(On-site evaluation: April - May 2006)
Ex-Post Monitoring of Completed ODA Loan Projects
Evaluator:

Masakatsu Kato (IC Net, Ltd.)

Project Name: “Bangladesh Farming Village Development Credit Project” (BD-39)
Loan Outline
Loan Amount/Disbursement Amount:
Loan Agreement:
Loan Completion:
Ex-Post Evaluation:
Executing Agency:

2,986 million yen / 2,986 million yen
October 1995
June 1998
Fisical Year 2002
Grameen Bank, Bangladesh

Project Objective
By providing unsecured loans through Grameen Bank of Bangladesh to the landless rural poor for purchasing production goods, the project aims to
improve the lives of the agricultural sector’s poor, support production activities, and strengthen the financial status of Grameen Bank, and thereby
contribute to poverty reduction in Bangladesh.
Consultants: None
Contractors: None
Overview of Results
Item

At time of ex-post evaluation**In the ex-post evaluation, effectiveness wasevaluated based on a sample study of target
villages in which microcredit beneficiaries
resided. (The sample study and various otherdata appear in Ex-post Evaluation Report on
ODA Loan Projects 2002.)

At time of ex-post monitoring**In the ex-post monitoring, effectiveness, impact, and sustainability areevaluated based on the results of a sample study of microcredit
beneficiaries (a total of 125 households in three villages targeted at thetime of the ex-post evaluation).

Effectiveness and Impact
EffectivenessAfter the ex-post evaluation, beneficiaries who had made use of
the various loans showed clear improvements in living standards,
salary, savings, food security, and the status of women within
their households. The effectiveness has been high.

11. Home Building Loans

1. Home Building Loans

In all regions, the overall number of houses
with galvanized roofs or walls has increased,
as has the size of the main wing of houses.
The rate of houses with galvanized walls
among beneficiaries receiving microcredit(including that from Grameen Bank) has
shown a slightly higher increase than the rate
among non-beneficiaries.

・Some 37% of sample households had received this loan and built
improved houses, but half of all households continue to live in the same
house at the time of the ex-post monitoring.. The other half ofhouseholds have expanded or rebuilt their houses.
・Houses improved through the loans, by building walls of brick or using
galvanized steel on roofs, have expanded in area by a factor of 1.3-1.5 ormore.

2. Mid- and Long-Term G&C Loans (General 2. Mid- and Long-Term G&C Loans
Mid- to Long-Term Loans)(1) Water wells (including mainly manual pumps and water storage
No indices were collected for water wells. All tanks)
but one of the three target villages studied had ・In 11% of sample households wells were built using this loan; of those,more sanitary facilities. As for the purchase of 64% currently use the same well, whereas 36% have made repairs to thecapital goods, results differed depending on well.
the village under investigation, but they all
shared in common the fact that microcredit (2) Sanitary facilities (mainly the provision of simple toilets)
beneficiaries had more rickshaws or carts ・Some 6% of sample households built toilets using this loan; of thosethan non-beneficiaries.
households 63% are still using the same toilet, whereas 37% havemended them since that time.
(3) Purchase of capital goods
・Most capital goods purchased were for agricultural purposes, with 35%
primarily for agriculture; 28% were non-agricultural, and 37% could be
used for both.
・ Of these projects the vast majority were successful, with 65%
indicating expansion and 19% indicating improvement. Progress was
not limited to the improvement or expansion of agriculture orcommerce, as there were many cases where project diversification wasachieved by investing interest in other fields.

ImpactI. Positive Impact

I. Positive Impact

1. Economic Improvement
1. Economic Improvement
In the majority of cases, microcredit from a) Increase in Income: 91% of households have improved productivity,2Grameen Bank (and others) has resulted in and in 87% income capacity has increased.
clear increases in the income of beneficiary b) Food Supply Security: 94% of households have improved their eating
habits, and 78% have a more secure food supply.
households.
2. Increase in Savings
Grameen Bank requires the beneficiaries tosave some money when they are providedloans. The average savings figure comes tobetween 2,000 and 5,000 Bangladeshi taka.

2. Increase in Savings
Over the past five years, 93% of households increased their savings,
with average savings per household increasing from 2,053 taka in 2001
to 6,923 taka in 2005. In 2001, 75% of households had savings of lessthan 2,000 taka, whereas in 2005, 85% of households had savings inexcess of 2,000 taka, and 57% of households had savings in excess of
5,000 taka.

3. Changes in Financing for Farming Villages
With the introduction of microcredit from
Grameen Bank (and others), a retreat fromtraditional
high-interest
lending
was
inevitable, and changes have appeared in theform of loaning made to farming villages.

3. Changes in Financing for Farming Villages
Among beneficiaries, traditional high-interest lending seems to havedecreased. Among sample households, only 2% borrowed using
high-interest loans. At the same time, among non-beneficiaries in thevillages as a whole, a slight increase in high-interest loan borrowing wasnoted.

