Completed Research (2015-17)
- Financial Inclusion of Vulnerable Segment in Bangladesh
InM has initiated a new project on ‘Financial Inclusion of Vulnerable Segment in Bangladesh’ in October 2016 with financial support from the Japan International Cooperation Agency (JICA). Financial services are recognised as an important target and means of implementation for the Sustainable Development Goals (SDGs) in Bangladesh. For example, equal rights to economic resources is a target of the first SDG to eradicate extreme poverty, while secure access to financial services is a means of implementation of the second SDG to end hunger, achieve food security, improve nutrition and promote sustainable agriculture. The Seventh Five Years Plan of Government of Bangladesh also emphasise the importance of financial inclusion to alleviate poverty. Despite substantial expansion of bank branches and increase in the membership of MFIs and other financial institutions, a significant share of the country’s adult population still remains financially excluded.
In Bangladesh, the financially excluded sections of the population comprise different poor and marginal groups including small and marginal farmers, landless labourers, women, self-employed and informal sector enterprises, urban slum dwellers, street children/working youth, migrants, ethnic minorities and socially excluded groups and people who live in areas that are vulnerable to coastal storms, drought, and sea level rise. One of their greatest needs is improved access to financial services—not just loans, but savings, insurance, payments, pensions, and other products. While there are pockets of large excluded population in the urban areas, the rural areas contain most of the financially excluded population. Significant efforts are therefore needed to build inclusive financial systems in the country.
Beginning with the premise that financial inclusion is both pro-growth and pro-poor, the study will examine the landscape of financial services in Bangladesh and examine the financial inclusion issues under three separate but interrelated areas employing a comprehensive framework : (i) financial inclusion for disaster and climate resilient households and communities; (ii) financial empowerment for vulnerable street and working children/youth; and (iii) developing and Implementing Inclusive Insurance in Bangladesh. In addition to specific coverage, the analysis would address issues such as access and use of financial services, types of financial services and use levels, disparities in access and use of financial services (rural-urban, women-men, rich-poor etc), financial services in lagging sectors and regions (agriculture, MSMEs, lagging districts/regions), barriers to accessing financial services (macro, meso and micro levels), understanding financial exclusion of specific groups and sectors, lessons from international experience, and challenges and opportunities for Bangladesh.
- Financial inclusion for disaster and climate resilient households and communities
Bangladesh, being one of the most vulnerable countries to natural disasters and global climate change, faces different individual and catastrophic shocks creating severe impact on the lives and livelihoods of the marginal segment of the population. To cushion the shocks, these households borrow from formal/informal sources, withdraw their savings, or sell productive and other assets. Moreover, availability of even these unfavourable coping mechanisms is inadequate and unreliable especially during times of natural disasters. Thus, a major constraining factor of the current efforts for sustainable poverty reduction and development at the grassroots level is the absence of adequate formal institutional mechanisms of risk mitigation for the poor and low-income households. Various studies conducted by InM show that full use is needed of NGO-MFI ‘social assets’ – trust and community relationships, extensive network of delivery services, culture of experimentation and learning, and expertise in rural development for disaster risk reduction and climate change adaptation.
The study comprises of two major components:
Component 1: Comprehensive stocktaking analysis of MFI and NGO engagements in disaster risk reduction and climate change adaptation.
Component 2: Designing action research
The design of the first component has three inter-related activities: (i) intervention stocktaking; (ii) balance sheet and contingency stocktaking; and (iii) spatial analysis. Intervention stocktaking will be based on a compilation of NGO-MFI interventions that are relevant to climate change adaptation and disaster risk reduction. It will review community institutions and households, and analyse how they contribute to climate change adaptation in the study areas along with a review of adaptation planning and support initiatives in the study areas. The balance sheet and contingency stocktaking will assess impact of past extreme weather events on financial health of MFIs, and will assess and present options for MFI preparedness for future climate risks. The spatial analysis will examine how vulnerability to climate change affects the financial performance of MFI branches and how vulnerability to climate change and natural hazards influences the spatial distribution of NGO-MFI services and how this spatial distribution has changed over time.
