11 lakh women microloan holders in Chattogram losing capital

Parveen Akhter, 28, a resident of Sitakunda municipality in Chattogram, obtained a Tk60,000 loan from a non-governmental organisation (NGO) to run a clothing business with her family. 

However, her business has been closed since the Covid-19 shutdown, so Parveen ended up providing for her family's expenses using her business capital. She has lost her direction and, with it, her capital.

Not only Parveen, but almost all of the approximately 11 lakh marginalised women in Chattogram who took the helm of their families – with income from business run by loans taken from NGOs – have lost their capital due to Covid-19 shutdown.

They are extremely worried about whether they will be able to repay their loans and start a business again. However, NGOs have stopped taking loan installments because of the Covid-19 crisis.

Young Power in Social Action (Ypsa), an NGO, said about 60 NGOs run microcredit programs in Chattogram to increase the income of the poor, the extremely poor and the disadvantaged.

Women use the microloans for: cattle rearing, agriculture, beekeeping, poultry farming, paddy husking, making puffed rice, running small shops or boutiques, sewing, cottage industries, operating beauty parlours, and making handicrafts.

At present, about 11 lakh women here are involved in income-generating activities by taking loans of about Tk35,000 crore from microlenders. 

Professor Dr Md Salim Uddin, Chairman of Executive Committee of Islami Bank Bangladesh and Bangladesh House Building Finance Corporation, said rural women have already spent about 30 percent of the loans taken from NGOs to support their families. Additionally, capital has declined by another 20 percent due to falling commodity prices due to Covid-19 crisis.

"With this, grassroots women entrepreneurs have already lost 50 percent of their business capital," he said. 

"Lenders will have to waive a portion of the loans or stop taking interest-free installments for at least three years to overcome the situation. Otherwise, it will be difficult to re-engage these women who have lost their capital in rural economic activities," he added.

Shamshunnahar, 55, Mirsarai upazila, said, "I have a bamboo business which I started with my own savings of Tk20,000 and a loan of Tk50,000 taken from an NGO. My business has been closed due to the shutdown. Expenses have been incurred due to a lack of money. "

Jasmin Akhter, 42, a woman with a disability in Sitakunda, said, "I used to run my family by making bags with a loan of Tk40,000 from an NGO, including my own savings of Tk5,000, when my husband fell ill. As the business is closed, I do not know how to repay the loan. "

NGO stakeholders said most of the NGOs run grassroots micro-credit activities in collaboration with the Palli Karma Sahayak Foundation (PKSF). Around 92 percent of the borrowers from these institutions are women.

Md Arifur Rahman, Chief Executive Officer of Ypsa, said the raw materials that they have bought or made with the loan are going to waste. Since many of them are not able to sell their products due to shutdown, they are losing more capital.

Additionally, women are at risk of losing their business and becoming unemployed as they have no alternative professional experience.

Arifur Rahman further said micro-credit lenders need to be more flexible in coordinating with the government so that women can continue their activities.

"Capital needs to be provided for women after the shutdown. Loan rescheduling and incentives should also be given to women and the grace period of the current loans should be extended by two or three months," he said.

Mohammad Alamgir, executive director of Organization for the Poor Community Advancement (OPCA), a Chattogram-based NGO, said the real picture will appear when the loan installments are received as per the government instructions after the end of the general holidays. Most women have lost their capital and business.

Like other sectors, women entrepreneurs involved in the rural economy need to be brought under incentives to re-engage them in economic activities.