The Norman Transcript

January 5, 2014

Microfinance helping to combat poverty in Bangladesh

By Joy Hampton
The Norman Transcript

NORMAN — Editor’s note: Transcript senior staff writer Joy Hampton is traveling with a U.S. State Department-sponsored group to Bangladesh. Journalists from Bangladesh visited Oklahoma in 2013.

DHAKA, Bangladesh — Oklahomans in Bangladesh have remained safe, comfortable and pampered this week even as Bangladesh is in a political upheaval that has cost lives and resulted in the burning of several schools slated to serve as election polling sites.

The young country is struggling, and yet its people remain courteous and friendly to Sooner state visitors on a State Department program.

Bangladesh is a very poor nation. In its landmark series on the garment industry, NPR reported that Bangladesh garment workers are the lowest paid in the world, and yet those jobs are an important step out of severe poverty and starvation for many. The industry employs mostly young women who come from rural areas to work in Dhaka, the nation’s capital.

The garment industry is only one means out of poverty, however. Microfinance of village artisans and entrepreneurs is being used at the grassroots level to help combat poverty in Bangladesh.

In 1972, Sir Fazle Hasan Abed was a young man with a vision to decrease early childhood mortality in Bangladesh. An employee of Shell Oil Company at the time, he wanted to make his young country a better place for its citizens.

“The biggest killer of children in Bangladesh was diarrhea,” Abed said.

Abed discovered there was a simple solution to this deadly problem — an oral rehydration solution with the right combination of sugar, salt and water would save lives.

He founded the Bangladesh Rehabilitation Assistance Committee, now known as BRAC, to teach one woman per household how to make this solution and teach the other women to make it. The organization had the ambitious goal of reaching out to 16 million households through teaching people in their homes.

“That was our commitment when we started this work,” Abed said.

After reaching out to 30,000 households, the group did a study to see how many of those households were now using the rehydration solution and found that only six percent were using it.

The women teaching the solution did not believe in its efficacy, Abed said.

Next, Abed’s organization educated the women on how the solution works and showed them results.

After reaching another 30,000 households, they again checked and learned while the results had improved, only a disappointing 19 percent were using the rehydration formula. They interviewed the households where the solution was not used and learned that the men had prevented it, because of misinformation.

“We decided that our program design was wrong,” Abed said.

Men made the decisions in these households, so the group changed protocol and began educating the men first. They went into the mosques, marketplaces and temples to reach the men.

The results were good.

“That had a tremendous impact in the reduction of childhood mortality,” Abed said.

Next, the organization worked with Unicef to immunize children, achieving an increase from two percent to 70 percent immunization rates. Abed said immunization today is around 95 percent in Bangladesh.

With child mortality reduced, women did not need to have as many children and their life expectancy increased as well. Female children are seen as a financial burden in poor households, but reducing the mortality of children and increasing the life expectancy of mothers has helped prevent early marriages.

In Bangladesh, most marriages are still arranged and early marriage still occurs, Abed said.

On Saturday, The Daily Star, a local English language newspaper reported a 14-year-old boy drowning after he and his girlfriend jumped into the river in a suicide pact. The 14-yearl-old girl was to marry a businessman in a couple of days. Rickshaw drivers were able to rescue her but could not save the boy.

Abed said about half of marriages are still below the legal age of 18 but the “age of marriage is rising.”

The early marriage problem is most common in lower income groups because girls have not been wage earners.

“It’s a class thing now — class and income levels,” Abed said.

BRAC began attacking poverty at its roots through education and by creating entrepreneurs within rural villages. BRAC put its emphasis on girls and has started 40,000 schools worldwide now in which 70 percent of students must be girls.

BRAC learned that empowering women by helping them get or create jobs helped reduce poverty and associated problems.

In the 1990s it became evident that people did not just need a meal, they needed to be able to earn their way out of extreme poverty.

“We decided to set up a bank that would provide loans to small and medium enterprises,” Abed said.

Through microfinance, artisans in villages are able to expand into true small business enterprises that allow mostly female entrepreneurs to earn a better way of life.

BRAC started with the rehydration program but has become the largest NGO in the world. It expanded to 10 other countries and has worked to eliminate TB, provide education, microfinance, adolescent development programs and technology interventions in agriculture.

“He (Abed) had no idea it was going to be something on a large scale,” said Mohammad Rezaur Razzak, associate professor and director of BRAC’s Centre for Entrepreneurship Development.

Razzak said poverty is not eliminated through just feeding people.

“You need to teach them to stand on their own feet,” he said.

While BRAC has experienced many failures along the way, the organization has learned from each failure and now reaches out to over 126 million people, 70 percent of which are women. Abed founded the organization to be financially sustainable rather than dependent on donations. Only about 30 percent of funding comes from donations.

A willingness to grow to meet increasing needs has been a hallmark of the organization that includes BRAC University and BRAC Bank Limited. The bank provides loans to small-scale entrepreneurs who would not otherwise be able to expand and grow their business enterprises. The university requires freshman students to spend a semester in a rural area working with people in poverty.

BRAC’s principles include continuity of leadership and space for creativity. Attracting a talented team with the creative skills to solve the problems of poverty is integral to the organizations success Razzak said.

BRAC employs 150,000 people worldwide in Africa, Asia, Haiti, and the U.S.A. It is currently expanding to Myanmar.

The Adolescent Development Programs specifically target early marriage and teen pregnancy.

Microfinance includes loans, but it also includes transportation of goods in a country where transport can be an issue, particularly for the disenfranchised in rural areas. BRAC also helps with marketing and distribution. BRAC loans have assisted 5.54 million micro-borrowers with a cumulative loan disbursement of $9.73 billion in U.S. dollar equivalent according to BRAC reports.

In Dhaka, Oklahomans shopped at Aarong, a store set up by BRAC in 1978 to alleviate poverty by giving rural women and artisans a chance to earn better livelihoods. Aarong is a Bengali word meaning “Village Fair.”

BRAC reports that Aarong provides employment to more than 65,000 artisans and directly benefits 320,00 people across Bangladesh. Aarong is BRAC’s “largest social enterprise and its surpluses are used to finance” some of BRAC’s development programs.

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