SMAP loans elevate 5 lakh farmer families from poverty

Changing lives and livelihoods

• SMAP is a joint project of Jica and central bank
• Jica provides funds at 0.01% interest rate
• 19% interest at final level due to regulations
• 4.84 lakh farmer families elevated from poverty
• 6.14 lakh farmers trained for free since 2016
• 83.7% of trainees under SMAP are women
• 11 MFIs disburse loans to marginalised farmers
• Weekly, monthly instalment schemes available

Life was difficult for Pabna's Salma Khatun and her husband Azizul. 

Already struggling to provide three square meals on the table with her husband's meagre daily wage earned from sharecropping, Salma became more and more distraught after having two children.

Despite facing such overwhelming odds, she dreamt of achieving financial independence. On suggestion from her neighbour, Salma took out an agricultural loan of Tk40,000 in 2016 from an NGO named CDIP.

Thus began a new chapter in her life. Starting from nothing, Salma presently owns 23 cows and an agricultural farm after five years of hard work and dedication. She has become a shining beacon of self-reliance in her village, thanks to the loan and CDIP's hands-on training.

More than 4.84 lakh farmer families just like Salma's have dramatically improved their lives through similar initiatives – made possible by low-interest loans from Small and Marginal Sized Farmers Agricultural Productivity Improvement and Diversification Financing Project (SMAP).

Aside from agriculture, they are returning profits from farming fish in water bodies, raising cattle and poultry, and sewing Nakshi Kanthas. These people have become the architect of their fortune.

Speaking about her venture, Salma said, "My husband and I have struggled for food ever since our marriage. We had to starve whenever my husband became ill. I am now financially stable and my family is happy. I also have a maid for doing chores in my home.

"I earn around Tk25,000 by selling cow milk every week. Besides, I made Tk5.5 lakh by selling four bulls last Eid."

Providing more details about CDIP's activities, its Deputy Assistant Agriculture Officer Zahid Hassan said, "Salma turned her life around with loans from the SMAP – supported by Japan International Cooperation Agency (JICA) and supervised by the Bangladesh Bank.

"Under this project, Salma took out a Jagoron Loan of Tk40,000 in 2016 based on weekly instalment payments. Later on, she took another loan of Tk1.3 lakh, with the option of paying back in monthly instalments."

He continued, "She paid back every Taka she borrowed, and presently she owns an agricultural farm. Salma has become very successful in raising poultry and farming crops. She is now offering training to people in the area."

Munshiganj's Nasima Khatun was going through similar financial challenges as Salma. Her husband Mohiuddin had only a few decimals of farmland, and the family struggled to earn enough money for buying food.

SMAP showed Nasima the means to become a self-reliant person. With a Tk50,000 loan and free training, she started raising cattle and farming in 2016. Nasima currently owns 30 cows, giving 50-60 litres of milk daily. 

She also grows and sells vegetables worth Tk10,000-Tk12,000 per month. Nasima and Mohiuddin live comfortably after marrying off their daughters. She has become an inspiration in her locality through her perseverance and resilience in achieving financial freedom.

"CDIP's loan has changed my life for the better. I survived my trials, and everyone here calls me Apa [Bangla for elder sister] out of respect," she told The Business Standard. 

Once struggling to cover even bare necessities, nearly five lakh families are now waking up at the crack of dawn to cultivate their lands, raise farm animals for milk and meat, farm fish, and engage in other income-generating ventures.

6.14 lakh farmers trained so far

Md Amzad Hossain, general manager and project director of SMAP Implementation Unit, Agricultural Credit Department of the Bangladesh Bank, said, "Under this project, nearly five lakh farmer families have received loans, while 6.14 lakh farmers received hands-on training.

"Marginalised farmers from across the country were trained on agriculture, raising and fattening cattle, and veterinary treatment."

According to the finance ministry sources, Jica took up the project in 2014 intending to create skilled farmers in Bangladesh through loans and training. Field level work began at the end of 2015 with a capital of Tk600 crore.

Under the supervision of the central bank, eleven micro-finance institutions (MFIs) including CDIP, ASA, Sajida Foundation, Uddipan, and Varc engaged their 2,000 branches for the project. 

Since then, Tk2,391 crore has been disbursed as loans to farmer families through re-scheming and refinancing. Stakeholders are optimistic that the amount will exceed Tk5,000 crore by 2029.

A SMAP official, on condition of anonymity, said, "The loans with a 0.01% interest rate from Jica did not only facilitate socio-economic development of farmers in Bangladesh but helped develop the infrastructure of local MFIs too.

"To implement the project, every MFI had to appoint and train agriculture officers. These officers were also oriented in multimedia projects to disseminate training to farmers." 

Lower interest, easier instalments

Rajshahi's Tofazzol Hossain took out a loan of Tk20,000 with a 29% interest rate in 2010. He was planning to improve his financial situation by cultivating his 210 acres of land. But instead of turning a profit with his venture, he became entrapped in debt.

Weekly instalment payments and the high-interest rate gradually multiplied his Tk20,000 loan several-fold. The crushing debt nearly forced him to sell his farmland. He then learned about the Jica-Bangladesh Bank's SMAP at the end of 2018.

Tofazzol secured a Tk1 lakh loan and received training on cultivating paddy and potatoes. Though this loan also came with a 19% interest rate, he had the opportunity to pay it back with a six-month instalment scheme.

His life began to change for the better ever since. His harvest of hybrid potato allowed him to pay all his debts in full and netted him Tk50,000 in profit as well. 

"I had taken two loans from SMAP, and successfully turned a profit through agriculture. I managed to pay back my previous loan and the SMAP loan. I now have enough capital at hand to launch my next venture."

Rasheda Begum – an award-winning farmer in Chattogram – also changed her life for the better through the lower interest rate and easier instalment facilities provided by the SMAP. She is presently training other people so that they can also become financially independent.

Speaking to The Business Standard, Rasheda said, "I took out a 1.1 lakh loan and leased 30 decimals of land to cultivate beans. I managed to pay off all my debts in just four years. I also won the Best Bean Farmer Award in 2020. I owe a debt of gratitude to SMAP.

Discussing the interest rate, Project Director of SMAP Implementation Unit Md Amzad Hossain said, "Jica provides us with the fund with a 0.01% interest rate, but due to the government directive and local regulations, the interest rate stands at 19% at the final level.

"It is usually over 27% in most microfinance institutions. We however provide training and advice to farmers for free, and such initiatives benefit them greatly. Besides, the loan recipients do not have to pay back in mandatory weekly instalments."

83.7% of SMAP trainees are women

According to the National Labour Force Survey, the number of women participants in Bangladesh's agriculture sector is still lower than men. But the SMAP has been an exception to this rule. Among the 6.14 lakh trainees, a staggering 83.7% are women. 

A similar percentage of women have also taken loans from this project.

On the matter, SMAP's Deputy Director Morshed Alam said, "The project has made the women both financially independent and skilled at their craft. Coming from impoverished families in rural areas, they are now well respected by their communities.

"Under the SMAP project, Bangladesh is fulfilling three goals of the Sustainable Development Goals (SDGs) – empowerment of women, poverty alleviation, and meeting food and nutrition needs."