Kathmandu University School of management

Balkumari, Lalitpur

Development Economics

Case review 5

The Role of Development NGOs: The BRAC model

Submitted to: Submitted by:

Mrs. Anupama S. Panta Sagun Adhikari (18704)

Faculty – Dev. Economics Bipsana Prasai (18774)

Praptee Shree Hamal (18736)

Anusha Poudel (18770)

Angel Nakarmi (18761)

Sramina Tuladhar (187120)

Mohammad Asif (18710)

Section: C

Date: December 12, 2019

Synopsis

The case talks about the BRAC model as a pioneer in innovation of specific programs with
effective development possibility setting an example for high scope of NGOs in developing
countries.

Core issues

The core issues found in this case are-

1. What kind of programs has BRAC been focusing on to enhance the development and
eliminate the poverty?
2. How has BRAC become successful in effectively maintaining the high quality
management discipline by challenging any environments?

Facts on core issues:

1. What kind of programs has BRAC been focusing on to enhance the development
and eliminate the poverty?
Answer: BRAC’s activities contribute more than half of 1% of Bangladesh’s GDP. As of
2013, BRAC had over 120000 employees, making in the country’s second-largest
employer. Over half of BRAC employees are primary teachers in its widely emulated non
formal BRAC Education Program. Once highly dependent on donors, BRAC has
responded to donor demands for greater self-reliance. It is now more than 70% self
supporting and the major source of its internal revenue is a growing network of
productive enterprises that aims of poverty reduction and net income generation. BRAC
has designed a strategy that it calls microcredit-plus-plus to convey the scope of its
interrelated village programs seeking to meet a variety of poverty reduction goals.

2. How has BRAC become successful in effectively maintaining the high quality
management discipline by challenging any environment?
Answer: One of the most important factors in BRAC’s success has been the high quality
of BRAC management is it has been able to recruit many other highly competent
 managers from all sectors of Bangladesh and it has repeatedly been able to find untapped
opportunities and to profit from them. It is also working actively with interested
government officials to infuse the public schools with some of the ingredients of its own
success. One can find no hint of a negative attitude toward the private sector at BRAC;
instead, BRAC is actively working to foster its growth.

Analysis

Aggregate Demand
Once highly dependent on donors, BRAC has responded to donor demands for greater self-
reliance. In fact, the major source of its internal revenue is a growing network of productive
enterprises that it has established.
The given case has talked in brief about the investment activities done by BRAC in various
productive sectors, their benefits as well as their effects on the public’s consumption behavior.
With the increasing investment, we see that there is an increase in the real GDP of the economy,
or in the production of the demanded goods and services. Along with this, the activities of BRAC
there have also been positive changes in the availability of basic consumer goods for the public
as well as in the labor market.
The aforementioned effect can be further explained with the help of the aggregate demand curve
as shown below;

AD2=C2+I2+G+NX
Aggregate
expenditure
AD1=C1+I1+G+NX

National income

Y1 Y2
 Figure 1; Shift in aggregate demand curve
In the above figure, the x-axis represents the level of aggregate demand (AD) and the y-axis
represents the level of national income. BRAC is involved in more and more investment in
various productive sectors, the production of goods increases consequently so, as to meet the
demand. As mentioned in the case, BRAC owns or co-owns and operates several small and
medium-size enterprises which produce goods such as chalk, seeds, shoes, and sanitary napkins.
Such increment in the investment level tends to increase the productivity level as well. Due to
the increase in investment from I1 to I2, the AD curve shifts upward from AD1 to AD2, which in
turn leads to a rise in the national income from Y1 to Y2?
Likewise, the increased productivity facilitates the adequate supply of inputs for non-formal
schools and farms and more affordable basic consumer goods for local people. This leads to an
increase in the consumption level; from C to C2, which also causes an upward shift in the AD
curve. In addition, the establishment of many productive industries and enterprises also has a
positive impact on the labor market, as it has seen to generate more employment opportunities
for poor women in the case.

Production Possibility Curve

BRAC, an extraordinary NGO with a mission to reduce poverty, has grown steadily, attracting
funds for its reputation for competence, dedication, innovativeness, accountability, and
effectiveness. As explained earlier, we see that there is an increase in the productivity level due
to the investment activities of BRAC.
More goods and services are being produced with added efficiency, as a result of the newly
established productive industries and enterprises. Due to the activities of BRAC, the resources
are utilized at an optimum level. This can be shown with the help of a production possibility
curve (PPC).

