Role of micro-finance for economic uplift of urban poor women (A study on Rishi Para slum, Narayangang Pouroshova)

1.1        Background

Bangladesh is a poor and third world developing country. Natural disaster, lack of better livelihood in rural areas caused migration from rural areas to urban areas. As a result urban population is increasing rapidly. About 23.39 percent of people live in various urban areas. A larger number of them are poor and live in the urban low-cost housing such as slums, squatters and their number is increasing day by day. Increasing the urban population more jobs are required in urban areas. But the country can not ensure large number of jobs for the growing urban population. As a result, there is a large gap between the employment and unemployment among labor force. On the other hand self employment is difficult for the poor people because of low capital, skill, lack of education etc in urban areas. These lead to urban poverty and growth of slums and squatters to accommodate them.

The goal of economic development of the country is to increase the well being and quality of life of the population through economic growth. Though women constitute about 49 percentages of the total population of Bangladesh their situation is not satisfactory compared to men. Despite the constitutional manmade that women cannot be discriminated in respect of any employment or office of the state, women’s visibility in the public services has been negligible. Their participation in institutional development and decision-making is also minimal in the country. Besides, most of the women are poor. They have no control over capital and have to work in gender ascribed roles in areas of employment with low wage and poor economic prospects. They are socially vulnerable and live at the lowest level of poverty. In urban areas women’s employments are concentrated in certain labor intensive activities such as the construction, garments, pharmaceutical, jute, electronics, baked food, fish processing industries, street food selling, tailoring, livestock, maid servants etc. Working women's participation in the informal sector is disproportionately higher than in the formal sector in urban Bangladesh. Being poor and lack of proper education, skill and capital urban poor women have little access to formal activities. More-over a significant part of them are involved in the informal sector economy, which plays important role for them to improve their socio-economic conditions.

Women face the greatest obstacles in the working sector are – lack of access to resources or lack of capitals in urban areas. From eighteen the lack of access to resources or lack of capitals has largely been solved by the discovering Micro-finance techniques. Micro-finance plays a great role in uplifting the social and economical conditions for the poor women. It has been focused as an important financial instrument to generate economic activity for the poor women in the informal sector. Women who are involved in the urban informal sector activities have increasingly become a key target group for micro-finance programmes. The strength of micro-finance lies in its ability to organize idle women into a productive workforce with their proven credit-worthiness. It is believed that 25 million people both in rural and urban areas in the worldwide are now using micro-finance to undertake income-generating or self-employment activities and 90% of them are women. The impact of micro-finance is very much positive for the urban poor women. Micro-finance not only makes women more productive, but it also empowers them. Similarly, it can integrate the women into the mainstream of socio-economic activities through contributing to family income and decision making and exercising more control over their fertility. In spite of having some criticisms micro-finance has been focused as a very effective instrument for economic upliftment of the poor women in the third world countries like Bangladesh. This research has conducted to measure the role of micro-finance for economic upliftment of the female headed urban poor women of a slum of Narayangang Pouroshova. 

                                                           

 1.2        Objectives

The specific objectives of the study are as follows:

q  To study the socio-economic conditions of the female headed urban poor households.

q  To study the role of micro-finance for economic upliftment of urban poor women engaged in the informal sector activities.

 1.3        Research questions

Some logical questions are essential for accomplish the study which may affect the total study. The research findings will depend on the creative answers obtained for these questions which also define the specific objectives of the research. The research questions will be more objective oriented. The clarified objectives depend on these questions as specified below:

·    Who are the urban poor women?

·    What is the status of the urban poor women in terms of education, health, employment?

·    What is informal sector?

·    Why urban poor women want to be involved in informal sector?

·    What are the roles of informal sector activities in employment creation among the urban poor women?

·    What is the impact of informal sector activities?

·    What is micro finance?

·    Who is the provider?

·    What is the system of micro finance?

·    What are the objectives of micro-finance?

·    What is the impact of micro finance on its recipients?

·    Why do urban poor women get involved in micro finance?

·    What are the indicators of economic upliftment?

·    How does micro finance help to economic upliftment of the poor women?

·    What are the roles of the micro-finance in economic upliftment for the urban poor women?

·    What are the problems of micro-finance for the urban poor women?

