The Bangladesh Rural Advancement Committee (BRAC)

As the rural population of Bangladesh increases, landlessness among people once dependent upon agriculture is a growing problem. The Bangladesh Rural Advancement Committee (BRAC) has been working with the rural poor since 1972, and in 1979 it began to provide credit via its 81 branches through the Rural Development Programme (RDP). Ten years later, significant success of the RDP in generating incomes and employment through small businesses and building up assets can be seen.

BRAC was started in early 1972 as a relief measure following the war of liberation. Soon it became a community development organization providing health, family planning, education and economic support to different sectors of the rural community, but with particular emphasis on the most disadvantaged, such as women, fishermen and the landless. Since 1977, however, BRAC has been working exclusively with disadvantaged sections of the community.

BRAC's initial experience with credit dates back to the early 1970s. In 1974, Brac provided credit to the villagers in its Sulla Project in Sylhetdistrict through the Sulla Thana Central Co-operative Association. In the following year, credit was advanced without interest to several landless groups; in 1976, BRAC started providing credit to landless through its Manikganj project.

BRAC's Rural development Programme

The Rural Development Programme (RDP) is one of the major programmes of BRAC. Started in 1979, RDP had grown by December 1989 into a large programme providing credit to target groups from 81 branches in 45 sub-districts of 22 districts. Its major objectives include:

• building viable organizations of the poor capable of bringing about desired changes in their own socio-economic and political circumstances;

• improving the socio-economic status of the rural poor through the provision of easy credit for income and employment generating activities; and

• developing the managerial and enterpreneurial capabilities of the poor.

To attain the above objectives, RDP works through different components in the following chronological order:

• Conscientization. RDP starts its operation with a conscientization programe through BRAC's functional education curriculum. Classes are held separately for men and women.

• Institution building. The functional education classes normally lead to the formation of village organizations for men and women.

• Training. Different types of training are organized for the members of newly formed groups. Some of these are held at BRACs own training centres, while others are held in RDP's local offices. The programme also a para-legal aid programme to provide legal awareness to group members.

• Credit support. The above activities normally take approximately six months before the group members become eligible to receive credit from RDP.

• Technical and Logistical support. Some of the income generation activities may reqire higher level technical and logistical support which are provided by BRAC. Examples include, vaccines for livestock and poultry, and marketing of locally produced items such as garments.

The Principles of Credit under the RDP

Borrowers are expected to use the loan according to the purpose for which it was given, and no loan is given for consumption purposes. Loan repayment is started immediately and is made on a weekly basis.

Loans are given to members on recommendation from their village organizations. They are given "on margin" which means that the borrowingorganization contributes its own resources to the extent that all members have a significant stake in the venture. Each group member saves every week, and this saving is kept in the member's account.

No collateral is demanded, and hence BRAC has to enquire beforehand about the borrower's ability to carry out the proposed venture and its potential profitaability. This is supplemented by continuous but supportive monitoring by BRAC staff throughout the entire life of the scheme. When a loan is given to procure an income producing asset, however, the asset remains hypothecated to BRAC until the full recovery of the loan. In case of default, the asset is sold and the outstanding loan is recovered. Such a situation, however, seldom arises. For effective supervision of the loan from the group side, a management committee is selected by the group members.

The amount of the loan varies depending on the nature of the scheme. The smallest was for Tk. 500 and the largest for Tk. 4 million. Large loans are given for collective enterprises, such as deep tubewells, power tillers and so on, organized by several village organizations, whereas individual loans vary from Tk. 500 to Tk. 8,000.

There are three lengths of duration for which credit is advanced to group members -

• short-term for a period of 12 months or less
• medium-term credit for a period greater than 1 year but less than 3 years
• Long-term credit for 3 years or more.

On all loans, an interest rate of 16 per cent is charged. BRAC's target group comprises those men and women who sell their manual labour for subsistence; most of this group are found to be landless or near landless.

Each branch of RDP is headed by a manager who is assisted by four to five programme organizers. Since 1983, RDP has recruited local male and femal gram shebak (village volunteers) to assitst in the credit activities. Approximately 45-50 villages (average village population 1,200) are covered through a branch and each gram shebak is assigned approximately 5 villages or 10 village organizations.

Until December 1989, RDP had been working from 81 centres in 45 sub-districts of Bangladesh which are scattered over 22 of bangladesh's 64 districts. The RDP has been working in 3,359 villages and 65 percent of the households belong to RDP-defined target groups, 68 percent of whom are members of RDP groups. Summary of RDP Achievement

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Number of sub-districts in which RDP is working       45
Number of RDP centres                                 81
Number of villages covered                         3,359
Number of village organizations formed                
	Male                                       2,882   
	Female                                     3,642
        Total                                      6,524

Number of Households covered                     202,883
Percentage of target households covered
       in participating villages                    67.8
Percentage of target households in
       in participating villages                    64.8
Size of membership
  	Male                                     137,736   
	Female                                   217,939
        Total                                    355,675

In some large villages,  more than one group of each sex
has been formed to facilitate  management and discipline
In the majority of cases, husbands and wives are members
of the respective village organizations.

The Savings and Credit Operation of RDP

Total amount saved (inmillion Taka)		      69
Average savings per member (Taka)		     193
Total amount of credit disbursed (in million Taka)   473
Loans repaid on time (percentage of credit)	    96.5
Average credit per group			  75,570
Average credit per individual borrower		   2,297
Percentage of credit received by females	    53.4

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Source:

Abstracted from - Chowdhury, A.M.R., M. Mahmood and F.H. Abed, "Credit for the Rural Poor - the Case of BRAC in Bangladesh", Small Enterprise Development, Volume 2, Number 3, September 1991.

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Contact Address:

BRAC, Head Office
356, Mohakali C/A
Dhaka-1212
Bangladesh
Phone: 00-8802-884180-7
Fax: 00-8802-883542,883614
E-Mail: Genaral@brac.bdmail.net

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Hari Srinivas - hsrinivas@gdrc.org
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