Summing up Grameen Trust's Decade of Experience Replication is a Doable Thing

H. I. Latifee

Essential principles of Grameen are replicable anywhere in the world, where there is poverty and there are poor people struggling hard for their survival and development.

Operation of more than 400 Grameen replications in 22 countries of Africa, 19 in Asia, 3 in Oceania, 15 in the Americas and 7 in Europe is a clear manifestation of the fact that Grameen approach has been widely accepted as a model for poverty alleviation irrespective of the level of development, differences in languages, culture, race and density of population.

Grameen Trust (GT) as a provider of financial and technical assistance has directly supported 105 Grameen Bank Replication Projects in 34 countries. It is apparent from the off-site and on-site monitoring reports of GT that its partners have made a significant progress in terms of their outreach, loan disbursement, loan products, savings, socio-economic impact and attaining operating and financial self-sufficiency. From only a few thousand borrowers ten years ago, GT partners now total about 800,000 families, directly benefiting 4 million of their family members. Together they have plans to reach 10 million of the poorest households by the year 2005, which is one tenth of the global target set by the Micro-credit Summit Campaign.

GT partners have so far disbursed more than $ 180 million as loans and generated about $ 15 million as savings. They have sustained a high repayment rate, including projects which have a perfect 100% repayment record. Clientele of most of the partners are overwhelmingly women.

The leading partners such as PROMUJER in Bolivia, RDI in China, ASA, CFTS and SHARE in India, MKEJ in Indinesia, KRT-WID in Kyrghyzstan, CSD and NIRDHAN in Nepal, LAPO in Nigeria, KASHF in Pakistan, ASHI, CARD and PD in the Philippines and PTF in Tanzania, have already distinguished themselves in the micro-credit world because of their pioneering work and excellent performance. Although, most of the replication partners are working in rural areas, some of them are also working in urban slums in cities like Dhaka, Chittagong, Manila, Jakarta, Addis Ababa, Kampala, New York, Chicago and Dallas. The prospect of urban replications appears to be bright because of instant marketing facilities and the higher entrepreneurial skills of the borrowers.

The replication projects in Kosovo and Myanmar are also doing very good. These two projects are directly implemented by GT under its Build, Operate and Transfer (BOT) model. They are serving exclusively the poor women and enjoying 100 per cent repayment.

Evaluation studies show that the GT partners are striving to cover their cost of operation from their interest income. Many have already reported financial viability for branch level operations. A few of them have reported institutional viability as well. Others are trying to narrow down the gap between their cost and returns and working on their business plans to reach the break even point as soon as possible.

It is evident from evaluation reports and case studies that the impact of replications in terms of accumulation of capital, generation of employment, improvement of income and overall quality of life of their borrowers has been quite impressive.

What are the principal constraints?
Although Grameen replications have grown rapidly, their future expansion and impact would be mainly constrained by the following reasons:

Lack of targeting

Grameen is a target oriented program. If targeting is not properly done, it is very difficult to establish and maintain credit discipline. If non-poor get into the program, the program is bound to be in trouble. And that's what is happening with some replications which are not sufficiently careful about targeting.

Still very limited funds are available

For many replicators, the sources of funds are donor and philanthropic organizations. They have no access to large commercial sources. They do not get the required funds and at the time their need is urgent.

Unfavorable macro policies

Grameen replications have come to the present level of development mainly because of NGO initiatives. In many cases their growth has been hampered because of unfavorable macro level policies of the government and unnecessary political interventions. Regulations which will facilitate micro-credit are required to foster as well as speed up new programs

Natural disasters

The poor have a weak economic base and are particularly vulnerable to natural disasters like floods, tornado, drought, etc. Their asset base is destroyed. Investments are lost. Working capital is eaten up. As a consequence, they lose their income and fall back into poverty, quite frequently being unable to repay their loans.

No business plans

For sustainable replications, every micro-credit organization should have its own realistic business plan. But in practice many organizations who are engaged in micro-credit operations have no business plans. They do not know in concrete terms what their business goals are, how and when they want to achieve their goals.

Conclusions

Given the constraints, it is high time for micro-credit practitioners to follow a course of action that will ensure the healthy growth of micro-credit operations. Generating more funds, learning by doing, setting standards, creating enabling conditions, developing professional staff and promoting committed leadership, are all needed to help replications to grow on a sustainable basis. This is undoubtedly a challenging task.

Grameen Trust and its partners are intensively engaged in finding ways to meet the challenge. We in Grameen Trust, hope that with the committed and concerted efforts of all concerned, micro-credit movement around the world will succeed in achieving the global target of reaching 100 million of the poorest households, particularly the women of these families, by 2005.

The author is the Managing Director of Grameen Trust.