Distant Voices: The Views of the Field Workers of NGOs in Bangladesh on Microcredit

Author(s): Mokbul Morshed Ahmad

Source: The Geographical Journal, Vol. 169, No. 1 (Mar., 2003), pp. 65-74
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The GeographicalJournal,Vol. 169, No. 1, March2003, pp. 65-74

Distant

the

voices:

NGOs

in

views

of

Bangladesh

the
on

field

workers

of

microcredit

MOKBULMORSHEDAHMAD
Departmentof Geographyand Environment,Universityof Dhaka, Dhaka 1000, Bangladesh
E-mail:dgg3mma@hotmail.com
Thispaper was accepted for publication in October 2002
Recently, microcredit has become a fashionable cure-all for most non-governmental
organizations (NGOs) in Bangladesh. The provision of services to the poor is by definition
always difficult, and even NGOs have problems. NGOs in Bangladesh define the poor in
differentways when creating their targetgroups. The policies of nearly all NGOs in Bangladesh
are formulated by their senior managers, and field workers are rarelyconsulted. This paper will
explore the opinions on microcredit of selected field workers of four types of NGOs in
Bangladesh - on how the problem of microcredit might be solved. Problems of microcredit
programmes, they say, include non-accessibility to the poorest, low return, misuse and
overemphasis on repayment. Field workers discuss what level of importance should be given
to microcredit as against services like education, health or awareness creation. Most conclude
that NGOs are overemphasizing microcredit, which leaves little time and few resources for
other problems of the poor, so bringing the whole 'development' effort of the NGOs into
question. Most field workers think that many microenterprisesare not sustainable and that in
many cases clients will remain dependent on the NGOs for credit.
KEY
WORDS:Bangladesh, NGOs, microcredit, poverty

in the world. ADAB (the Association of Development

Agencies in Bangladesh) had a total membership of
articlereviewsacademic writingsand what non- 886 NGOs in December 1997 (ADAB 1998), but the
governmental organization (NGO) field workers ADAB directory lists 1007 NGOs including 376 nonhave told me about specific aspects of microcredit. member NGOs. The NGO Affairs Bureau of the
Inmy view, field workersof NGOs are yet anotherunder- Government of Bangladesh (GOB), which approves all
utilized resource. I have therefore worked with the foreign grantsto NGOs working in Bangladesh,released
field workers of four types of NGOs of differing sizes grants totalling around US$250 million in the financial
in Bangladesh, each in one locality: one international year 1996-97 to 1132 NGOs of which 997 are local
NGO, MCC (Mennonite Central Committee) Bangla- and 135 are foreign (NGO AffairsBureau 1998). NGOs
one regional have mainly sought to service the needs of the landless,
desh; one large national NGO, PROSHIKA;
NGO, the RDRS (Rangpur-Dinajpur Rural Service)
usuallywith foreign donor funding as a counter-initiative
Bangladesh; and three small NGOs/GROs, which are to the state's efforts (Lewis 1993).
NGO initiatives in establishing income-generating
'partners'of SCF (Save the Children UK) Bangladesh'.
The field work for this article was conducted
activities have proved to be an effective alternative to
between September 1998 and May 1999. Participant top-down state programmes of rural works, but the
observation, semi-structured interviews and informal extremely low rates of return on such activities have
discussions with the field workers of NGOs, clients and caused many to question their long-term sustainability
mid-level and senior managerswas used in the research. (Ahmad and Townsend 1998). NGO relations with
To obtain basic information on the field workers, 109 their clientele appear to have become increasingly
were interviewed by questionnaire.
credit-oriented, and there are now more restrictive
There are probably more and bigger NGOs in Bang- rules (such as compulsory savings), all of which militate
ladesh than in any other country of a similar population against participatory procedures. The likelihood of

