MICROFINANCE PROGRAM OF MFIs IN REMOTE AREAs MICROFINANCE PROGRAM OF MFIs IN REMOTE AREAs

Since inception of microcredit/microfinance services, MFIs have been working in rural areas of Bangladesh covering poor, very poor and near poor people under their different programs. These areas also include remote areas and difficult terrains. Accessing financial services in these areas are indeed very tough for the MFIs. Despite this grim reality, the microfinance sector has marched forward towards expansion of microfinance programs in diversified fields such as micro-enterprise, micro-insurance and other insurances, social development programs, capacity development programs, etc. In this context, MFIs have expanded their programs to backward areas in terms of infrastructure of the country including Chars, Haors and Hilly areas. Chars are highly vulnerable to sudden and forceful flooding, river erosion resulting in loss of land & assets. Most of such areas are located in the northwestern part of the country where diversity of markets, healthcare facility, education and other essential services are scanty making the livelihood in the Char areas extremely difficult. On the other hand, Haor is a wetland ecosystem found in the north- eastern part of Bangladesh while Chittagong Hill Tracts, Chittagong, Habigonj and Moulavibazar are known as Hilly areas that constitute about 12% of the total area of Bangladesh. These areas are mostly poverty prone and having inadequate literacy and other development facilities.

4.1. MFIs work in remote areas: During 2015, a total of 506 MFIs including the Grameen Bank (GB) have provided information regarding their social development activities. Out of the total 506 MFis, about 93 MFIs (18.38%) have been found to have been implementing their microfinance programs in the remote areas, while the rest 413 MFIs (81.62%) did not have any program yet. Working in such areas is costly by MFIs.

Table 4.1: Distribution of MFIs by remote areas in 2015

MFI category Number of MFIs Percent of MFIs Working with remote area 93 18.38 Not working with remote area 413 81.62 Total 506 100.00 Source: CDF survey 2015.

4.2. MFIs and their branches in remote areas:

This review has found from the findings of the CDF survey 2015 that 93 MFIs (18.38%) out of 506 MFIs including the Grameen Bank are found to have been operating in difficult terrains. Over the years, the coverage in these remote areas has remarkably increased.

A total of 1,074 branches of the 93 operating MFIs is involved in implementing programs in difficult terrains of Bangladesh, which is 5.76% of the total branches. Among those branches, 593 are in Char areas, 275 in Haor areas and 206 are in Hilly and semi hilly areas. The Table 4.2 shows that the percentages of branch are 3.18%, 1.48% and 1.11% in Char, Haor and Hilly areas respectively in 2015.

Table 4.2: Distribution of MFIs and their branches by remote areas in 2015

MFIs in remote areas Branch in remote areas Remote area % of total % of MFIs total No. % of total No. % of total MFIs branches Char areas 73 78.49 14.43 593 55.21 3.18 Haor areas 27 29.03 5.34 275 25.61 1.48 Hilly areas 27 29.03 5.34 206 19.18 1.11 Total 93 100 18.38 1,074 100 5.76 Source: CDF survey 2015.

4.3. Active member and borrower by remote areas:

The number of active members and borrowers are still low in the remote areas. At the same time, the population density is also low in those areas. The active members of these three areas are 6.07% of the

28 | CHAPTER 04 | Bangladesh Microfinance Statistics 2015 total number while the borrowers are 5.11% of those of the total of 506 MFIs as on December 2015. The total active members are 2.20 million as on December 2015, while the borrowers are 1.51 million, indicating 69% borrowers in these areas. This shows considerable access to finance.

Table 4.3: Distribution of active members and borrowers by remote areas in 2015

Member Borrower % of MFIs % of MFIs Remote area No. % of total total No. % of total total members borrowers Char areas 1,060,919 48.24 2.93 710,025 46.96 2.40 Haor areas 808,456 36.76 2.23 545,057 36.05 1.84 Hilly areas 329,826 15.00 0.91 256,846 16.99 0.87 Total 2,199,201 100 6.07 1,511,928 100 5.11 Source: CDF survey 2015.

