the antipoverty group that helped pull Bangladesh out of the ashes

Is Bigger Better? Using market incentives, Fazle Hasan Abed’s antipoverty group helped pull Bangladesh out of the ashes. Next up: Africa.

David Armstrong
2 June 2008
Forbes Asia
Copyright 2008 Forbes Inc.

Using market incentives, Fazle Hasan Abed built the largest antipoverty group in the world and helped pull Bangladesh out of the ashes. Now he wants to take on Africa.

From the large glass window of his modern, well-lit and spacious offices 19 floors above Dhaka, Bangladesh, Fazle Hasan Abed, a former executive for Shell Oil, can keep tabs on nearby Korail, a dense slum of 60,000 people living in single-story mud, aluminum and bamboo shacks, some built on thin stilts over the brackish water of an urban lake. Abed, 72, has more than a little interest in the slum. The
organization he founded in 1972, BRAC, the largest antipoverty group in the world, with 110,000 paid employees and a $482 million annual budget, has its hands everywhere in Korail.

Down one muddy lane a teacher trained by BRAC instructs 36 students
using a BRAC-designed curriculum of Bengali, math and English. Nearby
a group of women in the final month of pregnancy sit shrouded in
colorful saris on the floor of a BRAC-built “birthing hut,” staffed
with BRAC-trained health workers, getting a lesson in prenatal
nutrition. Not far away, Mosammat Anwaraan, an energetic woman in her
late 50s, runs a mini real estate empire, the fruits of a 3,000 taka
($44) microloan in 1997 from BRAC. She owns 25 rooms in the slum,
renting out 18 for 700 to 800 taka a month, making $2,500 a year. “I
think rent will go up to 1,000 taka by next year,” she says proudly.

Abed has replicated all-in-one programs like these in 1,000 urban
slums and 70,000 rural villages across Bangladesh (the group was
originally called the Bangladesh Rural Advancement Committee). Its
microfinance program has made $4.6 billion in loans versus $6.9
billion from the better-known microlender Grameen. It runs 52,000
preschools and primary schools, with 1.5 million students. Its 68,000
health care volunteers, egged on by financial incentives, cover a
population of 80 million. It operates commercial dairies,
silkworm-raising centers and department stores to provide markets for
the goods its poor beneficiaries produce. Says Abed, “If you want to
do significant work, you have to be large. Otherwise we’d be tinkering
around on the periphery.”

The World Bank credits BRAC in part with what it calls the “Bangladesh
paradox”: Despite an impotent government (leaders of the two primary
political parties are currently in jail on corruption charges), this
country of 145 million people has improved significantly. According to
the World Bank, the fraction of the population living in poverty
(defined as below $2 a day in purchasing power) dropped from 58% in
1992 to 40% in 2005; secondary school enrollment has climbed from 19%
in 1990 to 43% today and childhood immunization from 1% in 1980 to 80%
today.

Thirty years ago a woman had, on average, seven children. Today the
fertility rate is two, thanks in large part to widespread delivery of
contraceptives to the countryside, a practice pioneered by BRAC. The
country’s 5% annual average growth in GDP since 1990 (to $2,300 per
capita) leads the World Bank to suggest that Bangladesh could join the
list of “middle income” countries in ten years. To be sure, trade
liberalization, garment exports and remittances from laborers abroad
are vital, but the effectiveness of these macroeconomic advances are
largely dependent on the kind of ground-level social progress BRAC has
made.

“I don’t know of any developing-world ngo [nongovernmental
organization] that has been more successful,” says Dr. Allan
Rosenfield, dean of Columbia University’s School of Public Health, who
serves on the board of BRAC’s U.S. arm. “Certainly in terms of the
issues they work on, they’re more like a minigovernment. If I were
giving out Nobel Prizes, there is no doubt I would give it to Abed.”

Born to a wealthy landowning family in the Bengal region of British
India in 1936, Abed grew up in a household full of servants. His
father was a government official. His mother, a religious woman, often
brought poor villagers to the Abed home for food. He attended Glasgow
University before going to London to study accounting and business. He
stayed for 12 years, working as a corporate financial officer and
enjoying the life of a professional expatriate: yearly drives through
continental Europe, vacations in Italy, reading Western literature. In
1968 he returned to Dhaka with a prestigious job, managing Shell’s
accounting department.

On Nov. 21, 1970 a cyclone hit the Chittagong area in the southern
part of the country, killing perhaps 500,000 people, still the
deadliest cyclone on record. Abed and friends volunteered to help. “It
really changed the way I look at things,” Abed says.

At the time, Bangladesh was the eastern portion of the country of
Pakistan, ruled over by an unsympathetic government in Islamabad. A
crackdown on the pro-East Pakistan independence movement sent Abed
back to London, where he raised funds for the millions of Bangladeshi
refugees in India.

After a bloody war Bangladesh won its independence in 1971. Abed sold
his London flat for $17,000 and returned to a country that lay in
ruins. Hundreds of thousands had been killed and the economy was in
tatters–soon after, Henry Kissinger famously called Bangladesh “an
international basket case.”

Abed and a small group of friends worked on aid projects, but he felt
much of the work wasn’t benefiting those who needed it most. “Poor
people are poor because they are powerless,” Abed says. He turned his
attention to poverty relief, mapping villages into quartiles based on
wealth and focusing his efforts on only those households at the
bottom.

