Member's Area
Indian Ocean Rim Association
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ISDP Bangladesh

IORA Sustainable Development Programme (ISDP) Workshop on
"Promoting Microfinance for Economic Development in IORA Region"
The Palli Karma Shayak Foundation
Dhaka, Bangladesh
8-9 April 2015

Background

One of the common problems faced by the lesser developed Member States of the Indian Ocean Rim Association (IORA) such as Bangladesh, Comoros, Madagascar, Mozambique, Tanzania and Yemen, is limited access to sources of finance. The sparseness of formal financial services (credit, banking and insurance) hinders the development of these economies resulting in its poor sections remaining in constant poverty. The global economic community agrees that microfinance is one of the remedies for this situation.

Recent estimates from the International Financial Corporation (IFC) indicate that around 130 million people now have access to microfinance. However, IFC underlines that this number constitutes less than 20 per cent of the total number of poor people who do not have access to financial services.

Seven countries in the IOR region reportedly have recourse to evolved microfinance services. These are Indonesia, Bangladesh, Kenya, Madagascar, Malaysia, Mozambique and Yemen. Of these seven nations, Bangladesh recorded the highest microfinance loan density. Out of every 1000 adults in Bangladesh, 342 have taken loans from microfinance facilities. It also recorded the highest number of institutional branches made accessible to the public. Malaysia follows, though far behind, with a microfinance loan density of 19 accounts per 1000 adults.

A comparison of data concerning access to microfinance and the number of small and medium enterprises (SMEs) reveal a positive correlation between these two factors. In March 2014, a study conducted by the World Bank titled; 'Dynamic Effects of Microcredit in Bangladesh' also confirmed that access to microfinance has led to improved chances of education, increase in personal expenditure and household assets, and that they mostly benefit women. Academics have further reaffirmed these conclusions in studies conducted in other countries.

The workshop on "Promoting Microfinance for Economic Development in IORA Region" served as a significant platform for regional dialogue between Member-States and provided an opportunity to exchange notes on successful microfinance mechanisms; consider measures to spread the reach of microfinance services; as well as retaining the sustainability of the practice amongst others.

Objectives

To promote the sharing of knowledge and best practices of IORA Member States in the implementation of microfinance scheme.
To promote the sustained economic growth and balanced development among Member States.
To reduce economic disparity among Member States and to enhance economic development opportunities.
To promote peer-to-peer learning within IORA.
To enhance the sense of community and belonging among the IORA Member States.

The Host

Bangladesh has developed to the extent to be referred to as a global reference to microfinance services.  Starting with the Grameen Bank, Bangladesh now runs more than 600 micro-credit programmes. The success rate of this facility is reflected in the drop in the percentage of people living under the poverty line (from 40% in 2005 to 31.5 % in 2010) and the 2.9 million SMEs recorded in 2003. The Secretariat believes that Bangladesh has demonstrated its potential and expertise in the microfinance sector which they could share with other IORA Member States.