Bangladesh Dispatch from Beth Rhyne

February 15, 2012

A characteristically fine essay from Beth Rhyne on her recent visit to Bangladesh:

Ask a casual observer to describe microfinance, and most likely he or she will mention Bangladesh and tiny group-guaranteed loans for women. But on a recent trip to Bangladesh, I learned that the Bangladeshi microfinance sector has moved on. Way on.

She describes in brief many of the changes that have occurred in Bangladeshi microfinance over the decades. In so doing, she illustrates the importance of seeing microfinance as a dynamic industry, not just a vehicle for mass-producing a static intervention called microcredit. That’s an important theme in my book, and I got it from Beth. Most of the changes were wrought by competition and benefited clients, such as the shift to savings and even insurance.

She notes that “overlapping” (taking multiple microloans) is a longstanding concern in Bangladesh…and yet there never has been a crisis, perhaps because the growth was never as fast as in, say, India. But like any thoughtful observer, she cannot rule out the possibility that it is yet to come. “Pride goeth before a fall, says the proverb, and if there is one lesson from the history of financial crises, it is that no financial sector is immune.”

Possibly Related Posts

• Backlash Brushfire in Bangladesh? Maybe Not.
• Microcredit Suicide Story out of Bangladesh
• India Dispatch

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1. Asif Dowla Says:
   February 15th, 2012 at 11:45 pm

   This is almost like “Nixon in China” moment .

2. Iftekhar Hossain Says:
   February 16th, 2012 at 1:27 am

   Bangladesh has been fortunate in not having a country-wide flood for many years. Such disasters would affect the micro-finance industry considerably.

3. Asif Dowla Says:
   February 16th, 2012 at 3:44 pm

   There were two episodes of flooding in 2004. MFIs in Bangladesh have long experience of dealing with floods. My own research suggests that savings, and an effective disaster plan, enabled Grameen to deal with the flood. Surprisingly, the members did not withdrew the savings as one would expect. They used borrowing to tide over.

   Other MFIs similarly dealt with the flood of 2004. This is also part of the national trend: declining mortality due to flooding even thought the intensity and frequency is increasing. The Government and the civil society in Bangladesh deserves credit.

   The MFIs had to deal with several cyclones: Sidr and Alia and they dealt with them effectively.

   So, let us give credit where it is due: a mature and dynamic microfinance industry in Bangladesh.