TARANGO – Bangladesh

TARANGO News publish in  CNN International

http://www.cnngo.com/explorations/life/box-three-locks-613408

From colonial times, Bangladeshis have been bedeviled by loan sharks’ high interest rates. This metal box, forming a basic local savings bank, offers hope for tribal farmers in Bandarban to establish a fair financial system.

It is time to manage the savings of one of the poorest communities in Bangladesh, one of the poorest countries in the world.

Travelers come to this region rarely, despite a “Beautiful Bangladesh” tourism campaign. Unlike Dhaka, which attracts travelers and expats and allows access to all the benefits of city life, most of Bangladesh’s poverty-stricken rural residents have to improve their lives by themselves.

I’ve come to this remote part of the country to see how a system of personal banking has changed the lives of the people here, and to spread the word of what appears to be a very simple, but very successful micro-finance program.

Also on CNNGo: Cheat sheet to Dhaka — 10 things to know

These people in the Chittagong District in northeast Bangladesh are known as Marma, or Mugh. Originally from Myanmar, they moved to Bangladesh to farm the hill regions. But the terrain is tough and they are now looking to find other ways to improve their income.

They are doing this through the Village Savings and Loan Association (VSLA), a program designed to help the world’s poorest save money effectively.

The bank that’s a box

Their “bank” where they keep their savings is a metal box, adorned with three sturdy locks. The keys are safeguarded by elected representatives.

Most shareholders do not know how to read or write, but in fact this is not necessary. The program’s success depends on it being easy to understand, even by the illiterate.

“Everything has to be understandable without having to read a single letter,” explains Nicola Momentè, representative of Bangladesh AIDA, a Spanish NGO, which, through local partners Tarango and BNKS, is providing advice and training.

“The VSLA functions properly and completely independently, without interference.”

Once the VSLAs are formed, not even the NGO can intervene in the running of this particular financial institution.

It functions like this: villagers deposit savings in the box, creating a grant fund to lend to its members; benefits can be drawn from this simple “financial product” that are passed on to the whole community.

VSLAs run for a single year, after which members split the profits between themselves according to their original contribution. They can then organize the VSLA again if it’s considered appropriate. About 85 percent repeat.

Most trusted are the key-keepers

At these daytime assemblies, like the one taking place in Bandarban, farmers come with their savings books — small notepads with the details of their various transactions — and identification cards, recognizing them as members of a particular VSLA.

Contributions are made in multiples of a base amount (usually 10 or 20 taka (US$0.13-0.26), represented by an arrow-shaped stamp in the savings book.

And you can only stamp the book when the community is holding a meeting before the box with three locks. No tricks. “Transparency and trust in the system are key for it to work well,” says Momentè.

Key-holders and box custodians are also elected at these meetings. These are the most trustworthy people in the community.

At special meetings, and only once a year, charges to be applied to loans and interest rates are set, with a maximum of 5 percent per month. The money has to be repaid within three months.

A small program spreading wide

“Both those who receive money with some interest, and those who can borrow more cheaply than they would at a regular bank, are very pleased with the performance of this community,” says Mea Se Prue, a member of the Golap VSLA.

This woman is not alone. The example has spread to other areas of the country and is seen as a substantial support at a time of triple crisis: economic, food-related, and the effects of the uncontrollable elements of nature.

In Bandarban, 78 farmer associations containing 1,500 people (of whom 1,050 are women) have been created.

Some 433 credits worth 246,877 taka (US$3,240) have been disbursed, and communities have profited to the tune of 42,442 taka as a result of this system, equivalent to 12 times the country’s minimum wage or approximately 25 times the average income.

These are small steps so far, but they are heading in the right direction.

For more information about VSLA click here
Read more: Gallery: Bangladesh’s box with three locks | CNNGo.com http://www.cnngo.com/explorations/life/box-three-locks-613408#ixzz1Z82VzSEz

As a Fair Trade practitioner TARANGO has celebrates the World Fair Trade Day 2011 by organized a sharing session between TARANGO our fair-trade producers, who are producing Fair-trade products and our international Fair-trade consumers who are supporting our women tof the Australian High Commissioner, Gulshan, Dhaka.

The World Fair Trade Day – A worldwide celebration supported by the business and consumer community, by policy makers and media as well as by thousands of social movements, NGOs, millions of Fair Trade small producers, artisans, farmers and small-hold manufacturers and more than 100.000 volunteers.    
 
The theme of this year is: TRADE FOR PEOPLE- Fair Trade your world”. The theme encompasses the strong belief in the need to put people and the environment at the heart of trade and consumption, Trade for People means trade for sustainable development of local communities.