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PARADIGM SHIFT FROM MICRO CREDIT TO MICRO GRANT TO THE POOR: A SUSTAINABLE POVERTY ALLEVIATION INITIATIVE OF THE GOVT. OF BANGLADESH

Dr. Prosanta Kumar Roy, Secretary (PRL), Rural Development & Cooperative Division

Introduction:

Poverty can be traced back to the beginning of the civilization as Herbert Spencer’s “survival of the fittest” has always created a huge gap between the powerful and the powerless. Economists, policy makers, banks, NGOs, Governments and many other financial institutions have been trying hard to find solutions to poverty. The economist[1] stated that “In 1990, 43% of the population of developing countries lived in extreme poverty (then defined as subsisting on $1 a day); the absolute number was 1.9 billion people (“Poverty Not always with us,” 2013). By 2000 the proportion was down to a third. By 2010 it was 21% (or 1.2 billion; the poverty line was then $1.25”. However, almost half the world population (2.7 billion people) today still lives on less than $2.50 a day[2] (UNDP, 2014). In 2050, the world population will be 9.2 billion, if the trend of poverty i.e. the number of poor will not be abridged what should we do then. In Bangladesh the trend of poverty reduces sharply, from 43% in 2000 to 36% in 2009 and a very sharp downing to 22% in 2015 is a miracle that deserves high appreciation, the strategy and steps are also important that needs to take into consideration in particular the social safety net programs and shifting of microcredit to grant to the poor is the most important initiative to this end. All these in fact lead to socio financial inclusion of the excluded and underprivileged sector in Bangladesh.

2. Microfinancing for the Poor:

In fact, after 2^nd World War, with many other initiatives fund raising for the poor has been considered as one of the most widely used ways to reduce poverty. World Bank has its bank fund for the world’s poorest countries and so does almost every country where many Non-profit organizations raise funds for charitable purposes. However, most of the times these charity funds fail to reduce poverty for the long run as they are mainly used by the poor for mere consumption purposes and after that they return to poverty again. The eradication of the poverty can be done through socio-financial inclusion, i.e. by giving them all the basic needs- not just money but the means by which they can fulfill their basic needs which would be also a source of income generation permanently.

Microcredit was introduced to give loans to the poor for startups or to start micro business but it failed to facilitate sustainable income generation due to several negative aspects including high interest rates and coercive methods of collecting repayments. Microsavings, on the other hand, proved to be a better method of helping the poor to achieve better livelihood with funding modalities. It may ensure the poor have funds in critical times and can invest in household level farming or smallholder businesses in the future. In addition, if the funding is permanent then this may lead to sustainable livelihood and income generation.

Government of Bangladesh headed by H E Sheikh Hasina took the issue of livelihood security to combat poverty through microfinancing with a radical change ensuring accessibility to fund with ownership to that. A person is poor because he/she has no money in hand to purchase food and other commodities i.e. inaccessibility to market due to lack of money. For example, there is 1000 metric tons of rice in Kawran Bazar, Dhaka but a number of beggars are there remain without food- the dilemma is that due to lack of money the beggars have no access to the rice market. Why the beggars remain without money because of lack of suitable income generation i.e. lack of secure livelihood. Now the question of livelihood security that needs fund to invest whatever may be the amount is. If it is tailoring that needs TK10,000 to buy a sewing machine, if it is tea stall that needs TK5,000 and or rickshaw that needs TK10-12 thousand. If it is goat rearing that needs TK10,000 and for Cow that needs at least TK20,000.

These small amounts of funding to the poor are being done for the last 50 years or more through micro credit by NGOs, MFIs and Public Sector Institutions, sometimes Banks even. But the result is not satisfactory or encouraging. Bangladesh achieved a lot in poverty alleviation due to socio financial support of the government. If the government withdraws the safety net support their vulnerability may rise up. So, government is working for making the trend of poverty reduction through sustainable socio financial inclusive poverty alleviation program.

Accoring to Ministry of Finance (2014), there are 12 Ministries and departments dealing with microcredit and loan in public sector (Table-1)[3]. They distributed Tk122,380 million as microcredit/loan to the poor and marginal households. Out of that Ministry of Agriculture alone disbursed 88% of total loan TK108,084 million and Ministry of Youth and Sports disbursed TK1259.15 million with a position of 2^nd top institution in Public sector followed by Bangladesh Rural Development Board disbursed TK11250 million. The fourth position regarding loan disbursement is determined by Ministry of Social Welfare with TK 492 million.

