In the fight against poverty, it is imperative for non-governmental organizations (NGOs) in Bangladesh to lower their interest rates and simplify loan terms. While foreign NGOs around the world work towards various humanitarian goals, it is essential for Bangladeshi NGOs to reevaluate their strategies to address the persistent issue of poverty in the country.
Despite the presence of numerous national and international NGOs, poverty levels in Bangladesh continue to remain high. This discrepancy raises questions about the effectiveness of these organizations in poverty reduction. Rather than efficiently utilizing donor contributions for poverty alleviation, many NGOs appear more focused on increasing their income from donor funding. Consequently, they may lack the incentive to help impoverished individuals achieve self-sufficiency, as this would eventually lead to a reduction in donor contributions. This cycle perpetuates the organizations’ dependence on poverty for financial gain, potentially diminishing their commitment to poverty reduction.
While some NGOs, like the Grameen Bank, have made strides in poverty alleviation through microcredit initiatives, concerns have arisen regarding the harsh consequences faced by individuals who cannot repay their loans.
There have been instances of impoverished women losing their homes due to loan defaults. Additionally, some Christian missionary NGOs have faced allegations of engaging in evangelism under the guise of providing assistance.
The poverty rate in Bangladesh has fluctuated over the years, with a significant increase during the COVID-19 pandemic. In 2016, the poverty rate stood at 24.3%, which decreased to 21.8 percent in 2018. However, the pandemic pushed the poverty rate up to 42 percent in 2020. According to a Finance Ministry speech in 2022, the poverty rate was reported at 20.5 percent.
These statistics suggest that poverty remains a significant challenge despite the presence of numerous NGOs in the country.
Bangladesh has a rich history of non-governmental organizations dating back to the Baptist Missionary Society’s establishment in 1794. Over time, the role of NGOs in the country has evolved, with many organizations shifting their focus from direct interventions to promoting the social and economic empowerment of rural communities. Currently, Bangladesh hosts 2,484 NGOs, with 240 of them being controlled by foreign funds. The NGO Affairs Bureau (NGOAB) was established in 1990 as a division of the Prime Minister’s Office to register and oversee NGOs receiving donations from foreign sources.
The Association of Development Agencies in Bangladesh (ADAB) was a prominent umbrella organization for NGOs involved in development work. However, the Federation of NGOs in Bangladesh (FNB) emerged as a new umbrella organization, replacing ADAB. The Palli Karma-Sahayak Foundation (PKSF), founded in 1990, plays a crucial role in supporting microcredit initiatives aimed at poverty alleviation.
One critical issue in the microcredit sector is the high interest rates imposed by NGOs. Many borrowers face challenges in repaying loans, with some resorting to extreme measures or selling their assets to meet weekly installments. While the government had set a 27 percent interest rate cap on NGOs in 2010, it has not taken substantial steps to reduce these rates. In 2019, the interest rate remained at 24 percent, as recommended by the finance ministry. Micro-credit institutions have also charged interest rates exceeding 18 percent.
To effectively combat poverty, NGOs in Bangladesh must consider lowering their interest rates, ideally below 10 percent. However, this may be challenging for these organizations as they seek financial gains and expansion. It is crucial for NGOs to shift their focus from profit-making to poverty reduction. This shift requires concerted efforts to provide affordable loans to impoverished communities, enabling them to improve their economic circumstances.
To achieve meaningful poverty reduction, NGOs must actively engage in sectors such as education, healthcare, family planning, rural development, and agricultural consulting. Collaborative efforts with local communities are essential to address the root causes of poverty comprehensively.
In summary, the high interest rates charged by NGOs in Bangladesh pose a significant obstacle to poverty reduction. To make a substantial impact, NGOs should prioritize affordability and accessibility in their loan programs, ensuring that impoverished individuals have the opportunity to break free from the cycle of poverty. Additionally, regulatory bodies like NGOAB and FNB should play a more active role in monitoring and regulating NGOs to ensure their activities align with poverty reduction objectives.
