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of end 1997, the following six Grameen Bank replications (GBRs) were
reaching a total of 34,619 poor households in three countries of Asia,
with financial services for poverty reduction: in the Philippines, ASHI,
Dungganon, CARD; in India, Nirdhan and SHARE; and Indonesia, MKEJ. Assuming
an average household size of five, this means that a total of more than
173,000 poor people were benefiting from their financial services. |
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Five years ago, in 1993, when the first funds
were received from GTZ through GT for scaling-up, when only 5 of the GBRs
were in existence and the other, MKEJ, had just received its seed capital,
they were reaching only 9,815 poor households, or about 50,000 poor people.
As impressive as the growth in their outreach to the poor has been, however,
a main point of this synthesis paper is that it could have been much greater
if funding had not been a constraint. This is supported by the identical
rank orders of total funds mobilized and total outreach to the poor, given
below.
In terms of reduction of poverty there is no doubt that the cumulative
impact of the six GBRs has been substantial. Funding from GTZ has played
a critical role in bringing this about. Initially it financed partially,
but importantly, the start-up of three of the six: Mitra Karya East Java
(MKEJ), SHARE and Nirdhan West Bengal. Subsequently management development
workshops to build the institutional capacity of these and other GBRs were
financed partially by GTZ funds through the Trust. Then, in an important
policy change in early 1991, GTZ proposed that its start-up funds could
be used also for scaling-up existing small, but successful GBRs. Four of
the six GBRs: Dungganon, CARD, ASHI and Nirdhan, plus TSPI of the Philippines,
benefited eventually from this important initiative policy change on the
part of the Grameen Trust, in September of 1994, to concentrate its scaling-up
funds, including those from GTZ, on the attainment of financially-viable
branches.
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The four basic concerns of the GBR self-evaluations are:
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1. The process of setting-up and expanding a poverty reduction program
through microfinance understanding the difficulties involved, the possible
ways to overcome them, and the success factors involved.
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2. The role of adequate financial and non-financial support in this
process, learning from the benefits, the constraints and difficulties you
experienced in relation with your supporters in order to improve such support
to better suit your needs.
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3. The progress you have made toward institutional viability in
providing your services related with the qualitative impact reached on
the level of poor households, and to understand what factors promote and
hinder viability of MFIs.
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4. The various adaptations/innovations which you generated since
the start-up of your GBR.
Data are taken from the Self-evaluation Reports as well as from the personal
knowledge of Assoc. Prof. Sukor Kasim and Prof. Gibbons and from the experience
of the Seremban Self-evaluation Workshop (January 1998). In addition, the
statistical information requested from each GBR is presented and analyzed
in a comparative way.
GTZ funding, through the Grameen Trust, while small in relation to the
total funding of the six GBRs, was significant in its timing as it enabled
three of the six GBRs to start their operations and the other to scale-up
when no other donor was interested.
The synthesis report is prepared from the GBR Self-evaluation Reports
and the Seremban Workshop
The Process
of Successful replication
All six GBRs have replicated the essentials of the Grameen Bank methodology
successfully, although not without major difficulties. Variations among
them in microfinance methodology are not many, but some may be significant
such as CARD's higher poverty-line and higher average loan outstanding.
The main difficulty of all GBRs was shortage of funds. These shortages
were more serious for some, e.g. Dungganon and ASHI, than for others; but
still it was the most serious problem faced by each GBR. Each GBR was affected
somewhat differently by its fund shortage. However, all survived their
fund shortage crisis and are now expanding again. Each GBR was successful
in its own way in raising additional funds.
Another common problem has been lack of a suitable legal status for
microfinance institutions working with the poor in general and for mobilizing
savings from them, in particular. In Philippines, Indonesia and India it
is, strictly speaking, illegal for NGOs and projects to mobilize savings
from the public. Only CARD has solved this problem by getting a license
as a rural bank. Yet the remaining five GBRs still take savings deposits
from their “members”. Central Banks in the three countries either don't
know about these activities or are “closing their eyes” to them. This is
not a sustainable solution. A microfinance institution that cannot maximize
its savings mobilization is like a one-legged-man. It needs a crutch, i.e.
subsidized funds, to limp along. Limitations of leadership were experienced
by at least two of the GBRs: ASHI and Nirdhan. The relatively small outreach
of both programs is partly a result of these leadership problems. Happily,
they have been overcome and both programs now have effective leadership.
Financial
& non-financial support
As fund shortage has been the major problem of each GBR, it must be
concluded that financial support has been inadequate. This is not surprising
as the international replicability of the GB methodology was not yet widely
known in 1994/95 when most of the GBRs were seeking additional funding.
However, finding ways of increasing financial support is vital for the
further outreach and institutional financial sustainability of these GBRs
and for the successful establishment of additional ones. The GBRs suggest
that funding should be a "package" to institutional financial viability,
with payments dependent upon the meeting of performance targets. With respect
to non-financial support, the main limitation, according to the GBRs has
been shortage of places in and finance for GT’s Branch and Area Manager
training programs. CASHPOR feels that it has not been able to provide effective
training in the more sophisticated areas of financial management, e.g.,
fund management, institutional financial analysis and the setting of appropriate
interest rates.
GBR impact
and financial sustainability
In terms of quantitative impact, i.e., number of poor households (active
borrowers) reached by the loan scheme as of 31.12.87, the six GBRs rank
as follows: Dungganon (10,031), CARD (9,909), SHARE (5815), ASHI (4,385),
MKEJ (2,549) and Nirdhan (1930). Concerning cumulative average loans disbursed
per active loan client, the ranking changes further to: CARD (US$553),
ASHI ($252), Dungganon ($200), MKEJ ($123), SHARE ($105), and Nirdhan ($100).
There is, therefore, considerable variation among the GBRs in terms
of scope and depth of outreach, but nevertheless a significant amount of
microcredit has been disbursed by all of the GBRs. Only CARD has had an
independent, professional impact evaluation study, the results of which
are very positive.
Progress on institutional financial viability also varies considerably
among the GBRs, However it is significant that all GBRs are now talking
about it in similar language. Measured in terms of institutional operational
sustainability at the end of 1996, they rank as follows: MKEJ (1.0), CARD
(0.74), Dungganon (0.51), SHARE (0.44), ASHI (0.42),and Nirdhan (0.26),
For September, 1997 MKEJ still reports 1.0, while CARD had reached 0.95;
and Dungganon 0.72; whereas by November 1997 SHARE had dropped to 0.4.,
due to heavy start-up costs of expansion.
It can be concluded that there is no necessary trade-off between lending
to the poor and the poorest on the one hand and institutional financial
viability on the other.
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