Special Focus on Poverty Alleviation

The fact that in this world a-fifth of the population goes hungry every night and a-third of people are found living in abject poverty conditions does demand special target-oriented poverty alleviation programmes through governmental and nongovernmental initiatives. In case of South Asia, where two-fifths of the population or 400 million people live in poverty conditions, a number of initiatives have already been undertaken. One of such instances is known as the Grameen Bank in Bangladesh. With a belief that the major factor responsible for poverty is the nonavailability of finances and the formal credit system does not cater to the needs of very small loans needed by the poor, establishment of the bank preceded some work in a few villages by its founders on pilot basis. Small loans were given on group guarantees in mid-80s. Instead of people or borrowers going to the bank, a system was evolved to take the bank to the people in far-flung areas and villages. In the villages visited, credit needs were assessed and small loans were given with a condition to repay in one year in 54 weekly instalments. The experiment proved to be successful leading to establishment of the bank, which over the years enlarged its network.

Presently, the bank is considered to be a success example of providing collateral-free small loans to the very poor people at the market rate of interest, maintaining recovery rates exceeding 90 percent and also promoting social mobilisation for addressing socioeconomic issues. Presently, it has 2.2 million borrowers with an average loan of $ 150, It has reached some 32,000 villages with 1,100 branches. The bank, besides general credit for one year, also provides loans for small house-building, tubewells and sanitary latrines. It has also led to an increased enrolment of children in schools, reduced family size and has improved health and sanitation conditions. One needs to have a deeper look at the Grameen experience and see as how it can be replicated in Pakistan. Its replication is already under way in over 35 countries including India, Nepal, Malaysia, etc.

Source: Poverty Alleviation in Pakistan: Present Scenario and Future Strategy, Mohibul Haq Sahibzada. Republished with permission.