Table-1: The distribution of cumulative loan disbursement of public sector microcredit agencies in  Bangladesh

Source: Bangladesh Economic Review 2014 (chapter-13: Poverty Alleviation, Page: 18)

Though there is hardly any concrete information or data regarding microcredit borrowers, their savings, investments, interest rates in Bangladesh, a report of Rural Development and Cooperative Division (RDCD) of Ministry of Local Government, Rural Development and Cooperative (LGRDC) revealed that more than 36 million households had taken loans in 2011 (Table-2).

Table-2: Major Institutions with savings, borrowers and dues under microcredit in Bangladesh.

Source: Report of Rural Development and Cooperative Division (RDCD), June 2011.

If each of the household comprises of 5 members, the population covered under microcredit was 180 million which is impossible because that time the population of Bangladesh was 150 million. Here the connotation is that everybody in Bangladesh had taken more than one or even several loans at a time.[4] The table also indicates the borrowers have huge dues which are unrecovered along with a large amount of savings of the poor BDT 253796.4 million.

Regarding funding sources of NGO-MIFs of Bangladesh, as mentioned by MRA (2015), it is seen that the highest portion of the fund comes from the savings of the poor clients (Table-3) [5]. It rose from 31.15% in 2010 to 34.4% in 2014. The 2^nd highest amount of fund is attained from the cumulative surplus i.e. the benefit of the microcredit business. The surplus amount escalated from 27.8% in 2010 to 32.28% in 2014. It can be noticed that half of the total revolving fund of the NGO-MFIs comes from the clients either as savings directly and as cumulative fund indirectly (mostly in the form of interest). The dilemma is that the poor is taking loan from their cumulative savings and interest is being paid to the NGOs and MIFs by them i.e. their money is using by the NGOs-MFIs as revolving fund and taking interest. Connotation may be the fish fry is being done by the oil of the fish and benefit is getting by the chef.

Table-3: Sources and amount of funds of NGO-MFIs of Bangladesh from 2010-2014

Source: MRA-MIS Database-2014

3. Drawback or dilemmas of microcredit:

Despite all these “striking” figures, still nearly 40 million people are living below poverty line in Bangladesh compare to same number people 30 years back when microcredit was introduced in the hope to promote poverty alleviation. Several drawbacks, which were only visible in the long run, have proved the microcredit to be ineffective and worsen the situations of most poor people. “Poor households do not benefit from microfinance; it is only non-poor borrowers (with incomes above poverty lines) who can do well with microfinance and enjoy sizable positive impacts. More troubling is the finding that a vast majority of those with starting incomes below the poverty line actually ended up with less incremental income after getting micro-loans, as compared to a control group which did not get such loans.” (Hulme and Mosley, 1996, as cited by Chowdhury, 2009).

It is found in many researches that many microcredit borrowers don’t spend money on entrepreneurial activities but on immediate consumption and, hence it becomes impossible for these poor to break out of the cycle of poverty as they are not involved in income generation activities. “They find it difficult to escape poverty because they are engaged in economic activities with very little or no productivity growth”, as highlighted by Christen and Mas (2009). Far worse, the high interest rates charged by microcredit institutions and NGOs proved to be a widely criticized topic. The high interest rates aggravate the situations of the poor as it became difficult for them to repay the loan along with these high interest rates with their no or extremely-low income. The interest rate of these microcredit programs is very complex and has many hidden costs. In a study, Karim (2008) mentioned that the effective interest rate was 32% which could go upto 50-60% and the borrowers ended up paying much higher amount compared to what they borrowed. Study found that many borrowers in Bangladesh took micro credit loans form one organization to repay the loan in another. Moreover, oppressions like public shaming, house-breaking (selling off the defaulting member’s house), arresting women borrowers were used to collect repayments on loans (Karim, 2008). Moreover, because of the “attractiveness” of the Grameen Model as a profitable business model, most of the MIFs follow this model and hence incorporate the flaws of the model, including the very high interest rate, without making any necessary amendments to facilitate the poor. “The principal source of revenue for the sector is interest on loans, which is rarely publicized on websites.” Hugh Sinclair (2014, para. 4) remarked. Furthermore, though microfinance was born to help poor, but till today it failed to include the hardcore poor segment. The borrowers are given insufficient repayment time which is often pressurizing and many of them cannot meet the deadlines and hence, in order to repay the loan of one institution they take loan from another institution (Zaman, 2013). Therefore this exacerbates the situation of the poor.

