Microfinance Engagements of the 'Graduated' TUP Members
This study assesses the developmental impact on women beneficiaries of Bangladesh Rural Advancement Committee's (BRAC) microfinance program, 'Challenging the Frontiers of Poverty Reduction/ Targeting the Ultra Poor' (CFPR/TUP) in 2002, the details of which are as under:
- Aim: to assist the poorest segment of the population to build up an asset base that would enable them to participate in microfinance activities.
- A 'grant phase' of 18 months;
- A 'graduation phase', where the ultra poor women form groups and are offered small amounts of credit.
The study explores:
- Ultra poor women's engagement in microcredit;
- The quality of participation in credit, including loan usage and repayment management;
- Informal market participation;
- Semi-formal savings.
The study finds that:
- Microfinance for the poorest may take longer to achieve sustainability;
- Income diversification is important for sustained microfinance engagement;
- Shocks can cause discomfort of repayment and dropout from credit activity;
- Engagement of ultra-poor households in microfinance increases with improved quality of living;
- Flexibility in deposit and withdrawal are more important issues than earning interest for the micro-savers;
- Their engagement in semi-formal microfinance does not reduce involvement in informal financial markets;
- Along with credit, accumulating savings is very important to ultra-poor households.
The paper concludes by recommending:
- A recognition of the importance of savings;
- Innovations in the area of appropriate savings products.