The impacts of the MFIs in rural areas of Bangladesh
In measuring the impacts of MFIs on the lives of the rural Bangladeshi people, most scholars, financial analysts, economists, and other observers use diverse means. According to Weber (2013), among the common measurement strategies include the outreach measurement, which seeks to understand the number of people that the loans from MFIs have impacted (149). Before the invention of the MFIs, loans were not available for people struggling economically. Consequently, they were left at the mercy of the loan sharks who would exploit them with over two hundred percent returns on interests. However, from the 1970s, when Mohammad Yunus founded the Grameen Bank (village bank), access to loans for the poor rural people has changed. The impact of MFIs can, therefore, be studied based on the accessibility of the loans by the marginalized rural areas. The most important way of measuring the impacts of the MFIs on the lives of the Bangladeshi people is the use of social cost-benefit analysis (Weber, 2013). The social cost-benefit analysis incorporates almost all aspects of the lives of the Bangladeshi people. The social aspect of life takes into consideration the adverse effects the loans received from MFIs have had on the Bangladeshi people.
The statistics available show that a significant number of people from the country are struggling with loan repayment and thus are weighing the down in terms of the standard of their living. Additionally, a significant number of suicide cases have been reported from the extreme cases that result from failure to repay the loans from the MFIs. Other social issues that have arisen from the MFIs institutions in the lives of the rural Bangladeshi people are domestic violence, which is caused by the men being threatened due to the empowerment of women. The benefits of MFIs in the lives of the rural people are also noticeable in the improved living standards of most people (Weber, 2013). Moreover, young children in rural areas have managed to have access to social and educational institutions such as hospitals and schools. Some MFIs have further undertaken to transform the lives of the women by offering financial courses that enable them to manage their finances soundly and invest in income-generating activities. From the social cost-benefit analysis, it seems that the contributions of the MFIs hang on the balance for both positive and negative impacts on the lives of the Bangladeshi people. Subsequently, there are measures that should be undertaken to ensure the MFIs offer effective services to the people with little negative impacts.
Possible Solutions to MFIs Implications
Solutions that exist for alleviating some of the negative social and economic impacts on the lives of the Bangladeshi people should be implemented by the MFIs. Almost all the struggles that the women face are as a result of the policies implemented by the MFIs. First, the MFIs should implement policies that are geared towards reducing the interest rates charged on women from rural areas (Mia & Rana, 2018). Their interest rates should not be similar to those in urban areas because the level of spending in rural areas is low; thus, it takes a lot of time to make meaningful profits. Secondly, the MFIs should implement flexible loan repayment dates for women in rural areas. Subsequently, this policy will enable the women to avoid a loan-repayment cycle, which makes them borrow loans from others to furnish due loans. Such levels of desperation only seem to push the women further into debts. Thirdly, as a part of the loan package, the MFIs should offer financial education to the women to enable them to understand discipline management of financial resources that they borrow. Fourthly, there is a critical need for supervision on how the women invest the money borrowed from the MFIs because some investment choices might not bring the desired returns. These solutions are institution-based and can only be implemented through the MFIs.
Conclusion
The impacts of the MFIs in rural areas of Bangladesh have been both positive and negative. The positive impacts can be observed in the change in living standards in most households in rural areas. Further, women in rural areas have managed to come up with ways of sustaining their families through investments made by the acquisition of loans from the MFIs. Children also have had better access to basic needs, such as education and health care. However, the MFIs have their fair share of negative impacts on the lives of the Bangladeshi women. Repayment of loans has been a burden often pitting looking for food and fulfilling the debts against each other. As a result, the MFIs have contributed to food insecurities in the rural areas of Bangladesh. Additionally, the empowerment of women has also threatened the position of men in the family setup, thus resulting in increased gender-based violence. However, these cases can be salvaged by the MFIs offering education to rural families. Further, the MFIs could also make the repayment system flexible to accommodate the economic status of the rural people.