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Seasonal and extreme poverty in Bangladesh : evaluating an ultra-poor microfinance project

Author:	Khandker, Shahidur R.; Khalily, M. A. Baqui; Samad, Hussain A.;	Collection Title:	Policy Research working paper ; no. WPS 5331
Country:	Bangladesh;	Date Stored:	2010/06/03
Document Date:	2010/06/01	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	Finance
Rel. Proj ID:	1W-Seasonality, Hardcore Poor And Micro-Finance: A Case Study Of B -- -- P100448;	Region:	South Asia
Report Number:	WPS5331	Sub Sectors:	General finance sector
SubTopics:	Regional Economic Development; Rural Poverty Reduction; Debt Markets; Food & Beverage Industry	Volume No:	1 of 1

Summary: Microfinance is often criticized for not adequately addressing seasonality and hard-core poverty. In Bangladesh, a program known as PRIME was introduced in 2006 to address both concerns. Unlike regular microfinance, PRIME introduces a microfinance scheme that offers a flexible repayment schedule and consumption smoothing, as well as production, loans. It targets the ultra-poor, many of whom are also seasonally poor, with a severe inability to smooth consumption during certain months of the year. Besides providing loans, PRIME offers extension and training services. This paper uses a quasi-experimental survey design to evaluate PRIME against regular microfinance programs. The results show that PRIME is more effective than regular microfinance in reaching the ultra-poor, as well as the seasonal poor. PRIME also helps reduce seasonal deprivation and extreme poverty. Although the program has demonstrated its promise, it is too early to conclude whether the accrued benefits are large enough to contain both seasonal and chronic poverty on a sustained basis.


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