Day 1
Facilitator: Mr. Achmad
Rofi’ie
The inaugural session of the course started at 9 a.m. after arrival of the honourable Ambassador of the Republic of Indonesia. In the inaugural occasion, the following distinguished guests made their valuable opening remarks.
Opening his
speech, Mr. Muyeed Chowdhury,
Executive Director of BRAC, welcomed the distinguished guests, participants and
other attendees in the inaugural session. He appreciated the NAM CSSTC to take
such a novel initiative and choosing
He welcomed all
participants and distinguished guests for their time and spoke about the
importance of the training that it will increase and broaden the experience of
participants about the microfinance issues and concerns in South and
Mr.
Achmad Rofi’ie, the coordinator of the programme also welcomed the
distinguished guests, participants and all other invites attended the inaugural
session. He also reinforced the objective of NAM CSSTC for increased
collaboration among the countries in the non-aligned movement for sharing and
exchanging experiences and technologies related to development for poverty
alleviation. He emphasized on the capacity building and human resource
development of NGOs in the frontier of global changes and challenges. He
acknowledged the cooperation of
Session 2:
Getting Acquainted
Facilitator: Mr. Shabbir
Ahmed Chowdhury
Next, he requested the participants to introduce themselves giving name, country, and the organization. All participants introduced themselves. Also they were requested to write their self-portrait in a sheet of paper and display it in the specified place in front of the training room. The name, organization, working place and country of the participants were as provided below:
1.
H S
Srikantamurthy, Myrada, Bellary, Karnataka, India
2.
Md. Harun-Or-Rashid, Grameen Bank, Mirpur,
Dhaka, Bangladesh
3.
Letho, Bhutan Development Finance Corporation, Thimphu, Bhutan
4.
Foruzan, BRAC, Parwan, Chirkar, Afganistan
5.
Abdul
Khaleque, Uddipan, Pirojpur,
Bangladesh
6.
Md. Ibrahim Biswas,
BRAC, Mohakhali, Dhaka, Bangladesh
7.
Md. Zakir Hossain, TMSS, Bogra,
Bangladesh
8.
Madaminov, Ministry of Economic, Uzbekistan
9.
Saleha Sadat, BRAC, Poli Sukhta, Afganistan
10.
Kapila Nanda
Mondal, Vivekananda Sevakendra –O- Sishu Uddyan, West Bengal
11.
Bhupendra Batsa
Lamsal, IIDS, Nawalparasi, Nepal
12.
Aminullah Khair Andish, AREA, Afganistan
13.
Narayan Bhattarai, Agricultural Development Bank, Kathmandu,
Nepal
14.
Aishaih Ikram, Ministry of Planning and National
Development, Maldives
15.
Israr Mohammad
Khan, AHR
NCRD & MA, Islamabad, Pakistan
16.
Muna
17.
Harry
Lckamse, SEEDS, Colombo, Sri Lanka
18.
M. Latif Malik, NRSP, Khushab,
Pakistan
19.
Md. Abdus Samad, ASA, Shayamoli,
Dhaka, Bangladesh
20.
Madhurantika Moulick, Facilitator, Kolkata,
India
21.
Md. Manirul Islam, BURO Tangail, Tangail, Bangladesh
22.
Somasiri Liyanwala,
23.
Emrul Hasan, Plan International, Dhanmondi,
Dhaka, Bangladesh
24.
Sharda Naidoo, Johansberg,
South Africa
25.
Mohamed
Nazirwan, BRI, Jakarta,
Indonesia
26.
Shabbir
Ahmed Chowdhury, BRAC, Mohakhali, Dhaka, Bangladesh
27.
Md. Harun-Or-Rashid, PMTC, Banani,
Dhaka, Bangladesh
Training schedule was then reviewed and discussed with the participants and necessary other instructions were provided to the participants regarding hotel, ticketing, transport, laundry, shopping, health service and medicine, and contact persons from the organizer of the course.
Facilitator: Shabbir Ahmed Chowdhury
What is Microfinance?
