WELCOMEWELCOMEto a presentation to a presentation

onon

BRAC Micro and Small BRAC Micro and Small Business Finance ProgramsBusiness Finance Programs

Presented By:Presented By:Aminul Alam Aminul Alam

Deputy Executive Director, BRACDeputy Executive Director, BRAC

Brief HistoryBrief History Opened as a “Relief” Organization aiding Opened as a “Relief” Organization aiding

and resettling refugees in 1972and resettling refugees in 1972 Twin objectives of :Twin objectives of :

- Poverty Alleviation,- Poverty Alleviation,- Empowering the Poor, especially women- Empowering the Poor, especially women

Underwent 2 major Transitions:Underwent 2 major Transitions:- “Relief” to a “Development” - “Relief” to a “Development” OrganizationOrganization- Development focused from - Development focused from “Community” to “Community” to “Target Groups”“Target Groups”

Core Programs of BRACCore Programs of BRAC

1.1. BRAC Economic BRAC Economic Development ProgramDevelopment Program

2.2. BRAC Education ProgramBRAC Education Program

3.3. BRAC Health ProgramBRAC Health Program

4.4. Support Programs Support Programs

BRAC Micro Finance CanvasBRAC Micro Finance Canvas

Urban (20%)

Rural (80%)

Better-off (27%)

Vulnerable Non-poor (20%)

Moderate Poor (17%)

Extreme Poor (31%)

IGVGD

TUP

Dabi

UnnotiProgoti

Destitute Poor (5%)

Target Ultra Poor (TUP)Target Ultra Poor (TUP)

Designed to meet the demands of the Ultra poor Designed to meet the demands of the Ultra poor by strengthening their livelihood conditions by strengthening their livelihood conditions

““Push Down” Strategy:Push Down” Strategy:• Targeting very poor households who have Targeting very poor households who have

suffered relative neglect in most interventionssuffered relative neglect in most interventions• Special investment program in the form of a Special investment program in the form of a

grant/capital in kind and stipendgrant/capital in kind and stipend• Skills and Social development training ProgramSkills and Social development training Program ““Push Out” Strategy:Push Out” Strategy:• Addresses neglected dimensions of human capitalAddresses neglected dimensions of human capital• Strengthens the voice of the poor in the Strengthens the voice of the poor in the

structures and processes that determine structures and processes that determine livelihood outcomes.livelihood outcomes.

Features of TUPFeatures of TUP

Loan RangeLoan Range US $ 25 – US $ 300US $ 25 – US $ 300

Service ChargeService Charge 15 %15 %

Repayment PeriodRepayment Period 1 year (46 weeks)1 year (46 weeks)

Repayment Repayment MechanismMechanism

Equal Weekly Equal Weekly InstallmentsInstallments

Loan ProductsLoan Products Cow/Goat/Chick Rearing, Cow/Goat/Chick Rearing, Vegetable production, Vegetable production, NurseryNursery

MembersMembers 6,9526,952

Active ClientsActive Clients 2,293 or 33 % (Oct 04)2,293 or 33 % (Oct 04)

OutstandingOutstanding US $ 61,084US $ 61,084

Total DisbursementTotal Disbursement US $ 87,118US $ 87,118

Dabi / Poverty Alleviation Dabi / Poverty Alleviation / MF 1/ MF 1

Caters to the moderate poor in both Caters to the moderate poor in both rural and urban areasrural and urban areas

Organizes landless groups (Village Organizes landless groups (Village Organizations) and provides them with Organizations) and provides them with financial services and self-employment financial services and self-employment opportunitiesopportunities

Provides collateral free loans, savings Provides collateral free loans, savings facilities, and members ‘death benefit’ facilities, and members ‘death benefit’

Features of DabiFeatures of Dabi

Loan RangeLoan Range US $ 75 – US $ 300US $ 75 – US $ 300

Service ChargeService Charge 15 %15 %

Repayment PeriodRepayment Period 1 year (46 weeks)1 year (46 weeks)

Repayment Repayment MechanismMechanism

Equal Weekly Equal Weekly InstallmentsInstallments

Loan ProductsLoan Products General, Sector, General, Sector, Housing, EmergencyHousing, Emergency

Compulsory SavingsCompulsory Savings 5 % of Loan Amount5 % of Loan Amount

Active ClientsActive Clients 3,722,406 or 82 % (Oct 3,722,406 or 82 % (Oct 04)04)