This review has further found that the number of active members in Char area is 1,060,919 as on December 2015, which is around 48% of the total active members. In Haor area, the number of active members is 808,456, which is around 37% in remote areas, while the active members are 329,826 in Hilly areas, which is 15%. The similar picture can be found with regard to borrowers like the active members. About 47% (710,025) of the total borrowers of remote areas were from Char area. Similarly 36% (545,057) of remote area borrowers were from Haor areas, while the rest of 17% (256,846) borrowers were from Hilly and semi hilly areas.

It may be noted that the outreach in terms of members and borrowers may appear a bit low but in view of the low population density and lower number of households in many inaccessible locations, the performance of the MFIs cannot be belittled. .

4.4. Loan disbursement, outstanding and net savings in remote areas:

Based on the branches, members and borrowers, etc. of the reporting MFIs, this section presents a picture of savings, disbursement and loan outstanding of the MFIs in remote areas including Chars, Haors and Hilly areas as collected from the data through CDF survey, 2015.

4.4.1. Net savings: Net savings mobilized by the members of the MFIs in remote areas is Tk. 7,123.29 million as on December 2015, which is 3% of the net savings mobilized by the members of 506 reported MFIs. Of the remote areas, around 48% net savings has been mobilized by the members of MFIs operating in Char areas followed by 32% and 20% in Haors and Hilly areas respectively.

4.4.2. Loan disbursement: It has been found that over the year 2015, the amount of loan disbursement is around Tk. 35,959.69 million in remote areas, which occupies 4% of total loan disbursement of the reporting MFIs in 2015 (Table 4.4).

It is clear from the table below that the amount of annual loan disbursement in Char area was Tk. 18,013.92 million, which is 2% of the total disbursement in 2015.

Besides, out of total disbursement in remote areas, Char area contributed 50% followed by Haor areas (24%) and Hilly areas (26%).

Table 4.4: Disbursement, outstanding loan and net saving in remote areas (As on December 2015) (Tk. in million) Remote Loan disbursement in 2015 Loan outstanding Net savings area Tk. in % of % of MFIs Tk. in % of % of Tk. in % of % of million total total million total MFIs million total MFIs disbursem total total

Bangladesh Microfinance Statistics 2015 | CHAPTER 04 | 29 loan net ent outstand savings ing 18,013.9 10,341.6 3,382.1 Char areas 50.09 2.18 45.63 1.98 47.48 1.25 2 4 3 2,300.8 Haor areas 8,462.75 23.53 1.02 8,931.32 39.40 1.71 32.30 0.85 6 1,440.3 Hilly areas 9,483.02 26.37 1.15 3,392.53 14.97 0.65 20.22 0.53 0 35,959. 100.0 22,665. 100.0 7,123. 100.0 Total 4.34 4.34 2.63 69 0 49 0 29 0 Source: CDF survey 2015.

4.4.3. Loan outstanding: The review has further revealed that the total outstanding amount of loan in remote areas was Tk. 22,665.49 million in 2015, which is 4% of the total loan outstanding in 2015. Amongst the remote areas, highest outstanding amount is about Tk. 10,341.64 million (46%) in Char areas followed by Haors (39%) and Hilly areas (15%) respectively.

4.5. Conclusion:

There is no denying the fact that the remote areas are very backward in terms of infrastructure that include chars, haors and hilly areas. These areas usually have low population density, very scattered populations, remote locations coupled with lack of infrastructural facilities, and as such very costly and risky operations for MFIs. In order to increase the existing services of MFIs in Char, Haor and Hilly areas, donor and government support is imperative other-wise the MFIs will continue to be losing concerns all the time and will be eventually discouraged to continue and expand operations. The remote areas that are still unaddressed need special attention by the Government, international development agencies and various donors so that the downtrodden populace does not remain un-served.

30 | CHAPTER 04 | Bangladesh Microfinance Statistics 2015