I.   Basic Project Data

Type of Evaluation:	Final
Project Number:	BGD/86/CO3
Programme Title:	Small Farmers and Landless Labourer's Development Project (SFDP)
Govt. Executing Agency:	Rural Development and Cooperatives Division, Ministry of the Local Government, Rural Development and Cooperatives
Executing Agent:	n/a
Cooperating Organization:	Bangladesh Academy for Rural Development (BARD)
Sector:	Agriculture, Forestry and Fisheries/Crops
Sub-sector:	Agricultural Development Support System
Date project approved:	27 April 1988
Date project started:	July 1990
Date Mid-Term Evaluation:	April 1995
Date project ended:	June 1998
Date project evaluated:	February 2001
Project budget
UNCDF:	US$   695,653
UNDP:	267,640
Government of Bangladesh:	(in kind) 273,330
Janata Bank:	324,360
Total:	1,560,983
Actual Expenditures at Evaluation:	1,560,983

II.   Background

Small farmers and landless labourers in Bangladesh constitute around 60%of rural households in Bangladesh. Research has found that they are highly productive, use inputs and services well, and have a high propensity to invest in order to maximize profit. However, most small farmers and landless labourers obtain credit from the informal credit market with high interest rates (yearly rate of 120 to 200%). The lack of low interest credit, and limited access to formal financial institutions have been identified as major factors in low productivity and in perpetuating poverty. In a context of widespread poverty and limited coverage of the rural poor population by rural development programs, the Small Farmers Development Project (SFDP)was formulated.

Towards its goal of development of small farmers and landless labourers in Asia, the Food and Agricultural Organization (FAO)conducted a study, the ‘Asian Survey of Agrarian Reform and Rural Development, ’in 1972 to formulate recommendations for the improvement of the lives of small farmers and landless labourers of the region. The development of small farmers and landless labourers was considered important because these socio-economic groups were perceived as significant contributors to the economy. Following the recommendations of the study, the government of Bangladesh (GOB) initiated the SFDP in 1976. It started as an action research project under the Bangladesh Academy for Rural Development (BARD). At that time, the project provided collateral- free credit to the rural poor. In fact, this was the first poverty alleviation project through the provision of micro-credit. The SFDP was only launched as a full-fledged programme in 1988, with institutional support and resources of the Ministry of Local Government and BARD under the Third Five-Year Plan period (1985-90).

The programme was implemented in eight villages of the three Sadar thanas (sub-districts)of Comilla, Bogra and Mymensingh districts;and BARD, the Rural Development Academy (RDA), and the Bangladesh Agriculture University (BAU)were entrusted with the responsibility of monitoring programme activities in those three regions respectively. Later, SFDP activities spread into 22 thanas in eight districts of Bangladesh. Initially, FAO provided technical assistance to the project for three to four years. Later on, in 1988, UNDP and UNCDF came forward to fund the project. The UNDP funding terminated in June 1991 while the UNCDF continued its support to the project up till 1998. The SFDP is still continuing with support from GOB and Janata Bank.

III.   The Project

Development Objectives

The SFDP was formulated to help alleviate poverty in rural Bangladesh. The development objectives of the project were to create self-employment for landless labourers and to increase the productivity of small farmers through the provision of micro-credit. The project was to build linkages with the formal commercial banking sector and to develop inter-group associations and self-sustaining village groups that are economically and socially viable, through participatory management. Other objectives of the project included development of extension services like health, irrigation, other inputs, technology, etc.

Immediate Objectives

The immediate objectives were to:

1. Create employment for the small farmers and the landless;
2. Raise agricultural production through organized groups in order to raise income.

Outputs

In order to realize the above objectives, the project activities were to yield a series of outputs:

1. Organize 27, 800 small and landless farmers into 2, 780 credit groups in 200 villages covering the entire Patuakhali District and the Sadar thanas of Bogra, Comilla and Mymensingh;by project termination, approximately 42, 500 (cumulative)small and landless farmers will have benefited from small scale credit for income earning opportunities.

2. Almost 4, 000 groups linked directly with the banks for obtaining loans against their savings with working capital loans totaling Taka 160 million (US$400, 000)in cumulative disbursement to group members;

3. Disburse US$500, 000 in credit;

4. Develop inter-group associations with the small and landless groups;

5. Build capacity of the village groups for self-management so that they can function independently, like BRAC groups;

6. Train village groups to operate credit programs directly with the delivering banks;

7. Train extension workers in the groups who can help enhance their productivity, income and self-sustainability.

The inception report conceived of three major project inputs (or components), of which credit was the most crucial. The village groups formed under the project would get credit from a commercial bank and the group members would establish links with the bank through the operation of credit to support their farm and non-farm income- generation activities. Training was another important input. Training would be provided in livestock, fisheries, horticulture, education, health, nutrition, sanitation, etc. The goal of training was to develop skills amongst the group members to enable them to use the loans more effectively. The last input was the management and monitoring aspects of the project, which would be done primarily by the BARD authorities with specific inputs from Janata Bank and UNDP.

IV.   Evaluation Findings

Evaluation of Results

SFDP had quite successfully attained its social development objectives. Group members from all project areas benefited from activities during the project ’s lifetime. The coverage and disbursement of credit exceeded targeted amounts. While the targeted number of group-members to benefit from credit operations was 42, 500, the actual number of group-members reached 55, 667 by 1998 when UNCDF ceased funding. The number of groups reached the level of 8, 660 against the target of 4, 000. The credit disbursement (cumulative)reached a level of Taka 471. 61 million against the target of Taka 160 million. However, the training goals were not fully met. SFDP project authorities trained 3, 355 persons, only 6 percent of the 56, 000 participants. The duration of the training programme was too short and the quality of training was found to be low as well. Consequently, the training failed to develop and enhance skills.

