Dr. Md. Mizanur RahmanJaiz bank, nigeria
Women Participation in Islamic Microfinance in Bangladesh and their Role to Share Prosperity: An Empirical Study
Table Of Contents
Sl. No Contents Pages
1 Introduction 03
2 Overview of the Program 04-9
3 Literature Review 10
4 Objectives of the Study 11
5 Research Methodology 12-16
6 Results and Discussions 17-24
7 Welfare Activities 25-29
8 Future Plan of RDS 30-31
9 Challenges Faces by the Clients 32
10 Conclusion 33-34
11 Recommendations 35-36 2
Introduction
• From the primitive society, women have
been marginalized;
• In Bangladesh 50% of the total population
are women, those were solely housewife;
• Dr. Mohammad Younus, developed the
collateral free institutional loan system;
• It was interest based credits and rate of
interest is very high to commensurate with
the risk in micro-finance lending;
• Clients ethics were not taken care off;
• So, RDS was developed in 1995, which
also has integrated welfare programs;
• Only a little impact assessment study was
so far been conducted.
3
Microcredit Activities in Bangladesh
• No. of MFIs : around 1500• Clients : 30 million• Loan Portfolio : US$ 2352 Mil. • Loan Growth : 25%• Recovery Rate : around 95%• Savings : US$ 1434 Mil.
4
Microfinance
IGAs
Household income
Purchasing ability
Expenditure on food
Improvement of
livelihood
Factors influences income-
generating activities (IGAs):
1. Age
2. Education
3. Asset holdings
4. Land size
5. Earning family member
6. Rural infrastructure
7. Skill building Training
8. Morality and Ethics
Conceptual framework
5
RDS: Special Features
• Shariah based Islamic micro-finance;
• Collateral free investment;
• Finance farming and off-farming
activities;
• Generate Self-employment and
income;
• Provides Welfare, moral and ethical
services;
• Quard facilities for tube-wells,
sanitary latrines;
• Lowest profit rates.
6
RDS: Brief Information
• Launched in : 1995
• Total Disbursed : USD 442 million
• Outstanding : USD 69 million
• Invest. Size (Avg.) : USD 145 - 435
• No. of Groups : 1,21,093
• Villages covered : 11,354
• Total Members : 5,18,864
• Female Members : 85%
• Rate of Recovery : 99.16%
• Country Position : 4th of 1500 MFIs
7
Target Groups of RDS
• Farmers
• Sharecroppers
• Person engaged in off-farm activities
• Fishermen
• Women and distressed people
8
Sector-wise Investment of RDS
Off-Farm
Activities
32%
Agriculture
26%
Live Stock
17%
Rural
Transport
8%
Rural
Housing
8%
Fisheries
4%
Agricultural
Equipment
2%
Nursery &
Forestry
2%
Poultry/Bird
1%9
Literature Review
• Widyanto and Ismail (2006) found positive impact of Islamic
microfinance saying that the size of financing, formal education,
marital status and business experience have significant influence
poverty alleviation;
• Ahmad (2007) and Obaidullah and Khan (2008) showed the
significance of Islamic microfinance as a tool to boost economic
growth, to counteract the effects of economic instability and to
empower women;
• Mardhatillah and Rulindo (2007, 2008) show a relationship between
level of spirituality and micro-entrepreneur’s performance;
• Rahman et al. (2008) and Rahman (2010) conducted two research to
assess the impact of Islamic microfinance and found positive impact
on Rural Poor's’ poverty alleviation.
10
Objectives Of The Study
• to assess the impact of Islamic microfinance on their income and
livelihood with especial emphasise on women share to the prosperity;
• to determine the moral and ethical changes of the clients and its impact
of on their income and livelihood;
• to confirm a positive link between Islamic microfinance and socio-
economic well-being of women;
• and also to explore the context in which Islamic microfinance programs
function in Bangladesh and the way their performance can be improved.
11
Research Methodology
• This study is based on primary data collected from two sites of RDS of
IBBL in Bangladesh.
• 250 samples [(100+25) + (100+25)] were selected using multistage
random sampling method;
• Both qualitative and quantitative data were collected in 2013, using pre-
structured and pretested questionnaire;
• Excel software was used to enter and analyses the data;
• Data were analysed using different econometric model;
• Both tabular and graphical methods were used to present the results.
