Grameen Trust Spearheading
Global Microcredit Movement

H I Latifee

   The Mandate

Grameen Trust is completing twelve years of operation providing financial and technical assistance to microcredit institutions around the world. It has assisted 111 organisations in 34 countries, including 85 organizations in Asia and Pacific alone. It has now the successful experience of directly implementing projects in Kosovo and Myanmar under its Build, Operate and Transfer model. These projects have been implemented under extremely adverse circumstances.

Grameen Trust (GT) started its operations in 1991 when the world was only just beginning to realize the power of microcredit as a tool for poverty alleviation. People became interested in learning more about the Grameen Bank Approach (GBA) and applying it in their respective poverty focused programs. However, they had difficulty in accessing information and mobilizing funds for operational and onlending purposes. These were the challenges that faced all microcredit practitioners. Grameen Trust accepted this challengee and started developing a support system for potential replicators of GBA in different countries.

   Replicating Grameen Cost Effectively

Grameen Trust has developed its tools and techniques for Grameen Bank Replication Program (GBRP). The tools included the international dialogue programme, training, monitoring, evaluation systems and technical and financial assistance to potential replicators. It also included advocacy and networking.

The international dialogue program is intended for potential Grameen replicators and other microcredit practitioners. It is the first step in the development of a partnership with GT. It provides immersion into the Grameen Milieu in Bangladesh and assists practically in designing Grameen type programs. Up to the end of June 2002, GT had organized 46 dialogue programs and received 852 participants from 99 countries of Asia, Africa, Australia, Pacific islands, Europe and North, South and Central Americas.

During the dialogue program, participants see Grameen operation in the ground, attend centre meetings, interview borrowers, learn about their lives and livelihood and try to understand how collateral free microcredit helps them overcome their poverty. They also talk to the Grameen staff at different levels (branch, aream zone and head office) to understand the philosophy, tools and techniques of Grameen methodology and to examine whether these could be used by them to serve the poor in their own localities.

Dialogue programs have acted as a great catalyst for initiating GBA replications worldwide. It is estimated that there are more than 600 replication projects in 81 countries, including those supported directly by GT. Support has been given to those projects that have committed leadership, but have little or no access to funds On average, GT has provided US$ 50,000 to the start up replications.

   Fund for GBRP

With a clearcut vision of a poverty free world and its own mandate, GT mobilized resources from donor agencies to support GBRP worldwide. It has received funds from USAID, World Bank, GTZ, UNCDF, UNDP/UNOPS, MacArthur Foundation, Rockefeller Foundation and Fred Matser. Missione Arcobaleno of Italy allocated funds to GT for Grameen replication in Kosovo. UNOPS provided funds for implementing a livelihood project following GBA in Myanmar. In addition, the Citigroup Foundation has committed funds to GT for implementing GBRP in Indonesia, Malaysia, Philippines, South Korea and Thailand --- the countries that were badly affected by the financial crisis of 1997. Citigroup committed funds to support GBRP in China.

Given the urgent need for more funds, Grameen Trust also initiated the ambitious process of raising a US $ 100 million People's Fund in March 1995 to support Grameen replication programs all around the world. GT believes that people can take the lead and show the way to governments, regional and global development organizations and financial institutions. GT hopes to appeal to one million people, each contributing US$100 or equivalent in other currencies. The response so far has been slow. Grameen Foundation, USA is playing a major role in this fund raising effort.

   Startup Funds for Quick Ignition

GT from the very beginning started supporting start up projects so that they can grow in number and scale up their operations to serve the poor. It has developed specific criteria for its seed and scaling up support. Its support comes in the form of soft loans rather than in the form of any grant. It absorbs the shock of foreign currency fluctuations and requires its partners only to be responsible for the repayment in local currency.

GT applies a number of criteria for selection. The project under consideration should have a legal entity and a committed leadership. The chief executive or his deputy should have attended a dialogue program. The project proposal should be well designed. Its budget should be realistic. The project should have a clear management structure. Its governance should be transparent. It should have a well defined targeting criteria and a demonstrated commitment to serve the poor.

Having applied the criteria for selection of partners, GT has provided financial support to as many as 111 organizations in 34 countries. Starting from only 18,000 members, GT partners are now serving more than one million members (95% women). Being the largest, SHARE India, is currently serving more than 142,000 members. Around five million poor persons are getting benefits directly from the microcredit operations of GT partner organizations.

GT has committed about $16 million to its partners who in turn have made a cumulative disbursement of more than $350 million to its borrowers. The amount of their loan outstanding has grown from $344,671 in 1993 to $66 million in April 2002. GT partners have been able to successfully leverage additional funds from other sources. They have also succeeded in mobilizing a significant amount of savings from the clients around $23 million as savings up to March 2002.

   Scaling Up Support to Attain
      Financial Viability

The organizations which have been able to increase their outreach, minimize their gap between cost and return, develop professional staff, increase the amount of outstanding loan, maintain a high repayment rate and low portfolio at risk, have received further scaling up funds from GT. As many as 43 replicators have received scaling up funds from GT.

