alums, Iodized Salt, and clothing and quilts to affected borrowers ; Assisted the clients to return to their houses speedily when flood water receded; Provided special loans quickly to recover capital, allocate loan for food and for farming; Distributed paddy, wheat, corn, mustard and vegetable seeds to clients
GB Best Practices Parameters Adapts community participation approaches to empower women; Group lending; Loan proposals/appraisals are conducted in the weekly centre meetings through mutual discussions and observance; Groups are composed of five poor women of similar socio-economic backgrounds; Six groups make one center in a neighbourhood/village; GB staff screen and verify members’ portfolio backgrounds to ensure that they are indeed the poorest of the poor.
Unique practices of GB and its impact in the society Change Centre Chief, Group Chair, and Group Secretary every year by rotation; This practice helps to enhance leadership qualities and decision making skills in all members; GB each branch audits bi-annually enhances to prevent leakage; Close monitoring system ; In-service staff training, staff refreshers training; Disburse exact timely required business loans; Follow-up of loan utilization within two weeks after receiving loans; Credit for asset creation and development for consumption and not use for unproductive sectors; Center house is a meeting place and platform for clients for their development.
Impact of micro credit Grameen Bank group lending system has been widely replicated in other developing countries; Bank Rakyat in Indonesia and Banco Sol in Bolivia, CADRO Philippines, Bandhan India, Self-Help Group India; Activist for Social Alternatives (ASA), Tamil Nadu, India, SHARE, Andrapradesh, India, CARD in the Philippines and NIRDHAN in Nepal and Grameen Americas in US; Different international organizations like UNDP, UNHCR, UNICEF, ILO, CIDA, FAO, SARC, SIDA, USAID and several countries included the micro financing program in their policies to address poverty; It is a ‘community driven development’ (CDD) program; Access to micro credit indeed empowers poor people; Provides borrowers the opportunity to have an account and to save money in the bank; It provides opportunity to invest in small business; encourage investors to invest to micro-credit projects.
Impact of micro credit -continue-2 Study finds clients have strengthen their crisis-coping mechanisms and diversify their income-earning sources; Build assets and improve the status of women (Montgomery et al., 1996; Morduch, 1998); Small Industry Development Bank of India (SIDBI) (2008) mentions that 76 percent of the poor were able to increase their income through MFI assistance; 77 per cent could provide better educational facilities to their children; Likewise the micro credit impact survey on poverty reduction is also reviewed by Morduch & Haley (2002) in India, and Khandker (2005) in Bangladesh; and they find GB provides 100 % better educational facilities Poor have partnerships and ownerships in these MFIs ; Micro enterprise services have participatory approaches.
Compare GB activities with GC and GKF -its two other GB sister organizations GB has created twenty seven sister organizations; Two of them are (1) Grameen Chek (GC), and (2) Grameen Krishi Foundation (GKF); (1) GC is producing handloom fabrics, manufacturing garments and marketing them nationally and internationally; It runs its own business by mobilizing funds internally; It covers it’s costs from its revenue; (2) Grameen Krishi Foundation (GKF)- it involves in agricultural irrigation, crops production and crops marketing in Bangladesh; It is working with marginalized farmers in Bangladesh; GKF received grants from donors that mentioned earlier.
GKF fails to continue to run deep-tube wells in Bangladesh Reasons are: Huge overhead costs . Overhead costs is 25% of its total operational costs; Staffs are over burdened with workloads to maintain records and to supply information to donors; New crops like sugar cane, maize, soybean are new crops to farmers and they are expensive to grow; Farms income per taka expenditure is BDTK 0.46; Less farming area; Old machines and pumps frequently breakdown Repairing costs are high; service stations are far away Seed production high costs; Low output from costly buried pipe installation.
Implications Grameen Bank, Grameen Chek and Grameen Krishi Foundation open up more business opportunities for marginalized people in Bangladesh; They generate a smart economics-sustainable quick impact economy in Bangladesh; GB group based micro-credit technology has replicated all over the world to address the issue of poverty and to promote micro-enterprises; Many NGOs and MFIs in Bangladesh observed them and accepted many ideas from these organizations; Palli Karma Shauk Foundation-an apex MFIs agency setup by the Government of Bangladesh to support MFIs services in Bangladesh. Govt. Of Bangladesh also establishesMicro-credit Regulatory Authority to register MFIs in Bangladesh.
Conclusion Grameen Bank and GramerenChek do not hire foreign consultants and do not receive foreign aid; They are financially self-sufficient and continue their services in Bangladesh; However, GKF received grants, but failed to sustained; Because of external consultants wrong plan and forced GKF to implement their plans; Goner Myridal great works, “Foreign aid it had no paid”; Aid should not be conditional and donors should not force aid recipients to implement foreign consultants’ plan of action.
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