The experimental design of the action research will provide effective institutional and operational arrangements and intervention packages to build adaptive capacities at household and community levels. The action research will be elaborated to reflect the impacts of climate change on different parts of Bangladesh, e.g. draught-prone areas in the North-West and sea level rise and greater weather extremes in the South-West. The experimental testing of different sets of interventions for different locations will generate scientific knowledge with generalisable conclusions for applications in Bangladesh and other countries with similar environmental conditions. The interventions selected for the action research will be based on the results of the stock-staking and other background studies and the exposure visit of the researchers to selected countries to identify progressive practices.
- Financial Empowerment for Vulnerable Street and Working Children/Youth
An important component of Bangladesh’s development agenda is to empower, include and educate all children and youth for a life free from poverty and financial instability. The aim is to ensure that youngsters of today grow up to become confident and responsible adults of tomorrow who believe in themselves and their ability to guide the country’s development towards making the middle income country status a reality for Bangladesh in the near future. In this context, an important challenge is to ensure financial empowerment and inclusion (FEI) for the vulnerable street and working children/youth who are one of the most deprived and disadvantaged segments in Bangladesh society. The vulnerable street and working youth/children mostly come from families with financial hardship, often plagued by poverty and indebtedness. Overall, the vulnerable street children/youth face many barriers to accessing financial services, including restrictions in the legal and regulatory environment, inappropriate and inaccessible products and services, and low financial capabilities. Overcoming these barriers and achieving successful FEI requires a multi-stakeholder approach that engages government (including policymakers, regulators and line ministries), financial service providers, NGOs and other youth stakeholders. The street children/youth need, of course, to be at the centre of the entire process.
The study will explore the current status of FEI of vulnerable street children/youth in Bangladesh along with providing an in-depth assessment of the present Bangladesh Bank initiatives of providing these children with access to bank accounts through participating banks and NGOs. In this context, the study will examine the hypothesis that providing street children with access to banking services can be most effective when the service is provided within a package of complementary services such as financial literacy, communication skills and mentoring. Along with others, the study will address three major research questions: (i) What is the current status in terms of situations, impacts, and issues of existing financial services for street/working children/youth? (ii)What potential services could be explored and improvements incorporated, and issues addressed in future action researches to develop financial packages that meet the demands and needs of different groups of street children/youth? and (iii) What changes are necessary to improve existing services and regulatory frameworks and operational procedures for successful FEI of street children/youth? The study will use primary and secondary data from both supply and demand sides.
- Developing and Implementing Inclusive Insurance in Bangladesh
Micro-insurance (MI) is seen as a central way of providing social protection to the poor and vulnerable people especially in disaster prone areas. It is agreed that MI has the potential to emerge as one of the sustainable ways of helping the vulnerable groups in enhancing their capacity to withstand vulnerabilities and shocks which is central to reducing poverty and increasing welfare. MI is a low-cost insurance mechanism that covers life, health, crops, livestock and property of the poor and vulnerable groups. As a matter of fact, MI is now emerging as a central component of climate change adaptation measures in disaster-prone countries like Bangladesh.
In Bangladesh, households recurrently face various types of adverse shocks that can be broadly categorised into two types: idiosyncratic (e.g. death or illness of household head) and covariate (e.g. damage of properties due to flood). In principle, households can cope with these shocks well if they have access to formal insurance mechanisms. As formal insurance industry is still less developed in Bangladesh, poor households often resort to informal mechanisms to cope with these shocks including borrowing from friends and moneylenders, selling productive assets such as livestock, cultivable land and selling other properties. In such circumstances, the poor households are forced to reduce their consumption which threatens their food and nutrition security and constrains their ability to improve their social and economic welfare.
