NGOs to save or exploit people?

We have a common perception towards Non-Government Organisations (NGOs) that they suppress and exploit our poor people. So, it is not very unusual to think that NGOs are charging very high interest and taking loan installments forcefully and causing more trouble to the people already weighed down by problems in such difficult times. Despite the fact that thousands of NGOs are functioning and giving no end of loans, it seems that the demand for such loans will never decline in our country. What is the story behind this?
FE

In the last few months, when poverty was mounting and the economic downturn was looming, our NGOs didn’t just sit idle. Palli Karma-Sahayak Foundation (PKSF)’s partner NGOs, guided by nothing but altruistic principles have spent Tk 300 million in the last few days. Of this amount, TK 40 million has been donated to PM’s National Relief Fund and the rest has been spent in the field. To this end, NGOs faced some impediments from the local authorities since working in a pandemic situation is hazardous. They along with PKSF asked permission from the PM’s office so that they could work. Through these humanitarian efforts made by many NGOs in recent times, it has become evident that all they needed was mere permission and now they are just unstoppable.

With our NGOs” blood, sweat, and toil that went into bringing our poverty rate almost down to 20.0 percent, they couldn’t just bear the poverty rate soaring up to 35 percent, again, in the last two months! NGOs wanted to intervene and why shouldn’t they? Their whole castle is made up solely of a dream, the dream of seeing a poverty-free Bangladesh. And that dream has been shattered!

PKSF has made a 14-point guideline for its partner NGOs to restart their general activities by taking necessary health precautions and the result has been outstanding. PKSF has already distributed Tk 8.0 billion. loan to its partner NGOs recently and these NGOs have already distributed Tk 10.0 billion to the penurious people and that too amid this raging pandemic. If giving money to poor people is our concern, nothing can beat our NGOs.

But in terms of collecting installments, following the recent circular given by the Micro-Credit Regularity Authority (MRA), NGOs aren’t doing very well because of the slow-moving rural economy. Members’ increasing trend of savings withdrawal is making this situation worse. This whole sector is now at stake because of cash inadequacy.

The stimulus packages recently declared are 3.70 percent of our total Gross Domestic Product (GDP) which makes us the second, just after Indonesia, among the peer countries. So, though providing stimulus packages was never a problem many sectors are suffering.

To know the root of this problem, we have to dig more into the issue. According to the present scheme, only Tk 30.0 billion will come from the government’s treasury and a big chunk of the money will be funded by the Bangladesh Bank and the commercial banks. So, we are telling our banks to inject their own money, and that too making their lending rate capped at 9.0 per cent. It’s not like they have enough liquidity to burn. Besides, banks are already dealing with enough problems of their own, to say nothing of this whole stimulus package becoming a big burden on them.

Banks are always willing to deal with sizeable loans because big loans create more profits and fewer stresses. Besides, banks take collaterals and maximum SMEs are unable to provide that. Will the banks be interested in dealing with the riskier and smaller SME loans knowing they can earn very little and have to go for double hassles?

To keep the burden on the banks to a minimum, the government can bring the NGO sector into the picture. Our entrepreneurs barely take interest rates into account. All they want are easy loan facilities and fewer formalities which our banks are very reluctant to provide. So, with the vast experiences of NGOs on how to deal with small loans and manage such borrowers, having a recovery rate of about 99.0 percent, NGOs can work with banks simultaneously. Banks can give loans to NGOs and NGOs can further distribute these loans to the worthy recipients. It should be on the NGOs to make the best use of the loan and recover it on time. This will help the NGOs to solve their cash crunch problem and the banks to function well and create a win-win situation for all of the stakeholders.

Nevertheless, rather than bringing NGOs back into the job, we are doing just the opposite. Of the stimulus package of Tk 30.0 billion declared for the Microfinance Institutions (MFI), only Tk 320 million has been disbursed in the last two and a half months. Only one MFI got that money whereas 140 MFIs applied.

Conversely, countries like Iceland, Taiwan, Vietnam, Thailand, Israel, Spain, etc. are doing a lot with their cooperatives. India has already declared Rupee 500.0 billion for the cooperatives and MFIs under the ‘Atma-Nirbhar Package.’ But being one of the prominent birthplaces of the microcredit cooperative revolution, we are surprisingly lagging behind other countries.

In 2007, after the devastating cyclone ‘Sidr, our NGOs made a great impact on the southern part of our country. They facilitated financial inclusion to help our SMEs and that worked incredibly. During every major calamity, our NGOs were there to act as the savior. NGOs know where to go and who to lend a hand.

MRA has 759 registered NGOs and PKSF has 278 partner NGOs working in the economy helping especially the people we are desperately trying to save. Almost 73.0 percent of our total rural investments and 45.0 percent of the families are directly associated with Microfinance. A member’s entire working life, in a word, everything is being supervised by an MFI. Our MFIs guide them and protect them from adversities. Knowing what NGOs are capable of, can we really afford to ignore them?