Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?

Are Microcredit Participants in BangladeshInM has organised a seminar entitled “Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?" at PKSF Auditorium, Dhaka on 1 July 2013. The seminar was aimed at addressing and disseminating the findings from the diverse experiences regarding the role of microcredit in terms of microcredit participants, poverty and indebtedness.

Dr. Atiur Rahman, Governor, Bangladesh Bank, graced the event as the Chief Guest. The seminar was chaired by Dr. Qazi Kholiquzzaman Ahmad, Chairman, InM and Palli Karma-Sahayak Foundation (PKSF), and he moderated the whole session of the seminar. Professor Dr. M. A. Sattar Mandal, Member, Agriculture, Water Resources and Rural Institutions Division, Planning Commission, Government of the People’s Republic of Bangladesh, was present as the Special Guest.

The Keynote Speaker of the seminar was Dr. Shahidur R. Khandker, Lead Economist, The World Bank, and Team Leader, “Long-term Dynamics of Microcredit Programmes in Bangladesh” study at InM. A paper entitled “Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?" was presented by Dr. Khandker at the seminar.

Professor M. A. Baqui Khalily, Executive Director, InM, welcomed the participants to the seminar and briefly introduced InM and its activities to the participants, and also addressed the objectives of organising the seminar.

Dr. Khandker, in his keynote presentation, addressed whether microcredit participants in Bangladesh are trapped in poverty and debt, as many critics have argued in recent years. Analysis of data from a long panel survey over a 20-year period confirms this is not the case, although numerous participants have been with microcredit programmes for many years.

The results of the analysis suggested that participants derive a variety of benefits from microcredit: It helps them to earn income and consume more, accumulate assets, invest in children’s schooling, and be lifted out of poverty. This is not to say that non-participants have failed to progress over the same period. Both participants and non-participants have gained as the economy has grown; however, the rates of poverty reduction have been higher for participants.

The findings and econometric estimates of the study showed significant welfare gains resulting from microcredit participation, especially for women. They also show that the accrued benefits of borrowing outweigh accumulated debt. As a result, households’ net worth has increased, and both poverty and the debt-asset ratio have declined. The findings of such a study are expected to help policymakers understand the reality regarding microcredit participants that deserve special attention in alleviating poverty.

Followed by a “Discussion Session”, the discussants of the seminar were Dr. Quazi Mesbahuddin Ahmed, former Managing Director, PKSF, and Dr. Mahabub Hossain, Executive Director, BRAC. The discussants deliberated their thoughts and ideas on the significant issues highlighting the focus of the seminar. They praised InM for organising the seminar with such thought-provoking subject of microfinance and also for conducting related research studies.

The Chief Guest of the seminar Dr. Atiur Rahman said it is needed to improve corporate governance in microfinance institutions. He said microfinance can protect households from shocks, contribute to changing societal norms about the role of women in society and lead households moving out of poverty. Overall, it has played its part in the impressive progress Bangladesh has made in poverty reduction over the past two decades, Dr. Rahman noted. The Governor, however, said everyone does not utilise loans productively, and there is a risk of falling into over-indebtedness. He advocated that the role of microfinance should be strengthened through further innovations taking into account these pitfalls. He thanked InM for providing evidence-based research findings that would be helpful for policy implications..

The Special Guest Professor Dr. M. A. Sattar Mandal, emphasising the contribution of microfinance in development, said understanding how assets converted into wealth would be important for sustainable development. Microfinance should engage more in rural trade, technology and business development as well as it needs to be diversified as one of the major tools of development, he added. He hoped InM would contribute further to the sector thorough it’s contemporary and significant research.

The Chair of the seminar Dr. Qazi Khloquzzaman Ahmad, Chairman, InM, expressed his compliment to InM for organising the seminar and appreciated InM’s achievement in development research. He expected that InM would greatly contribute to its pertinent sector by conducting action research on the burning issues of microfinance and development.

He also praised InM for extending the Institute’s activates to a larger area like conducting research on environmental development and climate change along with its relevant field of research.

At the open floor (question-answer) discussion session, various queries came up from the participants and the panellists replied to the questions. The seminar became lively by the active participation of academicians, microfinance stakeholders, practitioners, policymakers, researchers, and other eminent personnel from reputed institutions and organisations.


The Institute for Inclusive Finance and Development (InM) is registered as an independent non-profit institution under the Societies Registration Act 1860.
The Institute works for developing the overall capacity of the financial sector and strengthening the links between the financial and real sectors through undertaking research, training, education, knowledge management and other programmes in priority areas including inclusive finance, microfinance, poverty and development.


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