GT always gives emphasis on branch development and branch level performance. It believes that if an organization knows how to develop a viable branch, it can easily develop viable branches one after another, provided it has access to financial resources. Branch viability gives it confidence, increases its credibility and demonstrates its capability to the donors and other financial institutions. In a situation where there is scarcity and uncertainty of funds, the journey from branch to institutional viability is always important. It minimizes the risk of getting stuck or lost on the way when many branches are started at the same time, without having adequate funds.

As a matter of policy, GT provided scaling up funds to 84 branches of 43 partner organizations, out of which 38 branches have become operationally and 20 branches have become financially viable. Their branch viability have pushed them forward to plan and strive for achieving full institutional viability. As a result 8 of GT partners have already achieved viability at the institutional level. The trend is encouraging. More of the partners are on track to achieve viability at the institutional level. Their achievement has given them access to commercial and other sources of funds including CGAP which has provided funds to more than 10 GT partners.

With initial support from GT, many of its partners have been able to access funds from other sources and become leading micro finance institutions in their countries. To mention a few, CMES, DSK and IDF in Bangladesh; Pro-Mujer in Bolivia; FPC in China; CSD, NSSC and NIRDHAN in Nepal; MKEJ and YDBP in Indonesia; LAPO in Nigeria; Kashf in Pakistan; ASHI, ASKI, CARD, KAZAMA, MILAMDEC, Project Dugganon, and TSPI in the Philippines; PTF in Tanzania; CEP-Fund and TYM in Vietnam; they have all received critical financial and technical support from GT and have become leaders in the microcredit world.

Many of GT partners have been extremely innovative. Partners like CFTS, India; Padakhep, Bangladesh and LAPO, Nigeria, have in fact received awards for their pro-poor innovations from CGAP. GT partners like CARD, Philippines; Kashf, Pakistan; Pro-Mujer, Bolivia; FPC, China; KRT, Kyrgyzstan; CFTS and SHARE, India, have received awards and citations from GF-USA for their excellent performance and pioneering role in the field of microcredit operation. MKEJ, Indonesia has received a Rotary award for its steady progress at a time when the country was yet to overcome the financial crisis.

   Funding — Still the Critical Issue

Although good performance has helped GT partners to mobilise funds from different sources, the amount they have received so far has remained far from adequate. Commercial banks in general do not consider them as risk free clients. They ask for collateral or guarantee fund which can be used to collect their loans, in case the MFI fails to recover its loan from the clients. The commercial banks also hesitate to consider funding the MFIs because of the nature of the legal status NGO/MFIs are holding. The MFIs with good track record should have easy access to commercial sources of funds. Their performance should be their guarantee. Without this, the outreach of MFIs will be restricted by the shortage of funds and their contribution to the cause of poverty reduction will remain insignificant.

It was assumed that with the growth of microcredit industry, there would be more funds available from donor sources for its expansion. But it happened otherwise. Donor fund is shrinking. Donor conditions are becoming more stringent. In cases where donors are directly supporting microcredit programs they are restricting their support mostly to those MFIs who have been able to scale up their operations. The issues are whether donors should only support mature and large operators and whether they should go for direct support through their traditional process of fielding missions. The donors may consider supporting more the growth of microcredit movement through intermediary organizations like GT, which is likely to be more cost effective and economic.

It is a fact that there are many MFIs in different countries that require only little initial financial and technical support. This little support is not only critical for them to survive and grow, but is also very important for micro-finance industry to grow. Without this kind of support, the microfinance industry would not have achieved what it has achieved so far. This is a niche market which GT has been trying to serve since 1991 and advocating strongly that start up projects can grow large. After all, the large MFIs are the outcome of such start up support provided by GT and others. This kind of support must be found. One way is to set up wholesale funds at national level that can on-lend directly to grassroots MFIs. The wholesale organisations like PKSF in Bangladesh and RMDC in Nepal, who took very cautious steps in their initial years and supported only successful and relatively large projects, have now opened their door for smaller and start up projects. PKSF is reportedly considering finding ways to support projects that are working with the extreme poor. These are encouraging steps. These need to be supported in order to have a quick and significant impact on poverty reduction, through rapid expansion of microcredit operators.

   Training, Monitoring, Evaluation and
      Technical Assistance

GT has designed and developed training programs to meet specific training needs of partners. It has also developed workshop materials to update the staff and upgrade their skills. Till the end of June 2002, about 2000 staff members from partner organizations participated in training and workshop programs organized by GT in Bangladesh, China, India, Indonesia, Nepal, Philippines and Uganda. The spill over effects of these programs have been very significant, since it facilitated the training of other staff in each of the participating organizations. In some cases, it resulted in the development of training facilities by the partner organizations not only for their own staff, but also for the staff of other MFIs. To name a few organizations: FPC in China, ASA, CFTS, IMSE and SHARE in India; MKEJ, YDBP in Indonesia; NIRDHAN and CSD in Nepal; LAPO in Nigeria; ASHI, CARD and PD in the Philippines; MCDT in Uganda. They have organized training for the staff of other MFIs also.

