Government-run microfinance

[carlos at bangla.net]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Dear CDB-L Friends,

This is regarding the issue of "should government directly run and manage
microfinance programs on a massive scale" ?

The Bangladesh government implements a huge microcredit program through a
government agency called BRDB - Bangladesh Rural Development Board. There
are persistent and consistent reports that we are getting from various
practitioners here that financial discipline and repayment is poor.
Lately labor unions and their agents have caused the shut-down of one major
BRDB project - RD9 project. That resulted to laying off many employees and
stopping the delivery of financial services to many poor people.

I have a growing conclusion and insight here that government agencies, in
general, should not be directly involved in retail microfinance, as many
government people / employees lack the vision, dynamism and work
ethics/energy to do good microfinance on the ground. Governance and
ownership are also unclear in a government agency. Political interference
and bureaucracy can slow down and corrupt many activities also.

I may be wrong, but this insight may be applicable across various
countries. What are the experiences in other countries? Are there
successful microfinance programs being run by government agencies?

The BRDB is probably now realizing its own weaknesses, and it is now
thinking of improving its operations by creating a clearer governance
structure. See below their recent press release.

Your comments and opinions are welcome.

Carlos Ani
CARE Bangladesh

= = = = = = = = = news article = = = =

BRDB to be upgraded into directorate

LGRD and Cooperatives Minister Zillur Rahman yesterday said Bangladesh
Rural Development Board (BRDB) would be upgraded into a full-fledged
directorate, reports BSS.

This would be done for effective functioning of the organisation to ensure
development for the rural poor, the minister told the newly-elected
executive committee members of the Officers Association of BRDB at a
meeting at LGRD Ministry.

The leaders welcomed the government decision and requested quick
implementation of the government decision.

During the meeting the delegation also informed the minister about
performance of different projects as regards creation of self-employment
opportunities to eradicate poverty through distribution of micro-credit
among the rural people.

The meeting was told the progress of implementation of poverty alleviation
programme in 440 thanas by BRDB.

The BRDB would disburse Taka 495.51 crore for micro-credit during the
current fiscal year to implement different poverty alleviation projects.

The association president Mohammad Mia led the delegation which included
secretary general Shahabul Islam and vice president Mohammad Shafiqur
Rahman, joint secretary general Mohammad Habibur Rahman, treasurer Mohammad
Saiful Islam, office secretary Mohammad Abdul Malek, members Mohammad
Asafudulla, Mohammad Abdul Mannan Sarkar and Rashidul Islam.

= = = = = = = = end of article
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[fwge1820 at mb.infoweb.ne]

May I join your discussion from Japan?
My name is Akihiko Morita. While working as head of the information & public
affairs division of the Japan Committee for UNICEF, I am studying on the
microfinance in the prewar Japan in the dotor course.

When I was writing my M.A.thesis, I was only interested in the private
microfinancing scheme such as pawnshop, mutual revolving fund ( they are
calles Ko or Mujin here in Japan ) and credit cooperatives.
However, recently I have noticed the role of Postal Saving Banks that worked
very well here in Japan in the prewar period in order to mobilize the
financial resources of the low-income people. Postal Saving Banks did not
provide loans and hence, we could not substitute the other microfinance
institutions with Postal Saving Banks. However, as the safest deposit
institution, Postal Saving Banks ,as a national institution, were widely
accepted. In this regard, I have also learned in one of the Tomothy
Guinnane's works that early in the 20th century, credit cooperatives did not
succeed due to the wide network of postal saving banks in Irelnad.
Evern though these examples do not justify the role or prove the
effectiveness of the state-run institutions as micro-finance schems, I feel
that it gives us some different perspective on the microfinancing.


----------
From: Carlos Ani[SMTP:carlos@bangla.net]
Reply To: carlos@bangla.net
Sent: Sunday, May 9, 1999 12:11 AM
To: COMMUNITYDEVELOPMENTBANKING-L@cornell.edu
Subject: Government-run microfinance


^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Dear CDB-L Friends,

This is regarding the issue of "should government directly run and manage
microfinance programs on a massive scale" ?

The Bangladesh government implements a huge microcredit program through a
government agency called BRDB - Bangladesh Rural Development Board.
There
are persistent and consistent reports that we are getting from various
practitioners here that financial discipline and repayment is poor.
Lately labor unions and their agents have caused the shut-down of one
major
BRDB project - RD9 project. That resulted to laying off many employees
and
stopping the delivery of financial services to many poor people.

I have a growing conclusion and insight here that government agencies, in
general, should not be directly involved in retail microfinance, as many
government people / employees lack the vision, dynamism and work
ethics/energy to do good microfinance on the ground. Governance and
ownership are also unclear in a government agency. Political interference
and bureaucracy can slow down and corrupt many activities also.

I may be wrong, but this insight may be applicable across various
countries. What are the experiences in other countries? Are there
successful microfinance programs being run by government agencies?

The BRDB is probably now realizing its own weaknesses, and it is now
thinking of improving its operations by creating a clearer governance
structure. See below their recent press release.

Your comments and opinions are welcome.

Carlos Ani
CARE Bangladesh

= = = = = = = = = news article = = = =

BRDB to be upgraded into directorate

LGRD and Cooperatives Minister Zillur Rahman yesterday said Bangladesh
Rural Development Board (BRDB) would be upgraded into a full-fledged
directorate, reports BSS.

This would be done for effective functioning of the organisation to ensure
development for the rural poor, the minister told the newly-elected
executive committee members of the Officers Association of BRDB at a
meeting at LGRD Ministry.

The leaders welcomed the government decision and requested quick
implementation of the government decision.

During the meeting the delegation also informed the minister about
performance of different projects as regards creation of self-employment
opportunities to eradicate poverty through distribution of micro-credit
among the rural people.

The meeting was told the progress of implementation of poverty alleviation
programme in 440 thanas by BRDB.

The BRDB would disburse Taka 495.51 crore for micro-credit during the
current fiscal year to implement different poverty alleviation projects.

The association president Mohammad Mia led the delegation which included
secretary general Shahabul Islam and vice president Mohammad Shafiqur
Rahman, joint secretary general Mohammad Habibur Rahman, treasurer
Mohammad
Saiful Islam, office secretary Mohammad Abdul Malek, members Mohammad
Asafudulla, Mohammad Abdul Mannan Sarkar and Rashidul Islam.

= = = = = = = = end of article
-------------------------------------------------------------------------
SHARENET - electronic mailing list for microfinance professionals.
Practical give and take. Sharing of valuable information.
To subscribe: send email to sharenet-subscribe@egroups.com
Moderator: Carlos Ani - <carlos-ani@mail.com>
--------------------------------------------------------------------------












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