***Nearly half (470.8%) of the country's total 44.8 million rural poor are hardcore poor, suffering from lack of basic needs. This poses serious development challenge to the country as huge amount of investible resources are needed to create income earning opportunities for the millions of rural poor and lift them above the poverty line.***
INSTEAD of being thrown into oblivion by the ruthless advance of modern corporate giants. the microentrepreneurs have made a resounding comeback as viable partners in development in the developing as well as developed countries. In more than 50 countries around the world over 500 million poor but economically active people have demonstrated convincingly that they are capable of running microenterprises on a profitable basis. More importantly. they have also proved indisputably that they are better borrowers than there so-called ''bankable" richer counterparts. They put their loans to productive uses to increase their assets to be able to repay them, enhance their productivity and income, improve living standards and play positive roles in reshaping the society.
Based on rational economic calculations, the real truth seems to Ue in the fact that given an access to productive resources along with some skill development training and guidance. the poor can eke out a living for themselves through engaging in diverse types of self-employment generating activities.
The reinforcement of this truth by Dr Mohammad Yunus through his much-publicised Grameen Bank (GB) experience in Bangladesh and its replication in many other countries has rekindled interests of the world leaders, donor community, private groups and social activists in the primacy of micro-credit as an effective weapon to fight poverty. From a background of willful neglect as an instrument of development not long ago, the micro-credit has reached the centre stage of discussion and analysis by thousands of researchers, policy makers and development agents as the most potent weapon for alleviating poverty, empowering the poor and the destitute, raising their living standards and turning them into agents of growth and de-
Nearly half (470.8%) of the country's total 44.8 million rural poor are hardcore poor, suffering from lack of basic needs. This poses serious development challenge to the country as huge amount of investible resources are needed to create income earning opportunities for the millions of rural poor and lift them above the poverty line.
velopment.
The World Micro-Credit Summit (WMCS) held in Washington during February 2-4. 1997, and attended by some 2.000 delegates from around 100 countries, with Bangladesh Prime Minister co-chairing it together with luminaries like the US First Lady, Queen Sophia of Spain and the former Japanese Prime Minister Tsu-tomo Hata, have for the first time, endorsed micro lending as the right answer to the problem of rural poverty. The micro-credit campaign has succeeded in focusing world attention to the fact that the scale of poverty in the developing world is so deep and widespread that nothing short of a "missionary approach" can alleviate it. While this has also created worldwide awareness about the importance of institutional lending to the poor for creating self-employment opportunities, the financial resources required to fund the micro-lending programmes on a large-scale (estimated by the Summit to be 21.6 billion dollars to reach 100 million of the world's poor by the year 2005) need to be raised through Joint efforts at both national and international levels. The commitments made by the participating national leaders and the multilateral donor agencies to make contributions to the fund-raising campaign for micro-credit lending launched through the WMCS points to important beginning in this direction.
As for Bangladesh, the Summit has brought at least two laurels. It has certainly been a personal triumph for Dr Mohammad Yunus who through two decades of hard work has reached out to two
million destitute women of Bangladesh with bank credits and enabled them to stand on their own feet. This has earned the GB universal recognition of being the replicable model worldwide for distribution of credit among the poor and alleviation of poverty through selfhelp efforts. The choice of Bangladesh Prime Minister by the organisers as co-chairper-son at the inaugural as well as the concluding ceremony of the August gathering has earned pride and honour for the country. Laudable achievements as these must be. they are also grim reminders to the fact that the country is burdened with the problem of poverty of a massive scale. Nearly half (470.8%) of the country’s total 44.8 million rural poor are hardcore poor, suffering from lack of basic needs. This poses serious development challenge to the country as huge amount of investible resources are needed to create income earning opportunities for the millions of rural poor and lift them above the poverty line.
