Micro-credit and Poverty Reduction in Bangladesh

The main objective of the study is to assess the impact of micro-credit on poverty reduction . The study was conducted among recipients of microcredit provided by both Grameen Bank and the BRDB in Manikganj Sadar Upazila of Manikganj district and Sagalnaiya Upazila of Feni district. The study reveals that Grameen Bank and BRDB covered higher proportion of landless households compared to control area. On an average each member in programme area received credit 5.35 times with an average of Tk. 44,000 from the date of their joining. A significant number of members used their credit in unplanned areas. The respondents opined that due to involvement in micro-credit programme, average food provisioning of Grameen Bank and BRDB members increased about 10 and 20 percent respectively. The calorie intake method reveals that 6-percentage points poverty reduced due to micro-credit. Percentages of hardcore and ultra poor in programme area were significantly lower compared to control area. Ninety three percent of the respondents under Grameen Bank and 94 percent under BRDB mentioned that their economic condition improved to some extent due to the involvement in micro-credit programme. Micro-credit had also positive impact on changing the housing condition. The relationship between access to micro-credit and incidence of poverty was not statistically significant at 5 percent level of significance. Improvement of economic condition assessed though self-assessment was positively related with the duration of membership in micro-credit programme, number of times received credit and amount of credit received and these were statistically significant. Impact of micro-credit on human poverty related indicators was relatively less compared to the income poverty related indicators. For accelerating poverty reduction through micro-credit the study recommended establishing the effective monitoring and evaluation systems on utilization of micro-credit by the beneficiaries, appropriate training to the beneficiaries, increase credit size and increase full time employment opportunity.