12
Clients Development Towards Prosperity After Joining Islamic Microfinance
Statements Very Good Good Marginal Poor
Score (no.) 10 6 4 0
Total income 104 33 29 26
Possession of assets 83 54 21 22
Schooling of the son 81 57 49 48
Schooling of the daughter 46 29 12 11
Perception of health 68 39 47 39
Pure drinking water 89 39 41 54
Sanitation 54 43 20 15
Guest Entertainment Expend. 40 33 29 52
Pleasant family relationship 41 39 27 18
Family decision making 43 49 61 32
15
Estimation of Ethics and Moral using Religious Activities of the Clients
Statements Regular Very
often
Very
rare
Not at
all
Score (no.) 10 (0) 6 (4) 4 (6) 0 (10)
Saying prayer 154 33 29 26
Know how to recite Holy Quran 143 - - 42
Reciting Holly Quran 81 57 49 48
Fasting 196 29 12 11
Inviting towards Islamic activities 58 39 47 41
Involvement with dowry 0 - - 154
Maintain Parda 64 43 20 15
Involve with interest 30 33 29 152
Misunderstanding in Family 21 19 17 118
Involvement with social activities 03 49 61 52
16Note: Ethics and Morality Was Estimated following the Method
of Estimating Clients Well-off
Changes of Monthly Income of the Respondents after Receiving Micro-finance
Female Clients Male Clients
Monthly
Income (Tk.)
Frequency Valid
(%)
Cumulative
(%)
Frequency Valid
(%)
Cumulative
(%)
1000 – 3000 9 5 9 8 17 6
3001 – 6000 41 21 50 12 25 17
6001 – 9000 69 35 119 13 27 30
9001 – 12000 33 17 152 6 13 37
12001-15000 28 14 180 5 10 43
15001- 18000 9 5 189 2 4 46
18000+ 7 3 196 2 4 48
Total 196 100 48 100
19
Annual Income Generation of the Household by Sources
Sources of
Income
Household
income
Change of Income Level of
Significance
Present Joining Taka Percent t-value Significance
Income Generation of the Female Clients
Agriculture 38754 23993 14761 62 3.188 0.001
Business 31092 21464 9628 45 3.865 0.000
Services 20705 12841 7864 61 5.463 0.000
Others 16695 11195 5500 49 2.507 0.012
Total 107246 69493 37753 54
Income Generation of the Male Clients
Agriculture 32162 24977 7185 29 3.041 0.012
Business 36061 25298 10763 42 4.015 0.000
Services 21548 16003 5545 35 4.009 0.000
Others 16827 13212 3615 27 2.964 0.051
Total 102667 71490 31177 44 20
OLS Results of the Household Income Model
Variables Coefficient t-value Sig.
Constant 2.789 21.314 0.000**
Log of Investment taken in December 2012 1.210 2.301 0.020**
Log of total land size 0.221 0.528 0.693
Log Number of earning family members 1.110 2.010 0.028**
Borrower’s age dummy (above 40 years 0.332 1.616 0.069
Education dummy (up to 5 years schooling
is 1 and 0 otherwise)
0.210 0.7283 0.470
Ethics and Moral (Dummy) 0.110 2.817 0.045*
Gender Dummy (Female is 1 and Male 0) 0.0215 2.794 0.039*
R-squared: 0.712
21
Estimated Results of Logit Model Results of the Clients Prosperity
Variable (B) Standar
d error
Walld
Statistics
Sig. Odd
ratio
EXP (B)
Constant -0.826 0.723 1.432 0.251 0.343
Duration of Membership (Years) 0.211 0.071 14.44 0.00** 0.713
AGS of the clients dummy (up to 40
years is 1 and 0 otherwise)0.021 0.251 0.211 0.061* 0.971
EDU = Education Dummy (up to 5
yrs of schooling is 1 & 0 otherwise)0.0131 0.241 2.016 0.081 0.581
DFM = Dependants No in Family -0.011 0.145 3.029 0.052* 1.019
FMIGA = No of Family Member
Engaged in Generating Income0.017 0.020 3.031 0.053* 1.010
GEND = Gender Dummy 0.154 0.213 3.416 0.052* 0.816
EAMC = Ethics and Moral Dummy 0.164 0.243 3.476 0.053* 0.846
Cox and Snell R square: 0.218
-2log likelihood: 547.145
Overall accuracy: 79.9 22
Clients Opinion about Increasing their Assets
Items Land
Property
House Livestock
& Poultry
Electric &
Electronics
Gold &
Silver
Other
Assets
Microfinance 52.2 65.7 66.0 45.0 68.0 69.5
Other Family
Income27.0 23.5 14.5 32.3 16.0 21.2
Inherent
Property09.0 04.1 01.7 02.0 7.0 01.5
Khas Land 01.1 00 00 00 00 00
Dowary 01.4 01.3 14.1 02.7 7.2 01.5
Gifts 00.6 00 02.6 10.3 1.8 03.4
Others 08.7 05.4 01.3 07.7 00 02.4
Total 100 100 100 100 100 100
23
Estimated Results of Logit Model Assessing Clients Ethics and Moral
Variable (B) Standar
d error
Walld
Statistics
Sig. Odd
ratio
EXP (B)
Constant 1.21 0.451 6.110 0.01** 3.008
Membership Duration (years) 0.542 0.315 4.121 0.04** 1.145
Education dummy (up to 5 years
schooling is 1 and 0 otherwise)0.472 0.151 3.816 0.06 0.531
Age of the clients dummy (up to 40
years of age is 1 and 0 otherwise)1.411 0.316 14.126 0.00** 0.243
Marital Status (Married is 1 & 0
otherwise)0.112 0.132 2.021 0.093 0.818