Several studies have been carried out in order to assess the impacts of microcredit on poor but very few of them involved valid statistical approach with sizeable sample and proper methodology. There are some papers on how sustainable the microcredit NGO and MFIs are in terms their portfolio yield, interest rate spread, return of assets (ROA) and operational self-sufficiencies (OSS). However, they haven’t been conducted to unearth how sustainable their members’ livelihood is. Bateman (2011) referred that most of the early impact evaluations of microfinance programs lack robust evidence as the papers incorporated stories of successful MFI members ignoring less successful and unsuccessful clients. Furthermore, the citations used were selected carefully from the articles that favored microfinance as most of these studies were conducted by MFIs or international development agencies with the hope of advocating the microfinance and accumulating funds from donors. In this regard, Morduch (1999, p. 1598) cited McKernan (1996, p. 31) as arguing that “selection bias can lead to over-estimation of the effect of participation on profits by as much as 100 percent”. This selection biases lead to tempting publications that help microfinance look like a triumphant tool for poverty eradication while in reality it is a profitable business for money lenders. Morduch (1998) argued in his draft paper that households who are under the microcredit programs do not really have higher consumption levels compared to the control households, and, in most cases, their children are not having more access to education even. According to his paper, microcredit to some extent may reduce vulnerability of the poor (for the time being) through consumption-smoothing but not poverty. While introducing the microcredit to the world, Mohammad Yunus’ proclamation was to help poor from local loan sharks. On the contrary, when the borrowers finish using the credits in immediate consumptions, being incapable of repaying the debt, they turn to other MIFs or even money lenders or loan sharks. Hence, instead of helping poor retaining money, microcredit tends to draw off most of the poor’s meager income through high interest rates.

Many reports have mentioned about the increased employment due to the growth of MFIs market as they employ staffs in their institutions, which in turn results in many indirect employment as well (Source: Bangladesh Microfinance Statistics 2013). However, the ultimate goal of the microcredit programs has failed to be met as they haven’t reached the hardcore poor or destitute and lift them out of poverty. In this regard, microcredit may help economic development by employing literate people, and by involving low-income people and upper-poor, but a substantial doubt can be made that how effective it can be regarding helping the ultra poor who makes up the half of the poor people in Bangladesh (25 million people are living in high poverty among the 40 million people living under the poverty line, as mentioned in “Bangladesh’s Poverty Rate”, 2015)[6]. Roodman and Morduch (2013) argued that “on current evidence, the best estimate of the average impact of microcredit on the poverty of the clients is zero.” In this sense, microcredit programs may be a successful business model but hardly a socio-economic inclusion model.

According to Human Development Report 2014, 22% (1.2 billion people) are living on less than $1.25 a day. The new poverty line- $2.50/ day- has raised the poverty rate to about 50% (2.7 billion people). Far worse, there is a very high chance that many who recently joined the middle class may fall back into poverty due to unforeseen circumstance changes. “Worldwide the proportion of the income poor and the multidimensional poor has been declining, but this does not necessarily mean that their vulnerability has been reduced (chapter 3). Sizeable portions of the population are close to the poverty threshold (the “near poor”), and such a clustering implies that idiosyncratic or generalized shocks could easily push a large number of people back into Poverty” (UNDP, 2014).

There are more dilemmas to be considered regarding microcredit programs. Since many poor have the tendency to use microcredit in fulfilling their immediate consumption or other needs, they need constant and close supervision so that they are involved in income generation activities. However, most of the time, the MFIs do not monitor the activities of the borrowers after taking the loans which leads to the misuse or unproductive use of the credit, as mentioned by Zaman (2013).

It is also noted by Sarder and Nabi (2012) that most of the MIFs in Bangladesh lack good governance due to the involvement of close relatives in the board who have no insight and devotion regarding microfinance industry, let alone poverty alleviation. They also mentioned that since MRA is the only monitoring body of this many MIFs and NGOs that it is quiet difficult for them to cast proper supervision on them. They lack skilled manpower.

All these proving microcredit lending to be less effective in pulling the poor out of their misery and hence, many researchers started to shift their emphasis on micro savings. According to Tanya Cothran (2012), micro-saving proved to be more effective compared to microcredit. In her post “Micro-loans or micro-savings: what works?”, she quoted some lines from David Roodman’s Due Diligence: An impertinent inquiry into microfinance: “Savings actually can reach the poorest of the poor (loc. 1190). One of the best lines of the book is a poor woman in rural Niger saying that micro-credit ‘is for rich people’ (loc. 1205).” In addition, she mentioned some crucial points from the book that supports micro saving as a better tool of eradicating poverty: “People want to save (loc. 3364) and don’t want to be in debt (loc. 1384); Giving people services that help them do what they want is better for them and a better story; Savings groups, which unlike micro-finance institutions (MFIs) can be flexible and reliable, are more likely to empower members (loc. 2476; 2820; 3616); Also empowering, self-help groups foster a sense of group ownership (loc. 2855); Savings can improve the impact of micro-credit (loc. 1531).”