Introduction

This

@ 2003 The Royal Geographical Society

0016-7398/03/0001-0065/$00.20/0

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66

The views of the field workersof NGOs in Bangladeshon microcredit

Originally a branch of an international NGO, the

LutheranWorld Federation, it became a national NGO
in 1997 (RDRS 1997). I worked in KurigramDistrict
and again found the work of this NGO had changed
from relief to microcredit.
SCF (Save the Children UK) is one of the leading
international NGOs of Bangladesh. Work started in
Bangladesh soon after independence in 1971. One
major activity of SCF (UK) is to enable its beneficiaries
to cope with floods, which frequently cause major disasters in Bangladesh. SCF (UK)has Coping with Flood
programmes in various flood-prone districts in Bangladesh. In Shariatpur, south-west of Dhaka, SCF (UK)
decided in 1996 to hand over its activities and
resources to local NGOs due to high operating costs.
The 22 formerSCF(UK)field workers formed three new
NGOs and are working as 'partners'of SCF(UK).Their
work is now all in microcredit, despite SCF(UK)'spublished preference for emphasis on social problems in
Bangladesh, which will be discussed later.
What is the work culture of these NGOs? Except for
SCF (UK) 'partner' NGOs, the other three NGOs have
service rules, policies on promotion, and transfer of
field workers. The small size and greater inter-personal
relations of the SCF (UK) partner NGOs seem to have
created less necessity for such rules and policies. The
large numbers of staff and large areas covered are the
major reasons for the presence of these formal rules
and policies in PROSHIKAand RDRS,while in the case
of MCCthis is mainly due to its internationalmissionary
nature.
All the NGOs studied have clear policies on casual
The NGOs studied
leave, medical leave and other benefits, however there
MCC Internationalfirstcame to Bangladesh to assist the are two issues that meritdiscussion. First,many of these
survivors of the great tidal bore disaster of 1970,
policies have been formulated in response to years of
centred at Noakhali, south-east of Dhaka. Now there demands from the field workers. Demands which in
are three main foci in the MCC programmes in some cases meant sacrifices, forced transferor redunBangladesh: agricultural and family development, dancy. Second, the mere existence of these policies is
employment creation and emergency assistance. MCC not enough for either NGOs or field workers. Most field
Bangladesh has 141 full-time staff. I worked in workers know little about these policies. Many field
Noakhali and found MCC leaders and field workers workers told me 'What can we do when our superiors
critical of microcredit, which they do not use.
do not follow the rules? We cannot go on strike or
PROSHIKAis one of the largest national NGOs in afford to go to courts.'
Of the NGOs studied, only MCC has effective rules
Bangladesh. Since its inception in 1976, PROSHIKA's
effort has been to engender a participatory process of and hours of work. MCC field workers do not have to
'development' and it claims to have succeeded in pio- work at weekends or after office hours. Forthe others,
neering an approach that puts human development at the hours of work specified on paper are meaningless.
the centre. PROSHIKAworks in 10 166 villages and Each field worker has a charterof duties and knows the
654 urban slums, with nearly 1.3 million men and performance indicators they must reach. It is these,
women from rural and urban poor households organ- ratherthan the contracted hours, which controls their
ized into 68 897 groups. This translates into a total use of time. In theory, a five-day week is worked in
programme reach of over 7.1 million individuals Bangladesh. All organizations are required to close on
(PROSHIKA1997). In Sakhipur, where I worked, I Friday, but they have the discretion with respect to
found microcredit displacing other activities.
closing, for example, from midday on Thursdayto midRDRS is one of the oldest NGOs in the country. day on Saturday.Forfield workers, however, it is much
Working in northernBangladesh, with around 200 000 easier to find clients at home on Fridays,so many work
households, RDRS employs about 1500 staff. on Fridays.
NGOs facilitating the empowerment of poor people
seems to have diminished during their expansion
(Ebdon 1995; Montgomery et al. 1996). I agree with
Hulme and Mosley (1996) that NGOs are no longer
vehicles for social mobilization to confront existing
socio-political structures.
Most Bangladeshi NGOs are heavily dependent on
foreign funds (Hashemi 1995). The volume of foreign
funds to NGOs in Bangladesh has been increasing over
the years and stood at just below 18% of all foreign
'aid' to the country in the financial year 1995-96.
Donors increased their funding from 464 NGO
projects in 1990-91 to 746 in 1996-97, a 143%
increase in value over the period (NGO AffairsBureau
1998). The disbursement of funds to NGOs is highly
skewed. The top 15 NGOs accounted for 84% of all
allocation to NGOs in 1991-92, and 70% in 1992-93
(Hashemi 1995). NGO dependence on donor grants
has kept the whole operation highly subsidized.
Donors give funds for certain activities and evaluate
the impact of that 'aid' on certain criteria (e.g. accessibility to the target population, improvement in
education including dropout rates, enrolment, girls'
enrolment, repayment of credit etc.). So, to ensure regular supplies of funds, NGOs have to ask their field
workers to maintain performance and to show performance to donors according to their criteria. This seems
natural as NGOs in Bangladesh are not membership
organizations and the NGO agenda in Bangladesh is
largely donor-driven.

