Micro-Loans Lift Millions of Bangladeshis from Poverty

February 2, 2011

The U.S.-based Microcredit Summit Campaingn, released a report last week suggesting that more than 10 million Bangladeshi people were freed from abject poverty with the help of micro-loans between 1990 and 2008.

That sounds like a large number. And it is. But according to experts, for each person in Bangladesh that has risen above the $1.25/day poverty threshold these past years there remain nine others trying to survive on less.

A survey of Bangladeshi households, conducted between February and August 2009, suggests that nearly 2 million families were able to climb out of the depths of poverty with the help of micro-loans even after accounting for set backs brought on by massive floods and repeated food and fuel crises in 1998 and 2008.

"There are quite a few people who believe that microfinance has lost its way," said Alex Counts, President and CEO of the Grameen Foundation. (The survey included a large number of customers of Grameen, which launched the first-ever MFIs there in the 1970s. ) "The Bangladesh survey reminds us that, even in the most difficult circumstances, major progress can be made," Counts added.

But data collected by at least one microfinance institution in the country found only 7% of borrowers were able to rise above the poverty line. "Many borrowers remained where they were while others suffered set backs," Dr. Qazi Kholiquzzaman Ahmad, chairman of PKSF told the BBC World Service World Business News. PKSF is a quasi-governmental agency that helps fund MFIs.

What's more, either number - 10% or 7% - leaves 90%-plus stuck at the bottom of the financial pyramid, and that's no great shakes, Dr. Kholiquzzaman suggested.

Copies of the report are available for download at the Microcredit Summit Website.

135 million of the world's poor today have some type of microinsurance policy