Issue 33: September 2010 - Learning highways through Asia

Rural microfinance in Bangladesh: learning points for Afghanistan

In its ongoing efforts to promote knowledge sharing, IFAD financed the participation of a group of eight Afghans to visit microfinance institutions, their field activities and rural beneficiaries in Bangladesh. The participants came from the Rural Microfinance and Livestock project supported by IFAD, the Ministry of Agriculture, the Food and Agriculture (FAO), and Afghanistan’s National Microfinance Support Agency (MISFA). This innovative microfinance project will incorporate the learning from the study tour in its activities.

   
 

Women’s credit group organized by Grameen Bank in a village of Tangail District, Bangladesh

  
     

The study tour focused mainly on the role of microfinance services in the vast agriculture and livestock sector in Bangladesh and to extract learning points for the Afghanistan microfinance project. IFAD project staff in both countries actively engaged local MFI staff and experts in a number of debates on the different effects of microfinance on the lives of rural farmers.

Bangladesh microfinance is unique in terms of its operation and accessibility to the beneficiaries.

Microfinance has succeeded in expanding coverage and diversifying products throughout the last 30 years.  Operational sustainability and successful public relations of the major microfinance institutions (MFIs) such as BRAC and Grameen Bank have also been significant.  As a result of their efforts, microcredit has now become a major part of the lives of rural farmers. For example, women’s participation in social and commercial activities has increased substantially through specific microfinance products for women and established women’s groups. During the group visit to the Tangail district, we realized that as a result of the women’s loan groups established by the Grameen Bank, women are now active in society and have acquired knowledge, skills and motivation to participate in agriculture and small rural businesses. (Most rural areas in Bangladesh dominated by men some 20 or 30 years ago.) Most rural livestock owners and farmers believe that their progress is due to their long-term commitment to particular field branches of the MFIs.

However, in-depth observation suggests that MFIs may need to rethink certain policies, particularly those concerning rural mobilization and public relations. For example, the MFIs need to work through their customer motivation systems to encourage further investment for savings rather than encouraging rural farmers to take out large loans in the name of rural business development.

During the group’s visit to the Tangail District of Bangladesh, a woman named Apa stated: “It is more than 17 years that I am taking loans from Grameen Bank. I started with 2,000 Taka (US$ 29) and now I have an outstanding loan of more than 150,000 Taka (US$ 2,165). I purchased one electric mill and then another one.”  When we asked Apa why she did not use her savings to buy the second mill, thus avoiding paying interest, she replied: “I would rather save my surplus in the Grameen Bank for more credit or for emergency situations and use loans instead.” Unfortunately, it is now a common mentality among most rural farmers that they need to keep significant amounts of their savings for emergency situations, while,

the household economy would develop properly if savings were effectively utilized for business growth and buying land.

   
 

A poor rural family that is being supported by an IFAD project

 

The study group learned that several rural microfinance beneficiaries from Rangpur and Tangail villages believed that their social prestige increased in proportion to their size of loans. For example, a farmer with a large outstanding loan is perceived a higher-class farmer than someone with a smaller loan. In other words, a new social class system had evolved based on the size of credit. This competition based on credit size keeps rural farmers attached to the MFIs and away from the value of self-sufficiency. Since this phenomenon is created partly due to the MFIs’ rural mobilization and field-level motivational efforts, microfinance authorities at the policy level need to take this into consideration.

Many positive features could be learned from the creativity, passion and persistence of the Bangladeshi microfinance institutions and the repaying capacity of poor rural farmers. After exploring their work processes and achievements, the study group could not help but hold admiration for the MFI field workers.

The Afghan team will use learning points from this study tour in the design stage of IFAD’s microfinance services in Afghanistan. The group learned that minimizing costs at the field level will accelerate corporate self-sufficiency. Another learning point was the importance of women’s empowerment through microfinance. IFAD-supported projects in Afghanistan and the National Microfinance Support Facility will certainly take this experience into consideration when designing new microfinance products.

Moreover, MFIs in Afghanistan need to build a bond with those they are seeking to reach. They must work to create groups of rural farmers that will, on the one hand, facilitate their loan processing, and on the other, increase social cohesiveness. Many lessons can also be learned from the ultra-poor programmes of Bangladesh MFIs, particularly the in-kind contribution and cash subsidies that enable very poor rural residents to become eligible for regular credit.

