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BRAC Microfinance Program in Bangladesh
and its International Replications
A BRAC Presentation
July 9, 2007
Building Resources Across Communities
BRAC’s Vision
Just, enlightened, healthy and
democratic societies free from
hunger, poverty, environmental
degradation and all forms of
exploitation based on sex, religion
and ethnicity.
Overview of BRAC
- BRAC started in 1972 as a small relief and
rehabilitation effort to support Bangladeshi refugees
returning home after declaration of independence in
December 1971. It then stood for Bangladesh Rural
Assistance Committee.
- By mid 70s, BRAC realized that more long term,
sustained effort was needed for change the lives of the
poor. The focus shifted from rehabilitation to
development, and BRAC was renamed to stand for
Bangladesh Rural Advancement Committee
Overview of BRAC (Cont.)
-
BRAC today provides microfinance to over 6
million clients, offers primary education to over
1.52 million students through its 52,168 nonformal schools, and delivers essential health care
to over 31 million people through a strong cadre
of 68,000 health volunteers. It has full-time staff
of over 42,000 in Bangladesh.
- BRAC’s budget in year 2006 was USD 339
million, over 70% of which was self-financed.
Overview of BRAC
- BRAC is committed towards using its
experience and expertise to work together to
fight poverty around the world
- BRAC aims to do so by empowering the poor
so that they can build sustainable capacities to
fight poverty
- Today, BRAC stands for Building Resources
Across Communities.
BRAC’s Main Programs
- BRAC Development Program (BDP)
- BRAC Education Program (BEP)
- Health, Nutrition & Population Program (HNPP)
- BRAC Training Division (BTD)
- Research and Evaluation Division (RED)
-
Support Programs and Enterprises
-
Other related institutions: BRAC University, BRAC Bank
BRAC Development Programs
- Microfinance
- Employment and Income Generation ( e.g.
poultry & livestock, fisheries, social forestry)
- Social Development, Human Rights & Legal
Services
- Health
- Education
The BRAC Approach
BRAC believes in holistic development approach and sees
microfinance as a powerful entry point that emerges from:
√ The social capital built by organizing the poor to form their own
groups through which they engage with BRAC and other formal
institutions.
√ The organizational/institutional capital that accrue in building its
ability to manage large scale microfinance.
√ The network capital built through large scale outreach of
microfinance constituting a network of producers and consumers
throughout the country.
Components of BRAC Microfinance Program
Group Based Products:
Poverty Alleviation (MF 1)
Employment and Livelihood for Adolescents (MF 1)
Economic Development (MF 2)
Individual Products:
Micro Enterprise Loans (MF 3)
Women Entrepreneur Development Program (MF 3)
Microfinance for the Extreme Poor:
Challenging the Frontiers of Poverty Reduction –
Targeting the Ultra Poor (CFPR-TUP)
Income Generation for Vulnerable Group Development
(IGVGD) – Collaborating with the government and WFP
BRAC Microfinance Services
Urban (20%)
Better-off
Vulnerable Non-poor
Moderate Poor
Extreme Poor
Rural (80%)
MF 3
MF 2
MF 1
IGVGD
CFPRP-TUP
Destitute
Group Dynamics and The Credit Ladder
√ Formation of Client Groups - Typically
known as Village Organizations (VO)s
√ Capacity development, healthcare services
and social awareness
√ Asset transfer, subsistence allowance for
CFPR-TUP members
√ Input support for IGVGD members
√ Savings and credit activities
√ Graduation onto MF 2
√ Enterprise loans (Individual)
Financial Services for MF Clients
1.
Credit
√ General Loan
√ Loan for income generating projects
√ Housing Loan
√ Enterprise Loan
2.
Savings
Death Benefit
3.