Grameen Trust has developed a data base for monitoring the performance of its partner projects. It receives monthly and quarterly reports from the partners. It compares and consolidates the reports, examines and analyses the data. It publishes consolidated statements of performance indicators like number of members, borrowers, groups, centres, branches, loan disbursement, loan repayment and outstanding, percentage of women borrowers, portfolio at risk and savings. Its quarterly report includes some more information such as aging status, loan loss and loan rescheduling rates, income and expenses including adjustments. It prepares analytical reports every month. GT updates its reporting formats on a regular basis keeping in view the new developments in the industry. It considers performance indicators set by CGAP, USAID and other donors, while updating its formats. GT has conducted evaluation studies of partner projects and provided technical assistance wherever necessary. It engages resource persons from GB and GBRPs for these jobs. The monitoring and evaluation reports of GT reveal that many of the partners need more capacity building in order to keep pace with the latest industry standards as well as to be able to prepare a realistic business plan and implement it.

   Direct Implementation

GT as a matter policy supports local organisation to implement their microcredit programs. But in special situations, GT goes for direct implementation under its Build, Operate and Transfer (BOT) model. The notable examples are those of Myanmar and Kosovo.


In 1997, at the request and with financial support of UNOPS, GT started implementing a microfinance program in the Delta Zone of Myanmar, following GBA under the name of Sustainable Livelihood Through Micro-Finance for The Poor'. It built the project with 6 senior management staff from Grameen Bank and 116 local staff from Myanmar who were recruited in phases and trained up. The project organized more than 35,000 poor women in Delta Zone through 10 branches, gave them loans, mobilised their savings and created a strong foundation for its sustainable operation. The project maintained 100% rate of repayment throughout. Its portfolio at risk remained nil. It achieved 139% operational viability. The economic and social impact of the project has been reflected in the improvement of the quality of life of its clientele. Having built the local capacity of the project and developing it into a viable one, GT withdrew its expatriate staff and handed over the project to UNOPS on 17 May, 2002. GT hopes that the project will successfully continue to serve the poor in Myanmar and will be institutionalized in due course of time.


In June 2000, GT started a GBRP in war torn Kosovo, with the financial support from Missione Arcobaleno, Italy. Kosovo Grameen-Missione Arcobaleno Microcredit Fund (KGMAMF), presented a very challenging and tough assignment. GT accepted the challenge on the invitation of the Italian mission. It sent six senior Grameen staff to Kosovo, recruited local staff, trained them and started implementing the program. The program has been providing financial services to more than 3,490 of the poorest women in Kosovo through four branches. It has generated self-employment for them, building up their capacity and expanding their capital base. Its repayment rate is 100%. It has no portfolio at risk. It has motivated its staff and clientele to face any crisis with confidence and courage.

As KGMAMF will complete its first phase in June 2003, GT is planning for the next phase. It hopes to build local capacity so that a local management can take over the charge of the project from GT in due course.

Given its experiences with BOT model, GT is ready to directly undertake similar missions in any country, where it may be needed to develop a successful microfinance program within a short time without sacrificing its quality.

   Grameen Global Network

GT is the secretariat of Grameen Global Network.

The immediate objective of the network is to develop a common approach and follow a common strategy to reach the Microcredit Summit's goal. The overall objective is to lead a concerted effort towards building a poverty free world with credit as the main weapon to fight poverty.

The network provides a forum for the exchange of experiences and learning amongst partners, friends and supporters of Grameen. It plays an advocacy role in mobilising resources from donors and other sources in support of GBRPs in particular and microcredit programs in general. It mobilises support in favour of creating an enabling environment for microfinance. It facilitates training and technical assistance and also disseminates information on the growing microcredit industry through newsletters, seminars, the electronic and print media.


GT believes that poverty reduction is a doable proposition. It can be significantly and rapidly reduced with Grameen based microcredit approach provided :

  • required funds are available to the nascent micro-finance industry at reasonable costs,
  • a professionally, competent and motivated staff is engaged in performing the operational tasks,
  • the communication or knowledge gap between donors and practitioners is minimized,
  • the gap between words and deeds, assurances and actions, is narrowed down and
  • an enabling environment is created by removing the obstacles that stand in the way of growth of micro-finance industry..
 Editor : Muhammad
Executive Editor : Khalid Shams 
Editorial Assistance :
Nazneen Sultana
Lamiya Morshed 
Editorial Advisory Board: Argentina : Pablo Broder, Buenos Aires     Australia : Shan Ali, Sydney     Chile : Benardo Javalquinto, Santiago     Colombia : Mauricio Fernandez, Bogota     France : Maria Nowak, Paris     Germany : Nancy Wimmer, Munich     Malaysia : David S. Gibbons, Kuala Lumpur     Philippines : Dr. Cecilia D. Del Castillo, Bacolod City     USA : Alexander Counts, Washington DC
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