Jawaid Samadey, Former Knowledge Management and Policy Analyst, Rural Microfinance and Livestock Project, Afghanistan

Useful links:

National Microfinance Support Agency (MISFA)

Iranian experts seek lessons learned from experiences of self-help groups in India

   
 

Community facilitator from the State Welfare Organization of Iran speaking with members of a self-help group in India

  

Microfinance has emerged as one of the most effective mechanisms for enabling economically underprivileged people throughout the world to access affordable financial services. Iran is exploring various approaches to address this challenge. Community or member-based microfinance institutions is one of them. An excursion to India allowed visitors from the State Welfare Organization of Iran to examine the features of one the  largest microfinance initiatives in the world that is also community based and member-driven.

Developing countries have proved to be the breeding ground for many successful innovative experiences in microfinance. These experiences are often the fruit of decades of trial and error. As such, they carry a valuable asset: the lessons learned. This asset is in abundance in developing countries and is accessible at low cost – through South-South cooperation.

At the time of increasing globalization, South-South cooperation offers a unique opportunity for acquiring in-depth knowledge of the microfinance industry, which is present throughout the South. As such, one country could be the source of knowledge on certain aspects or models while it may seek knowledge on other type of experiences somewhere else. For example, India is a valuable source to learn about the widespread movement of self-help groups (SHG) with financial linkages to the banking sector. At the same time, the country is looking to Brazil for hands-on knowledge about the ‘Banking Correspondents Model for Branchless Banking’. 

   
 

The then Head of State Welfare Organization (first row, left), and now President of Red Crescent of Iran, participating in knowledge exchange with members of a self-help group in India

 

Iran also values experiences in the South. An exposure visit to India in March 2008 allowed a group of 11 visitors from the State Welfare Organization of Iran (SWO) and the non-governmental organizations (NGO) community  to examine the potential of  bankable SHGs that are linked financially to the banking sector. The group included SWO local staff such as community facilitators, as well as senior officials, including the Head of SWO, who plays an active role in policy making.

SWO is spearheading an extensive system of social protection and social safety nets (SSN) in Iran.

However, the organization has realized that, where able-bodied but chronically or transitory “poorest of the poor” people are concerned,. much could be gained from enriching the provisions of SSN by adding a ‘Vision for Graduation’  In other words the capacity of eligible recipients of grants under the social protection programmes should be upgraded in order to enable them to become potential clientele for microfinance services.  SWO perceived microfinance as one of the promising instruments to help the achievement of this goal. Moreover, SWO was aware that microfinance can also increase the resilience of the low-income population against economic and financial shocks. As such, it could work as a ‘preventive tool’ to arrest the possible fall of low-incomes group into a downward spiral of impoverishment and destitution.

The visit organized by TÃK-International (a non-commercial civil society organization in Iran), which benefited from a small grant from IFAD, took the group to Karnataka Province in India. Hosted and briefed by MYRADA a leading NGO in India, the visit included a number of sessions devoted to presentation seminars and exchanges with the National Bank for Agriculture and Rural Development (NABARD), local banks and some providers of non- financial services.

The highlight of the visit was the face-to-face encounters with members of SHGs and their federations, where the visiting group could check the realities on the ground. The language barrier, although reduced by translation, posed some difficulties. However, the impact was indeed strong.

The exchanges started between community facilitators from SWO and the members of SHGs on the nature and effects of micro-loans, the importance of savings and the non-financial services that the members could access thanks to the dynamism of their group. They also discussed the dilemma of exclusion and self-exclusion of the poorest and most destitute people.

The Iranians learned the following major lessons from India’s experience:

Linkage Banking through SHG is a model that could be pursued in Iran, although with certain refinements. But other models should create a pluralist sector in tune with the needs of a highly heterogeneous potential clientele.     

During the visit, the Head of SWO articulated the role of the policy environment

“MYRADA’s meaningful motto, which says, ‘It is not enough to teach the people to fish when they cannot reach the river’, shows its understanding of the effective components of empowerment. Empowerment is a process during which training and capacity building should organize for people, community and legislation authorities as well. If the process of capacity building is organized just for people and the community, without considering the necessary policies for removing the fundamental and structural barriers that poor people encounter, it  may lead to a process of impoverishment instead of empowerment.”