Gender Dummy (Female 1 & male 0) 0.672 0.161 13.016 0.00** 0.511
Cox and Snell R square: 0.218
-2log likelihood: 557.181
Overall accuracy: 81.3
24
Non-financial Services (Welfare activities)
Ethical Discussion for the Clients Annual Get-together
25
Non-financial Services (Welfare activities)
Pure Drinking Water Program Relief Distribution Program
26
IDB – RDS Partnership
IDB has chosen IBBL as
strategic partner for its
proposed micro-investment
program in Bangladesh.
29
Future Plan of RDS
Expanding activities to all the
86,000 villages of the country;
Addressing the ultra poor by
developing Quard Fund;
Extensive investment in SME
sector in rural areas for Job
creation;
Financing in bio-gas and solar
panel in the rural house-holds;
Establishing primary schools;
31
Future Plan Of RDS
• Attaining 100% coverage of pure
drinking water and sanitation in
its project areas;
• Ensuring health safety-net of
beneficiaries;
• Extending massive plantation
especially in the coastal areas;
• Alleviate poverty from the
country.
32
Conclusion
• Nearly 50% populations in Bangladesh are women had no income generating
activities and also had no confidence to contribute in their family decision
making.
• Islamic microfinance has been used, to combat poverty and enhance the social
and economic prosperity;
• Findings show that the program has increased women’s income and assets,
which played a very important role in enhancing women’s economic
independence and sense of self-confidence.
• It also helped in breaking the cycle of poverty they live in and allowed them to
have more control over their lives and economic decisions.
• It has enhanced their security giving them access to assets and rights and
augmented their self-respect providing them choice and independence.
33
Conclusion (Cont.)
• It has enabled the poor women to undertake diversified economic activities
which generate flow of stable income round the year and thus has strengthened
survival strategy of the poor women.
• With microinvestment, the poor households now own assets, which can use to
meet contingencies without having to sacrifice their independence, security and
peace of mind by getting into debt.
• It has also empowered the beneficiaries by raising their social consciousness
and importance in family decision making and has also increased their mobility.
• The most important result is the link between receiving an Islamic microfinance
investment and the increase in schooling of the recipients’ children education,
health hygenity and pure drinking water sanitation conscious.
• It can be concluded from the study that Islamic microinvestment program has
benefited the clients in more than one way and women clients were more
benefitted than men.
34
Recommendations
• Some of the clients spent their investment in non-productive sector like, house
repairing, children’s marriage ceremony and furniture purchase etc. So, proper
monitoring and supervision should be made to develop their morals and ethics
so that they use their money in income generating activities;
• Studied RDS touches people having minimum 0.50 acres of land and also has
the working capacity but do not touch the ultra-poor. To alleviate ultra-poor’s
poverty, an integrated approach including zakat and awqaf would be needed.
• Government efforts to employment generation, infrastructure development and
electricity generation can also contribute alleviating ultra-poor’s’ poverty;
• Illiterate and poor borrowers are not aware of the modern technology so they
depend much on the traditional method of farming resulting in low production,
so needs based entrepreneurship training and services is needed;
35
Recommendations (cont.)
• It was noted in focus group discussion that clients often face problems
in marketing products. RDS can play a role to guide to perform the
marketing functions in organizing groups especially in case of selling
and promoting the products to the target people with fair price;
• Some field supervisors do not properly follow the Islamic investment
mode; which is Shariah violation so, monitoring should be strengthen
to develop their moral and ethics so that they do not violate Shariah.
• Besides, Only Bai-muajjal product is used, which is Shariah violation
prone but, Musharaka has comparatively less chances of Shariah
violation, so Musharaka mode of investment can be practiced.
36