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The views of the field workersof NGOs in Bangladeshon microcredit

Why do field workers work longer hours than they
are contracted to? The answer is to keep their jobs and,
if fortunate, to qualify for promotion. Staffevaluation is
a major factor influencing what field workers do and
how likely they are to retain their jobs. NGOs know
they can apply these criteria to their field workers, for
if any field worker fails to maintain the required standards, their contracts can be terminated and, due to high
unemployment, the NGOs have little difficulty in
recruiting new field workers.
Microcredit in Bangladesh
The rise of both state- and NGO-sponsored microcredit
programmes over the last three decades derives from
various factors: capital scarcity, the inability of the
formal system to reach the functionally landless
(uncollateralized) poor, and the limited ability of
the InformalFinancial Marketto meet the needs of the
majority of poor people striving to survive in the
off-farm sector (Bhatt and Tang 1998; Sharma and
Zeller 1997; Montgomery et al. 1996). However, my
research suggests three reasons.
1 International acceptance of the Grameen Bank
model of 'development'. The initial success of this
model has drawn international attention and many
donors have accepted it as a cure-all for the problem
of underdevelopment (Bhattand Tang 1998; Hulme
and Mosley 1998; Montgomery et al. 1996). Nayar
and Faisal (1999) found that MFIsshowed resilience
to the most devastating floods in Bangladesh in
1998. The replicability of the model has been questioned by many researchers like Reinke (1998).
2 A leading advantage of microcredit programmes is
that their 'performance' can easily be measured,
which enables the NGO to demonstrate achievements and satisfy its donors. Now that development
intervention is so much driven by 'performance indicators' (Mcnamara and Morse 1998; Gore 1998),
this can be a decisive factor in its adoption.
3 NGOs seek self reliance and independence from
donors. By working in microcredit, NGOs can use
interest paid by their clients to pay some of their staff
and other costs. Such charging of clients is one avenue for them to follow in orderto become self-reliant
(Edwards1999; Yaqub 1998; Mcnamara and Morse
1998; Rutherford 1998; Popham 1998; The Independent 1998a; Abels 1998; Rhyne and Otero
1992). Forexample, PKSF(RuralEmployment Foundation in English,a quasi-government organization)
lends to NGOs at an interestrateof 4%, while NGOs
usually lend to their clients at interest rates of
between 12 and 16% (PKSF1998). In the financial
year 1996-97, one SCF (UK) 'partner' NGO had a
total income of 384 000 Taka from interest on
microcredit and a total expenditure of 241 000

67

Taka2.After studying six nineteenth century microcredit organizations, Hollis and Sweetman (1998)
concluded thatdepositor-basedmicrocreditorganizations (MOs)tend to last longer and serve many more
borrowers than MOs financed by donations or government loans. The other option for increased autonomy is to start commercial ventures like BRAC's
(Bangladeshi Rural Advancement Committee)
marketing outlet, printing press and cold storage or
Ganoshasthya Kendra'sbrick field and pharmaceutical industries, which have also evoked comments
from the critics of NGOs (The Daily Inquilab 1996).
Although annual operationalcosts of BRAC'sbranchlevel units are still more than three times their
locally generated income (Montgomery etal. 1996),
White (1999) points out that BRACgenerates 31%
of its income from its business sources.
These opinions are drawn from the literature;but what
of the discourses of NGO field workers? When RDRS
started, it was the largest NGO in terms of number of
clients, but it was mainly a relief agency. After the
appearance of BRAC, Grameen Bank and ASA
(Assistance for Social Advancement) in the region in
the late 1980s, RDRS also began to provide credit
because it was losing clients to the big credit-giving
NGOs like BRAC and was under great pressure
from clients to provide credit. Nonetheless RDRS is
still inexperienced in operating credit programmes
compared to many large NGOs in Bangladesh.
PROSHIKAfield workers reported the same problem.
In contrast, MCC clients borrow from their group's
savings and NGO credit is of minor importance
compared to other NGOs studied.
What NGOs say and what NGOs do
The policy statements of these NGOs promote their
activities as diversified. However, to anyone visiting
the areas where the NGOs work, the homogeneity of
their activities becomes clearly visible. SCF (UK) is a
good example of an NGO which differs between
emphasis and disparity.
Since its arrivalin Bangladesh, SCF (UK)has worked
directly in 'development', and from 1996 onwards it has
handed over funds and some physical resources to
newly created'partner'NGOs. The firstgroupof 'partners'
is run by its former field workers (all women) in Shariatpur District. In my field work with these new, small
'partner' NGOs in Shariatpur,I found that the way the
SCF(UK)'partners'are now workingis directlyin contrast
to the strategy paper of SCF (UK) Bangladesh (1997):
Nearlyall developmentwork in Bangladeshis targeted
at the great mass of 'poor people' but actuallyneglects
the poorest and most marginalisedwithin this group.
Thus, for example, the famous Bangladesh credit

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The views of the field workersof NGOs in Bangladeshon microcredit