  

TÃK-International believes that the above process of knowledge sharing was a determining factor in convincing SWO (more specifically the Head of Organization at that time), who is now the President of Iranian Red Crescent) to launch an ambitious programme in 2009 with national dimensions in perspectives.

With an initial budget equivalent to US$ 1 million, the programme seeks to expand the access of poor people living in rural and peri-urban areas to financial services, with a focus on women, youth and the poorest people. The programme embodies the Vision of Graduation , and seeks linkages between provisions for social protection and microfinance as described above. TÃK-International, which is a civil society organization in Iran, will be the Executing Agency.of the programme.

Maharam Yousefi Sadat, TÃK- International
  
Useful links:

‘Action Research Sites’: Stimulating development by sharing innovative technologies and products

The sharing of learning, knowledge, technology and design through South-South Cooperation can have a dramatic impact, especially on communities and households living at a subsistence level. Action Research Sites (ARS), which the International Network for Bamboo and Rattan (INBAR) helped establish, through the Livelihood and Economic Development Programme with funding support from the International Fund for Agriculture Development (IFAD), are providing such opportunities.

At present, the Livelihood and Economic Development Programme operates across 17 Action Research Sites in ten countries – China, Colombia, Ecuador, Ethiopia, Ghana, India, Mozambique, Peru, the Philippines and Tanzania. The ARS work directly with rural community groups, associations and organizations, serving as a base for field-testing of new technology and processing techniques. To date, ARS programmes have lead to the successful development of a number of innovative products such as bamboo charcoal, fuel pellets, incense sticks, and laminated boards and panels.

   
 

Parts of a twin rip saw

  

The ARS are situated in areas where bamboo plantation, management and utilization are largely undertaken. Generally, the bamboo development programmes vary from one ARS to the other, but are undertaken in the ARS in collaboration with local NGOs – for example, In-Hand Abra Foundation Inc. in the Philippines;  Sacha Urku in Ecuador; and Tripura Bamboo and Cane Development Center, Konkan Bamboo and Cane Development Center and Tamenlong Bamboo and Cane Development Center, all in India.  The development learning processes, success stories as well as problems and weakness of project implementation are documented.  Technologies and resources including manpower resources are made available.

In Africa, bamboo was recently introduced as a material for development. Basic skills training was conducted in Ethiopia, Ghana and Tanzania on furniture, basketry and home accessories. The Industrialized Handicraft productivity module (which includes process flow, product costing, production scheduling, production management, budget control and fund management), developed by Medilen A. Singh, a Filipino, was used in training would-be producers and managers, who formed themselves into organizations that managed  bamboo production.  The productivity training was conducted by resource persons from In-Hand Abra  Foundation, a partner organization of INBAR in Abra, Philippines, one of the ARS.

Community organizers, foresters and engineers – also called facilitators of change – from Ethiopia, Ghana and Tanzania travelled to the Philippines and India to undergo basic skills training, which was held in community-based enterprises that were developed by INBAR.

In the village of Kumasi in Ghana, a group of bamboo producers organized themselves into the Akyawkrom Bamboo Furniture Makers Association (ABFMA). Looking for ways to ensure a sustainable market for bamboo furniture, they approached the Ministry of Education, which had approved the adoption of bamboo furniture in schools. The bamboo furniture used for the school prototype was generally constructed manually; mechanization was clearly needed. Basic machines like cutting saws, plainers and drills were locally available but not the splitting machine. INBAR commissioned three engineers from one of the leading bamboo training centres in the Philippines to fabricate a twin rip saw which enables bamboo poles to be cut into slats most effectively. The twin rip saw is similar to the functions of a splitting machine and its important feature is that it can split thick walled bamboos.

Instead of sending a fully fabricated twin rip saw to Ghana, INBAR decided to make the fabrication a learning experience for the technicians hired by ABFMA, including a few of their members who were being trained to operate and maintain their machines.. The machine was fabricated simultaneously in the Philippines and Ghana.  The pictures of the step-by-step process, specifications, design and bill of materials were sent to Ghana by e-mail. The machine was tested in Abra. When the fabrication was completed in the Philippines, Ghana finished theirs soon afterward. This learning process took place over one month (April-May 2008).