The term microfinance refers to financial services-offered to the poor.
Microfinance
members are typically self-employed, low-income poor women and men in both
urban and rural areas.
David Korten describes the development of NGO sector in the
following stages:
Stage I: First
Generation -Relief and Welfare
NGOs in this
stage involve in direct delivery of services to meet the immediate needs.
Stage II: Second
Generation -Small-scale, self-reliant local development
NGOs in the stage
involves in developing the capacities of the people to better meet their needs
through self-reliant local action
Stage III: Third Generation -Sustainable system development
NGOs in this stage are involved in policy changes. Focus are on creating a policy and institutional settings that facilitate, rather than constraining, just, sustainable development action
Stage IV: Fourth Generation-People’s Movement
NGOs in this stage focus on social movement and Global changes
Approaches
of Microfinance
· Continuous subsidy undermines development.
· Poor people can pay interest
· The goal of sustainability (cost recovery and eventually profit) is the key not only to the institutional performance of credit but also to make the lending institute more focused and efficient.
The facilitator divided the participants into 5 small groups.
Group 1:
Group 2:
Group 3:
Group 4:
Group 5:
The groups were asked to analyse and present their country context in the large group through preparing a flip chart. Facilitator instructed participants to analyse their country context according to the following four questions:
1. Who are the suppliers of financial services? What role does the Government and donors’ play?
2. How do existing financial sector policies affect the provision of financial services, which includes, interest rate policy, government mandate for sect oral credit?
3. The existing financial sector regulation and are the MFIs are subject to these regulation?
4. What economic and social policies affect the provision of financial services?
Participants worked for half an hour in the small groups and analysed their country context and prepared a flip chart paper, which they presented then in the plenary.
Aspects to
be reviewed and analysed to understand the context
After plenary on country context, the facilitator further elaborated the discussion reinforcing the following points:
It is also important to understand the
context in which the microfinance providers operate. These are:
The Key
Challenges of MF Program are:
l Regulation of Microfinance Program
l Overlapping and Competition
l Capitalization
l Hardcore Poor
·
Absence of adequate good
training institutions
·
Growth of microfinance is
not being supported by the growth of human resources
·
Lack of strong governance
& structure of MFI
·
Grant funds are shrinking
·
Lack of healthy
competition among MFIs
·
MFI are getting more
commercialised that is excessive influence of commercialisation
·
Poverty focus is by
passed by commercial and profit focus
Grant fund are squeezing and getting limited
·
The global actors have
changed their grant and subsidy policy
·
Dearth of effort for
identifying and implementing the best practices
·
Need to expand the
outreach
·
Innovation in service is
needed
·
Operate more effectively
and efficiently
·
Funding for the future
·
Developing an enabling
environment
·
Apex Body
Facilitator: Mr. Mohamad
Nazirwan
The facilitator started the session with a game; asked participants to name the 23rd alphabet of English language. One participant told it very quickly and he awarded with a small prize.
Financial Intermediary
Facilitator then explained the concept of financial intermediary showing PP Slides. Suppliers and intermediary is similar. Intermediary classification: Formal, Semi-formal and informal. He showed a framework on t financial intermediary, which was shown below:
► Any individual or institution that mediates between the source of funds (savers) and the users of funds (borrowers)
► Funds transfer from surplus side to shortage end (supply and demand)
► Transfer price (transaction cost) between both parties
Suppliers of Financial Intermediaries
Showing PP slides and giving relevant examples, the facilitator then explained the major two approaches in microfinance programming.
Provides micro-credit, savings, Insurance services only
Provides Micro-credit, Savings, Insurance services as well as Business Development Services, Health programs, Trainings, etc.
Facilitator also explained the role of microfinance programme showing the following diagram.
He explained the role of microfinance linking the poverty pyramid with the enterprise pyramid. While he explaining the concept, he answered different questions came from the participating citing various examples.
Next, the poverty alleviation toolbox discussed with the participants in a participatory manner, through which he explained the concept of the importance of designing appropriate financial products correspondence to the different classes of poor.
