AIGames -sdgoal 1 who's done most to end poverty with finance? - eg financial literacy finance most populous bank designed by pro-poor foundation partners ...; tech is best chance to end poverty but where's AI Banking and eg green finance

Wednesday, December 30, 2020

 ananya roy's poverty capital is interesting -

here are some of the mentions made of fazle abed - they show innovation context of a system developing contextually over 50 years of rural women building a nation

In 1972, Bangladesh achieved

independence from Pakistan, having been placed in this geopolitical

configuration by British colonial rulers as they departed the Indian subcontinent

in 1947. The war for independence exacted a heavy toll of death,

suffering, and sacrifice. It is in this context that BRAC emerged as a relief

organization, led by Fazle Abed with a small founding core of “young,

nationalistic youth” working to resettle refugees in the remote northeastern



reach of Bangladesh. After a while, Abed and his team “came to realize that

reconstruction was only a stop-gap and that new approaches were needed

to help poor villagers on a permanent basis” (Lovell 1992: 23; see also Chen

1983). Abed recounts the transformation as one dictated by the need to

address poverty: “Poor people are poor because they are powerless.” Relief

work, he felt, did not address such powerlessness or challenge the distribution

of wealth (Armstrong 2008). BRAC thus went from being “an

almost entirely donor-funded, small-scale relief and rehabilitation project”

to “an independent, virtually self-financed paradigm in sustainable human

development . . . one of the largest Southern development organizations”

(, accessed July 10, 2008).==========

The “credit as a human right” framework is often identified with the

models of microfinance that are practiced in Bangladesh. But I will later

argue in this book that the story of development and poverty alleviation in

Bangladesh is more complex. Indeed, “credit as a human right” can be

understood to be a “public transcript,” obscuring a less visible “hidden transcript”

of social protection programs and human development

infrastructure. Here, the work of BRAC, which is perhaps the world’s largest

NGO, is crucial. Like the Grameen Bank, BRAC also uses microfinance as

a key instrument of poverty alleviation. However, it embeds microfinance

in a vast array of development services. While Yunus, in an interview (August

2004), impatiently noted that “there is no point waiting for the state,” Fazle

Abed, founder and chairman of BRAC, states that his main goal is to “align

government policy to meet the needs and aspirations of the poor”

(Covington 2009: 24).


But social

capital, specifically “good” social capital, can also be converted into economic

capital (Fine 2000: 62). The interlocutors of millennial development,

such as Francis Fukuyama, thus turn to “culture” and “premodern”

traditions and norms (Fine 2000). Bundled together as social capital, such

traditions and norms are unmatched in their capacity to perform “double

duty”—“as a counterweight to the unfettered individualism of the market

and, simultaneously as a means to gain advantages in it” (Portes and

Landolt 2000). Thus BRAC, one of Bangladesh’s largest development NGOs,

emphasizes “process capital”: “the greatest power of microfinance lies in the

process through which it is provided” (Abed and Matin 2007: 4). Such views

present a challenge to CGAP’s market minimalism, for they indicate that

institutional innovations are as significant as financial innovations; that

“development finance must also be defined as building social capital”

(Capital Plus 2004: 5).=================

At the 2005 Boulder Institute, various key

figures in the CGAP circuit talked about how if microfinance were to receive the

Nobel Prize, then the prize should go to BRAC. “If I were in charge of Nobel Prizes,”

declared Marguerite Robinson, World Bank consultant, “then I would give it to Fazle

Abed and his extraordinary institution, BRAC.” These declarations anticipated the

inevitable: that Yunus and the Grameen Bank were the public face of global

microfinance, and that a Nobel Prize would undoubtedly be conferred upon them.

BRAC, while much more favored by the Washington consensus, did not enjoy the

same global recognition. BRAC was not—as one of the Italian attendees at Boulder

had put it so elegantly—as beloved and well-known as is parsley in Italy.


Muhammad Yunus and Fazle Abed (2004) jointly wrote a letter titled

“Poverty matters.” Never published by the New York Times, it appeared on the

Microfinance Gateway. Yunus and Abed make note of the “three decades of

innovation” in Bangladesh that have made microfinance a “powerful tool” to help

the very poor and that were overlooked by the article. In an interview (December

2005), Yunus registered his outrage that the letter was never published by the New

York Times. He saw this as evidence of how his ideas were being marginalized and

superseded by the authoritative knowledge produced by CGAP.=========

Yunus and Abed (2004): “Without incentives, the free

market doesn’t cater to the world’s poorest people. Instead they are the first

to be left behind.” Their argument rehearses familiar themes of millennial

development: of market failure, of persistent poverty as a severe form of such

market failure, and of the role of development interventions in mitigating

market failures. But it also rehearses a geographical imagination that

challenges the Washington consensus on poverty:

If the experts in New York and Washington lived in Bangladesh, as we have

done for more than 50 years, and were confronted with the same stark realities

and intimate knowledge that only experience provides, perhaps they too would

see what is possible and needed in the lives of the very poor.