The Grameen Bank and hundreds of other NGOs in Bangladesh have shown that the provision of micro-credit, savings mobilisation, and asset formation for the poor can initiate important socio-economic changes through development of micro-enterprise activities. The NGOs in Bangladesh are playing important role in the development of microenterprises through implementing poverty-focused credit programmes and supply of other complementary inputs. Assessing the impact of such programmes on poverty alleviation and social development, a large number of studies (i.e
Rahman. R I Impact of Credit for Rural Poor. 1996: Khandker and Chowdhury: Targeted Credit Programmes and Rural Poverty in Bangladesh. 1995) confirm significant positive contributions to the growth of rural household Incomes and alleviation of poverty through development of rural non-farm activities (RNA) which they undertake as both full-time and part-time occupations using micro-credit and other supporting inputs. However, relevant studies ( i.e H Z Rahman and Binayak Sen: Rural Poverty Update. 1992) also indicate that incomes derived from RNAs constitute only part (varying between 20-30%) of the total income and employment of the rural households.
Similarly, the extent and spread of poverty being varied across different groups (i.e 'extreme poor" and "moderate poor") among the poor themselves. neither did all eligible beneficiaries benefit equally from the micro lending programmes nor could all categories of the poor could be reach by such programmes. While greater coverage of the poor of all categories and generation of higher incomes and employment opportunities for them to lift them above poverty line may be possible through Increased availability of microcredits and interlinking the micro enterprise development process with changes in other socio-economic sectors, the scope for further expansion of micro lending will critically depend on how far the credit funds are invested in the growth-augmenting RNAs and how much to they contribute to increases in rural incomes.
A number of possible limi-
tations may act as important barriers to the large-scale expansion of the poverty-focused micro-credit programme In Bangladesh. To start with, the newly-discovered enthusiasm in microenterprise development must not overlook the critical importance of small industry development in Bangladesh. Necessary caution has to be practised in allocating the available funds to competing alternative uses influenced by the positive constraint of comparative economic viability of growth-augmenting modern small-scale industries and the poverty-reducing traditional microenterprises. Both higher economic growth and employment opportunities ("wage" as well as 'non wage' employment) for the poor are important for poverty alleviation.
Second, we must not take ■only a static view of the income increases accused to the poor through their involvement in the self-employment generating activities. Instead, concerns must be shown as to whether the beneficiaries undertake dynamic activities within the microenterprise sub-sector in order to be able to grow on a sustainable basis and maintain a high income flow after paying for the interest costs and other dues. Another important dimension of poverty requiring close attention from the policymakers is the rapid increase in urban poverty. The future micro-credit programmes must take serious note of this spatial dimension of poverty and make necessary allocation of investment funds for creating employment and income-earning opportunities for the urban poor. Development of a vibrant urban informal sector is a
prospective candidate in the desirable scenario. An overriding constraint limiting the expansion of microenterprises and other self-employment creating pursuits in both rural and urban areas is the demand constraint facing these activities.
The design and implementation of the expanded microcredit programmes need to be integrated within the overall microenterprise and small and cottage industry development programmes in both rural and urban areas for achieving several types of inter-sectoral linkages and balances in order to ensure greater coverage of the poor, higher income flow, and sustainable growth.
In order to reach the poor more effectively with sufficient credit and other supporting assistance package ( i.e better technology, education and training, healthcare, fair markets and adequate infrastructure etc) the existing institutional capacities for micro -credit delivery, savings mobilisation and business promotion has to be strengthened and new capacities built through increased networking and exchange of experiences at both national and international levels, designing appropriate !>olicies and making provision or better skill and management training for the social entrepreneurs and the micro credit managers.
The legal, administrative, and regulatory rules and regulations must also be changed and re-oriented towards ensuring greater flow of productive resources to the poor as well as the non-poor potential microentrepreneurs. The World Bank. UNDP and other multilateral donor agencies can help Bangladesh and other developing countries in transition to market economies by offering important technical assistance and advice in these areas.
The author is Professor and former Chairman of the Department of Economics. University of Dhaka