10 Million Bangladeshis Move Out of Severe Poverty

February 3, 2011
by Lesley Reed, Publications Manager

Nearly 2 million Bangladeshi households involved in microfinance rose above the US$1.25 a day threshold between 1990 and 2008, according to a new Microcredit Summit Campaign report. This represents almost 10 million people when you factor in family members of borrowers! And this massive movement out of poverty occurred even after the setbacks of a devastating flood in 1998 and the food and fuel crisis of 2008.

The finding, from a survey of more than 4,000 Bangladeshi households, mirrors official research from the Bangladeshi Household Income and Expenditure Survey (HIES), which estimated that 10.62 million Bangladeshis left hardcore poverty between 1990 and 2005.

“While the Bangladesh survey was not designed to assign causality, it is very significant that the number of microfinance clients who left poverty closely links to the national data on poverty reduction,” said Microcredit Summit Campaign Director Sam Daley-Harris. “The majority of poverty in Bangladesh is in rural areas and so are the majority of microfinance clients.”

This news comes during a difficult time for microfinance. In an attempt to make profit on microloans, some microfinance lenders have been shifting their status as nonprofit organizations to commercial enterprises. SKS Microfinance, the biggest microlender in Andhra Pradesh, India, raised $358 million in an initial public offering last August. Since then, charges have emerged in Andhra Pradesh about microfinance borrowers taking on multiple loans and excessive debt, coercive collection practices by microfinance staff, and even suicides resulting, in part, from these challenges. (Read an op-ed by Muhammad Yunus in the New York Times on the problem of commercialization of microfinance.)

“There are quite a few people who believe that microfinance has lost its way,” said Alex Counts, president and CEO of Grameen Foundation, in a Microcredit Summit Campaign press release. “This Bangladesh survey reminds us that, even in the most difficult circumstances, major progress can be made. Bangladesh is not the ‘bottomless basket case’ that then-U.S. Secretary of State Henry Kissinger called it 35 years ago. It is instead a teacher to the rest of the world, with its civil society leading the way.”


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