Microcredit's Contribution to the Socio
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African Journal of Business Management Vol. 5(22), pp. 9760-9769, 30 September, 2011 Available online at http://www.academicjournals.org/AJBM ISSN 1993-8233 ©2011 Academic Journals Full Length Research Paper Microcredit’s contribution to the socio-economic development amongst rural women: A case study of Panchagarh District in Bangladesh Ferdoushi Ahmed 1*, Chamhuri Siwar 1, Nor Aini Hj. Idris 2 and Rawshan Ara Begum 1 1Institute for Environment and Development (LESTARI), Universiti Kebangsaan Malaysia, 43600, UKM, Bangi, Selangor D. E., Malaysia. 2Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600, UKM, Bangi, Selangor D. E., Malaysia. Accepted 27 July, 2011 Rural women in Bangladesh have a lower socio-economic status compared to men. They have very limited access to income generating as well as social activities due to number of social, cultural and religious barriers. Thus, microcredit programme is intended for improving the socio-economic status of rural women in Bangladesh. In the present study, an attempt has been made to assess how microcredit programme contributes to the socio-economic development of rural women. The study is based on empirical data collected through interviewing the two groups of rural women for example, ‘with credit’ and ‘without credit’ rural women. A multiple regression analysis was conducted to identify the factors influencing the respondent’s contribution to the total monthly family income. The multiple regression analysis shows that there were strong positive effects of age of respondent, level of education, family size, earning member, occupation of respondent’s, and also monthly income of respondent’s while status of marriage has a strong negative effect. It was found that majority of the ‘with credit’ respondents contribute much higher to the family incomes than the ‘without credit’ respondents. The results also reveal that the ‘with credit’ respondents show higher educational attainment (schooling, secondary and higher secondary certificates) as well as engage in economic and social activities in a larger scale compared to ‘without credit’ respondents. The study concludes that microcredit programme contributes to the development of socio-economic status of rural women in Bangladesh through adequate and timely availability of credit for income generating and productive activities, improving women’s education level, and initiating skill development training. Key words: Rural women, socio-economic status, microcredit programme, Bangladesh. INTRODUCTION Bangladesh is one of the least developing countries in the World. Almost 80% people live in rural areas (2006a). Women are almost half of the total population of this country (2006a). The status of women is an important factor affecting the socio-economic development of a *Corresponding author. E-mail: [email protected]. Tel: country. There are many microcredit programmes in +60143626210. Fax: +603-89255104. Bangladesh for rural poor women for their development. Microcredit programmes provide small loans to the very Abbreviations: BRDB, Bangladesh Rural Development Board; poor in order to undertake self employment and other GB, Grameen Bank; PKSF, Pallil Karma Sahayak Foundation; financial and business activities giving them the ability to BRAC, Bangladesh Rural Advancement Committee; ASA, care for themselves and their families and thus, achieve a Association for Social Advancement; PDBF, Palli Daridro Bimochon Foundation; SPSS, Statistical Package for Social level of independence. Microcredit is also referred to as Science; SSC, Secondary School Certificate; HSC, Higher microfinance and micro lending which has demonstrated Secondary Certificate; NGO, non-governmental organization; to be an effective tool in the ongoing struggle against CSFP, Commonwealth Scholarship and Fellowship Plan. poverty and enables those without access to lending Ahmed et al. 9761 institutions to borrow and start small business (ABS, than the target group in the control village and 25% 2005). In Bangladesh, the major microcredit programmes higher than the target group non-members in GB villages. engaged by government organizations such as Therefore, Newaz (2007) found that women had hardly Bangladesh Rural Development Board (BRDB), Grameen had any choice of their own in purchase clothing, Sari in Bank (GB), Pallil Karma Sahayak Foundation (PKSF), particular. They usually could afford only one Sari at a and Non government organization like Bangladesh Rural time. After gaining credit access, most of them were Advancement Committee (BRAC), Association for social having better experience since they could afford more Advancement (ASA), PROSHIKA, Palli Daridro Bimochon than one Sari and they could