Katy Love

ANNEX 1: “The promising practices” case studies series

BRAC Case Study

I. Context:
a. Socioeconomic overview
The ‘hardcore’ poor in rural Bangladesh suffer from food deficit, illiteracy, and lack of
access to land. More here?
b. Purpose of intervention
BRAC’s Income Generation for Vulnerable Groups Development Program (IGVGD),
creatively links a government safety net program, which provides food grain, with
financial services to those women who have been traditionally deemed too risky by other
MFIs or who have self-opted out. BRAC collaborates with the government and the World
Food Program. The goal is to graduate women from the program to regular MFIs. Locally
elected representatives select women to receive the food grain, and BRAC then selects
90% of those women (only excluding the handicapped) for participation in its program.
c. Description of target group/clients/members
Over ten years, BRAC has successfully targeted approximately one million hardcore
poor, rural Bangladeshi women who have few or no economic opportunities. More on
client group size?
II. Description of methodology:
a. Summary of design concepts:
IGVGD works with the Government of Bangladesh’s subsidy program to provide the free
food grain assistance for an 18-month period to impoverished, female-headed
households. The food grain provides an incentive for the women to participate, and
BRAC, then, provides skills training and savings and credit services.
b. Process/steps in implementations:
The three components of the program are the food grain subsidies, skills training, and
financial services. Once receiving the food grain, women are trained in raising poultry
and livestock, sericulture, or other income-generating activities for which there is a ready
market. Women are required to attend weekly meetings and save US$0.50 a month, or
more if they can. The first loan is given after training is complete, and weekly
repayments begin immediately. Once the first loan is repaid, another loan is given, during
which time the food grain program ends. When the second loan is repaid, women
“graduates” can begin participating in normal MFIs.
c. Methods of measuring results:
Monitoring is an important component of the program and is continually carried out by
the government, the World Food Program (WFP) and by BRAC itself, which is annually
audited by WFP. The government monitors BRAC’s monthly reports and the WFP makes
field visits to visit programs. May need more here.
III. Results
One study tracked one hundred IGVGD participants in ten locations at their program
entrance in 1994, and again in 1996 and 1999 in order to evaluate program effectiveness.
The year 1996 appeared to be the peak for participants, when women had just stopped
receiving food grain but the loss had not yet registered, and they had received their
second round of credit.
A majority of women did benefit from program participation; they were able to increase
both income and asset ownership because of their ability to save and then reinvest
earnings. Half of the women increased their ownership of clothing and shoes, and most
ate three meals a day. Many noted an increase in self-confidence because of the
improvement in their financial situation. In fact, overall, two thirds of the participants
have “graduated” from destitute poverty to regular microfinance clients and have not
required government aid. In the long run, one third of the women did not benefit from the
program and again require government subsidies. Thus, a strong need for a safety net
services continues to exist.
IV. Resources required/cost to institution
Because the Government of Bangladesh and the World Food Program provide the
incentive of food grain (6,000 takas per woman), BRAC pays for the women’s training
(725 takas per woman), and the gross total is 6,725 takas, or $135.
V. Challenges/pitfalls/lessons learned
One concern from participants was regarding the transition after the food grain subsidies
ended. Most managed to receive and repay loans, although 25% of participants stated that
they were unable recover once they lost the food grain and returned to absolute poverty.
A concern for the organization is that of mixing financial and non-financial services. The
subsidies should not be directly provided by the MFIs. However, BRAC is able to avoid
this obstacle because the government already provides the assistance and a strong
separation is necessary for the program’s success.
Finally, risks like economic shocks, natural disasters and poultry diseases can be
minimized by portfolio diversification.
VI. Contact information/sources of information
Other organizations like Jagorani Chakra and Care Bangladesh have also successfully
linked financial services with government employment services.
The BRAC case study was written by Syed Hashemi.