MICROCAPITAL BRIEF: Bangladeshi Farmers to Receive Microloans via Credit Cards Arranged by CARE Bangladesh, DAM, mPower, USAID

The Agricultural Extension Support Activity (AESA) of the United States Agency for International Development (USAID), which is implemented by the Bangladesh-based nonprofit Dhaka Ahsania Mission (DAM), is piloting an initiative to provide smallholder farmers with loans via bank cards.

AESA and the DAM Foundation for Economic Development (DFED) are collaborating with Bangladesh-based Bank Asia Limited and local microfinance institutions (MFIs) Society Development Committee and Grameen Jano Unnayan Sangstha to test the program in the districts Barguna, Bhola and Faridpur.

Bank Asia, AESA together with the MFIs will provide 2,500 farmers with bank accounts and linked cards that uses near-field communication, short-range wireless technology that can transfer data from a card to a receiver. The goal is to disburse loans to 500 farmers by December with the remainder receiving loans during the first half of 2017. The loans will range in size from BDT 10,000 (USD 127) to 20,000 (USD 254).

Farmers can use the cards to purchase seeds, fertilizers, pesticides, weedicides and fuel at retailers that are equipped with smartphones with “payment gateway applications” to deduct the money from the credit card accounts. The loans will carry an annual interest rate of 9.5 percent, and loan repayment is scheduled to occur after harvest. Mokhlesur Rahman, a farmer from the Faridpur District said, “I’ll be able to buy agro-input from designated retailers with the A-card. There’ll be no weekly paybacks, no cash transactions. I’ll payback only after six months.”

The following organizations are providing technical assistance to support the effort: CARE Bangladesh, an arm of US-based CARE International; mPower, a Bangladesh-based enterprise that uses technology for social development; and USAID’s Mobile Solutions Technical Assistance and Research (mSTAR) for Bangladesh.

By Kevin van den Brink, Research Associate

About Dhaka Ahsania Mission for Economic Development (DFED)

Dhaka Ahsania Mission for Economic Development (DFED), is a non-governmental organization that was founded in Bangladesh in 1958. Its goal is to provide services that increase unity, peace and development within Bangladesh. During 2015, the organization received BDT 244 billion (USD 31 million) in grants and spent BDT 233 billion (USD 29 million).

About mPower

MPower is a social enterprise founded in 2008 by students of two US-based universities, Harvard University and the Massachusetts Institute of Technology. Its aim is to use technology for social development, a process it terms “smart development”. It has conducted 85 deployments in Bangladesh, Botswana, Egypt, Guatemala, Haiti, India and the Philippines. Since its inception in 2008 the organization received USD 2 million in grant funding. Annual funding data are unavailable.

About CARE International

CARE (Cooperative for Assistance and Relief Everywhere) International is a US-based non-governmental organization seeking to reduce poverty. Founded in 1945 with the aim of sending supplies to post-war Europe from America, it has evolved into a multipurpose humanitarian organization focused on developing women’s economic capabilities. In 2015, CARE reportedly supported 720 projects that reached 58 million people and held total assets of USD 376 million.

About USAID

The United States Agency for International Development (USAID) is a government agency that provides international assistance. It focuses on areas such as economic growth, agriculture, trade, health, democracy, conflict prevention and humanitarian assistance. Under its Development Credit Authority (DCA), it provides credit guarantees that cover up to 50 percent of defaults on wholesale loans made by private financial institutions to retail lenders serving low-income borrowers. USAID reported a total of USD 27.1 billion in budgetary resources for 2015.

Sources and Additional Resources

[1] Dailystar, News, “Debit Card for Farmers: USAID-led initiative to make their banking hassle-free

MicroCapital Universe Profile: DFED

MicroCapital Universe Profile: mPower

MicroCapital Universe Profile: CARE International

MicroCapital Universe Profile: USAID

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at http://www.microcapital.org/products-page/

Share

Comments are closed.