Although the project attained its physical targets, the pace of improvement of socio- economic condition of the group members was slow. The majority of the beneficiaries of SFDP could not move up the socio-economic ladder in the two decades of project period. The contribution to farm and non-farm production was also marginal. Group members involved in small or petty businesses enjoyed greater economic flexibility. Particularly in the Comilla Sadar area, many members operated small businesses to earn a handsome living. However, these small business owners were not poor to start with. They were able to become group members due to the lack of a systematic selection process. Any improvement in the economic conditions for most other group members was due to an overall progress in the national economic growth. It was not certain whether the project would continue without government and other additional support. The project would not be sustainable solely based on the strength of existing institutions and group members ’savings. The BARD authorities were planning to institutionalize the SFDP with government support. Janata Bank could also play a more dynamic role in project ’s continuity and sustainability through well-designed credit operations.

Despite the above limitations, there are some indications that the SFDP have had some overall socio-economic impact. Group members were interviewed to assess this impact. Several indicators (both quantitative and qualitative)–income level, savings, educational level, housing condition, etc –were used in the assessment. The interviews showed that the level of income for group members was very low before project inception;58%earned below Taka 80 per month. The majority increased their income by Taka 200 to Taka 600 through involvement in project activities. Using very small loans as seed capital, many respondents even earned between Taka 400 to Taka 800 a month. For the rural poor, such an income could play a significant role in alleviating poverty. The savings level also rose significantly for most of the respondents during the project period.

Group membership increased access to better housing conditions for many. Some respondents were able to replace their katcha ghar and adha-katcha ghar (clay huts) with tin-sheds and brick houses. The social-status of women also improved consistently. Female members of the households attained higher educational levels and were more involved in family decision-making process. Credit operations of SFDP created banking opportunities for many group members, though the majority of them still could not operate accounts without assistance.

Evaluation of the Project Design

The project design was reasonably sound under the circumstances prevailing at project inception. Subsequently, limitations emerged in the following areas:

1. The project aimed at raising agricultural production as well as non-farm output largely through micro-credit. A combination of skill development through intensive training along with the provision of access to credit could have achieved these goals more effectively.

2. The SFDP activities followed a vertical expansion when it should have grown horizontally. A horizontal expansion by concentrating project activities in only a few areas would have made poverty alleviation impact more visible.

3. According to the project guidelines, membership eligibility was to be assessed on the basis of land ownership. Later, income level was included as a criterion. However, these criteria were not used consistently in the member selection process. Especially in the Comilla Sadar thana, where many middle-class farmers, as well as some from higher income groups, became group members, in violation of the project guidelines.

4. The average initial loan amounted to Taka 3, 000 only, which was insufficient to buy even a cow or to undertake a small fishery endeavor. The amount needed to be higher to undertake any income generating activity (IGA)and to alleviate poverty effectively.

V.   Recommendations

Training received a lesser degree of attention in the project than required. It also needs to be redesigned to benefit a large number of group members. Training should also be organized near the project areas to reach a maximum number of group members.

The role of the Group Organizer (GO)was crucial for group members. The GOs should have, at least, a college degree with proven background and skills. Their remuneration needs to be raised substantially to attract qualified candidates and their accountability must be ensured. GOs must visit SFDP project areas frequently and should be provided with transportation. They should be provided with management and other special skills training to pass on to group-members.

Although the repayment period was 18 months, most members repaid their loans within a year. The recovery rate was quite satisfactory but earnings could be increased if the loan amount is increased and the repayment schedule made relatively longer.

Groups were formed with the duel objectives of (i)group savings and (ii)learning from each other. In reality, group members only met to secure loans and to pay their installments. The GOs should organize regular meetings and discuss IGA issues to generate new ideas for socio-economic activities.

The rate of interest for SFDP loans was close to the market rate charged by the authorized banks. It was lower than the rates charged by most of the NGOs. However, the inclusion of service charges and other costs related to loan disbursement made the total cost of loans somewhat high. The interest rate should be minimal to ensure people ’s active and continued participation in the scheme.

VI.   Lessons Learned

SFDP initiated a new approach of rural development and poverty alleviation programme in the country by utilizing a major nationalized bank in its efforts. Its key achievements include income generation and savings creation for poor households. However, there was a forced savings mechanism in place, as group members could not withdraw their savings even in emergencies. Yet SFDP strived to assist the poor to make efficient use of the money borrowed. The repayments were almost regular. The beneficiaries maintained their high savings propensity and they were willing and able to help themselves in improving living standards.

An interview with Rizia Khatun, a widow and a mother of four sons, indicated that credit could also be channeled into areas other than IGA. Rizia, owner of some agricultural land, took two SFDP loans -one for cow fattening and the other for rice-trading purposes. Instead she used both loans to pay for the education of her two college-going sons. Three of her sons are now employed and one married. Her family has become somewhat affluent. Her story demonstrates how micro-credit can finance education as well as other longer-term investment and asset building activities over an extended repayment period.

VII.   Composition of Evaluation Mission

• Research and Development Collective (RDC) was entrusted with the responsibility of final evaluation work.
• Mr. Mesbah Kamal, Dhaka University, Social Analyst, (Team leader)
• Mr. Ahmad Mukammeluddin, Micro-credit expert
• Mr. Matiur Rahman Dhaly, Economist
• Ms. Manashi Hazra and Ms. Hira Anindita Ghagra, Field-Investigators
• Mr. Mafizur Rahman Khandker, Field-Coordinator