10 Million Bangladeshi Microfinance Clients Move Above $1.25 A Day

By Microcredit Summit Campaign, PRNE
Tuesday, January 25, 2011

WASHINGTON, January 26, 2011 - According to a report released by the Microcredit Summit Campaign, a
program of the US-based advocacy group RESULTS Educational Fund, nearly 2
million Bangladeshi households involved in microfinance - including nearly 10
million family members, on net - rose above the $1.25 a day threshold between
1990 and 2008. Microfinance programs offer loans of $50 and above that enable
the poor to start or expand small businesses and provide other financial
services such as savings and micro-insurance products.

A survey of more than 4,000 Bangladeshi households, led by Sajjad Zohir
of the Dhaka-based Economic Research Group, found that a dramatic number of
families moved out of poverty between 1990 and 1997 but that a massive flood
in 1998 and the food and fuel crisis of 2008 were the likely cause for
millions of families to fall below the $1.25 a day threshold during that
later period. Even with these setbacks, on net nearly 10 million people rose
above poverty.

The Microcredit Summit Campaign report closely mirrors the findings of
official country-level research in Bangladesh with the national Household
Income and Expenditure Survey (HIES) estimating that 10.62 million
Bangladeshis left hardcore poverty between 1990 and 2005. Zohir, the report's
author, writes, "[O]ur estimate seems quite in line with the national level
poverty findings."

"While the Bangladesh survey was not designed to assign causality, it is
very significant that the number of microfinance clients who left poverty
closely links to the national data on poverty reduction," said Microcredit
Summit Campaign Director Sam Daley-Harris. "The majority of poverty in
Bangladesh is in rural areas and so are the majority of microfinance

This good news comes during a difficult time for the microfinance sector.
In recent years, microfinance programs have seen growing questions about
their effectiveness. Several randomized controlled trials (RCTs) matched
microfinance clients with control groups and showed no movement out of
poverty in the group receiving the microloans. But these studies, touted for
their rigor, have been met with questions of their own.

"Two of the problems I have with the RCTs that have been done to date are
that they haven't studied programs that are known for their deep commitment
to ending poverty, and they typically cover a 12- to 18-month period, which
is too short a time for real change to take place," said Chris Dunford,
President of Freedom from Hunger. "We have to remember that not all
microfinance programs are the same. This new study from Bangladesh includes a
large number of clients from BRAC and Grameen Bank, two Bangladeshi
institutions known for their groundbreaking efforts to end rural poverty."

Another setback for microfinance came in the wake of a tremendously
successful initial public offering (IPO) in 2010 by SKS, an Indian
microfinance program based in the state of Andhra Pradesh. Soon after the
IPO's success, serious charges began to emerge in the state about
microfinance borrowers taking on multiple loans and too much debt, coercive
collection practices by microfinance staff and even suicides spurred by these

"There are quite a few people who believe that microfinance has lost its
way," said Alex Counts, President and CEO of Grameen Foundation. "This
Bangladesh survey reminds us that, even in the most difficult circumstances,
major progress can be made. Bangladesh is not the 'bottomless basket case'
that then-U.S. Secretary of State Henry Kissinger called it 35 years ago. It
is instead a teacher to the rest of the world, with its civil society leading
the way."

The Bangladesh survey was administered between February and August 2009.

Download the Report:

Microcredit Summit Campaign:

The Microcredit Summit Campaign is a project of RESULTS Educational Fund,
a U.S. based advocacy organization committed to creating the will to
eliminate poverty. The Campaign was launched in 1997 and in 2007 surpassed
its original goal of reaching 100 million poorest families with credit for
self-employment and other financial and business services. The next Global
Microcredit Summit will be held November 14-17, 2011 in Valladolid, Spain.

Economic Research Group:

The Economic Research Group is a not-for-profit organization based in
Bangladesh and was established to promote education and research with a view
to improving social economic justice. ERG seeks to bridge the gap between
academic research and policy analysis within Bangladesh and other countries
of South and Southeast Asia. Through its work, ERG also aims to extend the
frontier of knowledge on developing economies through analytical research and
discussion of views on contemporary economic issues. www.ergonline.org

Sam Daley-Harris, +1-202-390-0012, samdharris at microcreditsummit.org, or Jeanne Gessa, +1-347-277-3281, gessa at microcreditsummit.org, both of the Microcredit Summit Campaign

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