 1.4        Justification of the study

As a poor country most of the women are illiterate and their social status is very low. Women are expected to perform familiar rather than extra familiar roles and avoid contract with the public realm, especially in terms of employment and exposure to strangers. They have no direct control over the means of production or other social and economic resources. Besides, the urban poor women lack capital to generate employment and income. Where the formal banking system are failed to provide credit to the poor women, the micro-finance organizations such as NGOs, Local somiti are the great helping hand for the poor women access to credit. Micro finance extends small loans (about tk 2000 to tk 25000) to very poor women for self-employment projects that generate employment and income, allowing them to care for themselves and their families.

Micro-finance can plays a very effective function for economic upliftment of the urban poor women. Sufficient amount of credit in a reasonable interest rate with reasonable installment and repayment are the essential parts in terms of taking credit for the poor women. The poor women want their required amount of credit in a reasonable interest rate with reasonable installments and repayment period from the credit providers. Besides, the micro-finance providers should provide credit for self employment and income generating for the poor women.  

The economic upliftment of the poor women can be measured with the increase of employment, income, money contribution to family, savings, access to expend for major resources, insurance or life security and living standards. Taking finance, the urban poor women can find works in informal sector, earn money which can help to uplift their economic condition. Micro-finance not only provides finance but also generates savings and insurances facilities for the poor women. These are really beneficial for the economic upliftment of the poor women.

The current research tries to find out how to uplift the economic condition of the poor women in Rishi Para slum through involving into micro-finance.

 1.5        Limitations of the study

Like all other researches, this study also faced some problems such as, lack of money and lack of time. As this study is related with people at the grass root level, some extra problems were faced. The people of the slums are not educated and aware of their problems so it was difficult to extract answers from them.

            It was a hard job to identify the socio-economic conditions of the poor people. Most often the occupations are not permanent and income from these occupations could not be justified properly. Like middle income and higher income people, the expenditure pattern is not always well structured for the urban poor people and there are a few specific fields for fixed expenditure. Moreover, there is a permanent disparity between income and expenditure. Again, there is a tendency among the people not to disclose the exact income to any other people and strangers. Hence, it was a great problem in identifying the income and expenditure pattern of the slum dwellers.

            Sometimes, it was difficult to identify the age of the women. This was done in an indirect way; either from the years the women spent for studies with respect to the current educational condition or from age of marriage and so on.

            It was very difficult task to differentiate between primary and secondary occupations, as most of the occupations are not permanent. Besides, these are some informal occupations that have no fixed places to perform. For example, rickshaw drivers, daily labours and hawkers. The distances between working places and residences for these people could not be properly identified.

Another problem was arisen during taking informations from the micro-finance organizations. The organizations were not friendly to give real information.

            The institutional setup for the database management is not so rich in Narayangang Pouroshova. The secondary sources of the data related to the Narayangang Pouroshova are not available.

            Moreover, there are few researches done on the micro-finance for economic upliftment of urban poor women and the secondary sources of data related to the topic are not readily available.

 1.6        Literature review

Limited publications have been found having relevant articles and specific chapter and discussions about the analysis of role of micro-finance in economic upliftment of urban poor women. Various secondary sources like – Books, journals, unpublished thesis, reports etc.

Books

§        In “Expanding Micro credit Outreach to Reach the Millennium Development Goal- some Issues for Attention” by Muhammad Yunus (2005) described that Micro finance Summit of 1997 set the goal to reach 100 million poorest families with micro-finance, along with other financial services, preferably through the women in those families by 2005. He said that by the end of 2001, more that 26.8 million poorest families around the world have been benefited from micro-finance and most of them are the poor women. The author described that women empowerment is very important for the socio-economic development in the poor countries. He suggested that micro-finance organizations should play a golden role for the poor women in both urban and rural areas. He also suggested some considerations for the formation of micro-finance :

• The law should be designed in such a way that it becomes it attractive for the NGOs to convert themselves into formal financial institutions.

§  A regulatory body should also be created simultaneously to oversee the operation of the microfinance banks and to facilitate their activities. Microfinance regulatory body should be independent from the central bank, but participated by the central bank. It can be created in the form of a Microfinance Commission.

§  The law may allow creation of microfinance banks with several options in terms of operational areas and levels of services. These levels may be defined by geographical areas, like, sub-districts, districts, provinces etc.

§            In From the Margin to the Mainstream: Micro-Finance Programmes and Women’s Empowerment: The Bangladesh Experience, Gita Sabharwal (2001) described about the micro-finance programmes, the development theory of micro-finance, women’s participation in micro-finance, their empowerment and development. She said that taking micro-finance many poor women not only improved their living condition, but also increase their economic participation in to their family, their knowledge, opinions.