buy Sari of their own choice Foundation (PDBF). Among these microcredit on occasions and during festivals. This paper shows a programmes, GB is a successful model of poverty case study of Panchagarh district of Bangladesh. This alleviation in Bangladesh. GB was started in 1976 by paper also discusses the socio-economic variables such Professor Muhammed Yunus as an action research as age, level of education, marital status, occupation, project in ‘Jobra village’ in the district of Chittagong. In family size, distribution of earning and dependent person 1983 it was transformed into a formal bank under a and also income status that contribute to the rural special law passed for its creation. It is owned by the women’s income. poor borrowers of the bank who are mostly women. Borrowers of GB at present own 94% of the total equity of the bank. Remaining 6% is owned by the government MATERIALS AND METHODS (GB, 2007). In 1976, Professor Yunus lent US$ 27 in loans to 42 women in Jobra, Chittagong, Bangladesh. At Survey design, data collection and data analysis the end of July 2009, GB had cumulatively disbursed Tk Deriving accurate information is highly dependent upon the survey 465.29 billion (US$ 8.26 billion) to 7.93 million borrowers, method. The direct face-to-face interview is the most commonly 97% of whom are women, 2,558 branches, in nearly used approach (Carson et al., 1996) and is employed in this study. 84,573 villages across Bangladesh (GB, 2009). During The data for this study is taken to reflect the objectives of the study. the past 12 months (from August 2008 to July 2009) GB Data was collected through interview from the selected samples of Pachagarh Districts with two groups (‘with credit’ and ‘without disbursed Tk. 72.98 billion (US $ 1060.42 million). credit’) of rural women. GB members are chosen for ‘with credit’ Monthly average loan disbursement over the past 12 respondents. For the ‘with credit’ samples, this study has selected month was Tk 6.08 billion (US $ 88.37million). 200 samples from the GB members in the villages of Pokhi Laga, In Bangladesh, traditionally the role of women has been Vetor gor, Chand para and Madhuban guchchho gram. For the that of daughter, wife and mother. Their activities in the ‘without credit’ samples, this study has selected 100 samples from socio-cultural milieu of Bangladesh are primarily domestic the Goual para and Jamader para villages, which do not bear loan or credit. The data were collected by the researcher herself and the in nature confined to the four walls of home (Islam and . period was from1st April 2008 to 30 June 2008. After survey of the Sultana, 2006) In the rural areas of Bangladesh, social study, all the data were coded directly on questionnaires and then capital is scarce because “purdah” norms isolate women. entered into personal computer. Several analyses of the data have Grameen meetings provide a socially accepted excuse to been carried out in the core of this study. Simple descriptive gather and to talk. Thus, GB borrowers have succeeded statistics such as sums, means, ranges, percentages and in defining “purdah” more flexibly expanding the concept frequency distributions are were used to analysis primary data for this paper. This study utilised the Statistical Package for Social of ‘inside’ to include their GB activities. Just by requiring Science (SPSS) to analyse the data. This study also conducted a their presence in public places, the Bank has increased multiple regression analysis for determining factors which are women’s visibility (Todd, 1996). The impacts are both affecting the respondent’s contribution to the total family income. psychological and economic; not only do women feel less isolated, but they also strengthen their support networks Multiple regression analysis (Larance, 2001). In 1998, again, Pitt and Khandker (1998) used different data and controlled for unobserved Regression analysis is one of the most commonly used tools in heterogeneity at the individual, household, and village econometric work. The general purpose of multiple regression levels. They found that annual household expenditure analysis is to learn more about the relationship between several increased by $18 for each additional $100 of cumulative independent or predictor variables and a dependent or criterion disbursement. If this effect persists and if the average variable. Applications of regression analysis exist in almost every field such as economics, political science, sociology, psychology, effect exceeds the marginal effect, then the increase in education, etc. The common aspect of the applications is that the expenditure by itself would provide at least $0.09 per dependent variable is a quantitative measure of some condition or dollar-year borrowed to balance the subsidy of $0.22. Pitt