FROM MICRO-CREDIT TO ENTREPRENEURSHIP: SUCCESS

UNCLAS SECTION 01 OF 02 DHAKA 006038

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EAID SOCI XD BG
SUBJECT: FROM MICRO-CREDIT TO ENTREPRENEURSHIP: SUCCESS
STORIES FROM BANGLADESH


1. SUMMARY: Citigroup Foundation, the philanthropic arm of
Citigroup, recently presented its Second Annual
Micro-Entrepreneurship Awards. Micro-credit is closely
associated with Bangladesh, since Bangladesh was one of the
first countries where the concept was widely employed to meet
the financial needs of the poorest members of society. The
stories of the award winners illustrate not only the
individual winners' successes, but also how the concept works
to lift people and entire communities out of poverty. END
SUMMARY.

BEST MICROFINANCE INSTITUTION
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2. Illustrating just how micro-finance works, the Eco-Social
Development Organization (ESDO) began in the wake of the 1988
flood and soon branched out into micro-credit. On a
day-to-day basis, ESDO helps local groups organize to conduct
training and collects small amounts from participants for
savings. Once the idea of saving is established, small loans
are made. Initial loans are usually in the BDT4,000 range
(approximately US$60),but ESDO has made loans from BDT2,000
to BDT 200,000 (approximately US$30 to US$3000). The
repayment rate for ESDO loans is 99%.

BEST WOMAN MICROENTREPRENEUR
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3. While many of these groups are oriented to women and the
majority of the loans are made to women, several of the
speakers at the event spoke about getting the loan "after
seeking and obtaining permission from my husband". While
this may be difficult for Westerners to hear, it shows that
successful programs work with the existing culture wherever
possible. The winner in this category was one such example.
When Jahida Begum's husband was unable to find work, she took
out a BDT 4,000 loan (approximately US $60) to rent a pond
near her house to raise fish for sale as food. She was able
to repay that loan, and take out a second loan for slightly
more money and buy two goats. When they bred, she repaid and
took out a third, larger, loan. This is the typical method -
repayment, and a subsequent larger loan. Her most recent
loan, after ten years, was for BDT 20,000 (over US $300) and
she has diversified into various livestock, farmlands, and a
restaurant. Her husband was very supportive in an interview,
th
anking Allah for this opportunity, and working with her in
their diverse enterprises; but there is no doubt that she is
the driving force behind their success.

BEST PROGRAM FOR THE HARDCORE POOR
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4. Given the level of poverty shown by all the nominees, it
is sometimes difficult for an outsider to differentiate the
hardcore poor from the merely poor. But at the lowest
levels, there is the highest risk for trafficked persons,
child labor, and women forced into prostitution. The winner
of this category shows that micro-credit obeys the same
economic laws as other commercial endeavors, and that there
are ways to provide financial services at all levels.
Rangpur Dinajpur Rural Services (RDRS) has provided 26,930
micro-credit customers with loans and has done so at 9%
interest. This is remarkable, since the typical interest
rate for micro-credit is 10%. RDRS has thus gained market
share by undercutting other micro-credit institutions,
providing access to even the most needy financial consumers,
and still maintaining a 90% repayment rate.

BEST MICROENTREPRENEUR
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5. The winner in this category is a great example of how an
entire community can be improved. From an initial loan of
BDT 5,000 (approximately US $75) to buy a loom, Zakir Hossain
has continued the upward spiral of repayment and larger loan
to the point when his ninth loan was for BDT 275,000
(approximately US $4,230). He now owns over 80 looms,
employs 120 weavers, his monthly payroll expense alone is
over BDT 300,000, and he is diversifying into the food
business by purchasing an oil press. But even beyond all
this he has begun making small loans himself within his
community, in some cases even to his own employees, for them
to purchase their own looms and start up their own
businesses. By his example, and by his own loans, he has

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lifted his community up and given them the ability to achieve
economic stability.

MOST INNOVATIVE BUSINESS
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6. When Nilufar Yasmin's husband lost his job in Dhaka
making sports equipment and returned to her in their small
village, they were in severe financial hardship. From a loan
of BDT 4,000 (approximately US $65),she began utilizing
local wood to make cricket bats and now operates a successful
factory employing many people in the village. She has also
gone through the loan/repayment/larger loan cycle five times
since 2003, the latest being BDT 50,000 (approximately US
$715). Her hopes for a bright future include her own saw
mill to provide upstream supply chain management, and
expanding from distributing cricket bats all over Bangladesh
to distributing them worldwide. Showing her business acumen,
she talks about the need to begin placing her own labels and
stickers on the bats in the village, to create her own brand
image. In a nice gesture, she was escorted to accept the
award by the Captain of the Bangladesh National Cricket Team.

CONCLUSION
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7. Citigroup Foundation's stated goal of the award is to
promote micro-enterprise, to recognize the success stories of
the entrepreneurs, and to put the spotlight on local
micro-entrepreneurs who are helping to lift the economic
fortunes of their communities. Each winner received a plaque
and a check for US $4,000, which coincidently was in most
cases the amount of the initial loan they received; except
the loan was in Bangladesh Taka, for approximately US $65.
BUTENIS