Consumer Goods

ss
B

PPC

Capital Goods
 Figure 2; PPC curve

A production possibility curve is a curve which shows the combination of various goods and
services that can be produced within the given resources and the available technology. In the
above graph, the x-axis and y-axis represent the units of consumer goods and capital goods that
can be produced with the existing resources respectively,

The economy has been operating at an attainable yet inefficient point i.e. at point A in the
beginning. However, due to the investment activities of BRAC there has been an increase in the
level of productivity, which has facilitated the proper and optimum usage of the available
resources, be it physical, technical or human. For this reason, there has been an outward shift
from point A to point B, which indicates an efficient point in the production possibility curve.

Emphasis on Education
BRAC has been one of the major driving forces in transformation of Bangladesh through its
education program. The organization’s leaders understood that the problems of the rural poor
were chronic and structural, and they turned their attention to long-term development and
poverty alleviation efforts. Just over half of BRAC employees are primary teachers in its widely
emulated non formal BRAC Education Program. In Bangladesh 30 years ago, attending school
was an unimaginable luxury for most of the poor. Even in 1990, fewer than half of all children in
the country completed primary school. But by 2003, about two thirds were completing school.

BRAC began establishing highly innovative village non formal primary schools in 1984, in
response to the needs and requests of the village women with whom it works. A major reason
that parents do not send their children to school is that their work is needed at home and on the
small family farm plot to help the family survive, second reason being harassment of girls. The
program structure was developed to respond to schooling problems identified by mothers taking
part in other BRAC programs. BRAC schools teach the children of poor, often landless families.
Two-thirds of the students are girls. BRAC hoped to make up for shorter school hours with a
higher-quality education featuring a significantly smaller class size of about 30 to 35, engaging
teaching styles, and the care shown for the pupils. The education program has evolved over the
years to reflect the changing needs of the rural poor. Nearly all the teachers (about 97%) are
village women who are trained and supervised by professional staff. Women are getting
employed in their own villages. This way BRAC has developed education system as well as the
condition of women in Bangladesh.

Poverty Trap
The development NGOs based in Bangladesh such as BRAC and Grameen Bank have been a
major initiators of poverty reduction in Bangladesh. BRAC was founded in the aftermath of civil
war and famine. The organization discovered that the problems of the rural poor were chronic
and structural and hence turned their attention to long term development and poverty alleviation
effort. As for the Grameen Bank, it focuses on providing microfinance for the poor because it
believes lack of credit is one of factors that leads to the poor getting trapped in a vicious cycle of
poverty.

It is reported that tens of millions of people and some regions of Bangladesh are caught in
complex poverty traps. A poverty trap is a mechanism in which it is very difficult or nearly
impossible for the poor to escape poverty. They have low income which in turn leads to low
saving, productivity and investment which would ultimately lead to low economic growth of the
nation

Poverty trap can also be explained from the above diagram. The income today influences the
future income as well. The amount of money you have today determines what you eat, money on
health, education, etc, which in turn influences the income in the future. The poverty trap is seen
as a S-shaped curve; where the poor are stuck in the left side of the graph below the diagonal line
where the future income is less than the present income and it continues to decrease. So the poor
are trapped in poverty being unable to escape.

In order alleviate poverty, BRAC and Grameen has made some significant efforts. BRAC has
brought program innovation in education, nutrition, health, credit, legal rights, advocacy and
other fields. It has also designed microfinance credit program such as Linchpin program,
microcredit plus-plus to meet its poverty reduction goals. In terms of education, BRAC has
established highly innovative village non-formal primary schools in response to the needs and
requests of the villagers. BRAC has also played a role in its health care innovations and
programs. Grameen Bank on the other hand has enabled several million poor Bangladeshis to
start or upgrade their own business. Aside from microfinance it also engages in social
development activities for the upliftment of the poor. Through such efforts of these organization
the poor population have gradually been able to escape the poverty trap.

Discussion Questions:

1. Is BRAC truly a learning organization? Why

2. What are the potential role of NGOs in relation to the government and private sectors?
3. What are the several challenges faced by BRAC?
4. How has BRAC been working in order to foster its growth?
5. What can developing countries like Nepal learn from BRAC?
6. How was BRAC able to gain self-reliance?
7. How did BRAC and Grameen as NGOs contribute to social development?