(Yunus and Abed 2004)=============

the Grameen Bank is recognized primarily

for its “outreach,” in other words for the millions of borrowers that

it serves, but it is rarely presented as a model of innovative microfinance.

Instead, such praise is reserved for BRAC, whose innovations have been

circulated by CGAP and its experts. BRAC’s founder Fazle Abed has received

substantial global recognition—from the Conrad N. Hilton Foundation



Humanitarian Prize to the first Global Citizen Award of the Clinton Global

Initiative. In presenting BRAC with the Gates Award for Global Health, Bill

Gates noted that “BRAC has done what few others have—they have achieved

success on a massive scale, bringing lifesaving health programs to millions

of the world’s poorest people” (Covington 2009). A recent book on BRAC

makes note of its “remarkable success,” a message endorsed by the who’s

who of millennial development: from Bill Clinton to George Soros to James

Wolfensohn (Smillie 2009).

Since its modest inception as a small-scale relief rehabilitation project

in 1972, BRAC has grown into one of the world’s largest non-profit

organizations with over 40,000 full-time staff and over 160,000 paraprofessionals,

72 percent of whom are women. BRAC’s annual budget is over

$430 million, 78 percent of which is self-financed. BRAC’s microfinance

program, with 6 million borrowers, has cumulatively disbursed $4 billion.

More than 1.5 million children are currently enrolled in 52,000 BRAC

schools and over 3 million have already graduated. BRAC’s health program

reaches over 100 million people in Bangladesh with basic healthcare services

and programs for tuberculosis, malaria, and HIV/AIDS (http://www.brac.

net/, accessed August 3, 2008)==========

In a visit to Bangladesh in November 2007, during which time he met

with Yunus, World Bank president, Robert Zoellick acknowledged that

“Bangladesh has made significant economic and social gains since the

1990s. Its human development achievements have been remarkable in

reaching a number of the Millennium Development Goals.” World Bank

statistics show sharp drops in poverty (from 70 percent in 1971 to 40 percent

in 2005); as well as significant increases in secondary school enrollment,

childhood immunization, food security, and drops in infant and child

mortality and fertility. World Bank reports now forecast that Bangladesh

could join the list of “middle income” countries in ten years (http://www.


K:141137~piPK:141127~theSitePK:295760,00.html, accessed May 17, 2008).

Such human development impacts are a matter of pride in the development

community in Bangladesh. In an interview (December 2004), Fazle

Abed noted the decline of maternal mortality as one of the most important

achievements of Bangladesh in recent years. As described by Covington

(2009), Abed has a personal tie to such an issue, with his first wife having

died in childbirth in 1981: “I thought at the time, ‘My God, if my wife can

die in a Dhaka hospital, it must be so much riskier for the poorest women

having difficult childbirths in rural areas without any hospitals, without

any support.’” But it is also a story about institutions: BRAC’s maternal

mortality program currently reaches 30 million people and is set to “scale

up to cover the entire country” (Covington 2009). The interest in such

indicators also marks the Bangladesh consensus as ineluctably different

from the Washington consensus on poverty. While the latter gives place of

prominence to financial indicators, the former is focused on human

development and the inter-generational transmission of poverty=====

The Bangladesh model is also an experiment in social development.

While the Washington consensus valorizes a minimalist model of microfinance,

the Bangladesh model is best understood, in the words of Fazle

Abed, founder of BRAC, as “microfinance multiplied” (Microfinance

Gateway 2008). Of the many innovations, let me highlight three: “opportunity

ladders” for the ultra-poor; social enterprises and value chains; and

building economic and political assets.=================

include social and political power.

Fazle Abed and Imran Matin (2007: 4) argue that the “greatest power of



microfinance lies in the process through which it is provided” and how it

thus creates “new forms of engagements, relations, and capacities” through

“social intermediation.” They call this “process capital.” BRAC’s village

organizations, each with 30–40 women members, are a key institutional

arena for the creation and circulation of such process capital. Established

by BRAC, the village organizations are federations of the poor that achieve

autonomy and that manage various aspects of development—from loan

repayment to what Matin, in an interview (December 2005), described as

“pressing claims at the local level for resources.” The village organizations

are both an institution that facilitates “one of the world’s largest

nongovernmental financial intermediation programs” as well as a way of

organizing the poor through practices of conscientization (Lovell 1992: 1).

