Providing Small Credit for Higher Income

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Providing Small Credit for Higher Income

The Vulnerable Groups Development Programme in Bangladesh

The Vulnerable Groups Development programme (VGD) is the largest government poverty alleviation programme in Bangladesh exclusively targeted to women. The Programme combines food assistance with a training and credit package, and is aimed at enabling assetless women to improve their economic and social conditions.

The population covered by the programme is the poorest 10 per cent of women, in most cases women with no land holding. Many of them are widows or have been deserted by their husbands, and do not have any assets or other income earning sources.

One of the VGD’s projects aims to increase the earning capacities of women, through skill training and access to credit. Further, it aims to develop a savings habit and to increase functional knowledge of women through training and participation in the group activities. Also, it aims to increase the food intake of women and their families.

The sub-project targets poor, distressed women. The selection criteria include landless women or women with less than 0.5 acres of land, women with extremely low or no family income, and women who are daily or casual labourers. Preference is given to women with young children and to women who are heads of households, widowed, separated, abandoned, divorced or having disabled husbands.

The project aims to develop poultry rearing as an income earning activity for the VGD women, enabling them to earn a cash income. For a two year period, however, they are provided with 31.25kg of wheat per month as an income transfer. In addition they participate in a savings scheme. The ultimate aim is that the income earned from the poultry activity will be at least equivalent to the value of the monthly wheat ration.

The women who participate in the project also receive loans through a Credit Scheme. Depending on the purpose of the loan, the upper limits of these loans range from TK 1,000 (US$25) to TK 5,000 (US$125), and carry a yearly interest rate of 16 per cent.

Poultry rearing was selected for this programme for several reasons. It is a low cost programme that is suitable for widespread implementation. It requires little skill and can be incorporated into the house work schedule. It is a highly productive enterprise, for which a large market exists, and it has significant implications for nutrition levels. Though the major activity, poultry production is not the only one being used. Other projects under the programme include livestock raising, small trading, and the operation of restaurants and grocery stores.

As time passes, many women go on to receive credit for other income generation activities. Thus a woman may have her poultry business, a cow which will ultimately be sold and a few goats, all made possible through credit. In this way women are able to build their income to sizeable amounts, making it possible for them to send their children to school, improve their housing, purchase clothing and so on. In some cases it may also increase the possibility of a widow remarrying.

The success of the project described above is evidential. Not only did it benefit the women directly involved, the project also had an immense spin off effect, e.g. it was pointed out that government officials became more active as a result of the programme, partly because the developments made their roles more feasible and partly because they became more motivated. Also, the quality of poultry in these areas improved, from which many farmers, and ultimately the community, benefited.

Taken from the publication: “Making an Impact: Innovative HRD Approaches to Poverty Alleviation”, ESCAP, 1997