   
 

Gift items made of bamboo

 

Similarly in Tanzania, the Isongole Bamboo Cooperative Society went into the production of various bamboo products. For the bamboo mats, which are used for ceilings, walls, back support and furniture seats, the patterns and designs came from the Philippines. In addition, the maximum utilization of the bamboo culm/pole  was introduced by In-Hand Abra Foundation.. All waste was turned into charcoal through a drum pyrolizer. A picture and specifications for the fabrication of a drum pyrolizer was sent  to Tanzania. This was how bamboo charcoal was introduced to Tanzania and eventually to Ghana and Ethiopia.

Filipino designers belonging to EcoNET, an organization composed of technology developers,  product designers, production and market specialists, shared some of their bamboo designs with the Akyawkrom Bamboo Furniture Makers Association of Ghana , Isongole Bamboo Cooperative Society of Tanzania and the Bule Women’s Association of Ethiopia. These were designs  for kitchenware, trays, bags and other gift wares.  The objectives were to improve the skills of the producers in the execution of new designs and to introduce new designs to the market so that people will appreciate and accept bamboo products. The designs were crafted to fit into Africa’s local bamboo material so that the African product would not resemble the Philippine product -- this also challenges the Filipinos to continuously innovate new technologies and designs that suit the needs of the global market.

Carmelita B. Bersalona, Production Systems Specialist, Livelihood and Economic Development Programme, International Network for Bamboo and Rattan, and Aniceta C. Baltar, Project Coordinator, In-Hand Abra Foundation, Inc.

Useful links:

International Network for Bamboo and Rattan

Terra Madre: A unique example of South-South Cooperation

   
 

 

South-South cooperation can take place at different levels, among government and among projects. This is what IFAD has already embarked upon and what it is committed to do more and more. Going beyond IFAD’s boundaries and traditional schemes, a unique initiative that comes to mind is Terra Madre, a global event organized every two years by Slow Food International in Turin, Italy. According to Slow Food, “eating is the first and most important agricultural act”. Food is the expression of the cultures of local people. Food should be “good, clean and fair”.

To date, Terra Madre has held three events –  in 2004, 2006 and 2008. In 2008, more than 5,000 representatives from all over the world gathered. In addition to the global events, Terra Madre is now taking place regionally and locally. Despite its young age, Terra Madre’s network of associations now reaches more than 150 countries, and keeps growing. Good ideas fly….

What is Terra Madre?

Terra Madre aims to bring together “representatives of the food communities around the world”: farmers, fishers and herders, but also cooks and food retailers. The idea is simple: bringing together people with a common agenda, giving them the opportunity to develop and act on it, and contributing their experience and knowledge.

Another idea of Slow Food has been not to lodge the participants in hotels but to invite local farmers to host them. In this way, participants break language barriers and cultural differences, and often establish relationships that continue long after the event is over. As some participants said, Terra Madre “helps us rediscover our strength, and gives us the pleasure of knowing others and being together.”

Why is Terra Madre is so successful?

   
 

A participant in the Terra Madre conference demonstrating food she has prepared

 

Terra Madre events run over five days, during which participants share their own food products (some of them supported by Slow Food through its Presidiums), attend seminars and workshops, participate in artistic events, play music and dance. The knowledge content of the events is huge, with more than 50 seminars that run in parallel attended by representatives of academia, the private sector and public institutions.

Topics vary from protection of biodiversity, to sustainable agriculture, to food safety, and to local knowledge.  One full day is left for regional meetings, where participants discuss regional plans and strengthen their network.

The most spectacular section of the last edition of Terra Madre was the Youth Forum, From IFAD’s perspective, Terra Madre’s capacity to attract and make the best use of the energies and talents of young people is indeed impressive and critical.  How to attract the youth in our programmes is something so important, and something that development agencies have neglected for too long. How can we think about long-term agricultural development when the farming population is ageing quickly? The question of “Who will feed the world in 2050?” has been mainly addressed from its food production and productivity angle. How can this be achieved when rural societies are breaking down? How can we revitalize these societies without investing in youth?

Why do so many youth respond to Terra Madre? Why does its message inspire so much motivation? The answer is not easy, but it can be argued that youth, (we were all youth, and perhaps we still remember how it was), are keen to find a strong sense of purpose in life. What is more appealing than an open call made to partake in rethinking a different, certainly more equitable and sustainable, food system?

