Case Study

Microfinance Engagements of the 'Graduated' TUP Members

What drives ultra-poor womens' engagement in microfinance?
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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.
  • Phases:
    • 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.

About this Publication

By Sulaiman, M., Matin, I., Siddiquee, M., Barua, P., Alarakhaia, S. & Iyer, V.