Access to Finance
Finance is at the core of the development process backed by solid empirical evidence, development practitioners are becoming increasingly convinced that efficient, well-functioning financial systems are crucial in channeling funds to the most productive uses and in allocating risks to those who can best bear them, thus boosting economic growth, improving opportunities and income distribution, and reducing poverty.
Access to finance refers to the availability of financial services – in the form of deposits, credit, payments, or insurance – to individuals or enterprises. The availability of such services can be constrained for instance by physical access, affordability or eligibility. Access to finance is the ability of individuals or enterprises to obtain financial services, including credit, deposit, payment, insurance, and other risk management services. Accumulated evidence has shown that financial access promotes growth for enterprises through the provision of credit to both new and existing businesses. It benefits the economy in general by accelerating economic growth, intensifying competition, as well as boosting demand for labor. The incomes of those in the lower end of the income ladder will typically rise hence reducing income inequality and poverty.
The lack of financial access limits the range of services and credits for household and enterprises. Poor individuals and small enterprises need to rely on their personal wealth or internal resources to invest in their education and businesses, which limits their full potential and leading to the cycle of persistent inequality and diminished growth. The Access to Finance business line works to support the growth of businesses in southwest coastal areas of Bangladesh through the following ten programs:
- Rural Microcredit (RMC) Program:
Rural Microcredit (RMC) program, now renamed Jagoron focuses broadly on rural development. The target group of Jagoron is the rural poor who have own land less than 50 decimals or a total asset that is materially worth less than the value of one acre of land. The initial idea was to provide finance in favor of off-farm activities but with time and gradual expansion on-farm activities have also been supported finance in Jagoron program. Rural micro credit participants take different types of income generating activities under Jagoron program. NGF support both men and women under the Jagoron program .Every poor participant of Jagoron program has access to loans for the development of various sectors of income generating activities (IGAs) that include small trade, goat rearing, cow rearing, beef fattening, poultry rearing, homestead farming, paddy husking, fishing and fish culture, local transport, aquaculture, grocery, tailoring etc. A special focus of the program’s support is to help poor women increase their loan capacity to owned businesses that enhance women entrepreneurs.
- Buniad (Ultra Poor Program) Micro-credit:
Ultra Poor Program, now renamed Buniad focuses on needs of extreme poor or ultra poor people of our country having no or very little access to the traditional microcredit services due to the existing rigidity of usual microcredit products. The ultra poor program is a separate intervention of NGF throughout its working areas. The program also provides different non-financial support like primary healthcare services, technical services for implementing income generating activities (IGAs), capacity building training, and support to the disaster-stricken people, awareness building on nutrition and social issues to the targeted participants according to their needs. Woman headed family, beggar, day labors, divorced women, widows; child labors headed family parents, floating people, street dwellers, slum dwellers, homeless people, house servants, floating sex-worker and landless farmers, elderly and disabled people with no source of income are enrolled under this program. With the financial & non-financial support of NGF, the participants under Buniad program are now involved in different kinds of off-farm & on-farm income generating activities that secured their income and improved livelihood sustainably.
- Agrosor (Micro-Enterprise) ME Program:
Micro Enterprise (ME) program, now renamed as Agrosor focuses on graduated borrowers who have taken more than two (2) loans from NGF Jagoron Program and have developed successful enterprise are eligible for Agrosor loans. Microenterprise is very essential to reduce poverty in view of the fact that it is the key to income generation & employment creation. These entrepreneurs are playing a vital role in developing in rural and national economy. According to the present Agrosor Loan policy, its loan size ranges from BDT 30,000 to BDT 10,00,000 as per the needs of the entrepreneurs. Apart from the graduated borrowers of Jagoron program, potential individual entrepreneurs also take loans for the enterprise. NGF provides need based capacity/skill development training to the entrepreneurs to help them manage their particular enterprise more competently.
- Sufalon (Agriculture Micro-Finance (ASM) & Seasonal Loan (SL):
Seasonal Loan & Agriculture Sector Micro-Finance program, now is renamed Sufalon program focuses on the agriculture sector micro-finance for adoption of agriculture sustainable income generating activities (IGA) and Poultry & livestock technologies by the moderate poor and acquisition of agriculture, livestock knowledge to improved livelihoods and food security of moderate poor households and empowerment of women as well as seasonal based agriculture crop cultivation, poultry and livestock’s development related IGAs, seasonal small business initiatives throughout the year with mainstream credit support from different branches of NGF. The target participants of Sufalon are distinct and selected very carefully. Special concentration is given to the disbursement of loan on time while the repayment of loan starts after harvesting of each crop season. The important role of Sufalon is to provide skill development training and transfer modern technologies to the traditional farming system to enhance their skills and productivity in the long run.
- ENRICH Loan (IGAs, Livelihood Support & Assets Creation Loan):
NGF has started Income Generating Activities Loan, Livelihood & Assets Creation Loan since 2010, under the Program of ENRICH (Enhancing Resources and Increasing Capacities of Poor Households towards Elimination of their Poverty) project. A holistic approach towards union based total household development- focused on poverty eradication with a view to sustainable development.
- Sahos (Disaster Management Loan) DML:
NGF has started the Livelihood Restoration Program (LRP) since 2007, EFRRAP -Emergency 2007 Flood Restoration and Recovery Assistance Program funded by NGF for disaster mitigation. The members who have suffered natural and manmade disaster and who have the treat to face disaster would be benefited from this loan program. At present each member receives Tk.1500-15000 loan to take preparation for pre and post disaster control. The affected members are using the loan money for their food security, medical support, housing & repairing, re-installation of tube-well, reconstruction of latrines, post disaster rehabilitation purposes etc.
- SAHOS (Special Assistance for Housing of SIDR Affected Borrowers):
On 15th November 2007, Cyclone SIDR & on 25th May 2009 Cyclone AILA ravaged the southern coastal districts of Bangladesh causing loss of life and rendering hundreds of thousands of people homeless and destitute. The SIDR was probably the worst natural disaster in human memory of Bangladesh because over 3000 people lost their lives and millions lost their homes, possessions and livestock across the most severely affected districts Satkhira and Khulna. Cyclone SIDR & AILA has affected to various degrees, some 33 out of 64 districts in the country. NGF has been undertaken a separate project named Special Assistance for Housing of SIDR Affected Borrowers (SAHOS) with the assistance of NGF for its members and borrowers among the SIDR /AILA affected people to provide interest free loan for house building, repairing house for those member/borrower whose house have been damaged fully and partially in the cyclone.
- RESCUE (Rehabilitation of SIDR affected Coastal Fishery, Small Business & Livestock Enterprises):
NGF has also undertaken Rehabilitation of SIDR/AILA affected Coastal Fishery, Small Business & Livestock Enterprises (RESCUE) for rescuing and regain SIDR/AILA damaged and affected small business, poultry & livestock and aquaculture related IGAs with the assistance of NGF for its members and borrowers among the SIDR/AILA affected people to provide flexible interest /service charge loan for fishery, small business & livestock enterprises for those member/borrower whose income generating activities have been damaged fully and partially in the cyclone.