68

Table1 The NGOs'definitionsof theirtargetgroups

MCCBangladesh

PROSHIKA

RDRSBangladesh

SCF(UK)'Partners'

Men or women from

householdswho cannot
produceor buy food for
morethan 3 months.Own
less than 1 acre of cultivable
land. Not morethanone
memberfromthe
same family

Landlessand marginal
farmers(menor women).
Not morethanone
memberfromthe same
family

Householdshouldhave
less than 1.5 acresof land.
The membershouldbe from
the 18-45 age group.Not
morethanone memberfrom
the same family.A family
head, with not morethan
8 yearsof school education,
and a permanentresidentof
the village

Womenfromhouseholds
with less than 1.5 acresof
cultivableland,who are
permanentresidentsof
the NGO'sworkingarea.
Not morethanone member
fromthe same family.
Monthlyhouseholdincome
of less than 1500 Taka.
Not serviceholders

Source: NGO literatureand interviews

programmestypicallydo not benefitthe poorest strata

If the general NGO priority is to provide resources

and opportunities to those currentlyexcluded, it seems
a waste of time and money to begin work where these
same time, the povertyalleviationprogrammeswhich resources and opportunities are already available and
muchof the developmentcommunityin Bangladeshare sometimes duplicated. Ebdon (1995) found NGOs
engaged in treatspovertyas an almostpurelyeconomic competing for the same clients to facilitate rapidexpanphenomenon.Many of the most serious situationsin sion of their programmes. A similar situation occurred
Bangladeshare not the 'inevitable consequences of in all my study areas with the exception of the area
poverty'thatboth NGOsand policy makersseem to see where MCC was active. Such competitive behaviour
them as. Such situationsare associatedwith povertybut contradicts NGO claims to cooperation and coordinaare caused by social factors.They are not likely to be tion with the common interestof empowering the poor.
solved within the next fifty years by the slowly rolling Instead, it creates and perpetuates factions and conpoverty alleviation programmeswhich dominate the flicts at all levels (Ebdon 1995).
of society and although, they are targeted at women,
may tend to exploit or burden women further. At the

development scene in Bangladesh .. . Many of the

problemsof the most poor and marginalisedare both

economic and social in naturebut social problemsare
especiallyneglectedin much developmentpractice.We
will thereforefocus muchof our attentionon them
SCF(UK)Bangladesh1997, 3
The 'partners'of SCF(UK)in Shariatpur,however, work
only on a single activity - credit.
Only the MCC proved in practice in the field to have
a differentphilosophy and to spend littletime on credit.
On working with two other NGOs, I found that they
also had a heavy bias to credit. PROSHIKAusually has
two types of field workers - EDWs (economic development workers, working on credit) and DEWs (development education workers). Most field workers told me,
'If you want to get quick promotion, try to be an EDW,
and show success in credit'. Although RDRS documents (RDRSBangladesh 1996a 1996b) reporta range
of services, all the field workers I interviewed are preoccupied with credit and most complained that they
cannot give enough time or importance to other services. Generally, RDRSfield workers leave their homes
or hostels each morning to reach their clients to collect
or disburse microcredit.

Defining the target group

More than 50% of the rural population of Bangladesh
is poor3. NGOs claim that their target should be not
only those who are materially poor but also those who
are vulnerable, vulnerable to naturalhazards like flood,
river erosion and cyclones, and who have very few
ways to escape poverty. Here I want to explore the
'target groups' of the NGOs and to demonstrate that
NGO field workers would like broader targetgroups in
MCCand PROSHIKA,to include some of the less poor,
and RDRSand SCF (UK) 'partners'would like to reach
even poorer people than they do already.
Most NGOs in Bangladesh have specific target
groups (Table 1). Most field workers of MCC Bangladesh said that the definition should be extended to
richer farming or fishing households. Many argue that
both small and marginal farmers need help of the type
that MCCprovides to its clients, not just the poorer people in the target group.
PROSHIKA'starget group consists of landless and
marginal farmers;but most field workers would prefer
to include medium-scalefarmers(owning lessthan 3 acres
of land). They think these farmers deserve PROSHIKA

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The views of the field workersof NGOs in Bangladeshon microcredit

