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Beyond Financial Services - Chars Livelihood Programme Bangladesh  Image

Promoting Inclusive Markets and Financial Systems

Beyond Financial Services - Chars Livelihood Programme Bangladesh

Beyond Financial Services - Chars Livelihood Programme Bangladesh


The purpose of this case study is to examine how Savings Groups can be promoted within a multi-input, rural livelihoods programme with pre-existing groups and targeted programme beneficiaries. 
The Chars Livelihoods Programme (CLP) – a seven-year (2004-2010), GBP 50 million (approximately USD 74 million) programme of the UK Department for International Development (DFID) – aims to halve extreme poverty in the Jamuna river-basin of northwest Bangladesh by 2015. The temporary islands and embankment  areas  (chars)  of  the Jamuna River  in northwest Bangladesh  are home to three million people; poor and isolated, these rural communities face multiple livelihood challenges.
Through  a  network  of  18  local  NGO  partners,  the  CLP  tackles  the  poverty  of  the  chars  on  many 
  • The provision of asset and cash transfers to enable households to protect, accumulate and expand household wealth;  
  • Infrastructural  transfers  to  mitigate  against  flood  and  improve  household  sanitation  and hygiene;  
  • Social development assistance to raise social capital and improve social cohesion;  
  • Enterprise  development  activities  that  improve  and  strengthen  microenterprises  and commercial suppliers on the chars;  
  • Promotion  and  training  of  Village  Savings  and  Loan  Associations  (VSLAs)  that  provide community-managed financial services;  
  • Building  the  capacity  of  local  microfinance  institutions  to  improve  systems  and  offer products that are better suited for the local clientele;  and  
  • The provision of basic primary health and education services.  
The  CLP’s  centrepiece  activity  is  the  Asset  Transfer  Programme  (ATP), which  provides  productive assets  to  the  55,000  poorest  island  char  households  in  its  working  area.  Beneficiary  households receive a package of physical assets (mainly livestock) and an 18-month cash stipend worth a total of approximately Tk 20,000 (about USD 300), the equivalent of roughly one year’s household income.  
CLP estimates that only 10 percent of its beneficiary households have a savings account with a bank or  an  NGO  microfinance  institution  (NGO-MFI);  formal  insurance  services  are  completely  non-existent  in  the  chars.  As  a  result,  opportunities  to  smoothen  irregular  household  cash  flow  are limited and households regularly adopt severe coping strategies, such as the distress sale of assets, reduced food consumption and over-indebtedness, to meet consumption and emergency needs. In this  context,  the  CLP aims  to ensure  that  by  the  end of  the programme, most poor  char  dwellers have access to appropriate financial services and that at least 100,000 char households have a safe place  to  save.  In  addition  to  its  MFI  Capacity-Building  Programme  –  aimed  at  strengthening  the systems and improving the product offerings of 12 local MFIs – the CLP explored various community-managed microfinance models  in  2006.  In  2007,  it  introduced  the  Village  Savings  and  Loan  (VSL) 
model to its working area, ATP groups and targeted beneficiaries. By the end of the CLP in 2010, the Village  Savings  and  Loan  Programme  will  have  established  nearly  2,000  self-managed  VSLAs  that provide over 42,000 households with access to sustainable, self-managed savings and credit facilities in very poor and remote areas of north-western Bangladesh.        
This  case  study  describes  the  process  through  which  the  CLP  experimented  with  VSLAs;  built  a network  of  10  implementing  organisations  around  a  coordinating  agency  with  implementation experience; integrated the VSL approach into its multi-input programme; and facilitated the delivery of  sustainable,  self-managed  financial  services  to  targeted  extremely  poor  communities  and households, at  less  than  USD 8  per participant. The paper also examines  the difficulties,  risks and mitigation strategies in introducing the VSL model to pre-existing groups and targeted beneficiaries within a multi-input programme, as well as the added value of promoting Savings Groups within a large-scale, rural livelihoods programme centred on an asset transfer  approach.  This  paper demonstrates  that  the  opportunity  to  save  and  borrow  frequently  in  small,  flexible  amounts  has supported and protected the increased asset base of ATP beneficiaries and enabled them to engage more  effectively  in  the  various  market  development  initiatives  of  the  CLP.  Primarily,  CLP beneficiaries  that  are  members  of  VSLAs  exhibit  increased  savings,  reduced  loan  repayments  and improved  household  cash  flow  management;  increased  income;  improved  emergency  coping mechanisms; and improved social status within the community.     
This  case  study  is  based  on  a  literature  review of  research  papers, programme reports  and  notes from the Chars Livelihoods Programme, an independent survey of 540 CLP beneficiaries conducted in  January  2009,  and  the  experiences  of  the  authors,  who  fulfilled  research,  programme management and short-term consultancy roles with the CLP since 2006.
Brief also available.

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