Mohammad Abdul Mannan Managing Director & CEO Islami Bank Bangladesh Limited 1

Poverty defined by United Nations Lack of basic capacity to participate effectively in society Not having enough to feed and clothe a family Not having a school or clinic to go to Not having the land to grow food or a job to earn living Not having access to credit Insecurity, powerlessness and exclusion Susceptibility to violence, living in marginal or fragile environments

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Poverty defined by World Bank



Low income and inability to acquire the basic goods and services: low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life.

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Poverty Dimensions

Shaky livelihoods Excluded locations Physical limitations Gender relationships Problems in social relationships Lack of security Abuse by those in power Dis-empowering institutions Limited capabilities Weak community organizations Source: Voice for the Poor: World Bank 4

Poverty statistics : 925 Million hungry people in 2010 Regions People

     Asia and the Pacific Sub-Saharan Africa Latin America & Caribbean Near East and North Africa Developed Countries - 578 Million - 239 Million - 53 Million - 37 Million -19 Million 5

Public Sector

PRSP : IMF & World Bank

• • • • • Country-driven, Result-oriented, Comprehensive, Partnership-oriented, and Based on a long-term perspective.

MDGs: United Nations and Others

Goals agreed to achieve by 2015: • • Eradicating extreme poverty , • •  Reducing child mortality rates, Fighting disease epidemics Partnership for development Private Sector

NGOs

• • • • Charitable orientation Service orientation Participatory Empowering orientation

Banks

• • • • Financial Inclusion Priority based finance Need based finance Micro Finance 6

Trickledown Approach

  

Assumptions/Features Riches are the driving force behind economic growth.

Wealth will naturally trickle down and benefit everyone. Ensuring the right environment for the rich and the larger companies Strategies :

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Market Mechanism

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Growth promotion Result : Benefits hardly reached the poor

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Cooperative Movement

Features :

  Persons benefit voluntarily cooperate for mutual social, economic, and cultural An expansion of decision-making power from a small minority of corporate shareholders to a larger majority of public stakeholders.

◦ Occupied by the well-to-do farmers

Result : Failed to benefit the Small Farmers and Landless

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Target Group Approach

Strategies/Instruments

Microfinance, Credit Entitlement, Group replaces collaterals

Results/Outcomes:

Could not reach the Extreme Poor Slow graduation process High interest rate 9

Parameters

     Access to Finance Non financial wants Repayment Maturity extension Fellow feelings

Status

Pricing Basis Ignored Mandatory Excluded No Provisions 10

Islamic principles of poverty alleviation are based on the Islamic views of social justice and the belief in Allah Almighty.

Islam defines poverty as a state whereby an individual fails to fulfill any of the five basic human requirements of life:

(a) Faith, (b) Physical self, (c) Intellect or Knowledge, (d) Offspring, and (e) Wealth.

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Maslow’s Need Hierarchy

5. Self actualization 4. Esteem 3. Belonging 2. Safety 1. Physiological

Shatibi’s Need Pyramid

3. Tahsaniah (Beautification) 2. Hajiah (Complementary) 1. Jaruriah (Essentials) 12

Universal brotherhood Distributive justice Circulation of wealth Transfer payment Financial inclusion Filter mechanism Fellow feelings 13

Benevolent loan (Qardul Hasan) Zakah Awqaf Fidiyah (Compensation for non fasting) Mohor (Dowry paid to women while married )

Micro Finance

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A tool of satisfying the financial needs of the poor following Shariah principles A form of socially responsible investment. A target group approach under Islamic financing modes.

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Positive Measures

Income Growth Functional Distribution of income Equal Opportunity

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Preventive Measures

Control of Ownership Prevention of Malpractice

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Corrective Measures

Compulsory transfer: Zakat Recommended Transfer: waqf Government’s Responsibility

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Program able to address the extreme Poor Social Charter accepting that the Poor are entitled to get Initial Capital along with their microfinance entitlement Turning into a Credit-Plus Integrated Poverty Alleviation Scheme

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Shariah based micro-finance Collateral free Farming and off-farming activities Job Creation Welfare and ethical services Quard facilitates for sanitati

on 20

Farmers Sharecroppers Persons engaged in off-farm activities Fishermen Women and distressed people 21

Particulars No of Village No. of Member Disbursement (Million BDT) Outstanding (Million BDT) % of total investment Rate of Recovery Members Savings (Million BDT) 2011 12,857 608703 10,438 7072 2.18% 99.58% 2402.13

National Rank 4 th position Out of 1500 MFI of the Country 22

 Introducing Integrated (microfinance, Zakah and Awqaf) model  Targeting the extreme poor  Portfolio diversification 23