Draft for comments only Reviewing existing NGO services for the ...

needs vary widely. Standardized NGO services cannot match the specific and individual needs of the
poor; even their loan utilization capacity, which is linked with their initial endowment base, differs
significantly among the poor. The present generation of microcredit, commonly practiced by most
NGOs, is not beneficial for all the poor because the minimum loan ceiling (fixed by mainly
considering the cost side of lending 5 ) exceeds the capacity of the ultra poor to utilize the loan
productively.
Problems relating to targeting:
Success of any intervention depends on the appropriate selection of a target population whose
specific needs should clearly match the package of services offered. A wide variety of development
literature addresses the failure of government and NGO development programmes in reaching the
poorest. Further, studies demonstrate that the success of micro-credit, i.e., the productive and
effective use of micro credit, is highly and positively correlated with the initial endowment base of
the participants’ households. NGOs, therefore, are reluctant to include the ultra poor in their
micro-credit programme in order to minimize the risk of default.
Through our survey, we tried to explore the problems faced by NGOs in selecting target groups. As
mentioned earlier, in all the surveyed Thanas there was more than one functioning NGO. All of the
NGOs target similar groups of people – the poor. The NGOs used similar definitions in identifying
the poor and their service package do not vary significantly. Sometimes, several NGOs work in one
particular village offer similar kinds of services indicating a high level of competition among NGOs
to attract potential customers. Most of the NGO officials reported that NGO membership overlap
increases the risk of default and, therefore, all NGOs try to avoid including people with existin
NGO membership in their programmes. However, proving multiple membership can be very
difficult, most NGO beneficiaries hide their personal identitly while joining (sometimes they
mention false names for their fathers or husbands or use father's name in one NGO and husband's
name in another). The non-target population is sometimmes included for different reasons.
Influence of the village elite and political leaders and neopotism amongst the beneficiaries generally
caused this kind of inclusion. Lack of skill and knowledge on targeting methodology among the staff
and the absence of clear-cut definition of the target group also increases the risk of mistargeting.
5 The cost of per taka lending is higher for smaller loans and the cost declines as the loan amount increases. The ultra
poor, however, do not have the capacity to utilize higher loan amounts and in majority cases they are default loanees
who failed to pay back their borrowed amount in due time.