The Impact of ASA’s Microfinance Programme on Poverty in Bangladesh 2015
Microfinance has been considered as one of the poverty reduction tools. It is also believed that the microfinance institutions have been playing an important role in bringing poor and disadvantaged people into the financial system and thereby increasing the financial inclusion.
ASA is one of the biggest microfinance institutions in the world. ASA is also known for its cost-effective, innovative and sustainable approach in microfinance operations. It provides microcredit to the poor people without any collateral with the aim to reduce poverty and inequality. Currently, the microcredit programme of ASA is serving over six million borrowers who are typically underserved and disadvantaged. At present, the organization has been offering consistently microfinance services integrated with the non-financial services such as Primary Health Care, Education, Water & Sanitation and Physiotherapy to more than 7 million people throughout the country.
The ASA Research & Evaluation Section conducts follow-up study every two to three years on the role of its microfinance programme on poverty in Bangladesh. This study aims at assessing the impact of ASA’s microfinance programme. In particular, it investigates whether the borrowers of ASA have managed to improve their livelihood such as household’s income, expenditure on food, health, clothing and education. Impact analysis also assesses the status of women empowerment.
Objectives of the study:
The foremost objective of the study is to investigate whether the microfinance programme of ASA has been successful in reducing poverty or not. In particular, the specific objectives of the study are as follows:
- To investigate the impact of ASA’s microfinance on the household’s income, expenditure, savings and assets;
- To examine the impact of ASA’s microfinance on the basic needs (food, clothing, health, education and housing);
- To assess the impact of ASA’s microfinance on the borrowers’ health awareness, cleanliness and access to safe sources of water and sanitation;
- To illustrate the impact of ASA’s microfinance on the women empowerment.
- Process of Sample Selection:
• Method of Data Collection
• Structured Questionnaire;
• Face-to-face Interview.
Assessment Based on Collected Data:
The average household monthly income increased by BDT 5,657 and the average household monthly expenditure increased by BDT 4000 from 2012 to 2014. The respondents also increased the amount of household savings as ASA encouraged its borrowers to enhance saving in order to tackle any cash crisis in the near future.
Figure: 01 Average Monthly Household Income, Expenditure and Savings
The survey results indicate that over 50% of the respondents had a TV in their household in 2012 and this gradually increased to 64% in 2014. The average number of cattle and poultry had increased over the same period. Most importantly, the average land area owned by ASA households increased to 41 decimal in 2014 from 28 decimal in 2012. It clearly indicates that the ASA’s microcredit programme facilitated enhancement of household’s assets.
Table: 01 Household’s Assets
Conditions of Dwelling House:
The following table shows about 90% of the borrowers are living in their own house over the period from 2012 to 2014. The number of ownership of the house remained the same over the three-year-period.
The study also revealed that the number of respondents having houses made of bamboo and tin declined from 2012 to 2014 while the number of semi-pucca and pucca houses increased by about 3 % during the same period. It shows that the overall living conditions improved after getting involved with the ASA’s microcredit programme.
Figure: 02 Type of Accommodation
Borrowing Information & Employment Generation:
One-quarter of the respondents borrowed from ASA for agricultural activities such as cash capital for buying fertilizer or paying labour cost related to the agriculture. Almost half of the respondents borrowed purposively for either starting small and medium businesses or buying stocks for their existing small businesses. This study reveals that about 92% of the respondents managed to create employment after receiving loans from ASA. The average employment increased to 1.6 in 2014 from 1.4 in 2012.
Figure: 03 Main Purpose of Borrowing
Drinking Water and Sanitation:
Majority of the borrowers were found using proper sanitation and the safe sources of drinking water such as water from shallow tube-wells (65.5%), supplied water (10.27%), deep and shared tube-wells (16.27%). The situation was observed to have improved in contrast to that prevailed 3 years back
Figure: 04 Sources of Drinking Water
Earlier, it was found that about 6% of the ASA borrower did not have proper sanitary latrines [Aziz, M. A. (2013) Impact Assessment of ASA Mircrofinance Programme 2013, ASA University Review, Vol. 7(2)]. Three years later, this study found improvement about 1% more respondents managed to have access to proper latrines.
It is noted that ASA provides knowledge regarding safe drinking water and proper sanitation continuously among members in group meetings. But the limited sources of drinking water and the lack opf education are the main hindrances for attaining further progreess in the area.
Figure: 05 Respondents Using Sanitary Latrine
Medical Treatment and Awareness of Cleanliness:
The study found that the number of people going to the qualified doctor increased year by year. With widening of ASA health programmes, poor people could avail themselves of the treatment facilities by spending as little as BDT 10-20 (US$0.08-0.15) or even free of cost.
Figure: 06 Sources of Medical Treatment
The study found that almost all the respondents (99.9%) were aware of cleanliness including practices of nails clipping, teeth brushing and hand washing. ASA Health Awareness Programme has created a positive impact among the borrowers.
Figure: 07 Awareness of Cleanliness
(Decision on family matters, use of loan and voting; access to land asset and social mobility)
ASA provides loans mostly to the poor women in order to empower them. It was found that about 14% of the women mentioned their decision-making role on family matters while about 9% of the women borrowers could decide on the use the loans. Almost one-third of the women borrowers relied on their husband’s decision on the family matters and using the loans. About 8% of the respondents were the actual user of the loans and almost half of the loans were used by their husband. Majority of the respondents could take their own decision on voting. Remarkably, about 34% of the respondents had access to the land asset.
It could be illustrate that their involvement with ASA firmed their position in their household side by side they have been empowered with regard to the socio-economic and political indicators.
In order to empirically estimate the impact of ASA’s microfinance programme on the financial indicators, this study uses statistical models which reflect that the microfinance programme of ASA had a significant positive impact on the basic needs. The level of education of both the borrowers and the head of household were also playing an important role in fulfilling the basic needs.
The empirical results indicated that the decision on participation on voting, social mobility and access to household’s assets by women increased after being involved in the microfinance programme of ASA and the length of ASA membership had a statistically significant impact on the women empowerment.
To sum up, this study adopted analytical approaches for impact assessment of microfinance programmes using four broad indicators to quantify and demonstrate some of the outcomes from ASA microfinance intervention. It showed that the microcredit programme of ASA had a positive impact on improving the households’ income, expenditure, savings, employment opportunities and the borrowers’ basic needs. The study also observed that majority of the respondents were using safe sources of drinking water and almost all the respondents were aware of personal cleanliness. In addition, the result also showed that a large number of the borrowers increased their access to the household assets, gained their bargaining power within the household on family matters, enhanced participation in voting and social mobility. The empirical result of the study showed that the length of the membership had a significant positive impact on the women empowerment. Thus, the programme contributed to the poverty reduction efforts of ASA members and made a real difference in their lives.