4. Empowerment of Women
Female members of Grameen Bank are more
active than before, and the status of women isthought to have risen. However, microcredits
themselves have been mostly used by male
household members.

4. Empowerment of Women
The status of women within the household has continued to improve as aresult of microcredit. The number of households who responded that thehousewife participated in decisions on the use of the loan and the
management of family assets came to 84%. In the villages of Thittokur
and Gunjal, there were many examples where women beneficiaries
acted as village officials and so on, taking part in social activities outside
the household. Overall, through microcredits, women’s self-confidence
and concern for society has risen as their status and right to speak has
continued to improve.

5. Ability to Handle Emergencies
By investing microcredit in things other than
farmland, borrowers have been able tomitigate the effects of natural disasters.

5. Ability to Handle Emergencies
In line with income and economic improvements, beneficiaryhouseholds’ ability to handle emergencies has also improved. 91-92% ofhouseholds have become able to cope with a sudden need to purchasefoodstuffs or to cope with an illness in the family. What is particularly
worthy of note is the fact that many families diversified their economic
activities and have a more stable base of income than before.

3II. Negative Impact

II. Negative Impact

1. Increase in dowry amounts at the time of 1. In the ex-post evaluation report, the issue of marriage dowries wascited as a negative impact. In the current beneficiary study, while some
women getting married.
felt that dowries themselves were a serious problem and their amounts
continued to increase, others suggested that the increase in dowry
figures simply reflected the economic improvement of households.
2. Worsening of relations over repayment 2. Worsening of relations over repayment among microcredit members−Essentially not a problem.
among microcredit members.
Sustainability
Just as at the time of the ex-post evaluation, there was noproblem with the operation and maintenance of the subproject.
Even though Grameen Bank, the executing agency, has beenstrengthening the execution system and improving the scale offunds, and as beneficiaries maintained a high ability to repay
loans at the time of the ex-post evaluation and thereafter,
financial status has become more favorable.

・Project sustainability
・Operation andmaintenance

I. Subproject Sustainability

I. Subproject Sustainability

1. Home Building Loans
With reference to the sample village impact
study, the following has been confirmed:
・No particular problems were seen in termsof durability.
・Operation and maintenance are relatively
favorable.

1. Home Building Loans

2. Mid- and Long-Term G&C Loans(1) Water wells

2. Mid- and Long-Term G&C Loans(1) Water wells
Same as with home building loans.

・No particular problems were seen in terms of durability.
・Operation and maintenance are relatively favorable.
・All beneficiaries are either maintaining and improving a home thatthey built using a loan or are building an improved home.
・Income has increased; beneficiaries are able to take out new loans;beneficiaries’ operation and management capability has increased.

(2) Sanitary facilities(2) Simple toilets/Sanitary facilities
Compared to houses and wells, toilet facilities need relatively frequent
maintenance, but this is not seen as an exceptionally big problem.

(3) Purchase of capital goods
・None of these are shown.

(3) Purchase of capital goods
Projects that used capital goods purchased by beneficiaries have for themost part succeeded. Through improvements in productivity and4income, the living standards of beneficiary households have increased
and stabilized.
II. Executing Agency
II. Executing Agency
1. Degree of Governmental Contribution
1. Degree of Governmental Contribution
The government’s holding ratio of Grameen No change since the time of the ex-post evaluation.
Bank is 6.67%. The board of trustees comesto a total of 13 people, with one coming from
Grameen Bank, three from governmental
institutions, and nine from member
representatives.

2. Organization of Executing Agency
The bank has 1,170 branches and 11,494
employees. There are no particular problems
with the quality of the employees.

2. Organization of Executing Agency
Through a drive to expand operations starting in 2004, the number ofbranches has risen from 1,195 in 2003 to 1,735 in 2005, and in the same
period, the number of villages served has risen from 43,681 to 62,089.
The number of members of Grameen groups has reached 908,568
people (one group consists of five members). The bank’s total number of
employees is 16,142,269 (1.7%) of which work at the Dhaka
headquarters. There are no particular problems with employee quality.

3. Grameen Bank’s Financial Condition
Since the bank is receiving assistance fromthe government, and stability and fundraising
are not issues. However, net profit ratio andnet return on financial income have fallen
greatly, and it is expected that stricter criteria
would be applied to credit management.

3. Grameen Bank’s Financial Condition
Through a new operations policy entitled “Grameen Bank II,” initiatedin the year 2000, the bank has sought to expand the sources and volumeof its fund, including deposit receipts from other sources, i.e., notexisting members (the poor in farming village districts). At the sametime, the bank has continued to diversify its operations; as a result
Grameen’s financial condition has taken a dramatic turn for the better.
Indicators for factors such as profit ratio, net return on financial income,and return on equity, have improved. Therefore the bank has no
particular financial problems.

5Grameen Bank Financial Status (%)
Indicator / Year

2000/01

2003/04

2005/06

Profit ratio

0.37

9.99

14.13

Net return on financial income

0.38

11.06

18.66

Return on equity

0.55

10.63

22.16

Lending rate (weighted avg.)