69

services to facilitate their 'development'. Such farmers jobs (e.g. Rahman 1999 on Grammen Bank). So, they
would, of course, be clients with a greater ability to prioritize microcredit at the expense of other activities.
In Bangladesh, all microcredit is designated for
repayand therefore easier for field workers to deal with.
Of the four NGOs, PROSHIKA
reaches most poor people, income generation; there is no consumption credit.
but this is not in line with the preferencesof their field Many borrowers have to devote some of the credit to
workers.
consumption (food, marriage, house repair), which
Field workersof RDRSand SCF(UK)identifiedgroups makes it difficult for them to generate enough income
in poverty currently excluded from their target groups. to repay loans. NGO credit for the poor in Bangladesh
For example, RDRS field workers pointed out that a can be exploitative. A senior manager at MCCtold me
household with five members owning 3 acres of land that he thinks this is the case for most NGOs (Shafiqul
has less land per capita than a household of three mem- Islam, personal communication). This is also the
bers. Similarly, the requirement for a client to become opinion of most of the MCC field workers I intera permanent resident in the NGO area may exclude viewed. However, it must be that MCC differs from
many. Poor families cannot survive in many localities the other NGOs I worked with, as its priorities and
during lean periods (when there is scarcity of jobs), and working methods are different.Iascribe these differences
many male members of such households migrate sea- to its missionary nature.
PROSHIKAis a good example of an NGO which has
sonally. Since women arethe NGO membersand depend
on their husband's income to make most of the repay- changed its priorityfrom conscientization to credit over
ments on the loan, the criterion of residence excludes the last 25 years. Many older field workers reportedthe
a major group in poverty. RDRSchooses the age group changes that PROSHIKAhas gone through:
that can work hard and repay their loan in time, but
When I joined PROSHIKA
10 years ago, my work was
ironically the over 50 age group, which is the most
to go to the farmersand to organisethem in groups,
vulnerable in Bangladesh, is excluded from the 'target'
motivatingthem through music and lectures. So, I
group of RDRS.Additionally, the educational qualificalearned how to sing and use the harmoniumand the
tion of eight years of formal education excludes many
of the poor. However, most field workers told me that
'Dhole' (the drum).People came to listento our music
this qualification should be raised to the Secondary
and lecture. Some days, I found some people crying
after listeningto our music which was describinghow
School Certificate level, which is equivalent to ten
an affluent farmer became landless through the
years of formal education, since this helps with record
exploitationof moneylenders.My life was easy. There
keeping. This would further exclude the poor. Most
SCF (UK) 'partner' field workers interviewed argued
was no credit programmebut little skill or literacy
that their target group is inappropriate to reach the
training.... Now I ride hundredsof miles, I have no
leisure. I have to show good repaymentrate of my
poorest people because of the problems of landholding
disbursedcredit to save my job. To get money back
and permanent residence, which have already been
sometimesI abuse my members.Now my life is full of
alluded to. The rules do have some positive features:for
tension. Many nightsI cannot sleep due to the anxiety
instance, Montgomery et al. (1996) argued that a baron
aboutwhat I shall do if I lose the job.
dual membership from the same family ensures more
QamrulIslam,TrainingCoordinator,Sakhipur,
peer pressure and partly reduces the risks.
February1999
Why do so many field workers want clients who are
less poor? It is clear that the targets already exclude the
poorest people, those who do not own land and/or are In general, it appears that PROSHIKAgroups are
less well educated, are migrant and people over 45. working well. Some groups are very committed to
Undoubtedly this is related to the evaluation of the per- attending the training programmes for microcredit. But
formance of the field workers, which is mainly meas- many field workers also told me of ineffective groups
ured in terms of their performance in microcredit and, and groups which have split. There are four reasons for
in the case of MCC, technical assistance. Field workers this:
would prefer not-so-poor, more educated clients
(Khandker etal. 1998; Tonah 1994), which would
1 Most field workers and even many group members
mis-target and deepen credit disbursement (Matin
thought that PROSHIKAgroups (normally 20-25
1998; Sinha and Matin 1998). This is against the stated
people) were too large for credit though not for conscientization or mobilization activities. As trainingof
objectives of all of the NGOs studied.
members in group work is almost non-existent, it is
difficult to keep the groups from being controlled by
Credit: problem of repayment and pressure on the
one or two people (e.g. Rahman 1999 on Grammen
field workers
Bank). Some members discourage others from
Field workers are under tremendous pressure to
repaying loans or depositing monthly savings, statproduce high credit repayment rates to secure their
ing that PROSHIKAhas no legal authority to take