§            International Year of Micro-credit 2005; Building Inclusive Financial Sectors to Achieve the Millennium Development Goals by United Nations (2005) underscored the importance of microfinance as an integral part of the collective effort to meet the Millennium Development Goals. It said that sustainable access to microfinance helps alleviate poverty by generating income, creating jobs, allowing children to go to school, enabling families to obtain health care, and empowering people to make the choices that best serve their needs. UN demonstrated the impacts of micro-finance in the following way:

• Micro-finance helps poor households to meet their basic needs and protect against risk.
• The use of financial services by low-income households leads to improvements in household economic welfare and enterprise stability and growth.
• By supporting women’s economic participation, micro-finance empowers women, thereby promoting gender- equity and improving household and improving household well-being.
• The level of impacts relates to the length of time clients have had access to financial services.

Journals

§            “Empowering women through micro-credit” by Susy Cheston and Lisa Kuhn (2002) discussed that although microfinance does not address all the barriers to women’s empowerment, microfinance programs, when properly designed, can make an important contribution to women’s empowerment. The authors began by examining some of the theories and assumptions behind the targeting of women for microfinance and the resulting implications for empowerment. Drawing on the studies and experiences of microfinance institutions in Africa, Asia, and Latin America, the paper looks at what evidence is known about impact on women, in terms of both welfare and empowerment.

§            “South Africa key to Africa's economic upliftment” by Sapa (2004), said that Johannesburg - Developing South Africa's financial sector is key to improving the economy of the entire continent says National Treasury director-general Lesetja Kganyago. "Although South Africa is the largest financial centre on the continent, its capital markets have yet to play a significant role in channeling debt and equity capital to where it is needed for African infrastructure projects, direct investment and government finance".  Current levels of domestic savings and foreign direct investment in Africa fell short of the capital needed to achieve Nepad's goals. "A strong regional financial centre can help cater to the capital needs of the region, especially if African entities were a key focus rather than a global afterthought.

§            “The Coffee Beans Route”, in Kalkfontein Township, Cape Town by the Khoisan Development Trust, Kalkfontein (2004) discussed that with the help of micro-finance poor women can uplift their socio-economic conditions. The study discussed that with the help of micro-finance many poor women have been uplifted their economic conditions. They have been found their jobs in the small business such as digital photography, bakery, coffee-shop, outside catering service, cobbler etc. Their income has been increased, savings has been increased, a money contribution to family has been increased. Not only that but also their living standards has been improved. They become stronger in their knowledge and opinions.

Unpublished thesis

There have been little investigations and research on this type activity in Bangladesh.

§            A study of Md. Golam Mostafa (2002) on “Women in urban informal sector and their activity pattern” – A Case Study of Some Selected Slums in Khulna” discussed about the women who involved in urban informal sector and the role of micro-finance. The study discussed that micro-finance has been played an importance role for the poor women and resulted that many women have improved their socio-economic conditions through taking micro-finance. The study also focused that micro-credit not only improving the socio-economic conditions of the poor women but also their keen intelligence has been utilized in income generating activities.

Reports

§            Women in the informal sector and their access to microfinance, the report of ILO (International Labor Organization) (1998) for the Inter-Parliamentary Union (IPU) Annual Conference, Windhoek, Namibia, presented a completed feature of accessing micro-finance for women in urban informal sector. The paper focused on the women in urban informal sector, the targeted group of accessing micro finance for the women in urban informal sector, the most common programmes, the mechanisms of the micro-finance institutions, the classification of the micro-finance, the impacts of micro-finance and its control. According to the paper the features that most programmes have in common are:

• Close targeting of the neediest borrowers.

§  Decentralized loan delivery and management systems through intermediary.

§  Institutions or parallel banking system

§  Group formation to ensure financial discipline.

The paper also presented the classification of the mechanisms providing women with access to financial services. According to the paper the mechanisms may be:

• Social programmes.
• Intermediary programmes.
• Parallel programmes.
• Poverty-oriented development banks.
• Community revolving loan funds.
• Savings and credit cooperatives and unions.

The paper also presented the characteristics of the micro-finance institutions. These are:

• Offering primarily short-term working-capital loans.
• Having a turnaround time for loan approval of less than 2 weeks.
• Providing services close to borrowers' home or work.
• Charging interest rates significantly above the rate of inflation.
• Having lower salary levels than financially less viable programmes.

The paper focused that both in side and out side of the home micro-finances have a positive impact on the livelihood of poor women.

§  Leading to higher income that will help women to better perform their reproductive role as brokers of the health, nutritional, and educational status of other household members.

§  Increasing women's employment in micro enterprises and in improving the productivity of women's income-generating activities.

