Publication: Mitigating Seasonal Hunger with Microfinance in Bangladesh : How Does a Flexible Programme Compare with the Regular Ones?
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Published
2015
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1943-9342
Date
2015-01-29
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Microfinance institutions, often criticised for inadequately addressing seasonality and hard-core poverty, have begun to introduce innovative programs designed to tackle both the concerns. One such program in Bangladesh is the Programmed Initiatives for Monga Eradication (PRIME). PRIME exclusively targets the ultra-poor, especially in the country’s northwest region, and offers both production and consumption loans with a flexible loan repayment schedule, and other services. This article assesses the effectiveness of PRIME and regular microfinance programs in reducing seasonal hardship. Findings of this article suggest that PRIME is better targeted than regular microfinance programs and also performs better in mitigating seasonal starvation.
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Publication Seasonal and Extreme Poverty in Bangladesh : Evaluating an Ultra-Poor Microfinance Project(2010-06-01)Microfinance is often criticized for not adequately addressing seasonality and hard-core poverty. In Bangladesh, a program known as PRIME was introduced in 2006 to address both concerns. Unlike regular microfinance, PRIME introduces a microfinance scheme that offers a flexible repayment schedule and consumption smoothing, as well as production, loans. It targets the ultra-poor, many of whom are also seasonally poor, with a severe inability to smooth consumption during certain months of the year. Besides providing loans, PRIME offers extension and training services. This paper uses a quasi-experimental survey design to evaluate PRIME against regular microfinance programs. The results show that PRIME is more effective than regular microfinance in reaching the ultra-poor, as well as the seasonal poor. PRIME also helps reduce seasonal deprivation and extreme poverty. Although the program has demonstrated its promise, it is too early to conclude whether the accrued benefits are large enough to contain both seasonal and chronic poverty on a sustained basis.Publication Seasonal Hunger and Its Mitigation in North-West Bangladesh(Taylor and Francis, 2012-11-20)Seasonal hunger may result from seasonality of agriculture when households fail to smooth income and consumption. Using household survey data from the north-west region of Bangladesh, this article examines alternative measures of seasonal hunger, and provides some evidence to support policies and programmes needed to mitigate seasonal hunger. The results suggest that a large majority of food-vulnerable households are the perpetual poor, as opposed to a small percentage of households who are subject to food deprivation only during the lean period. Findings suggest that government safety net programmes and microcredit provide a cushion for the poor to stave off seasonal hunger.Publication Seasonal Migration to Mitigate Income Seasonality : Evidence from Bangladesh(Taylor and Francis, 2011-12-19)In north-west Bangladesh, some 36 per cent of poor households migrate every year during the lean (monga) period to cope with seasonal deprivation. Analysis of household survey data shows that the probability of seasonal migration is high for households with a high dependency ratio, high dependency on wage employment, and in villages with high unemployment; but low in villages with microcredit access. Findings show that seasonal migration helps households to smooth consumption and that non-migrant households who suffer during monga would likely benefit from deciding to migrate. But the cost of migration and lack of networking are potential barriers.Publication Beyond Ending Poverty(2016-07-12)The recent past has witnessed phenomenal growth in MFIs around the world. Today as many as 200 million people are beneficiaries of microfinance. Given its worldwide attention, microfinance has received serious criticism, including the argument that it is a fad with less-than-expected benefits for the poor. Surely, microfinance is not without any pitfalls. Yet the premise of improving access to financial services for consumption smoothing by the poor has never been a subject of controversy. What has been controversial is whether microfinance can alleviate poverty. That the poor lack an effective and affordable alternative financing mechanism to support income generation does not necessarily mean microfinance is a panacea since it involves entrepreneurial skills, which many poor lack. It is little wonder that studies evaluating the benefits of microfinance have produced conflicting results. Of course, study findings are contextual: They are positive in conducive environments and less so in unfavorable ones. Microfinance must be distinguished from anti-poverty schemes (e.g., conditional cash transfers) because benefits from microfinance-supported activities, which involve participants’ entrepreneurial skills and ability, take time to realize. This book using household long panel survey of 1991/92-2010/11 from Bangladesh addresses some of criticisms—including whether pushing microfinance has made it redundant as a tool for poverty reduction—while investigating whether it still matters for the poor after two decades of extensive growth. The book’s findings confirm the positive effects of continued borrowing from a microfinance program. Despite a manifold increase in microfinance borrowing, loan recovery has not declined and long-term borrowers are not trapped in poverty or debt. Interest rates charged by MFIs are not too high for realizing returns on investment, although the MFIs have scope for lowering them. The book is expected to contribute to the ongoing debate on the cost-effectiveness of microfinance as a tool for inclusive growth and development. It is expected to fill knowledge gaps in understanding the various virtues of microfinance against its portrayal as having drifted from its original poverty-reduction mission.Publication Seasonal Hunger and Public Policies : Evidence from Northwest Bangladesh(Washington, DC: World Bank, 2012)Seasonal hunger induced by agricultural seasonality is often a characteristic feature of rural poverty. The evidence of seasonal distress in many agrarian societies can be found in the narratives of economic historians. With agricultural diversification made possible through technological breakthroughs in many parts of the developing world, the severity of seasonal stress and adversities has been reduced considerably, if not altogether eliminated. In certain agricultural settings, however, the seasonality of poverty and hunger, along with the associated seasonal shortfalls in income and consumption, is still a policy quagmire. The problem gets more complicated when agricultural seasonality is locked into a cycle of endemic poverty, seasonal hunger, and risk of further impoverishment. Poverty and seasonality may also reinforce each other through various other forces that create and sustain both. The thrust of policy needs to be to break this interlocking cycle of poverty and seasonality. The book has nine chapters. Chapter two looks at the key conceptual issues and presents a global perspective on the challenge of addressing seasonal hunger. Chapter three brings Bangladesh's reality to the fore regarding seasonal poverty and food insecurity and the vulnerability of the northwest region. Chapter four analyzes the vulnerability of households to seasonal hunger, their coping strategies, and the extent to which income seasonality affects seasonal poverty and food deprivation. Chapter five reports some findings for both the Rangpur region and the country as a whole regarding the effects of policies and programs on poverty and food deprivation. The findings reported in the next three chapters are mainly related to the Rangpur region only. Chapter six examines the issue of seasonal migration in the context of mitigating seasonal deprivation. In chapter seven, the impact of the social safety-net programs is tested, whereas the effectiveness of microfinance is assessed in chapter eight. The concluding chapter, chapter nine, looks at the policy implications while also pointing to some emerging challenges.
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