Institutional Action Plan

Grameen Bank Replication Program

The Microcredit Summit launched in 1997 a campaign to reach 100 million of the poorest families with credit for self employment, particularly the women of those families, by 2005. Grameen Trust (GT) has pledged that it will reach, through its network of Grameen replicators worldwide, 10 million poorest families by 2005 i.e. one tenth of that goal.

Grameen Trust is one of the largest international networks of microcredit organizations for the poor in the world. It currently provides funding, training, technical assistance and other support services  to 86 Grameen type credit and savings programs in 28 countries.

GT has already sought Institutional Action Plans from its funded partner organizations that provide their targets  for outreach upto 2005. Sixty eight (68) of eighty six (86) partner organizations of Grameen Trust have committed to reach,  according to their institutional action plans, approximately 8.4 million of the poorest families by 2005, if their funding and training requirements are met (Table 1). In other words, these organizations have the institutional capacity to expand rapidly if the resources are made available.

The action plans have been developed by the partner organizations themselves and are subject to revision on the basis of  experience.  In some cases, organizations have set ambitious targets which we take as an indication of  their commitment. GT believes that the remaining partner organizations and prospective new partners in coming years will collectively have the capacity to reach the 10 million families.

In order to achieve this target, GT envisages providing funding, intensive training on Grameen technology and technical assistance to its partner organizations, as it has been doing. Organizations such as CARD, ASHI, Project Dungganon, TSPI in the Philippines, Tau Yu Mai and CEP Fund in Vietnam, CSD and Nirdhan in Nepal, SHARE, ASA and RDO in India, RDI in China, LAPO in Nigeria received financial and technical assistance from Grameen Trust  in the early stages of their development and are now serving between 4,800 – 38,000 poor families with microcredit (see Table 2). Other institutions such as GBUP/CFTS in India have received funding and training support from Grameen Trust to undertake fast track replication of the Grameen Bank approach in India that will reach financial viability in 4 years and reach 13,000 poor families.  Many of these organizations have not only created training facilities for their own staff but are also in a position to offer training to the staff of other microcredit programs.

At the time of the launch of the Microcredit Summit campaign in 1997, Grameen Trust funded partners had reached collectively 134,939 poor families with credit through their organizations. By April 1999, the number of poor families reached by the funded partners is 320,187.  This number has doubled in just over two years and provides an indication of the exponential rate at which these organizations can grow, if resources can be made available. If we include the outreach of GB replicators who have received training (and not funding) from Grameen Trust, the current number of poor families reached exceeds 500,000.

What is needed?

The Summit has estimated that US$ 22 billion is required to reach 100 million families. Thus, it can be estimated that GT’s partner organizations will require approximately US$ 2.2 billion to reach 10 million poorest families.

The entire US$ 2.2 billion required to meet this  target will not necessarily be channeled through Grameen Trust. GT’s role will be primarily to identify and provide start up support, both financial and technical, to these partner organizations and assist them to move towards financial and institutional sustainability. These partner organizations will then explore alternative sources of funding, increasingly from commercial sources. That this is a realistic strategy is evident from the fact that many of GT partner organizations have diversified their funding sources and are receiving loans from commercial banks (Table 3). Two of these organizations (CARD, Philippines and Nirdhan, Nepal) have already been able to set up their own banks (CARD Bank and Nirdhan Utthan Bank) with the approval of the Central Bank in their countries. This reflects the professionalization of their services and efficiency in financial management.

We believe our partners have the leadership, commitment and structures in place to reach the target of 10 million poorest families with credit for self-employment and income generation by 2005. What is missing currently is institutional links between the grassroots level organizations and available global funds. Grameen Trust will advocate on behalf of its partners to create strategic alliances with bilateral and multilateral donors, banks, regulators and other institutions so that the momentum can be created to achieve the goal. We need to create user- friendly mechanisms to provide funds to microcredit organizations working for the poorest, including the creation of wholesaler funds to provide  loan funds for microcredit organizations, which would help overcome the problem of irregular flow of funds.

Mainstreaming of microcredit will involve policy changes at the level of national governments, such as the removal of interest rate ceilings and establishing  legal frameworks that will allow microcredit organizations to  mobilize savings and flourish.  Grameen Trust has been in dialogue with Central Banks in various countries and there has been some progress in creating conditions favorable for microcredit organizations based on the needs defined by Grameen Trust’s partners.

We have to strengthen the activities of the Grameen Global Network, the regional networks such as CASHPOR, national networks such as PHILNET in the Philippines, IND-NET in India, the Grameen Network in Nepal, the Nigerian Grameen network, and Uganda Grameen network and others to share the technical expertise available and advocate for regulatory changes .

We invite our partner microcredit organizations and networks, donors, governments, central banks  and all friends of microcredit to work with us to realize our goal.