Unnoti / Enterprise Unnoti / Enterprise Development / MF 2Development / MF 2

Caters to the small and marginal Caters to the small and marginal farmers, who do not have the farmers, who do not have the capacity to start their own income capacity to start their own income generation activitiesgeneration activities

Forms Enterprise Organizations so as Forms Enterprise Organizations so as members can exchange views and members can exchange views and share knowledgeshare knowledge

Members attain cost effectiveness Members attain cost effectiveness and efficient time managementand efficient time management

Particular type of work: Agriculture, Particular type of work: Agriculture, Poultry & Livestock, AquaculturePoultry & Livestock, Aquaculture

Features of UnnotiFeatures of Unnoti

Loan Range US $ 250 – US $ 830

Service Charge 15 %

Repayment Period 1 year (46 weeks)

Repayment Mechanism

Equal Weekly Installment

Loan Products Agriculture, Poultry & Livestock, Aquaculture

Compulsory Savings 5 % of Loan

Active Clients 154,921 or 69 % (Oct 04)

Progoti / Individual Progoti / Individual LendingLending

Caters to small enterprises with growth Caters to small enterprises with growth potentials in rural and semi urban areaspotentials in rural and semi urban areas

Provide loans to that part of the Provide loans to that part of the population that fall neither in the MF population that fall neither in the MF target group nor are able to take loan target group nor are able to take loan from the formal banksfrom the formal banks

Create new employment through Create new employment through enterprise development enterprise development

Motivate small and medium enterprises Motivate small and medium enterprises to produce better products that are to produce better products that are export qualityexport quality

Features of ProgotiFeatures of ProgotiLoan Range US $ 500 – US $ 5,000

Service Charge 15 %

Repayment Period 12, 18, or 24 months

Repayment Mechanism

Equal Monthly Installments

Loan Products Grocery, Bakery, Stationary, Pharmacy, Clothing, etc.

Loan Appraisal Fee 0.5 % of Loan Amount

Collaterals Needed Guarantor Bond, Mortgage Deed, Equitable Mortgage

Entrepreneurs 53,849 (Oct 04) (cum. 134,241)

BRAC Bank LimitedBRAC Bank Limited Inaugurated in 2001 as a full fledged Inaugurated in 2001 as a full fledged

commercial bank for promoting access to commercial bank for promoting access to economic opportunities for all individuals and economic opportunities for all individuals and businessesbusinesses

Believes that the pursuit of profit and Believes that the pursuit of profit and development can be mutually reinforcing goals.development can be mutually reinforcing goals.

Special focus on providing Small and Medium Special focus on providing Small and Medium Enterprise (SME) who do not have access to Enterprise (SME) who do not have access to institutional credit. institutional credit.

Provide mass financing to enable mass Provide mass financing to enable mass production and mass consumption, hence production and mass consumption, hence contributing to the overall development of contributing to the overall development of BangladeshBangladesh

Features BRAC Bank Features BRAC Bank LimitedLimited

No. of BranchesNo. of Branches 1010

No. of SME unitsNo. of SME units 261261

Loan RangeLoan Range US $ 3,300 – US $ US $ 3,300 – US $ 50,00050,000

Service Charge:Service Charge:•US $ 3,300 – US $ US $ 3,300 – US $ 13,500:13,500:•US $ 13,501 – US $ US $ 13,501 – US $ 25,000:25,000:•US $ 25,001 – US $ US $ 25,001 – US $ 50,000:50,000:

(Reducing Method)(Reducing Method)

24 %24 %

21 %21 %

18 %18 %

Repayment PeriodRepayment Period 12 or 24 months12 or 24 months

Repayment MechanismRepayment Mechanism Equal Monthly Equal Monthly InstallmentsInstallments

No. of ClientsNo. of Clients 13,50013,500

BRAC AfghanistanBRAC Afghanistan Registered as a Foreign NGO and started in Registered as a Foreign NGO and started in

May 2002May 2002

Working in 56 districts of 17 Provinces with 6 Working in 56 districts of 17 Provinces with 6 Core Programs:Core Programs:

• HealthHealth• EducationEducation

• Income Generation ProgramsIncome Generation Programs• Capacity BuildingCapacity Building

• Agriculture & LivestockAgriculture & Livestock• National Solidarity ProgramNational Solidarity Program

