CLP, M4C and UFL sign agreement to improve access to finance for char farmers
Despite Bangladesh being well known for its pioneering work in promoting microfinance which gives small loans to the poor, very few microfinance providers operate on the remote chars of north-west Bangladesh. This is mainly due to the higher costs and risks involved for the lenders.
Lack of access to microfinance (and to formal financial institutions) in the chars puts a brake on economic development. Poor livestock and crop producers can’t access enough capital to make investments in more efficient production practices which have the potential to increase incomes and improve livelihoods.
In an effort to help tackle this issue, we’ve teamed up with Making Markets for the Jamuna, Padma, and Teesta Chars (M4C) and United Finance Limited (UFL). In the agreement, titled “Promotion and Distribution of Seasonal Loan Products in the Chars”, UFL plans to provide agriculture and livestock loans to 14,590 char-based borrowers across CLP and M4C working areas in six Districts over four years. The plan is to disburse a total of BDT 642 million in loans. CLP and M4C will provide BDT 6.23 million to support the scale-up effort.
The agreement follows the success of a pilot project in the Bogra chars during 2014/ 2015 in which UFL, supported by M4C and CLP, successfully disbursed and (importantly) recovered crop and beef fattening loans from 108 farmers.
The newly signed partnership will supplement our other efforts to provide poor char households with a safe place to save, earn interest and occasionally take out small loans. During the last six years, we have established nearly 7,000 village savings and loan (VSL) groups. Between January and June 2015, VSL groups gave loans totaling Taka 159,578,517 (£1,387,639) illustrating the high demand for such services on the chars. To read more about VSLs click here.