Key Features of Loan Product
- Micro Loans
√ Lending through group formation, namely Village Organizations (VO)
√ Loan Range: Tk.1,000 to 50,000 (US$15 to $700 )
√ Repayment through equal weekly installments
- Micro Enterprise Loans
√ Individual Lending between Tk 50,000 to Tk 300,000 (US$700 to $4,500)
√ Repayment through monthly installments
√ Service charge: 12.5% (Flat)
√ Emergency loans are also given at the time of disaster
2. Savings Products
BRAC has four types of saving products:
√ Weekly personal savings for the VO
members
√ Compulsory savings deposit for VO
members
√ Monthly savings deposits
√ Term deposits
3. Death Benefit
Death Benefit policy for BRAC Microfinance
group members:
√ Any poor village woman when she
becomes a group member is eligible to get
this benefit
√ The group member does not need to pay
any premium for this
BRAC Micro Finance Program in Bangladesh:
At-A-Glance (May- 2007)
Inception of Micro Finance Program : 1974
Districts Covered
: 64 out of 64
Total No. of Branch Offices
: 3028
Total No. of Village Organizations
: 206,820
Total Number of Members
: 6.2 million
Outstanding Borrowers
: 5.3 million
Outstanding Loan Amount
: US$ 438.14 million
Members’ Savings Balance
: US$ 163.71 million
Loan Recovery Rate
: 99%
Cost per Unit of Dollar Lent
: US$ 0.10
Credit Delivery Model
√ BRAC uses Village Organization (VO) as a platform for
launching and implementing its various activities
√ VO is an association of poor, landless people that come
together with the assistance of BRAC and try to improve
their socio-economic position
√ Credit decisions are taken in weekly VO meetings
√ BRAC considers three things before considering a loan
application:
- Capacity of utilizing the loan money
- Types of business
- Profitability of the business
Loan Application, Processing and
Disbursement Procedure
Loan Processing
Loan Proposal
- Loan is proposed
in a weekly VO
meeting
- Formal Loan
proposal is
prepared by the
respective program
organizer (PO)
- The accountant
checks and verifies
savings and credit
records of the
applicant by using a
computer
- Loan proposal is
forwarded to the
manager at the same
office
- Verified and
approved by the
manager
Disbursement
At the branch
office, the
accountant
disburses the
loan after the
manager
interviews the
borrower
Installments and Savings Collection,
Documentation and Reporting Procedure
Collection
-Savings and loan
installments are
collected in
weekly VO
meetings
- PO makes
entries in the
collection sheet
and updates the
passbook, which is
kept by the
members
Documentation
and Record
Keeping
-PO compiles and
submits the
collection sheets to
the accountant
-The accountant
gives computer
posting
- Computer printouts are generated
for the managers
while required
Reporting
- Daily back-ups
are kept at the
branch office
- Reports are sent
to the branch and
regional office on
weekly basis
- Diskettes are sent
to the Head office
at the end of the
month
- Data is entered
into the central
MIS system
International Initiatives of BRAC
- In late 2001, after the fall of Taliban
regime, the new Afghan Government
invited BRAC to work in Afghanistan.
- BRAC Afghanistan was set up in 2002
and today works in 24 out of 34 provinces
in Afghanistan in the major fields of
microfinance, health and education
- In 2005, BRAC responded to the Tsunami
victims in Sri Lanka with relief and
livelihood reconstruction support.
BRAC International Initiatives
- With the aim of attaining the MDGs by working
together with governments, civil society
organizations in Africa, BRAC started its
operations in Uganda and Tanzania in second
half of 2006. BRAC also initiated microfinance
program in Southern Sudan in early 2007.
- In late 2006, replications of TUP program
through partnership in Haiti and in India (West
Bengal) were launched.
BRAC Micro Finance Program in Afghanistan:
At-A-Glance (May- 2007)
Micro Finance Program Launched
: 2002
Provinces Covered
: 22 out of 34
Total No. of Branch Offices
: 203
Total No. of Village Organizations
: 10,332
Total Number of Members
: 176,594
Outstanding Borrowers
: 143,651
Outstanding Loan Amount
: US$ 69,169,612
Members’ Savings Balance
: US$ 5,266,444
Loan Recovery Rate
: 94.93%
BRAC Micro Finance Program in Uganda:
At-A-Glance (December - 2006)
Micro Finance Program Launched
: 2006
Districts Covered
:8
Total No. of Branch Offices
: 10
Total No. of Village Organizations
: 460
Total Number of Members
: 11,912
Outstanding Borrowers
: 5,808
Outstanding Loan Amount
: US$ 540,748
Loan Recovery Rate
: 100%
BRAC Micro Finance Program in Tanzania:
At-A-Glance (May- 2007)
Micro Finance Program Launched
: 2006
Districts Covered
: 5
Total No. of Branch Offices
: 10
Total No. of Village Organizations
: 307
Total Number of Members
: 8,033
Outstanding Borrowers
: 5,131
Outstanding Loan Amount : US$ 558,419
Loan Recovery Rate
: 100%
Some Challenges
- Understanding the local context
- Different regulatory structures
- Inadequate banking network
- Gaining trust of local institutions and people
- Cultural differences and management of national staff
- Competition and competitors’ response to BRAC intervention
- Ensuring continuous flow of funding, high cost of fund and the
issue of self-sufficiency and sustainability
Thank You

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