17.42

18.50

19.33

Deposit rate (weighted avg.)

8.57

9.85

10.12

Borrowing interest (weighted

4.33

3.24

2.28

avg.)

III. Sustainability of TSL (Loan Recovery and Delinquency Status)
III. Sustainability of TSL (Loan Recovery and 1. The loan recovery rate improved after 2000, from 88.73% in that year
Delinquency Status)
to 99.00% in 2005. The percentage of loans in arrears likewise
1. The repayment status of subloans is improved, falling from 11.27% in 2000 to 1.71% in 2005.
favorable.
Grameen Bank Loan Recovery Rate (%)
Indicator /

2000

2001

2002

2003

2004

2005

Year

/01

/02

/03

/04

/05

/06

Recovery rate*

88.73

91.00

98.74

99.09

99.05

99.01

Delinquency

11.27

9.00

0.92

2.32

1.84

1.71

rate***Up to the year 2001 the recovery rate was defined as 100% minus the delinquency rate.
From 2002 onwards, the recovery rate was defined as the percentage of actual repayment
relative to repayment expiration figures.
**The definition for delinquency up to 2001 was a default on repayment lasting in excessof two years. From 2002 onwards, the entire unpaid loan was considered in arrears in thefollowing cases: (i) repayment had been missed ten times in a row; (ii) for loans with6

terms shorter than one year, if one half of the loan had not been repaid within 26 weeks;and (iii) for loans with terms greater than one year, repayment had been missed 26 weeks
in succession.

2. Management of special accounts (revolving
funds)The management of revolving funds did not
do well immediately following project start,
but in 1997 and thereafter it steadily
improved, only to slump once again in 1999.

2. Management of special accounts (revolving funds)
Grameen Bank does not provide a special account solely for JBIC yen
loan funds; its special account involves various revolving funds besides
JBIC funds. With this base, the amount and the number of loans since2001 has increased rapidly.
Grameen Bank Revolving Fund (RF) Status (%)
RF loans / Year

2000/01

2001/02

2002/03

Amount (million taka)

73.29

56.30

824.69Number of loans

21,45812,08042,275RF loans / year

2003

2004

2005

Amount (million taka)

177.484560.488107.52

Number of loans

95,716240,604

371,731

Includes home building loans and lease loans (micro-enterprise loans).

IV. Sustainability of the Microcredit System
Because of the favorable economic growth in Bangladesh over the past
few years, the need for funding has risen substantially in farming village
communities, and this trend is particularly strong among the poorest
segment of the population. Organizations such as Grameen Bank havebeen positively responding to this need, taking new steps such asincreasing lending amounts and diversifying their product offerings. The
number and amount of microcredit (MC) loans is increasing as before,
and microcredit organizations are expanding their loan figures.
Moreover, under the Grameen Bank II policy, lending schemes arecontinuing to diversify. Specifically, the bank has introduced
micro-enterprise loans, which are larger than lease loans and can be used
for a greater variety of applications, together with new product offerings
such as life insurance and “beggar loans.”

7Lessons Learned,
Recommendations,
Information Resources,
and Monitoring Methods.

(1) Follow-up on lessons
learnedandrecommendations made in
ex-post evaluation reportor in later evaluations(2) Proposals for securing
sustainability andinstructions given at timeof follow-up monitoring

Following the expansion in scale of Grameen Bank and theincrease in beneficiaries, it is hoped that repayment schedules
would take beneficiaries’ convenience into greater consideration,and that technical support would be provided for projects
undertaken using loans.
(1) Recommendations found in the ex-post (1) Follow-up on recommendations and lessons learned from the ex-post
evaluation report are listed below. However, evaluation.
the recommendations are for microcredit None in particular.
overall, and do not pertain to the present
project (or ODA loan projects) in particular.
・The maintenance of an insurance system tocover risk that arises in microcredit schemes;a method for contending with heavy debtors;
diversification of lending schemes; thebuilding of new, medium-scale loan schemes;
and the further strengthening of savings are
all needed.
・The approach used to empower women andthe poorer classes needs to be strengthened,
and an approach for handling “those left
behind” (the most destitute) needs to befound.

(2) Recommendations at time of ex-post monitoring.
In order for beneficiaries to receive even greater benefits from Grameen
Bank’s microcredit, the following two measures are recommended:a) Loan Repayment Schedules - Many beneficiaries pointed out that the
weekly repayment schedule used for loans is not always convenient
given their income flow (in particular, farmers’ income does not come inregular, short-term periods). Therefore, repayment schedules should, inprinciple, be set according to the income flow of the project undertaken.
Grameen Bank headquarters claims that repayment periods are set
taking income into account, but if that is the case, then it is important tomake sure that bank clerks actually execute this policy at the bankbranch and local office level.
b) In this ex-post monitoring, it was not able to confirm details about themost destitute class which is left out of—or not covered
by—microcredit schemes. The continuing consideration of measures forthese excluded classes, including steps beyond microcredit, is needed.

8