International NGOs made their presence felt during the liberation war of Bangladesh in 1971 along with other private initiatives like those of the founders of BRAC, GK and so on by ameliorating the sufferings of the refugees and war-affected people. After the war, both local and international NGOs were engaged in the post-war massive relief and rehabilitation activities alongside the government of Bangladesh. It had been the period of their relief and rehabilitation strategy and obviously it was the most suitable strategy pursued by them.

The NGOs began to realize that the dream and spirit of liberation of people would evaporate had there been sustained relief and rehabilitation activities without shifting the then pursued strategy to some kind of strategy that enabled the community people getting empowered by their self-help activities. So, there was a strategy shift to community development from the earlier one. This was concerned with getting the community people organized into groups of mostly poor and disadvantaged people to be ready to do their self-help activities with the necessary support from NGOs and relevant other agencies.

There had been dialogue between the organized group members and their supportive NGO people to figure out their critically serious problems that they considered as obstacles on the way to their empowerment and development with their self-help activities. They were able to identify their many and varied problems and one problem that emerged very prominently and clearly was microcredit for which they had to go to the local money lenders for borrowing at a very exorbitant interest rate. Access to bank money was unimaginable by them.

During their community development period, roughly started from 1975, the organized group members were animated to go for their collective savings funds as the necessary early step towards self-help development journey. At that time, there were serious debates among many NGO leaders on whether to give matching funds to their supported groups from the revolving loan funds (RLF) managed by the NGOs at a service charge which they could bear. There were also arguments against it for the groups would be dependent on them. They favored the conscientization for critical awareness on the causes of poverty and the need of their struggles for changing power-structure that would empower them.

In such a situation, microcredit came as a black swan in the financial landscape of Bangladesh to meet the credit needs of the excluded and disadvantaged people. A black swan is an implausible event which is infested with the elements of risks and uncertainties; it can either meet with failure or can make massive positive impact. Those who argued in favor of microcredit were perhaps sure that the venture of microcredit fund support from the RLF of NGOs was mined with risks, but they thought that the elements of uncertainties were not there in the venture. Microcredit is now a story of success in Bangladesh and beyond.

Infested with the risks of meeting with failure, the journey of microcredit went on the bumpy road on the financial landscape of Bangladesh. The poor, disadvantaged and excluded did not have necessary collateral and other related things in order to be creditworthy. Such limitations were overcome by an innovation-the collective responsibility of the groups. At such a time, the Grameen Bank of Nobel Laureate Professor Dr. Muhammad Yunus created by an Ordinance of 1983 in Bangladesh and its functioning went a long way to boost the microcredit journey in Bangladesh.

A black swan in the late seventies of twentieth century has been able to transform microcredit activities into a sustainable system for providing financial services to those who were once excluded to access to credit from the formal sector. It has been shedding its skin in the course of its journey; it was microcredit at early period, then micro-finance and now financial inclusion services. The NGOs doing financial inclusion services are now termed as NGO-MFIs; their regulating body is Microcredit Regulatory Authority (MRA); the apex coordinating body is Credit and Development Forum (CDF) ; and their fund providers are Palli Karma Shahyak Foundation (PKSF), commercial banks and so on.

There is now a big collaboration between NGO-MFIs and formal sector banks. Innovation and digitalization have been enabling formal sector banks to expand their financial inclusion services to the once excluded through agent banking system and partner NGOs. The partnership between NGO-MFIs and formal sector banks for providing financial inclusion services has enabled to cover greater number of service-recipients and to do justice to all. NGO-MFIs have also now changed their credit-giving limits from microcredit to bigger enterprise credits to the better users benefiting them and others in society.

In order to give an idea of financial inclusion services by NGO-MFIs and Grameen Bank, a few relevant statistics by Bangladesh Microfinance Statistics 2017-18 (a pre-Covid normal time) has been given here. A total of 475 MFIs reported that they disbursed a total of TK. 1,405,858 million; had recovered Tk.1,303,716 million; had outstanding of TK.814,398 million; and had loan overdue TK.30,176 million. The total number of borrowers during the period was 31,479,974 and their savings stood at TK.399,967million by the members of reporting MFIs. Currently most of the borrowers are women.

Given the above statistics, it can be said that a black swan has been able to positively impact the financial landscape of Bangladesh. It can also be inferred that this huge quantum of financial fuel moved the rational borrowers to invest their borrowed and saved money in agriculture, fishery, poultry, apiculture, forestry, housing, small trade and industry, transportation and so on. It will not be unwise to say that the rural economic vehicle of Bangladesh runs to a significant extent on the financial wheels supported by NGO-MFIs and Grameen Bank. It has been observed that the early Covid-19 shocks in Bangladesh in2020 of the urban poor and disadvantaged temporary guests in 2020 was absorbed by the rural hosts.

The author is a columnist and vice-chairman of CDIP.

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