As in the case of its ultra-poor programs, BRAC is acutely reflexive about

its village organizations. In an interview (December 2005), Matin speculated

on whether they serve as pathways for poor women to enter into the public

life of the village and even political life beyond. Others in BRAC seek to

understand whether such village organizations can be relied upon to ensure

that the benefits of development reach the ultra-poor and thereby resist the

“elite capture” of such benefits (Hossain and Matin 2004: 7). These are

radical considerations that speak directly to structures of power.======

BRAC’s international success poses interesting questions about the

globalization of microfinance. Unlike the Grameen Trust replications that

adhere, in seemingly strict fashion, to a formula—first the Grameen Bank

model and now Grameen II—BRAC’s international programs seem more

fluid. Thus, Fazle Abed notes that in Afghanistan, BRAC had to start with

community infrastructure projects rather than with microfinance:

“Organizing women into microcredit groups began as a follow-on service

to tailoring centers and quickly gained acceptance.” Similarly, in Africa,

BRAC adjusted its lending practices: “Trading activities are more common

among our African clients, so we responded to their demand for shorter

duration loans” (Microfinance Gateway 2008). Will BRAC be able to hold

on to this philosophy, articulated by Imran Matin in an interview (June

2004), that while it is possible to learn from its work in Bangladesh, it is

impossible to replicate this work in any formulaic fashion? Will the influx

of development capital—$15 million from the Gates Foundation to replicate

BRAC’s microfinance, agriculture, and health programs in Tanzania and $1

million from Nike to establish designated centers for teenage girls in

Tanzania—transform BRAC into a “best practices” institution?

Recently, BRAC has established “non-profit resource mobilization

organizations,” one in London and one in New York, to “support BRAC’s

global expansion.”=================

the Bangladesh consensus on

placing priority on human development (rather than simply loan repayment

or income generation). They also reinforce the argument made repeatedly by

Bangladesh institutions—that what matters most is not the decrease in

income poverty for microfinance borrowers but rather the impacts on their

children, as noted by Fazle Abed in an interview (December 2004):



In BRAC we constantly ask how we can create the maximum impact on the

next generation, especially girl children . . . There have been great improvements

in Bangladesh in infant mortality and other human development indicators.

I never thought I would see them in my lifetime.==============

the striking trend

of microfinance securitizations. The first of these, launched in 2006,

provided BRAC with 12.6 billion taka or approximately $180 million of

financing. Structured by RSA Capital, Citigroup, FMO (Netherlands

Development Finance Company), and KfW development bank, the deal

“involves a securitisation of receivables arising from the microcredits

extended by BRAC . . . and the creation of a special purpose trust which

purchases the receivables from BRAC and issues certificates to investors

representing beneficial interest in such receivables.” Fazle Abed, founder and

chairman of BRAC, celebrated the securitization as “a landmark for the

microfinance industry . . . We have brought the global financial markets

to the doorsteps of nearly 1.2 million households in Bangladesh”

(, accessed December 17, 2006).

Securitizations can be seen as a new strategy of the Bangladesh consensus.

In 2008, ASA International, ASA’s global network, with operations

in China, Cambodia, Ghana, India, Indonesia, Nigeria, Pakistan, the

Philippines, and Sri Lanka, secured an equity capital commitment of $125

million from Catalyst Microfinance Investors, a private equity investment

fund managed by ASA and Sequoia, a corporate investment firm (Business

Wire 2008). These securitizations are meant to create access to cheap capital

for microfinance institutions, thereby, as BRAC argues, “reducing dependency

on volatile donor financing.” They seek to recalibrate the asymmetries

of global–local transactions by conferring financial power on microfinance

institutions. For example, in the case of the BRAC securitization, the “entire

currency risk for the transaction is borne by global investors” (http://, accessed December 17, 2006). Indeed, like microfinance



itself, securitizations place their faith in access to capital as the key to


Abed, F. and Matin, I. (2007) “Beyond lending: how microfinance creates new forms of capital

to fight poverty,” Innovations, Winter and Spring, 3–17.

Covington, R. (2009) “Bangladesh’s audacity of hope,” Aramco World. Online. Available HTTP:

(accessed June 10, 2009).

Microfinance Gateway (2008) “Microfinance multiplied: an interview with Fazle Abed.”

Online. Available HTTP:

1.26.9120/ (accessed August 16, 2008).

Yunus, M. and Abed, F. (2004) “Poverty matters,” unpublished letter to the New York Times.

Online. Available HTTP:

1.26.9075/ (accessed September 1, 2004).