RURAL BANGLADESH - PreventionWeb

Socioeconomic Profiles of WFP Operational Areas and Beneficiaries
respectively from moneylenders. NGOs and CBOs have been slower to penetrate the
relatively remote hinterlands of the Haors and CHT.
Table 28: Source of loan by WFP Priority Region
% within WFP priority zone
Relative/ friend
Bank or financial institution
NGO/ CBO/ Samity
Grameen
Money lender
Other (list)
Total
Source of loan
CHT Coastal Drought N/W Char Haor Total
12.3% 14.6% 8.0% 11.0% 12.3% 16.6% 12.5%
25.6% 24.2% 8.7% 12.5% 10.9% 16.6% 13.4%
42.7% 48.3% 55.1% 46.0% 44.5% 36.3% 44.6%
6.2% 8.8% 23.2% 23.5% 25.1% 15.0% 20.8%
10.1% 3.8% 1.4% 5.5% 6.6% 13.5% 7.1%
3.1% .4% 3.6% 1.5% .5% 2.1% 1.6%
227 240 138 200 211 193 1209
56
WFP priority zone
The conventional philosophy of microfinance institutions is that the provisioning of smallscale
rural credit breaks a fundamental capital constraint in household economies, thus
encouraging investment in income-earning assets and activities.
Table 29 indicates that this premise holds true for non-vulnerable households but is not yet
the case for invisible poor households. More than three-quarters of non-vulnerable
households invest their loan in some kind of enterprise. Microcredit however does not
apparently assist the invisible poor in easing capital constraints; three-quarters of their loans
are directed toward household consumption needs. Perhaps as alarmingly, almost onequarter
of the loans taken by invisible poor households are directed toward repayment of
previous loans (24 percent). Other less vulnerable households are not nearly as indebted to
multiple sources. In only 22 percent of the credit cases were invisible poor household loans
invested in business inputs, including poultry and livestock, agricultural inputs, and other
small business inputs. Besides non-vulnerable households, the other households in the study
invest 16 to 17 percent of their loans toward paying housing-related expenses.
Table 29: Loan use by Household Socioeconomic Status
Business input
Consumption
Loan repayment
Housing related
expenses
Dowry payment
Other puposes
Percentages and totals are based on respondents.
Loan use (multiple answers possible)
HH socio economic status
Non
vulnerable 2 3
Most
vulnerable
76.3% 55.3% 43.5% 22.1%
22.7% 41.1% 53.6% 75.4%
4.2% 7.9% 9.1% 23.6%
8.5% 17.2% 16.6% 16.0%
3.7% 2.1% 5.1% 5.7%
8.8% 8.1% 9.8% 6.7%