The next Terra Madre is scheduled to take place in Turin from 21-25 October 2010 and will focus on the products, languages and cultures of indigenous people. IFAD will contribute its experience, sharing its interventions in Brazil and India, for which it also provided financial support for the organization of the local Terra Madre. When I attended Terra Madre in Torino in 2008 I was struck, together with my colleagues, by the elements of enthusiasm, friendship, warmth and energy flowing around the stands. There is a lot to enjoy – and so much to learn.

I hope that as many of the readers of this article as possible will have the chance to participate, either in Torino or in one of the local Terra Madre events, and have the opportunity to eat, drink, sing and dance together. As Carlo Petrini, the President of Slow Food, likes to say, “we need a new humanism. Let’s all contribute to build it!”

Mattia Prayer Galletti, Country Programme Manager, IFAD

Useful links:

Terra Madre

The value of Learning Routes

‘Rutas de Aprendizaje’ or ‘Learning Routes’ is an interesting example of South-South collaboration supported by IFAD. It is currently being implemented by the Regional Programme for Rural Development Training (PROCASUR) – a Latin American training organization specialized in building capacities for rural development. PROCASUR brings together a multidisciplinary group of rural development workers and partners from different regions for a series of thematic visits to communities that have faced development challenges.

   
 

A member of the Grameen Bank in Bangladesh explains the benefits of various rural housing products to the participants of the 'Rural Microfinance Innovations Learning Route in Asia'.

 

Since 2006 when IFAD started supporting the programme, the Learning Routes have proved to work as an effective learning mechanism for development workers and beneficiaries – both men and women – from different social, economic and cultural environments.

Through the programme, PROCASUR promotes the recovery and systematization of available knowledge, its pedagogical organization, and the exchange and application of new approaches, good practices and lessons learned. By doing so, it aims to multiply the transfer and dissemination of knowledge and develop rural organizations, technical teams of rural development projects, their national executing institutions in local governments and private organizations.

PROCASUR’s milestones are the development of technical capacity linked to the field,  decentralization in order to have lower and fixed costs, a demand-driven approach and ‘inter-generational’ dialogue. The idea is to unify the best talents in order to help the poorest and the most disadvantaged rural people.

Since the beginning of the programme, PROCASUR and its partners have implemented over 45 Learning Routes to innovative activities in 15 countries from Latin America, Africa and Asia. This has strengthened the capacities of more than 650 direct participants from 35 different countries; more than 4,000 people from rural areas have benefited from the knowledge acquired during the routes. PROCASUR is looking to scale up the initiative, and especially to explore new areas of intervention and influence.

The programme includes and values the best experiences and knowledge of institutions, associations, communities and rural families. Each route is organized thematically  around  experiences, case  studies  and  best practices  on  innovative  rural  and  local development  in  which  local  actors  become  trainers. 

Through workshops and interviews in the field, participants learn about the struggles and successes of small entrepreneurs when trying to start their businesses and the ways to make them successful. This approach is enriching both to the visitors – mainly development professionals of various disciplines, community leaders and policymakers – and their hosts, and provides opportunities for discussion and collective analysis.

   
 

Officers of IFAD-supported projects in Rwanda and Malawi interviewing small producers iduring the 'Innovations Learning Route 2010' in Peru.

 

The routes, apart from transferring knowledge, gives visitors a new vision for their country, teaches them how not to repeat errors and helps them find solutions to develop their countries’ institutions.

It has been highlighted that during the routes simple teaching demonstrations can be extremely fast, but are useless if observers are not able to absorb and internalize the what they have learned and acquired, and to teach and explain this to others when they are back in their countries. Indeed receivers’ countries, when asking for technical and financial support, aim to apply the future lessons learned in their single country, which often has different characteristics from the one where the route has been organized
 
Roberto de Haudry, IFAD Country Programme Manager for Peru and Colombia and a strong supporter of the Learning Routes, stressed that it is not, and should not be, a “20-people exercise”, just for the visiting team and its limited interests; on the contrary, hundreds, thousands of people need to benefit from a single route’s knowledge and content, which in turn would help multiply poor rural incomes and create stronger and more substantial livelihoods.