Furthermore, Christen and Mas (2009) pointed out in their study that one day borrowers would have more funds than the micro credit institutions or local banks can provide. Therefore, the poor need their own “permanent” fund. One of their crucial revelations was that clients who were forced to save felt that it had helped them in their financial crisis. They argued that poor people can invest the saving money in new businesses if they are allowed to save even small amount over time. This will ensure their food security, improve their nutrition and give access to their children’s education, which in turn will make them more productive over time.

4. Conceptualization of the paradigm shift from credit to grant:

H E Sheikh Hasina the Honorable Prime Minister of Bangladesh thought about poverty alleviation in true sense not by dilemma, mockery or sarcasm like many other political or social leaders. Her consideration was why the world leaders had and have failed to combat poverty. Either there is lack of commitment or lack of proper strategy and/or proper action. The cold war between Capitalism and Socialism followed by macro and micro economy and market economy finally with microcredit for the poor, all failed to solve the poverty of the world. And human beings are still struggling to find ways to eradicate it. She had been working on it for a long time and started the program as piloting in 1995. Through trial and error she established a specialized model of microfinancing for the poor of Bangladesh. First of all the Honorable Prime Minister H E Sheikh Hasina studied the traditional microcredit of the world along with Bangladesh run by NGOs, Micro Finance Institutions and Government Agencies like Bangladesh Rural Development Board (BRDB). She conceptualizes the traditional microcredit model roughly as below:

It was identified the fund of micro financing comes either from the government or from donors and local charitable and social institutions but does not reach to the poor directly. There are middlemen, the NGOs-MFIs and government agencies as well. Another crucial finding was the poor do not have any proprietorship i.e. ownership to the fund. The middlemen i.e. the NGOs and other agencies are receiving the money from primary sources and distributing those as loan/credit to the poor and again are receiving back from the poor to their account with high interest. The savings of the poor are also taken to the bank account of the institutions. The poor remain vagrant for capital or fund to invest in income generating activities again. On the other hand the fund does not go back to the primary resources like government or the donors and remains to the middlemen and the fund is being used as revolving and it increases day by day with them not with the poor or the primary sources. And the poor have to borrow from the agencies again and again. It is further cruel, the micro or small savings of the poor also goes to the stomach of the middlemen, the lending agencies resulting their Multinational Companies, Banks, Industries, Petrol Pumps, Private Hospital and Private School, College and Universities etc. So, the identified crucial issues related to microcredit are:

1. Persistent fund constraint to the poor
2. Temporary and uncertain funding
3. Lack of ownership of the poor to the fund
4. The Microsavings i.e. the funds saved by the poor are being used by the agencies
5. Lack of proper investment to income generating activities
6. Absence of self decision making and self fund management
7. Inadequate opportunity for the women i.e. lack of priority and empowerment
8. Social inclusion is difficult to attain on present uneven social context
9. The poor use money for immediate needs instead of investment in income generating activities
10. Time bound loan with high interest doesn’t create any tangible opportunity for income generation & poverty alleviation
11. Force weekly installment of the repayment creates trouble to the poor because no income comes from any short-term investment (in particular from agriculture) within a week

In 2009 the government headed by HE Sheikh Hasina again started the mission of poverty alleviation under the same Project One House One Farm i.e. each household must have at least one family farm, if possible more as income generating activity ensuring livelihood. She started it with asset transfer to the poor followed by skill development through training. Some amount of microcredit was also given to them. Within two years it was found this mixed strategy, assets and microcredit didn’t give tangible benefit. Most of the people sold out the assets and the small loan was not used by them properly. In most of the cases the poor spent the loan money for immediate needs like food, health care and cloths. So, the main objective investment for livelihood security and income generation was achieved hardly. Another important finding was the social inclusion of the extreme poor, the weak sec of the society not being done. During asset transfer the extreme poor were deprived by the socially strong and rich people.

