Bangladesh is well known in the microfinance industry for the scale of microfinance coverage. Very few villages are not in the programme of one or other service provider.
In most cases, though by no means all, targeting instruments have been used; these typically seek to select households that are functionally landless (below 0.50 acres) and that substantially depend on wage labour income. As this article reports for BRAC (Bangladesh Rural Advancement Committee), targeting has very often been reasonably effective, both in terms of who is reached and how they benefit. Certainly by international standards, the vast majority of microfinance beneficiaries would be classified as poor upon entry. But, as this article describes, BRAC has developed a wholly new programme, targeted yet more finely at the extremely poor. There was no culture of exclusion for BRAC, but poverty analysis of members and non-members clearly identified a sub-set of the poor who were typically not gaining access to financial services. This case study underlines the importance of understanding the poverty conditions prevailing in programme areas and of the need to develop products that are relevant for specific conditions and experiences of poverty. From a welfare perspective, this is particularly important when, as BRAC found, it is the extremely poor who have been excluded from mainstream programmes. Such exclusion has been wrongly interpreted to mean that finance is not useful for some groups. This is surely implausible and the truth is rather that programme design has not corresponded to the needs of some groups of people.
This article comes from the IDS Bulletin 34.4 (2003) 4. Poverty Outreach and BRAC’s Microfinance Interventions: Programme Impact and Sustainability