In order to ensure inclusive development of a poor-friendly MI sector in Bangladesh and promote sustainable expansion of on-going and new MI programmes, PKSF plans to establish the ‘Inclusive Insurance Unit’ under its core programme for implementing MI activities. The present research will identify and estimate important parameters for developing inclusive MI products, and design their implementation modalities by the proposed PKSF Inclusive Insurance Unit (PKSF-IIU). This study will specifically focus on two MI products: micro health insurance and property micro-insurance, which have been selected in consultation with PKSF.
5. Innovative Solutions to Sustaining Access to Safe Drinking Water for the Poor in the Saline-prone Coastal Belt: A Critical Review of LIFT Initiative of PKSF
The state of drinking water security in the coastal region is an important issue for Bangladesh as the coastal region is the home of large numbers of the poor, small and marginal farm families and shrimp workers. In the monsoon, the river basins flood resulting in disruptions of human habitation and settlements, agricultural land and pollution of drinking water sources. During the dry season (November-May), there is a scarcity of water because of the decline in water flows in the rivers and the drying up of large numbers of water bodies. Higher salinity level has two major consequences: (i) this limits agricultural activities in the area; and (ii) drinking water becomes very scarce. High level of soil salinity contaminates the ground water of the region. It is observed that average intake of drinking water of saline prone area is much lower than the national average having adverse health consequences. Rain water is the only form of purest water available for these saline prone areas (mostly during the rainy season due to lack of water preservation facilities). In recent years, different technologies have been explored for ensuring sustainable supply of safe water for the coastal people. For example, one option for drought- and saline-prone areas is to preserve rainwater in artificial ponds and distribute it to the communities. Similarly, although filtration and desalination plants are expensive, these offer chances to avert a looming crisis.
To sustain supply of safe drinking water, various technologies (pond re-excavation, rain water harvesting, pond sand filters, reverse osmosis technology etc.) are being promoted through different approaches. Palli Karma-Sahayak Foundation (PKSF) along with other development agencies, have been undertaking various interventions to overcome the challenges and improve the supply of safe drinking water in the coastal belt. For ensuring sustainable potable water supply in salinity prone areas, PKSF has set up 20 reverse osmosis based desalination plants through its 12 Partner Organisations (POs) in nine upazilas of four saline prone districts (Satkhira, Khulna, Bagerhat, and Potuakhali) under the LIFT Programme.
6.Branch expansion: Implications on institutional efficiency of MFIs in Bangladesh
This research seeks to examine the cost effectiveness of MFIs in relation to branch expansion and related decisions and identify the indicators that MFIs consider while deciding on branch expansion. It will also examine the effect of considerations such as location on outreach and service delivery and suggest cost-effective ways of enhancing the outreach in remote areas including the possibility of establishing partnerships of MFIs with mobile phone operators to reach the unbanked low income people. The study will collect both institutional and branch level information from selected MFIs.
7. Impact of ENRICH programme at the household level
PKSF has introduced a multi-faceted programme known as “Enhancing Resources and Increasing Capacities of Poor Households Towards Elimination of their Poverty (ENRICH)” in 2010. This study assessed the impact of ENRICH interventions at the household level. The study was conducted in two oldest unions – Shemanto and Shombhag – under the ENRICH programme. Four unions – two programme unions and two control unions – were selected.
The study concludes that ENRICH programme is effective in terms of empowerment and social-esteem and dignity of the programme participants compared to the control households. In the context of self-esteem and dignity as well as opportunities, access to electricity and sanitary latrine increases respect of households and dignity. In brief, the Enrich programme contributes to social and community development. Its participants feel more respected and dignified than before. The programme has significant impact on economic indicators like expenditure, investment and value of total assets.
The study recommends that, in order to create real and substantial impact, particularly on sustainable poverty reduction, PKSF needs to deepen programme interventions in the unions with higher intensity of economic interventions. Supply side constraints need to be removed for a sustainable impact, and to make ENRICH more effective.
8.Impact assessment study of the FKW rehabilitation and livelihood programme and implementing NGOs
On 15 November 2007, a powerful cyclone – SIDR – impacted the South Western Coast of Bangladesh adversely resulting in loss of life and considerable damage in 30 of the 64 districts of the country. In response to the urgent need for assistance to the victims of SIDR, and to provide a long-term solution to the recurring cyclones in the sub-region, an anonymous donor (FaelKhair in Arabic) entrusted the Islamic Development Bank (IDB) with a generous donation of USD 130 million, which would be utilised for construction of several hundred school-cum cyclone shelters in the coastal belt of Bangladesh and to provide interest free loans to the SIDR affected farmers, fishermen and small businesses.
Twelve districts were selected for the implementation of the programme, which were severely affected by SIDR. Initially (in 2008), four NGOs were selected for cooperation in implementing the FKW programme, namely, BRAC, Islamic Bank Foundation (IBF), Voluntary Organisation for Social Development (VOSD) and Muslim Aid Bangladesh (MAB).
The objective of this study is to evaluate the performance of ―FAEL KHAIR WAKF (FKW) programme in terms of its impact on the beneficiaries’ livelihoods. The FKW program is different from traditional micro finance program. They are different in terms and conditions. One of the major elements of difference is interest free loan. Despite lower loan size compared to the traditional micro loan size, the participating households have higher positive gains on income, food and non-food expenditures, physical and non-land physical assets. This type of Islamic model will make a major contribution in reducing poverty. It provides a framework for adaptation and resilience building of the vulnerable households. With further experience and flexibility, the model will be a source of knowledge for the policymakers and professionals who have been searching for a model of improving adaptation capability and building resilience of the households vulnerable to climate change.
9.Diagnostics of Micro-enterprise (ME) Lending by MFIs in Bangladesh: Opportunities and Challenges and Way Forward
The study identifies key opportunities, challenges and way forward for microfinance institutions (MFIs) to expand micro-enterprise (ME) lending and deposit services in Bangladesh. The analysis is based on secondary data collected from Bangladesh Bank (BB), Microcredit Regulatory Authority (MRA) and MFIs; and primary data collected from 600 MEs and information through discussions with BB, MRA, banks and MFIs.
Several issues guide the analysis of the study. First, why development of MEs is so important in Bangladesh? Second, what constraints do MEs face in their development? Third, to what extent is finance a critical factor? Fourth, what is the existing demand-supply gap of ME credit? Fifth, what policies/strategies should be taken to promote and develop MEs through enhanced MFI financing?
The study identifies constraints to developing MEs especially relating to financing issues, and outlines different strategies for promoting and developing MEs. It identifies constraints faced by MEs, their current financial and capital structure and intensity of access to different credit markets and provides estimates of projected demand for ME credit to estimate existing demand-supply gaps and suggests policy options for improving accessibility of MEs to credit markets. The potentials of banks and MFIs in financing of MEs have particularly been examined in the study within a comprehensive framework
10. Impact of PRIME interventions at the Household Level: Seventh Round
PKSF has been implementing PRIME in Greater Rangpur since 2006 to eradicate monga through financial and non financial interventions. InM has been conducting the impact evaluation of this programme since 2008. It has already completed six rounds of studies and the seventh round report provides impact assessment of PRIME using panel data set for the period 2008-2015. The result of the 2015 survey was quite different from other previous years. Many areas were affected by flood just few months before the survey was conducted. In some areas the flood even occurred twice. Areas that were adjacent to river were affected by river erosion. In this backdrop, objective of this report was to see whether PRIME has created such economic base of the participating households which enable them to cope with adversity and whether the impact of the programme still remains as previous years. With expansion of interventions, this has become a multi-dimensional programme. The result of the study showed that the households that received non-financial services along with financial service better off than the households receiving only financial service in terms of food security, income, expenditures, value of physical and non-land physical assets and financial assets, reducing poverty and raising human dignity.