An alternative to microcredit-based development approach

An alternative to microcredit-based development approach

The idea of Community-Driven Development (CDD) became popular in development discourse when the world leaders started thinking critically about the pitfalls of traditional microcredit-based poverty reduction approach for the developing countries and sought for an alternative.

 CDD approach was developed in the 1980s as a relatively innovative type of participatory, demand-driven project support in which poor people and their institutions were treated as active partners in development rather than passive beneficiaries. Community-Driven Development (CDD), as a matter of fact, was recognised as a successful poverty reduction mechanism from mid-90s by the multilateral development banks and aid agencies and in just 10 years more than 80 countries of the world adopted this approach. According to the World Bank, CDD is an approach that gives control over planning, decisions and investment resources for local development projects to community group. Objectives of CDD projects classified by the International Fund for Agricultural Development (IFAD) are to facilitate impoverished people to surmount poverty successfully through ensuring external supports for community based organisations and promoting the local economy at the community level.

There is no scope to deny that micro-credit contributed massively in taking on the challenge to save the extremely impoverished people in Bangladesh. Soon after independence poor people, especially the landless farmers, found themselves in deep trouble as they had no other way but to submit themselves to the local moneylenders. Microcredit guru Dr. Muhammed Yunus has denounced the moneylenders as 'loan sharks'. Another proponent of microcredit, Sir Fazle Hasan Abed has also narrated how the lack of social justice in the post-independence era brought him to the field. Many other non- governmental organisations  NGOs) followed these two legends and made use of microcredit to emancipate poor people from the clutches of the 'loan-sharks'. However, like any other notions, microcredit has also shortcomings. Although borrowers with steady income flows are particularly benefited by conventional microcredit schemes, it can be detrimental for people with precarious income as they often fail to repay the instalments and in that way lose the collateral they showed before borrowing.

The government of Bangladesh (GoB) established Social Development Foundation (SDF) in 2000 under the Ministry of Finance as an autonomous and 'not-for-profit' organisation. It was registered under the Companies Act-1994 on July 28, 2001. SDF has been taking initiatives to empower the disadvantaged people in real terms putting the target communities at the driving seat following Community-Driven Development (CDD) approach. The uniqueness of SDF is that whilst all the development organisations of Bangladesh lend money to the poor imposing high interest rate, SDF grants money as absolutely unconditional cash transfer. SDF prepares the poor communities of the poorest regions of Bangladesh to work collectively forming village societies. The basic proposition of SDF is to channel funds to the village societies and equip the members with adequate training so that they can manage and disburse the fund to poor people.

The projects of SDF are assisting the government to provide service at the household level and train people to form their own co-operative societies. People of these village societies are now able to manage their accounts and make decisions on loan sanctions. SDF's uniqueness is that it never proposes any potential loan seeker, rather facilitates the steering committees of the village societies to manage it on their own. Ninety-four per cent of the project beneficiaries of SDF are women and 92 per cent of them are in executive committees of the village organisations which is enabling them to take decisions in a bid to implement the projects. Now, these village housewives are empowered enough to keep records of accounts like any other professional NGO workers.

Bangladesh's CDD experience with SDF offers some good lessons. For instance, capacity building of the staff in the early stage is the key to success in CDD projects. The staff members designated for the field operations must be well-equipped. Since the basic traits of CDD approach are different from the orthodox micro-credit projects, the staff may mislead the community people if they are not trained properly. Having contingency plans is essential for running CDD projects as the projects are operated by the communities themselves and problems may arise if these are not well-planned and properly executed by the implementing agencies.

After successfully taking on the challenges of Millennium Development Goals MDGs), Bangladesh is now facing the new challenge of eradicating poverty and hunger completely by 2030 as envisaged by Sustainable Development Goals SDGs). Bangladesh is well set to be a middle-income country by 2021 and hopefully the CDD projects of SDF would play their due roles in this regard.

Source Link: https://goo.gl/XuVvTG

Source: Financial Express Bangladesh

Updated Date: 3rd January, 2017