The basic learning from the mission was-

1. fund should remain with the poor permanently
2. ownership of the poor to the fund should be ensured
3. poor must have the power for decision making themselves
4. poor should do income generating activities according to their needs
5. poor should be empowered to ensure fund mobilization, utilization and management also
6. empowerment of the poor through socio-financial inclusion should be ensured

Depending on the learning the government redesigned the microfinancing model in 2011 incorporating participatory fund mobilization by the poor with specific savings supported by government funding as incentives with ownership to that. Government allowed the poor to take decision themselves sitting in the courtyard meeting independently. Government ensured the women participation in decision making and income generation incorporating the ratio of female and male 2:1 i.e. out of 60 member of the Village Development Organization (VDO) 40 would be female and 20 would be male. The mobilized fund lies with their bank account in favor of the VDO. They are taking loan from their fund and after investment they are returning to their VDO account with small amount of service charge. Thus the fund is increasing day by day and the poor are using it whenever necessary as revolving fund. The model can be explained as below:

If we try to compare the above models it is found that in the traditional microcredit the funds accumulated from any sources were given to the poor through NGO-MFIs & government agencies and the poor had enhanced the fund with their savings. Finally, they took loan from there & after investment, return it to the NGO-MFIS with high interests. Here, the NGO-MFIs are working as middlemen and getting the benefit of microcredit business at the expense of the blood and sweat of the poor of the world. In the second model practiced by the government of Bangladesh i.e. the funding was done by the government through a project to the poor in the form of grant. The poor mobilized the fund along with their savings and government support, then invested it in small household farms. The earnings from these farms were put back to their own bank account as permanent capital, not to the government or the project. So, the basic advancements in this model are- (a) Fund is given to the poor as grant instead of credit (i.e. forever); (b) Fund is raised up by their savings forming an integrated fund to invest for income generation at household level; (c) Finally, the fund is returned with interest to their own bank account, not to anybody else; and (d) Thus the fund is revolving & increasing and being directly used and handled by the poor instead of the middle men.

5. Introduction of the model of grant instead of credit:

To materialize the dream of sustainable funding to the poor and poverty alleviation the government of Bangladesh modified the project named “One House One Farm” i.e. each household must have a farm at least, if possible more with the mobilized fund depending on their needs and livelihood experiences. This project is in fact an initiative to promote socio financial inclusion of the poor people of Bangladesh has been using an innovative sustainable model to involve the poor in the microsavings program along with microcredit facilities with a trifling interest rate of 8% which is deposited back in the poor beneficiaries’ savings account. This results in permanent funds for the poor that last through generations leading to sustainable savings, sustainable investment and livelihood, and sustainable income generation finally. This is a government project which is unique in its nature.

The main philosophy of the project is fund mobilization by the poor supported by the government followed by investment for the smallholder farms ensuring more production and income generation. The sequences are shown in the diagrammatic Model.

The 1^st step, group formation with poor followed by savings at micro-level & participatory fund mobilization: A village development organization (VDO) is formed with 60 poor and underprivileged families of that village with priority to beggars, landless and female headed families. Each member of the VDO saves BDT 50 per week (BDT 200 per month) and the government provides the equal amount to him/her as welfare grant. The members of a VDO deposit BDT 144,000 annually and government gives them an equal amount in the VDO account. Hence, a total amount of BDT 288,000 is credited to the VDO’s bank account (village group account) annually. Another support BDT 150,000 is given as revolving fund to the VDO annually. So, a cumulative fund amounting BDT438,000 has been developed annually. Government provides this funding support for two years and the amount of fund for each VDO develops up to BDT 876000 ($ 11000) that usually scales up to BDT900,000 with bank interest & service charges. All these money are saved in the poor’s VDO bank account and it is their permanent fund which they use generation after generation.

The 2^nd step, self decision for investment & capital: According to their need, experience and livelihood pattern, the members apply to the managing body of the VDO for fund for investment through a fort-night or monthly courtyard meeting. The members participate in the decision making process where the 60% women can raise their voice. Thus they take decision themselves without any interference of third forces. So, they get required fund for investment as loan from the mobilized fund of the VDO. For example, one member asks for loan BDT 20,000 to buy a cow, all the members sitting in the courtyard meeting take decision whether she/he is illegible to get the loan to invest or not. If she/he fulfills the criteria the members of the meeting may recommend for the loan. They also take decision for installment of repaying the loan with 8% service charges according to the nature of investment and income. If it is an investment of cow, the installment may be after the birth of calves. If the investment is tailoring, the installment may be monthly or weekly even; as it is suitable to the member i.e. repayment is very much related with production and income generation.

The 3^rd step, development of farm: After receiving the fund from the common VDO account, each member develops small scale farms like fishery, livestock, poultry, nursery, vegetable gardening etc. at their homestead and agro field. Thus every inch of land of the smallholders is being used efficiently for agro production. If someone does not possesses any land he/she may do any kind of income generating activities she/he may have interest and experience.

