The New Nation - Internet Edition

The poorest of the poor used to earn too little even to qualify for many of the ongoing microcredit programs.

'Financial Services for the Poorest (FSP)' project successfully helped these people move up from the bottom of the economic pyramid in the society.

83.4 percent of project beneficiaries earning less than a dollar a day before project intervention now earn more than a dollar a day.

The FSP project ended recently which was implemented by the Palli Karma Shahayak Foundation (PKSF) on behalf of the Government of Bangladesh with assistance from the World Bank.

The FSP project reached out to the hard core poor people who lived on less than a dollar-a-day and proved that they can wisely invest small amounts of funds to earn a return that allows them not only to pay back the loan but also reinvest the surplus for economic emancipation. The FSP Project was vital in helping the hardcore poor to get out of vicious cycle of poverty. More than 50 percent of the beneficiaries have now successfully graduated to the mainstream microcredit programs.

Many beneficiaries of the FSP program were used to be beggars, sex workers, widows, or household help who generally couldn't access the conventional micro credit programs. After becoming part of the FSP, some have even saved enough money to take land leases. The abject poverty did not preclude these extremely poor families from knowing the best business options for them. As they moved up during the project period-year 2002 through 2007-the cheerful, sparkling faces of these beneficiaries reinforced the fact about how a better living is possible with an engaged assistance in the form of tiny loans to Bangladesh's poorest people.

Following an innovative credit plus approach, raising awareness and social development were very much part of the project. FSP also offered flexibility in savings and repayment schedule. There was flexibility in the grace period and the program offered seasonal loan options. The credit was used for innovative Income Generating Activities (IGA) covering small business, goat and cow rearing, poultry, agriculture, handicraft, food processing, tailoring/embroidery etc.

FSP project was piloted in 19 upazilas (sub-districts) of 17 districts through its 19 Partner Organizations (POs). A World Bank project review team recently evaluated project impact by visiting the sites. The report indicates that the project was able to mobilize 64,000 members, generated Tk.54 million (US$0.9 million) in savings and lent out Tk.644 million (US$9.3 million) to 58,505 beneficiaries. Experiencing the success of the pilot program, the Government of Bangladesh replicated the project all over Bangladesh. As of May 2008, over 828,000 beneficiaries were mobilized under the replicated Ultra Poor Program (UPP).

The World Bank team highly appreciated the Government and implementing organizations for this innovative and successful show-case program which clearly shattered the myth that the poorest of the poor are not "bankable"- a simple but powerful demonstration with huge lessons across the world.

PKSF is now implementing another World Bank-supported microfinance project 'Additional Financing for Second Poverty Alleviation Microfinance Project (Microfinance II)' targeted for rickshaw pullers and poor owners, affected by ban on non-motorized vehicles in major roads of Dhaka city.