BRAC Afghanistan Micro BRAC Afghanistan Micro Finance Program (MF)Finance Program (MF)

• Make credit available to the poor, Make credit available to the poor, especially women,especially women,

• Involve the poor, especially women, Involve the poor, especially women, in income generating activities,in income generating activities,

• Increase economic development in Increase economic development in Afghanistan by increasing the income Afghanistan by increasing the income level of poor women,level of poor women,

• Contribute to the overall Contribute to the overall development of Afghanistandevelopment of Afghanistan

Features of BRAC Afg. MF Features of BRAC Afg. MF ProgramProgram

Provinces Covered 12 (45 Districts) 75 Area Off.

Loan Range US $ 75 – US $ 400

Service Charge 15 %

Repayment Period 1 year (46 weeks)

Repayment Mechanism

Equal Weekly Installment

Loan Products Carpet weaving, small retail, cloth stitching, poultry, etc.

Active Clients 46,809 or 72 % (Oct 04)

Members’ Savings US $ 662,542 (Oct 04)

Total Outstanding US $ 3,034,300 (Oct 04)

Small Enterprise Project Small Enterprise Project (SEP)(SEP)

Catering to the small and medium Catering to the small and medium entrepreneurs who do not have the entrepreneurs who do not have the financial resources for expanding financial resources for expanding their businesstheir business

Loans are disbursed to stores like Loans are disbursed to stores like beauty parlor, grocery, stationary, beauty parlor, grocery, stationary, cloth, shoe, utensils, bukhari, etc.cloth, shoe, utensils, bukhari, etc.

Has 190 entrepreneurs with US $ Has 190 entrepreneurs with US $ 98,048 outstanding98,048 outstanding

Agriculture and Livestock Agriculture and Livestock Development and Credit Development and Credit

Support Program (ALDCSP)Support Program (ALDCSP) To generate income and create To generate income and create

employment opportunities, thus employment opportunities, thus increasing farm level income;increasing farm level income;

To develop existing enterprises by To develop existing enterprises by providing technical assistance and providing technical assistance and financial support;financial support;

To increase agricultural production;To increase agricultural production; To enhance agricultural practices;To enhance agricultural practices; To decrease the mortality of poultry To decrease the mortality of poultry

& livestock& livestock

BRAC Enterprise Bank BRAC Enterprise Bank (BEB)(BEB)

A vehicle for Microfinance and Small & A vehicle for Microfinance and Small & Medium Enterprise loan (MFSM) activities.Medium Enterprise loan (MFSM) activities.

Features of BEB:Features of BEB:* Relatively risk-free banking opportunities* Relatively risk-free banking opportunities* Involve light demand on human resources* Involve light demand on human resources* Deposits from Institutional/Wholesale * Deposits from Institutional/Wholesale

customerscustomers* Technical assistance to MFSM customers * Technical assistance to MFSM customers in areas such as agricultural extension in areas such as agricultural extension work, animal husbandry, sericulture, etc.work, animal husbandry, sericulture, etc.

BRAC Enterprise Bank BRAC Enterprise Bank (cont)(cont)

Commercial Areas of Business:Commercial Areas of Business:

* Letter of Credit* Letter of Credit

* Guarantees* Guarantees

* Remittances (internal and external)* Remittances (internal and external)

* Foreign Exchange Operations* Foreign Exchange Operations

* Deposits from * Deposits from Institutional/Wholesale Institutional/Wholesale customerscustomers

BRAC Afghanistan in the near BRAC Afghanistan in the near futurefuture

Have 150 MF Area Offices with 300,000 Have 150 MF Area Offices with 300,000 members by April 2008;members by April 2008;

Focus on increasing the number of SEP Focus on increasing the number of SEP clients; clients;

Assist in the increase in farm level Assist in the increase in farm level productions, by opening 75 ALDCSP offices by productions, by opening 75 ALDCSP offices by 2007;2007;

Collaborate with MoA on setting up a centre Collaborate with MoA on setting up a centre for hybrid seed and improved feed;for hybrid seed and improved feed;

Inaugurate BRAC Enterprise Bank;Inaugurate BRAC Enterprise Bank; Apply the know-how in Bangladesh and Apply the know-how in Bangladesh and

effectively implement them in Afghanistan.effectively implement them in Afghanistan.