The 4^th step, repay of the loan: After production i.e. income generation, the smallholder families deposit (repay) the loan in installment to the account of the VDO as they agreed during the sanction of the loan. Thus the fund is being revolved and utilized for production leading to poverty alleviation by the poor permanently.

Sustainability of the fund use: The above model depicts that the fund is accumulated in the account of the poor (VDO) permanently that would be invested and re-invested by them continuously followed by permanent production and income generation leading to sustainable poverty alleviation. Therefore, it can be said that the fund is developed by the poor, utilized by the poor and managed by the poor.

6. The salient features of OHOF and differences with traditional microcredit:

The major advances that the road to the micro savings model under OHOF are self fund mobilization & ownership to that, independent decision making and repay to their common fund after production with very small amount of service charge i.e. the repayment helps in increasing their fund day by day. However, we may compare the advancement in this self fund accumulation with government support and management practices with traditional microcredit in Table-4.

Table-4: The major differences between OHOF’s model and other microcredit

7. Experiences of the new model under OHOF:

OHOF is a 6-year old initiative and impact of it sounds fine with some substantial outcomes. Moreover, most of the micro savings programs are run by non-government institutions and none of them have the salient features of OHOF model. The under privileged people in particular the poor women of Bangladesh are using the services of this government sponsored project. More than 2.2 million households are now getting the benefit from online micro-savings services. Out of 2.2 million beneficiaries 60% are female headed underprivileged (e.g. widows, divorcees, orphan etc) households. The project has been running for the last five years covering 40,453 villages with 2.2 million households of Bangladesh. The beneficiaries have deposited BDT 10,551 million ($132 million) and government has provided a matching welfare grants BDT 8,522 million ($106 million). In addition, the government provided BDT 11,045 million ($138 million) as revolving grant. So, an integrated common fund with service charges and bank interest BDT 31797 ($400) million has already been developed (source: OHOF’s online banking dashboard, dated 27-04-17).

One of the main achievements of the OHOF program is the success of its e-financial inclusion. The banking system is fully automated to prevent fraud or corruption, and save poor villagers from the hassle of travelling to the city to withdraw or deposit money. Currently, more than 2.2 million villagers have used the online system with transactions exceeding BDT 25773.325 million. It is interesting, more than 2.9 million loans involving BDT 39,284 million have been sanctioned by the Upazila Nirbahi Officers through the online system and the poor have been informed through SMS sitting at their homes.

Table-5: Distribution of investment in family farming (March 2017)

Source: Report of OHOF (updated on March 2017)

From table-5 it is seen that the poor people invested BDT 39,280 million ($490 million) in 29,33,784 small income generating family farms. Out of 29,33,784 household farms the number of fishery is 6,08,231 where the poor members invested BDT7,222 million i.e. $90.27 million. The highest investment is done in livestock sector BDT12,819 million i.e. $160.23 million forming 9,29,422 household farms with cows and goats. The beggars and absolute landless people invested BDT4,258 million i.e. $53.22 million in 3,67,680 miscellaneous livelihood like mini shop, tea stall, rickshaws, hawker etc.

8. Some brief & indicative case studies of the beneficiaries:

The OHOF project has contributed greatly to the poverty alleviation of many poor villagers by involving them in income generating activities and microsavings, leading to sustainable livelihood of the poor.  Only some of the many successful cases are depicted below:

1. Masing Nyu Marma, an inspiring young entrepreneur:

Masing Nyu Marma, an inspiration among the members of Chemi Dolupara VDO in Bandarban.she had taken training from OHOF on the cultivation of strawberry and has become a thriving farmer. She has taken two loans of BDT 10000 the first time and BDT 15000 the second time from the cooperative VDO account of OHOF and is employing six people in her farm now. Furthermore, she earned National Youth Entrepreneurs award from the prime minister of Bangladesh for her success as an entrepreneur.

2. Self reliant Suchitra by Banana cultivation:

Suchitra, a woman from Darla, a small remote village in Satkhira district of Bangladesh, first came to know about One House One Farm Project from a local Inspector of Bangladesh Rural Development Board. She enrolled as a member of Darla Village Development Organization (VDO) and attended the courtyard meetings on regular basis. Under the project she got training on social awareness, tree plantation and vegetable cultivation. She took a loan amount of BDT 10,000/- from Darla VDO and planted 85-90 banana trees at the outskirt of her house. Later she earned about BDT 40000 by selling the bananas in the market. In addition to this, she has cultivated egg-plant on 10 kathas of land which is expected to return her BDT 30,000. Furthermore, she can learn about health care and nutrition in the courtyard meetings. Now Suchtra is a pioneer in the struggle against poverty.

