Dr. Matiur Rahman & Shishir Reza :
A number of non-government organization-microfinance institutes (NGO-MFIs) are operating microfinance programme in Bangladesh to alleviate poverty as well as to retain their organizational sustainability.
As the life threaten coronavirus (Covid-19) spread out all over the world in the year 2020 and government in many countries including Bangladesh were forced to declare state of emergency like lockdown to protect to spread of the coronavirus. So among other sectors NGO-MFIs run microfinance sector was also disrupted in Bangladesh.
A survey revealed that livelihood of the loan borrowers became worse due to the lockdown declared by the government. A large majority of the loan borrowers mentioned that their monthly personal income, household average total monthly income and savings have decreased. Even they could not go outside for work or even they could not meet their relatives.
Many of the loan borrowers had no income during lockdown period so they were forced to spend their savings money. Some of the loan borrowers compelled to leased out agricultural land; a few of them had to starve / spent days without three times meal; some of them had to sell their cattle/livestock; a few of them failed to pay electricity bill, gas and water bill.
A good majority of the loan borrowers fall in difficulties to bear household expenses. A few of the surveyed loan borrowers compelled to sell their movable and immovable assets.
All the respondents admitted that due to Covid-19 and associated lockdown their school going children experienced hinder of session loss/ lesson learning at school. Many of them mentioned that they failed to take doctors help/ treatment for their own or any other person’s illness in their family.
A very good portion of the loan borrowers mentioned that due to loss of income generating activities (IGAs) they could not payback their loan installments timely. Many borrowers were bound to withdraw their savings money from the NGO-MFIs. Regarding psychosocial effects, a very large portion of the borrowers reported that they lived in acute panic and mental anxiety. Oppressive behaviour, paranoia, depression, spousal violence and violence on children in the family increased. Their feeling of uncertainty also increased during the lockdown period.
From the survey it has also been found that total number of member and the total number of active loan borrowers of NGO-MFIs have decreased during the pandemic. Loan disbursement has decreased. Loan realization/ recovery rate has been reduced and the overdue amount has increased. Total income from microfinance programme has decreased and the net surplus income has also decreased remarkably.
The net surplus income of NGO-MFIs has been reduced due to the following reasons: (i) as per Government decision the microfinance programme was operated in a limited scale for about 03 months (April 2020-June 2020) (ii) disbursement and realization of loan money could not be done fully during this period, (iii) local administration instructed to all NGO-MFIs for not creating pressure to loan beneficiaries for realization of the loan money until September 2020.
Thus, the Covid-19 pandemic and associated lockdown has affected thousands of loan borrowers financially, socially and psychologically. NGO-MFIs have also suffered to run the microfinance programme smoothly. Thus, all these findings indicate that there is a severe impact of Covid-19 and associated lockdown on NGO-MFIs microfinance sector in Bangladesh.
The NGO-MFIs have prepared strategic plan to overcome the situation. Bangladesh Bank has also allocated incentive packages for NGO-MFIs.
The microfinance programme of NGO-MFIs will turn around forward like before pandemic to serve for more than hundred millions of deprived and destitute women and men in Bangladesh.
In conclusion we can say that with all sorts of fear society is also coming back in to a new normal life. NGO-MFIs is also very much hopeful that their poor beneficiaries will be able to uplift their livelihood through the microfinance. Microfinance as a system, as a scheme, as a tool for fighting against poverty will sustained over time.
(Dr. Matiur Rahman is Research Consultant, Human Development Research Centre and Shishir Reza is Associate Member, Bangladesh Economic Association).