Moving ahead

In May 2010, IFAD’s Asia and the Pacific Division met with PROCASUR to discuss how to support exchange of know-how among Asian countries. One possibility would be by scaling up the Learning Routes approach to ‘Learning Highways through Asia’ in order to reach and benefit as many people as possible.

The idea is to target beneficiaries, representatives from public organizations that are responsible for the execution of IFAD-supported activities, local partners and representatives from community organizations. The upcoming Annual Performance Review Workshop in Asia and the Pacific, scheduled to take place from 1-4 November in China, presents a good opportunity to undertake an ‘innovation mapping’ in order to identify institutions and innovation champions that could facilitate Learning Routes in Asia.
Nicolo’ Berghinz, Intern, Asia and the Pacific Division   

Useful links:

PROCASUR

Making the most of rural transformation of emerging economies

   
 

 

The rural societies of Brazil, China, India and South Africa comprise 25 per cent of the world’s population. They are undergoing a process of change unparalleled in history. The International Conference on the Dynamics of Rural Transformation in Emerging Economies, which took place on 16 April 2010 in New Delhi, brought together senior-level policy makers and public-sector administrators, as well as representatives from academia and civil society, to share models, experiences and new and flexible approaches that leverage the forces of globalization for the benefit of poor rural people.

The rural transformation of Brazil, China, India and South Africa is taking place in a context that is rife with change and fundamental uncertainties: climate change and its impacts; the impacts of growing scarcity of land and fresh water; the triple impact of the food, energy and financial crises; and whether the human race will have the wisdom, will and capacity to engage in national and international collective action to avert disaster. 

Such rapid change is creating conditions of enormous risk and vulnerability for rural people. At the same time new opportunities are emerging, linked for example to renewable energy, provision of environmental services, and food production.

The process of change is made ever more complex for the current generation since it is added to the heavy weight of many historical inheritances: poverty, inequality and injustice; dual agrarian structures; lack of rights and social marginalization of large groups in the rural population, particularly women and tribal and indigenous peoples; lack of access to health, education and other basic services; and insufficient private and public investment.

Despite this heavy inheritance, our hope for ultimate success is based on the evidence of the impressive achievements realized in emerging economies.  While outcomes have not been uniform between and within countries, hundreds of millions of people have been lifted out of poverty.

Food production has increased many times over since the famines of the late 1950s and early 1960s. Natural resources and ecosystems can no longer be destroyed in obscurity and with impunity. Hundreds of thousands of small and medium businesses have been created and are contributing to the economy of our planet. Mobile phones have reached almost every village. Many more young women and men are going to school than compared with their parents’ generation. Governments are more accountable to citizens than ever before. And civil societies are more active and vibrant than ever. 

What the rural societies of the emerging countries have done in the last generation is an achievement that has not been registered in a similar period of time or on such a scale.

The agenda for future – and better – transformation

The rural transformation that we envision continuing is about human development, as opposed to simply the development of assets. For this type of transformation to occur, there is a need for:

Moving forward

The International Conference on the Dynamics of Rural Transformation in Emerging Economies took place on 16 April 2010 in New Delhi. It aimed to stimulate the emergence of new frameworks, approaches and strategies for dealing with the major challenges posed by the dynamics of rural transformation in emerging economies driven by domestic and international trends. 

By bringing together senior-level policy makers and public sector administrators, as well as representatives from academia and civil society, we seek to share models, experiences and innovations that work, including new and flexible approaches that leverage the forces of globalization for benefit of the poor rural people. We seek to strengthen understanding between countries facing similar challenges and to build new networks between common interest groups.

We met in New Delhi with the firm expectation that this would be a first step towards a process of regular and systematic South-South learning and collaboration. The delegations from the four countries agreed on a number of measures to facilitate the further development of this process.

These comprise a two-level approach. First at inter-ministerial level carried out through the appropriate official channels, and second to continue with the open, multi-stakeholder and informal forum that emerged in New Delhi. These two approaches should interact and be supportive of one another.

It was also agreed that at some point these processes should be opened to other developing and emerging economy countries that are interested in South-South learning and collaboration to better meet the global and local challenges of rural transformation.

Thomas Elhaut, Director, Asia and the Pacific Division

Useful links:

International Conference on the Dynamics of Rural Transformation in Emerging Economies

Upcoming missions and events

Cambodia

China

India

Indonesia