3. Josna Paul, a self-confident woman:

Josna Paul joined Sanchadanga VDO of OHOF. Sanchadanga is a small village in Chowgachha Upazila under Jessore district. She, along with her family, had spent days in severe poverty until they started their family pottery business with the fund from the cooperative VDO account. She continued to save BDT 200 per month in the cooperative VDO account despite adversity. Later she applied for a loan amount of BDT 15,000/- informing them about her problem in Courtyard Meeting. As the members were well aware of her poverty, they accepted her application and after details scrutiny the UNO gave final approval to her desirous loan amount of BDT 15,000/-. With this money her family started their specialized income generating activities like pottery to overcome the poverty. In addition, they started to make rings for slab latrines and wells. Now she is self reliant with her family profession. She earns BDT 4000-5000 per month that is added to her husband’s income, can send her children to school, have sanitary latrine in their house. Moreover, they now know the importance of drinking safe water as taught in the courtyard meeting. She is planning to reconstruct her abode as well and shifting towards better livelihood.

4. Ahmed Nabi is a Successful Farmer:

Ahmed Nabi is the manager of Muslimpara VDO under One House One Farm Project at Sadar Upazila of Bandarban district. Due to fund constraint, he could not cultivate his lands properly. This caused a continuous poverty in his family throughout the year. He regularly saved money after having membership of OHOF. He spent his first loan amount BDT10000 on tomato cultivation and is very happy with his successful Tomato production as he made a profit of BDT 16,000/-. His children go to school, take nutritious food and use sanitary latrines. This additional income helped him improving his family’s living condition by ensuring food nutrition, education for his children and sanitary latrine for his family.

9. Beggar’s rehabilitation special initiatives under OHOF:

Another initiative under OHOF is the rehabilitation of the beggars in Kishorganj Sub-district of Nilfamari District where 951 beggars have been rehabilitated. As they are the members of the VDO in the fiscal year 2013-14, they have so far saved BDT 225600 within this short span of time. The local administration along with social welfare department supported them with BDT 1502400 to enhance their savings. As a result, the total savings have become BDT 1728000 and OHOF then gave the same amount BDT 1728000 to their account as welfare grant leading to a matching fund of BDT3456000. In addition to this, a second support from government as revolving fund of BDT 2377000 was given to them forming a common cumulative fund of BDT5833000. Out of that they have invested BDT 2995000 in small entrepreneurial activities like goat farming and 135 micro businesses like tea stalls, small mobile shops, hawkers, etc. The 5^th January 2015 was the 1^st anniversaries of poverty free Kisorganj which was celebrated with high dignity and appreciation. The beggars embraced the lives of diligent workers and left the life of a beggar. From this experiences government of Bangladesh is going to take an intensive program for the beggars with OHOF.

10. Conceptual framework with indicators and findings of IMED:

Depending on the conceptualization of the issues and experiences of OHOF’s 5 years implementation a framework linking both the independent and dependant variables with specific indicators for socio-financial inclusion has been developed for easy consumption of the readers as presented below:

From the model with indicators we may find some interesting socio financial inclusion of the poor and underprivileged of the society. The funding is coming from government that has been using and managing through a transparent online system where the poor are affiliated with e-management system. The major activities: fund mobilization, fund utilization, fund management and use of ICT are done by the beneficiaries with full government support. This shifting of credit to grant under OHOF project has established a dramatic advancement in the field of microfinancing in particular permanent funding, self decision making, self management and empowerment followed by a unique online financial inclusion. All these activities are ensuring their socio financial inclusion leading to a better life and living those are measurable e.g. household income, consumption i.e. calorie intake, health care, child care, child education, clothing etc.

Keeping the indicators in to consideration, a mid-term evaluation was made 2 years back by the government agencies like Implementation, Monitoring and Evaluation Division (IMED). That report pointed out some important changes and impact on the life and living of the poor. The major findings were:

• Income of the beneficiaries have increased by BDT 10,921 (i.e. $ 140/person/year)
• Percentage of low-income families in project area has reduced to 3 from 15.
• Percentage of comparatively solvent household has increased from 23 to 31 in the project area.
• Remarkable changes have been made in the lower income group: number of the lowest income group has reduced significantly while the number of the mid-income group has increased rapidly.
• Participatory capital formation created a positive impact on the poor that their capital is secured
• The poor appreciated the opportunity of self decision making sitting in the courtyard meeting
• The practical bottom up planning and self- decision making are praised by all sectors
• E-financial inclusion of the excluded and the poor with free, fair and quick services has become a milestone in the way of poverty alleviation.
• Empowerment of the underprivileged and destitute women has collected enormous admiration from everyone in the society.