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70

The views of the field workersof NGOs in Bangladeshon microcredit

action if they default or disobey. The high costs of

court action discourage the NGOs from taking legal
redress. But there are exceptions to this, as in one
case seven NGO clients were sent to jail for defaulting on loans (NFB 1999b). Unlike banks, NGOs
such as PROSHIKAhave no collateral against loans
and depend on their social capital.
2 Repayment is a major problem with the poorer
groups. Often they cannot repay loans regularly,and
when they utilize their loan money for consumption
(e.g. food or house repairs)they may be unable to
repay at all. In theory, members are required to utilize the loans for the purpose for which they have
been granted and field workers monitor utilization,
but poorer borrowers often disobey (e.g. Sinha and
Matin 1998; Rahman 1999 on Grammen Bank).
3 Usually clients must save 5-10 Taka a month, to be
deposited in the group's bank account. But often
group members collude and start credit businesses
instead, due to the fact that moneylending is profitable in ruralBangladesh, where interest ratesof 10%
per month are commonplace. Diversion of the group
savings to moneylending deprives other members of
the profit, which creates conflict in the groups.
Groups often split because of the conflicts moneylending creates.
4 Groups also split or become inoperative when group
members migrate (often to south-east Asia or the
Middle East to work). Migrants do not usually tell
other members or the field workers that they are
planning to leave the country since that will disqualify them from becoming members. When a group
member leaves the country an immediate problem
arises: who will repay the loan? Sometimes the
absent member's close relations repay the loan from
the person's remittances, but often nobody takes
responsibility.
Credit is now the main activity of RDRS,but their field
staff identified several problems with credit repayment:
1 Most clients 'do not utilize their credit properly',
although credit is given only for specific projects.
Some simply buy food with the credit and do not
invest money in the proposed project. Basically,
there is a lack of supervision of credit utilization. In
addition, many clients borrow money from businessmen and professional moneylenders and repay
these debts with the RDRS loans. This view was
shared by some PROSHIKAfield workers who
argued that clients should not be given credit on
more than three occasions, if self reliance is the ultimate goal. This was because most members use half
the credit for the approved project and the other half
in business, which gives a larger and quicker profit.
2 Many field workers complained that RDRS'management of loan repayment is lax, while other organizations such as Grameen Bank, BRAC, and ASA are

much more strict in loan recovery. Chowdhury

(1998) provides information on the strict policy of
loan recovery by ASA. Several field workers complained that many clients have not re-oriented their
relationship with RDRS from relief to credit, but
simply assume that credit is a non-repayable relief.
3 It has already been noted that there is competition
among NGOs in rural Bangladesh in disbursement
and repayment of credit. In some cases one RDRS
client simultaneously becomes a client of another
NGO. So, one member of a household takes a loan
from one NGO and repays the loan taken from
another NGO by another member of the same
household. In general, the policy of most NGOs is
that only one member from one household can be
an NGO member. But this does not work in all
cases. In some cases field workers force their client
to resign their membership when someone from the
same household becomes a member of another
NGO. However, field workers cannot expel a client
if they argue that the loan is inadequate, or if they
repay loan(s) and attend other activities of the NGO.
4 RSDS workers pointed out that it is almost impossible to pursue defaulters through the courts for the
same reasons outlined by the PROSHIKAworkers.
5 Many people (mostly men) migrate to other districts
in search of jobs during the planting and harvesting
seasons. As they are away from home for three to five
months, they do not repay loans during this time;
and after they return,they often default on the pretext of low income.
To keep a good repayment record SCF(UK)'partners'
exert group pressure through members of a group on a
defaulter as their main tool, although field workers also
go to local leaders to exert pressure on clients to repay
loans. Field workers from influential families in villages
are in an advantageous position because clients are
under obligation to abide by pressure exerted by local
leaders, and, therefore, their loan repayment records
are usually good. Some clients still default, arguing
'What can you do if I do not repay (my) loans?' Some
clients reported that field workers sometimes verbally
abuse clients for not making regularrepayments. As the
NGOs do not train clients in record keeping, problems
follow. In particular,illiterateclients who do not understand arithmetic or accounts often have misunderstandings with field workers. I found bitterness
amongst both clients and field workers. Although
Kabeer (1998) has suggested that there is some degree
of flexibility in loan repayments, most of the field
workers I interviewed disagreed with this because it
makes their work more difficult.
Field workers are not in theory supposed to be debt
collectors and 'development' workers simultaneously.
Usually the cashier or secretary of the group should
collect the money from the clients. In most cases this

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The views of the field workersof NGOs in Bangladeshon microcredit

does not happen due to the poor mobilization of the
groups and the problems mentioned above (Johnson
and Rogaly 1997).
Most field workers I interviewed, however, thought
that technical advice on agriculture, education and
health education should be given equal importance to
that of credit, and feared that, with increasing emphasis
on credit, other aspects of 'development' are being left
aside. Interestingly,Sharma and Zeller (1997) reported
the same concerns fuelled by the demands to keep up
a good repayment rate, and the World Bank noted
similar issues in the context of poverty alleviation
(Micronews 1999).
In some cases field workers feel they are under great
pressure to retrieve the money borrowed, and this has
led to anti-social behaviour amongst some field workers. As one PROSHIKAfield worker said:

