Microcredit is not an effective tool for poverty alleviation, says Hasina

Microcredit borrowers cannot get out of poverty because of the interest payments they have to make, Prime Minister Sheikh Hasina has said.

Speaking at the Ganabhaban on Wednesday, the prime minister said, “Interest payments of microcredit leave the borrowers without any savings for which they cannot elevate themselves.”

The prime minister made the remarks while launching 3G mobile services through a video conference at Lalmonirhat’s Dahagram, which is connected to mainland Bangladesh by a tiny strip of land in Indian territory—the Tin Bigha Corridor.

Hasina pointed out that the flaws in microcredit schemes had led her government into adopting the ‘one house, one farm’ project.

“We are disbursing loans among the rural people through it and also helping them to market their produce. We are also encouraging them to go for savings.”

The Hasina-led government initiated the project in 2009, which was set to end in 2014, but was later extended until 2016.

The local government and rural development ministry has been implementing the project in 40,527 villages across Bangladesh.

Around 300 local markets have been developed under the project to enable beneficiaries to sell their produce.

The project also helps beneficiaries to make savings.

“If someone can save Tk 100, then the government contributes another Tk 100, which continues for two years. The Palli Sanchay Bank (rural savings bank) was formed with those funds,” said Hasina.