§  Enhancing their self-confidence and status within the family as independent producers and providers of valuable cash resources to the household economy. 

 1.7        Operational definitions

1.7.1    Micro-finance

Microfinance is the term used to refer to different methods for giving poor people access to financial services. Generally, micro-finance is the basic financial services, like finance, savings and insurance, give poor people an opportunity to borrow, save, invest and protect their families against risk. It also helps to secure a family’s food supply, buy medicine and pay for children’s education.

1.7.2    Urban poor women

The urban poor women are those who are living in unhygienic and low graded habitats in urban areas and can not afford basic needs of life with their very low income. Basic needs requirements include food and nutrition, clothing, primary health care, education and shelter. The specific criteria of the basic needs are as follows—

§  Nutrition: 2122 kilo calories, as minimum requirement

§  Clothing: At least two sets of clothes

§  Health: Real access to the primary health care facilities

§  Education: Access and ability to obtain primary education or vocational training with literacy.

§  Shelter: An independent room which is strong enough to withstand weather elements and which provide minimum decent privacy with access to drinking water and toilet facilities.

1.7.3    Urban informal sector

The informal sector describes economic activity that takes place outside the formal norms of economic transactions established by the state and formal business practices but which is not clearly illegal in itself. Generally, the term applies to small or micro-business that is the result of individual or family self-employment. It includes the production and exchange of legal goods and services that involves the lack of appropriate business permits, violation of zoning codes, failure to report tax liability, non-compliance with labor regulations governing contracts and work conditions, and/or the lack of legal guarantees in relations with suppliers and clients. As such, it is conceptually, methodologically and theoretically difficult to define in terms of its precise nature, size and significance. There are two characteristics of the urban informal sector that are worth to mention:

·    In general, firms and workers in the informal sector do not pay fees or taxes and the administrative procedures are simplified.

·    It is difficult to protect the rights of the agents employed, as the informal- sector does not always comply with the rule of law.

Informal activities are the way of doing things, characterized by the following:

·    Ease of entry

·    Reliance on indigenous resources

·    Family ownership of enterprises

·    The small scale of operation

·    Labour-intensive and adapted technology;

·    Kills acquired outside the formal school system

·    Unregulated and competitive markets.

In addition to the above characteristics, the following are included:

·    Units work outside the formal administrative networks that cover the formal sector;

·    A relatively low level of capital requirement.

1.7.4    Self employed

            Self employment is used to refer to subsistence cash-crop or non-cash crop agricultural activities such as small industries, small business, trade and commerce, transport and services one carries out on one’s own to produce food grains and other commodities, goods and services for consumption by the members of the family or for the markets,

1.7.5    Wage employed

            The term wage employment generally associated with work in exchange for wages/salaries in cash/kind.

1.7.6    Unpaid family worker

            Unpaid family worker has been used to refer to those women who assist husband/male family members in their economic work without payment. Sometimes they provide finished goods for sale by the male members of the households without payment. In the process, they become invisible producers without any financial or other benefits directly accruing to themselves.

1.7.7    Slum

            In the respect of this study:

·    A slum is predominately an overcrowded area which is an advance state of decay where dwellings are unfit for human habitation.

·    It is an area where basic amenities like water supply, drainage for standard living are lacking, unsanitary condition prevail and diseases flourish.

1.7.8    Economic upliftment

Economic upliftment means the economic development, economic raise of the people. In this study economic upliftment has been measured with employment, income, money contribution to family, savings, insurance, major and valuable resources, living standards etc.

 2.1        Introduction

 Methodology is the working frame work of the study which gives a complete idea about how the study was done. To complete the study, the following sequential activities were performed.

 2.2        Selection of the topic

Bangladesh is a third world country in the world. For the rapidly growing urban population and limited resources in every event people have to competition for their existence. On the other hand the urban poor women have a little capital or nothing. But they have the ability to do something. Due to the low amount of capital, low education rate of women, most of them are engaged or want to be engaged in the informal sector activities. Micro-finance can play a great role in economic upliftment for the women who involved in the urban informal sector activities. In many developing countries, micro-finance have played a great role for the poor women and also changed their socio-economic conditions. The title of the study has finalized after identification and realization of the above problems.