71

relationship can easily be explained in terms of the

greater preference of the poor for consumption loans,
their greater vulnerability to asset sales forced by
adverse income shocks and their limited range of
investment opportunities. Lenders, they argue, can
either focus their lending on the poorest and accept a
relatively low total impact on household income, or
alternatively focus on the not-so-poor and achieve
higher impact (Hulme and Mosley 1996; compare
Khandkeret al. 1998; Evans et al. 1999). My research
findings are in line with their observations. In
Bangladesh, the impact of microcredit on poverty has
been limited, despite its fame. Hashemi (1998) argues
that although microcredit in Bangladesh (through
Grameen Bank, BRAC, PROSHIKA,ASA and other
governmental and non-governmental agencies) has
succeeded in reaching a quarter of all poor rural
households, poverty still persists. One major reason for
When I lend money, I always keep pressureon my this may be the limits to microcredit in effectively
clients that they have to repay it by whatevermeans. I targeting all of the poor; more specifically in leaving
tell them that if you die withoutrepayingmy loan I will out large sections of the 'hard core' poor - the
kick on your grave four times because you have not distressed (Khandker et al. 1998; Hashemi 1998;
Kabeer 1998; The Independent 1998c; Johnson and
repaidthe money.
AtiqulAlam,EDW,Sakhipur,February1999 Rogaly 1997; Evans et al. 1999). For Hulme and
Mosley (1996), the main problems worldwide in the
The emphasis placed on credit repayment can be practice of microcredit are overemphasis on credit
illustrated by the following example. If the repayment delivery, social exclusion in the delivery system and a
rate of a RSDS field worker goes below 75%, the professionalization of management under which
worker's food allowance is stopped for the next month. incentive structures for staff, such as bonus payments
Although RDRS field workers have to provide many and promotion prospects, favour concentration on
services (e.g. providing advice on education groups other than the poorest. All these features are
programmes, plantation work, fisheries and livestock highly developed in Bangladesh. Khandker and
projects) to their clients most of their time is spent on Chowdhury (1996) hold the relatively positive view
credit, since their job performance is mainly measured that, for the targeted credit programmes in Bangladesh,
in terms of credit repayment. Some field workers I it will take, on average, about five years for poor
interviewed, though very hard working, were poor at programme participantsto rise above the poverty line
record keeping. This caused furthermisunderstandings and eight years to achieve economic graduation (i.e. to
with their clients.
stop taking loans from a targeted credit programme).
On average, the women who work for SCF (UK) Montgomery et al. (1996), however, found little
'partner' NGOs walk 6-8 km a day in the morning to evidence that BRAC's clientele are altering their
collect money and disburse loans and after lunch structural position within the rural economy. Their
they work in their offices finalizing their daily accounts. conclusion, that credit may be insufficient and
Their working day often lasts ten hours. The NGOs inappropriate for alleviating extreme poverty
have to keep two months' salary for its staff in the (Montgomery et al. 1996), 1 feel is borne out by this
bank to ensure staff obtain regular salary disburse- research. Ebdon (1995) found in the case of the
ments. The long working days and lengthy arrears in Grameen Bank that most women would simply be
salary payment create extra burdens on pressurized given the money by their household to cover the
NGO field workers.
weekly repayments and hence their economic status
was not improved (Ebdon 1995; The Daily Star 1999).
Karimand Osada (1998) found that of those members
Does microcreditbenefitthe poor?
who dropped out of Grameen Bankgroups within their
In general, microcredit benefits the less poor more than seventh year of membership, 88% did not move out of
it does the poorest people, even if it reaches them. poverty.
Hulme and Mosely (1996) found that the impact of
Hulme and Mosley (1996) challenge the claim that
microlending on the recipient household's income every loan to women is a step forward in their empowtends to increase, though at decreasing rates, as the erment (Rahman 1999 on Grameen Bank)and suggest
recipient's income and asset position improve. This that NGOs need to pay much greater attention to their