11. Comment of the author:

Financial inclusion indicates the inclusiveness of the underprivileged to financing stream of a society with economic flow. The basic principles of financial inclusion are:

1. The people should be poor and the under privileged sect of the society.
2. They must have ownership and rights on the fund.
3. They must have smooth funding opportunity to use.
4. The funding opportunity should have sustainability to use i.e. the underprivileged sect may use the fund continuously without any disruption or break.

OHOF model has fulfilled all the basic features of financial inclusion. In addition, here the financial inclusion is done through internet i.e. ICT at their doorstep which would be taken as e-financial inclusion. And it is one of the special features of One house One farm project in Bangladesh.

Social business is a term that is getting market with new flavor rapidly. It is actually a social enterprise relating to ethics of non-profit but to run for the benefit of the society involving the beneficiaries concerned. Definition purview doesn’t indicate it exclusively for the poor, it may an initiative to solve any problems of the society involving all sectoral people. In this case of OHOF as the government support project, the beneficiaries are the underprivileged class of the society mostly landless and beggar, even. But the modalities of investment are same with the following features:

1. Fund is mobilized by them with the help of the government. They need not to borrow from anybody else. The matching fund is permanent and need not to back to any investors.
2. The underprivileged people may develop any type of enterprise or business for their livelihood and income generation. They have the opportunity to use the fund for their community benefit.
3. The interest or profit of the business is depositing to their own account raising the fund further.

It is seen that the program under OHOF of the government of Bangladesh is a radical paradigm shift in micro financing, empowerment and poverty alleviation. It is in true sense, financial inclusion of the underprivileged (as they are mostly landless with 0-50 decimal lands) and more they are e-financially included followed by sustainable poverty alleviation model supported with grant instead of credit. The modality of self decision making and investment for income generation both individually and in group is the basic feature of social business here. It would open a new dimension in the world history for eradicating poverty from the developing and poverty stricken countries that covers both social and financial inclusion. The new model of microfinancing shifting from credit to grant is a unique and sustainable mission for funding security, self decision making and empowerment of the underprivileged sec of the society along with self management. Its specialty is sustainable fund flow to invest and hasslefree online transparent financial management. In a single word, it is an independent model that the beneficiaries are manging everything in the way of sustainable poverty alleviation. It is in fact difficult to fight for the poor against the upper class socio political and socio financial competitors on the uneven socil context of the world.  Fact is that it will take some time to enable them that deserves the involvement of all the sectors public and private agencies and also the civil society along with political commitment are important to work together.

12. Conclusion:

There may be some limitations, despite of those existing schemes in achieving economic and social inclusion it is important to consider a newer variant of micro-finance through government sponsorship. Under this project Bangladesh government started providing capital to the poor people through village organization as investible capital in the form of a revolving fund. In other words, the mobilized fund lies with the account of the village development organizations as their permanent fund; which will be used by the local poor people generation after generation.  Central to the design of this project is that all decisions around savings, loans and financial transaction are taken by the local people operating as a community organization. Unlike conventional development initiatives EBEK (OHOF) involves a bottom up instead of top down approach in decision making. Moreover, the poor are getting services online i.e. they are basically financially included electronically (i.e. e-financial inclusion). To sustain the paradigm shift from loan to grant program under OHOF, recently, a rural bank ‘Palli Sanchoy Bank’ has been established which may be the first online bank in the world exclusively dedicated for the poor of Bangladesh.  We are very much optimistic that in near future poverty can be reduced to ‘0’ (zero) through this philosophy of sustainable micro financing (i.e. grants & savings) and investment at marginal level or bottom of pyramid in Bangladesh.

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[1] http://www.economist.com/news/briefing/21578643-world-has-astonishing-chance-take-billion-people-out-extreme-poverty-2030-not

[2] http://hdr.undp.org/sites/default/files/hdr14-report-en-1.pdf

[3] http://www.mof.gov.bd/en/budget/14_15/ber/en/Ch-13%20%28English-2014%29_Final_Draft.pdf

[4] During detail literature review and filed study we may try to ensure this dilemma of statistics.

[5] http://www.mra.gov.bd/images/mra_files/News/mcinbd17082015.pdf

[6] http://bdnews24.com/economy/2015/09/16/bangladeshs-poverty-rate-drops-to-24.8-ultra-poor-rate-to-6.5-percent