In this stage of discussion, he brought the following questions discussion by the participants:
From the discussion it revealed that institutional development approach has been proved effective and appropriate for poverty alleviation. He mentioned that for extreme poor and displaced households, there should have different set of programme, which is a subsidized programme.
Then he divided the participants into four small groups and asked them to review the framework and to see where are they and which group they are serving with what MF products and approaches.
The Simple Economics of Microfinance
Explained the concept by showing PP slides.
Microfinance Framework: Income Generation
Facilitator also explained the framework showing PP slide and giving various examples.
Source: Nazirwan (2001)
Explained by showing the PP slides.
What are the purposes of Credit?
Explained by showing PP
slides.
- Start up
- Existing business
- Unstable
- Growing
- Stable
- Production
- Agriculture
Fit
to the preferences of the clients:
ï Short loan terms, suitable with income pattern
ï Relatively unrestricted uses
ï Very small loan, meet the daily needs
ï Customer friendly approach
Streamline
operations to reduce unit costs
ã Standardize the lending process
ã Simple
ã Decentralized
ã Local oriented
Motivate
clients to repay loans
ð Joint liability groups
ð Incentives
ð Continue access
Cost
recovery
í Sustainable interest rate &
fees
í Transaction costs
·
Individual Lending
Group Based Lending
è Character
based (creditworthiness & willingness)
è Document
and asset based
è Loan
approval is based on available evidence
è Through
recommendation of respected persons
è Require
a credit history
è Loan analysis with at least 3 C’s of Credit: Character,
Capacity and Collateral
è Commonly use to serve micro-entrepreneurs & active working poor
è Usually for business expansion
è Have some collateral to offer
è Market interest rate
è Repayment are made in monthly instalment of principal &
interest
Terms for the loan usually up to 24 months
è
ð
Involves the
formation of groups of people
ð
Adopted from
ROSCA
ð
Peer pressure
as a substitute for collateral
ð
Reduce
institutional transaction cost
ð
Sometimes
accompanied with training programs
ä
A group of 30
to 50 forms a village bank
ä
There is a
support institution that lend to the village bank
ä
The amount of
the loan depends on the amount of savings it mobilize
ä
The village
bank lend to individual bank members
ä
Borrowers
repay the village bank in regular instalment
ä
The village
bank repays to the support institution at the of the loan term
è Relies on social pressure to reduce credit risk
è A self-selected group is linked with other groups from their
village to form a center
è Initially there is a training for prospective borrowers
è The group members make a small deposit
è If any member defaults, the whole group become ineligible to
receive subsequent loans
Savings in kinds
·
Cash
·
Grain
·
Animals
·
Gold
·
Land
Reason for Savings
·
Consumption
·
Investment
·
Social &
religious purposes
·
Retirement
·
Seasonal
variation in cash flow
Colleting
Savings
After presenting and discussing the above
described issues related to microfinance, the facilitator invited the
participants to watch an video clip on microfinance
activities of BRI.
Resource Person: Mr. Dipal Barua, Director
Administration, Grameen Bank
Mr. Dipal Barua told the history of GB, which started in Jubra gram near Chittagong University under Hathazary Thana of Chittagong district. GN is now working in 41,000 villages. It started with 42 poorest borrowers 1976, now the coverage is 2.5 million in 2003 through 516,257 groups. Showing PP slides he explained the microfinance program and other aspects related that. He also explained the core principles and working mechanism of Grameen Bank and recent changes in their microfinance programme. His total presentation was according to the following structure:
As the participants received handout on the presentation on Grameen Bank, the description for each contents mentioned above are not recorded here. Therefore, participants are requested to see the handout on Grameen Bank when they need to know information on each of the above-mentioned broad content.
Facilitator: Mr. Shabbir Ahmed Chowdhury
Before closure of the day, the course coordinator asked the participants to checkout by commenting how the day was to him. In response, the participants mentioned the following remarks: