Financing social innovation: a case study of micro financing in Bangladesh.

Mahmuda, Ismat, Baskaran, Angathevar and Pancholi, Jatin (2011) Financing social innovation: a case study of micro financing in Bangladesh. Pretoria. Institute for Economic Research on Innovation

Abstract

This study examined how micro financing can contribute towards poverty reduction by developing small enterprises. Bangladesh Rural Advancement Committee (BRAC) is one of the largest micro financing providers and is operating several types of micro financing programmes in Bangladesh. Among these programmes the CFPR (Challenging the Frontiers of Poverty Reduction) programme of BRAC was chosen as the case study and examined to understand the contribution of micro financing through developing small enterprises. The programme used a different approach of micro financing where asset was transferred rather than cash. The value of the transferred asset was more or less equal. The study was carried out by purposively selecting 21 beneficiary households and tried to identify the reasons, which made difference among the selected participants? economic condition and livelihoods. The study was mainly based on case studies. To complement these studies a mini survey was also conducted. The study revealed that the asset transferring programme resulted in significant improvement in the livelihood of the members in most of the cases. But there were also some cases where the beneficiaries could not improve their livelihood or the improvement was negligible. It was observed that the households can improve quality of life with micro financing if they demonstrate proper planning, hard work, and personal interest in the business they are starting. Idleness and absence of proper planning were the main reason for failure. To some extent, social barriers can also contribute to failures of micro finance beneficiary, even when they work hard and are highly motivated. Based on these findings, the study makes some policy recommendations towards improving and ensuring the success of the asset transferring approach.

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Contributors

Author: Jatin Pancholi

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