 2.3        Selection of the study area

The selected study area is Rishi Para slum in the Narayangang Pouroshova. Having many industries, manufacturing factories, garments, port, railway station and well road network and being a part of Dhaka Mega City, people migrate there. The slums of Narayangang Pouroshova provide shelter to a great majority of the poor people who are involved in urban labor markets and are employed in informal sector activities. It provides shelter to a large number of the poor people in various slums, squatters, low cost housing etc. The reasons for choosing the study area in Narayangang Pouroshova is that it continues to hold and nurture large informal sector activities where an ever increasing number of job seeking women are migrating from various parts of Bangladesh. On the other hand, many NGOs, socio-economic development organizations and Local Somities are involved in this area. They are playing their effective roles for socio-economic development and economic upliftment for the poor people especially for the poor women. These organizations also provide credit to the poor women for uplift their socio-economic conditions and income generating in the informal sector activities.

2.4         Data collection

Both primary and secondary data have collected for the study purpose.

2.4.1    Primary data collection

            Primary data has collected from the field survey through questionnaire survey method.

2.4.1.1 Field Survey

2.4.1.2 Reconnaissance Survey

After selecting the topic, the study area preparing the working schedule and enlisting data sources, a reconnaissance survey have conducted in the study area. It will help to gain a clear idea of the study area and also to make an efficient questionnaire for the study. In reconnaissance survey attention has given on the different aspects of the role of the informal sector and their impacts, the socio-economic conditions of the urban poor women, the role of micro-finance and their impacts etc.

2.4.1.3Sampling

Sampling is the process of selecting a subset of individuals from a large group of individuals, the selection being done with a view to drawing inferences about the larger group on the basis of information obtained from the subset. The larger group of individuals is known as population and the subset is known as the sample. The sample design refers to the technique or the procedure the researcher would adopt in selecting items for the sample. For this study, the total households of the study area have used for the sample size determination. First the initial sample size has determined and then the sample size has determined. The following technique has used for the present study 

2.4.1.4Questionnaire preparation

After reconnaissance survey and sampling, a well defined and structured questionnaire has prepared.

2.4.1.5Household survey

            Following types of data have collected from the study area through field survey:

Data types	Items
Socio-economic data	§  Household head §  Family informations Age, Sex, Marital. Religious status Housing conditions Educational status Income pattern Expenditure pattern Savings Housing conditions Room occupancy Room size and density §  Urban facilities §  Other facilities §  Distance of services and facilities from home etc.
Employment data	§  Self employment §  Wage employment §  Unpaid family labor
Informal sector data	§  Types of informal sector activities §  Women in informal sector activities §  Role of informal sector activities in self-employment, etc.
Micro-finance data	§  Micro-finance providers §  Programs for economic upliftment of micro-finance providers §  Micro-finance systems (finance size, interest rate, repayment periods, installments, etc ) §  Women recipients in micro-finance
Economic upliftment data	§  Overall change in annual employment §  Overall change in annual per income §  Overall change in annual per money contribution to their family §  Overall change in annual per savings §  Overall access to expend in annual major resources §  Overall change in annual insurance/life security §  Overall change in living standards

2.4.2        Secondary data collection

Secondary data has collected from various secondary data sources like - books, published and unpublished thesis and researches, newspapers, journals, various active NGOs in relevant works, Bangladesh Bureau of Statistics (BBS), Government organizations like-Narayangang Pouroshova, Local Government and Engineering Department-Dhaka and Narayangang. Following types of data has collected from various sources for the study:

Data types	Sources
·    Information of Narayangang Pouroshova	·BBS, 2001
·    Map of the study area	·Narayangang Pouroshova & LGED, Dhaka
·    Involved NGOs in the study area ·    Provided facilities ·    Micro-finance system of the NGOs	·NGOs ·Local people
·    Total population data ·    Female population data	·Local community
·    Others relevant data	·Newspapers ·Journals ·Reports ·Unpublished thesis ·Internet, etc.

2.5             Data processing & interpretation

After collecting the primary and secondary data from the field, data processing and interpretation has completed.

2.6         Data analysis and data presentation

In this stage, all the processed information and data has analyzed to fulfill the objectives of the study. After storing all the questionnaire data has grouped, categorized and interpreting according to the objectives of the study. Here the information has presented in the form of texts, tables, graphs, maps etc. For processing and analysis purpose computer data base software like Statistical Package for Social Scientist (SPSS), MS-Excel, MS-Access, MS- Word has used and for the map presentation Geographical Information System (GIS) and for presentation purpose MS-PowerPoint software has used.

2.7         Report final

After analysis and data presentation, a final report has prepared for its checkout.

2.8         Draft final

Final report prepared and after its checkout a final draft has prepared. Several drafts were made prepared for review and study of the supervision. After necessary accommodations of corrections the final report was prepared and submitted.