Study on local government and NGO operated micro-finance programs for urban poor at Bhairab pourashava

Abstract

More than 23.39 % of the total population Bangladesh lives in 522 of urban areas. But unfortunately most of these urban populations live under the poverty level. Poverty alleviation is always the key moto of the Bangladesh development strategy. Over the past two decades micro-finance programs have emerged as one of the leading strategies in the overall movement to end poverty. From Fiscal Year (FY) 2004-05, Asian Development Bank (ADB) financed a project which is monitored by Local Government Engineering Department (LGED) and implemented by the Bhairab Pourashava Authority like others 30 Pourashava. One of the objectives of this project is to provide slum dwelling women with micro finance (MF) so that they can be self-employed and improve their condition. This research provides a sort of knowledge about the Local Government (Municipality) operated microfinance services for the urban poor in Bangladesh regarding- microfinance services contributions to the key economic development indicators, importance of microfinance services, the socioeconomic impacts of microfinance services, microfinance methodologies, necessity of microfinance regulatory authority, microfinance institutions key successes and challenges, etc. This also tries to find out the strength and challenges of Micro Finance Program (MFP) operated by Pourashava and NGOs with experience from Bhairab Pourashava. The overall study results show that, microfinance programs participation is not only eradicating the poverty from the urban slum area but also make the economic and social development in the total area. The main mechanisms of the microfinance programs were to develop sustainable credit delivery mechanisms and savings mobilizations that target all the poor in Bangladesh. Microfinance plays a very important role for urban poor women’s empowerment perspectives, because women have clearly benefited by getting access to the credit; they are able to increase their income generating activities, become owner of non-land assets, etc. As a result these influence their children’s consumption, schooling and thus independent effect on household resource allocation. Though NGOs operates MFP for urban poor for the last 15 Years, it has not reached into highest level of consumer satisfaction yet due to its high level of interest cost and profit making approach. But within only 4 years Pourashava achieves certain level of consumer satisfaction that urban poor women are now prefer Pourashava operated MFP than that of NGOs. The study found that the Pourashava authority consults with people about their problems, needs and demands as well as give them opportunity to make some decision about service facilities. The general conclusion of this research is: the LG operated MFP in Bangladesh is explicit; which is not only alleviates the poverty but also plays as a vital socioeconomic development mechanism; the poor can be covered by savings mobilization and sustainable credit market. But for that there should be proper monitoring system. Therefore, proper monitoring system as well as honesty and responsibility of public representative in local government body is very much essential.