|Towards Creating a Poverty-Free World (UNESCO, 1995, 12 p.)|
I have emphasized the role of credit in poverty alleviation. Economists all along have been putting emphasis on credit in facilitating agricultural production. As a result a new category of a specialized bank called the agricultural bank was born. Because of the low coverage by agricultural banks, agricultural cooperatives came into focus to become a conduit for agricultural credit disbursement. Land banks, rural banks were also created to meet the credit needs of the farmers.
The experience of agricultural/rural credit is extremely depressing throughout the world. In Bangladesh the recovery rate on agricultural credit extended through the banking system is less than 20 percent. It is worse for credit handled by agricultural cooperatives. Most third World countries have similar experience or worse. Agricultural banking and cooperatives have virtually collapsed in these countries. This is not happy news for poverty alleviation.
Even this agricultural credit is not available to most of the farmers. The smaller the farmer, the less is the chance to get any loan.
Looking at Grameen experience anybody can say there is no reason why it should be this way. The only way we can explain the present collapse of agricultural credit Institutions is that nobody is seriously interested in designing and running a financially sound, efficient credit program for the farmers. FAO, the organization which is responsible for world agriculture, appears strangely indifferent about the whole collapse. FAOs coolness gives the impression that things are happening exactly the way they were supposed to be happening.
I am convinced that with only a little effort an excellent agricultural credit program can be run on a commercial basis. If Grameen were invited to design and run an agricultural credit program, I am sure Grameen could come up with a sustainable program. What is going on in the name of agricultural credit today is simply criminal.