The Grameen Bank micro-credit programme for ‘struggling members’ in Bangladesh: Empowerment to tackle social exclusion

The CIA estimates that 31.5% of the population of Bangladesh (approximately 163 million people) live below the poverty line of US$1.25 per day (World Fact Book, 2013). Thousands of people migrate everyday towards the capital city Dhaka (about 12 million inhabitants), hoping for a better life and begging from the pedestrians on the roadside, at traffic signals and in open public areas. There have been reportedly more than 700,000 people living below the poverty line across Bangladesh, about 40,000 of them living in Dhaka. Together with the Bangladesh government, Grameen Bank has implemented a new micro-credit programme to enable ‘struggling members’ to use their entrepreneurial skills for a better life.

Learn how such small-scale support can turn around people’s lives and consider whether a similar approach would work for homeless people in ‘developed countries’.

The main mission of Grameen Bank is to combat poverty in Bangladesh by providing small, collateral-free credit to ‘struggling members’ for income-generating activities or financial services for them to afford a dignified livelihood. By creating the right opportunity, Grameen Bank encourages people who were previously marginalised to make use of their own talents and entrepreneurial spirit in different ways, in particular selling goods from door to door. The programme empowers citizens who are economically ‘struggling members’ of their community, provides them with peer support and boosts their morale and dignity.

In addition, training programmes in family planning, sanitation, and tree plantation are designed and delivered, according to the interest of the members. Furthermore, the regular Grameen Bank group members (on ‘normal’ loans) act as mentors to the ‘struggling members’, providing guidance and support. As Muhammad Yunus (2005) points out, the bank treats its ‘struggling members’ with the same respect and attention as regular members and refrains from using the term ‘beggar’, which is socially demeaning.

In Bangladesh, many women are excluded from work. Many women therefore choose begging as a lifetime occupation, especially if getting divorced, or if they have a physical disability or lose their homes through flooding or river erosion (Dowla and Barua, 2006). In order to improve the situation, Grameen Bank has actively encouraged women to use their talents in productive employment. They can receive a housing loan that is explicitly designed to authorize women as decision-makers in the family.

Before the existence of the Struggling Members Programme, Grameen Bank employees were reluctant to have beggars joining the bank. They were doubtful whether beggars would be able to repay their loans. Now Grameen Bank has engaged its branch managers to identify beggars in their communities and convince them to join the Struggling Members Programme. Since employees typically commute through the village every day on their way to and from work, they know who these beggars are. Other members of Grameen Bank, e.g. those who already have loans, also help to identify beggars and encourage them to join the programme.

The concept of conventional banking practice is simply reversed by a system of mutual trust, accountability, participation and creativity. Therefore, the disabled, the blind, and people with learning disabilities, as well as older people in village society, become included in the banking orbit. 

Although there is no compulsion for the beggars to give up their previous lifestyle, 31% of them have now given up begging and moved on to being business people. They are now selling popular items at the places of begging. They are given identity badges with their name, picture, and bank’s logo, as physical evidence of the bank's support behind them. They can display these badges to let everybody know that they are Grameen Bank members and that this national institution is supporting them. The programme also supports their members with social development inputs by raising their social consciousness, and delivering health and nutrition training.

In 2006, during a BBC interview, cited in Dowla and Barua (2006), Syman talked about the contrast between her previous miserable days and later her good days as a supplier of goods to homes in her village: “I struggled hard while raising my children. I don’t have my father, or mother, or even my husband to look after them. We struggled a lot. No one suffered like me… So, when you came and gave me a loan, and now I go selling biscuits, cookies around the village, I honestly feel happy. This is much better than going around begging with empty hands.” 

As of July 2005, 76 million taka had been disbursed to 102,879 beggars, of which 45.3 million taka had been repaid. By July 2013, there were 189, 362 members with a cumulative loan disbursement of US $5.29 million and a cumulative loan repayment of US $3.17 million, at a repayment rate of 98%. 

At least 32,156 people have left begging, and 9,792 people have joined as regular Grameen Bank members (Maddocks, 2011). Over time, 2,565 branches of Grameen Bank in 266 areas, spread across all administrative districts of Bangladesh, have implemented this programme.

The ‘struggling members’ are encouraged to save with Grameen Bank as they wish. They are covered by the loan insurance scheme under which their loans will be fully repaid by Grameen Bank in case of death. In addition, an amount of tk500 is provided from the bank's emergency fund to the bereaved family to compensate for burial expenses. In general, savings mobilization is an indicator of a program’s capacity for self-finance and hence, independence. Grameen Bank has drawn a large portion of its resources from grants and concessionary funds. 

The stories above tell us how capital support and tailored capacity-building can turn street beggars into successful entrepreneurs, who are able to make a decent living. Each individual is converted from a passive recipient of alms into economically self-sustaining members of society.

In conclusion, it appears that the empowerment approach of Grameen Bank has significantly reduced social exclusion in Bangladesh. This could be an excellent template for other societies in ‘developed’ countries to tackle the issue of homelessness.

Muhammad Yunus (2005), Grameen Bank's Struggling Members Programme.

Asif Dowla and Dipal Barua (2006), The poor always pay back: The Grameen II Story. Kumarian Press.

William Maddocks (2011), “How Can Microfinance Programs Help the Struggle Against Social Problems Such as Begging, Child Labor, Prostitution, Violence Against Women, Criminality, Gangs, and Drug Addiction?”, Paper presented at 2011 Global Microcredit Summit, Valladolid, Spain.