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72

The views of the field workersof NGOs in Bangladeshon microcredit

capacity to assist target groups within the female

population (particularly the assetless, widowed and
divorced) ratherthan treating women as a homogeneous group (Hulme and Mosley 1996). My field work
with the case study NGOs supports this argument.
Among the SCF (UK) 'partners', the very small loans
give clients very little economic lift. With this nominal
economic progress, other aspects of 'development' of
their lives have remained largely ignored. One client
reported to me that her husband had lost most of his
money this year because of the low price of his product
- chilli pepper - and to repay her debts, her eldest son
stopped attending school to catch fish. This is directly
comparable to Wydick's (1999) observation from Guatemala that the relationship between access to credit
and investment in child schooling is not unequivocally
positive.
Turning to the potential for the improvement of
microcredit, the field workers of two other NGOs
- RDRS and PROSHIKA- said that normally about
30% of clients are successful in their microenterprises,
and these are mainly those involved in petty trading,
cottage industries, and fishery, livestock or poultry
projects (Rutherford1998; Khandkeret al. 1998). At the
same time they pointed out that all microenterprises
have limited growth potential, being constrained
both by their inherent nature and by contextual conditions such as market demand. They argue that few
clients can improve their economic position through
agriculture, mainly because they have so little land.
Of the rest, the majorityof clients show some improvement, but remain dependent on NGO credit to retain
this position. As one PROSHIKAfield worker put it,
'clients have to run very fast to stay in the same place'.
Most field workers agreed that the poor marketing
system hampers the sustained growth of microenterprises. At the same time, however, most thought that
if NGOs became involved in marketingthere would be a
strong possibility of exploitation of clients by the NGOs.
Field workers emphasized the importance of skills
training and of adult literacy programmes,as these help
the clients to become efficient sellers of their products.
This supports the recommendations of Khandkerand
Chowdhury (1996), Johnson and Rogaly (1997) and
Evans et al. (1999). Most field workers interviewed
advised that before considering the sustainability of a
microenterprise it is important to make provision for
the sustainability of the groups. They suggested more
emphasis on training in literacy and book-keeping,
which would enable the groupsto become self-operating,
as well as helping the individual clients. MCC differs
from the other NGOs in that most of the microenterprises they support are agro-based. Most MCC
field workers recognized that these agro-based enterprises cannot be sustainable, because clients have very
limited land and agriculture is always vulnerable to
naturalenvironmental fluctuations.

Microcredit has clearly made the relationship

between the NGO and its clients primarilyeconomic
(Hulme and Mosley 1996). However, this is not always
the case. Schuler and Hashemi (1995) and Schuler
et al. (1997) found that women's access to credit augments use of contraception and that there may be a
positive association between women's contributions to
family support and reduced domestic violence. They
furtherargued that much more extensive interventions
will be needed to significantly undermine men's violence against women (Schuler et al. 1996). They also
found that wife beating was never discussed in NGO
meetings, the discussions mainly being about credit,
and conclude that NGOs (the Grameen Bank and
BRAC)are interested in providing credit not in changing patriarchyin rural Bangladesh.

Conclusion
It is clear that the vast majority of the very poorest
people are not reached by the NGOs investigated
because of their definitions of their target population
and because of the preferences of field workers. This
situation has been made worse by the overemphasis on
microcredit, which has compelled field workers to
approach the slightly less poor to achieve good
repayment rates.
The misuse of loans is a major problem. The initial
success of the microcredit programmes may be attributed mainly to close supervision by the field workers.
The MCC system, where the field workers go with the
members to buy the cattle from the market, seems a
good model of close initial supervision.
For field workers there is pressure both to disburse
loans and to keep a good repayment record. If 'development' is to be participatory then they have to let
the clients decide whether they will borrow and how
much. The present evaluation system of the field
workers, which is mainly based on their credit performance, has put the 'development' effortof the NGOs into
question.
NGOs are losing clients due to competition between
them to lend. Coordination among NGOs to formulate
a common policy is urgently needed. This is particularly necessary to combat the present problems of clients switching NGOs to obtain credit or having clients
of different NGOs in the same household.
Microcredit is necessary for the poor but is no panacea (Hulme and Mosely 1996). NGOs should provide
microcredit along with other services, particularlyon
the basis of prioritiesidentified by field workers and clients. The other services are not only necessary for the
poor for other reasons: some are necessary for sustaining the groups and microenterprises. For example,
non-formal education, skills training and adult literacy
help the members to keep good records, which will
assist in making the microenterprise sustainable. The

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The views of the field workersof NGOs in Bangladeshon microcredit

great emphasis on microcredit also means that groups
break up both when they do not get microcredit and
when they misuse it. Many people join the groups only
to get credit. This is not mobilization of the poor.
Groups of the poor are the cornerstones for their 'development'. Ifgroups are formed for credit the whole effort
becomes banking for the poor. This does have benefits
but, as Hulme and Mosley (1996) argue, it does not
replace other state and NGO initiatives.
Acknowledgements
The author would like to thank Dr Janet Townsend at
Durham University for her comments on the initial
draft of the paper. The usual disclaimers apply.
Notes
1 These NGOs will be discussed in this order, from international to local, throughoutthe paper.
2 The US dollar was equal to 57 Taka in October 2001.
3 The povertyline is defined as monthlyper capita expenditure
which permits a daily intake of 2122 calories (World Bank
1996).

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