Using the proceeds of his London apartment sale, he formed BRAC in
1972. His biggest early success was reducing child mortality. In 1975,
25% of Bangladeshi children wouldn’t live to see their fifth birthday;
almost half of those deaths were caused by diarrhea. Abed trained
groups of women to fan out into the countryside and teach others how
to mix a solution of water, salt and sugar that would combat the
potentially fatal loss of fluid and electrolytes. Monitors would grade
the households based on how well family members did, and that grade
would determine the pay of the instructors. This was an
incentive-based “social entrepreneurship” program long before that
phrase became common. The average worker made $40 a month, with most
households scoring in the A or B range.

BRAC researchers estimate that the program, along with a government
immunization initiative, has cut the mortality rate of Bangladeshi
children ages 1 to 4 from 25% to 7%.

Abed vertically integrates many BRAC programs. A BRAC village
organizer will first gather 20 to 30 women and extend microcredit.
Many use the loans to set up small shops and grocery stores. If the
women buy a cow, for example, BRAC will help them double the price
they can get for milk by collecting it via refrigerated truck and
bringing it to one of BRAC’s 67 “chilling stations,” then to BRAC’s
commercial dairy production center, which processes 10,000 liters of
milk, yogurt and ice cream an hour, and selling it in the cities. It
earns BRAC $1.7 million on sales of $13.4 million, all of which goes
back into the programs.

Likewise, silkworm raising is the bottom step of another commercial
market. Majeda Begum, who lives in a small village a day’s drive from
Dhaka, used her loan to buy silkworm eggs from BRAC, paying $3 for 50
grams. She hatches them in a tin-roofed shack behind her home. Begum
feeds them by spreading mulberry leaves over the top, easy enough to
collect, since BRAC has planted 20 million mulberry trees around the
area to support the enterprise. She’ll sell the cocoons back to BRAC
for $5.75 a kilo. She earns, she figures, $370 a year, and no longer
needs BRAC’s loans. All three of her children, including two
daughters, go to school. Without the income? “I’d probably only send
my son,” she says.

The silk is eventually woven into clothes and sold to Aarong, a chain
of upmarket department stores BRAC owns in Bangladesh’s big cities.
Aarong netted $4.6 million on $28 million in sales in 2006. In all,
BRAC’s commercial enterprises account for some $90 million in revenue;
it pulls in $116 million from its interest on microloans. BRAC still
relies on donor funding for 20% of its budget.

Abed uses incentives for health programs, as well. Community health
workers are asked to make home visits to 15 houses a day and can
resell at a small markup common medicines, balm and birth control
pills that they have bought from BRAC.

Recently health volunteers have been trained to recognize the symptoms
of tuberculosis, which kills 70,000 Bangladeshis a year. Volunteers
collect a sample of phlegm from suspect people and send it to a BRAC
health office for testing. If it’s positive, the volunteer gets 200
taka (about $2.50). Patients are given medicine free of charge but
must post a $3.50 bond to ensure that they continue the six-month
course of medication. “There are market incentives in everything we
do,” Abed says. Bangladesh has upped its cure rate of known TB cases
to 90%.

BRAC has recently started targeting the 14% of women too poor to take
advantage of microloans. A day’s drive from Dhaka, in an
un-air-conditioned BRAC field office swarming with flies, Akhtar
Hossain unfurls a large sheet of brown paper on which is drawn a map
of a nearby village. His house-by-house survey is meant to find
“beggars and those with no land.” The government is supposed to give
these people a card that entitles the holder to 35 kilos of rice every
three months. “But they never get it,” he says. “The district official
in charge of disbursing the cards gives it to people he knows.”

To this group BRAC distributes cows, goats or a small plot of arable
land. Haliman Khatun, who once worked as a laborer in others’ homes
and was paid only with small amounts of rice, shares her small shack
in Pakundia with her cow, proudly showing off the space where the cow
sleeps next to her own bed. She sells milk from the cow at the market
but has bigger ambitions: She might sell it for the end of Eid, a
Muslim holiday when livestock is slaughtered; cows can fetch a premium
in the marketplace, and with that she could buy a plot of land or more
goats, she says.

Abed is now bringing BRAC into Africa. The Gates Foundation has given
$15 million in grants and loans to replicate BRAC’s microfinance,
agriculture and health programs in Tanzania, and the Nike Foundation
is giving $1 million to establish designated centers for teenage girls
in Tanzania. BRAC has set up organizations in the U.S. and the U.K. to
bring in more charitable dollars.

It remains to be seen if BRAC can repeat the success it’s had in
Bangladesh. But Abed is encouraged by its track record in Afghanistan,
where it set up shop in 2002. Some 180,000 women have borrowed $96
million from BRAC, and 4,000 have been trained as community health
workers. When Abed sets out to do something, he does it big.

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1 Comment

Filed under Bangladesh, Development, Poverty, South Asia

One response to “the antipoverty group that helped pull Bangladesh out of the ashes

  1. AJ

    I think BRAC should stay in Bangladesh. Even though BRAC did so much for the poor, there are still poor people in Bangladesh. I think with BRAC and Grameen Bank Bangladesh will be poverty free in less than 20 years or so, insh’Allah.

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