Linking Microfinance and Safety Net Programs to Include the Poorest: The Case of IGVGD in Bangladesh

This focus note presents the successful effort of the Income Generation for Vulnerable Groups Development (IGVGD) program in addressing the very poor through its microfinance operations. The BRAC-IGVGD provides free food grains for an 18-month period to destitute, female-headed households that are at the highest risk of hunger.

The very poor have been excluded from conventional microfinance programs as they are part of the high risk segment. MFIs prefer the better-off segments of the poor as repayment from them is assured. The essential elements of the IGVGD program involve a food grain safety net, skills training and provision of financial services in the form of savings and credit.

The paper discusses issues faced by the IGVGD program. These include:

• Interest charged from microfinance loans is not enough to cover cost of servicing the clients;
• Provision of non-financial and financial services within the same institution leads to reduced efficiency;
• Activities within the program need to be clearly operationally separated.

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