BRAC Bank’s SME Unit is the first of its kind to provide financial services on a national scale to small- and medium-sized entrepreneurs. After 18 months of operation, BRAC Bank approached BRAC RED to exercise an exploratory study on the effect of BRAC Bank’s SME Unit lending on employment creation. The objectives of the study were: 1) to assess geographical poverty outreach of the Bank’s SME Unit, 2) to identify the effect of SME lending on employment creation, and 3) to explore which enterprises create the greatest employment for poor people, and to what extent BRAC Bank’s SME Unit support these enterprises. The survey was conducted from February 22 to March 3, 2004, covering 85 BRAC Bank repeat borrowers. In addition, Focus Group Discussions with 43 selected repeat borrowers and CROs were also carried out. The report concludes by providing its findings that, among other points, state that BRAC Bank is reaching poorer districts but is insignificant to their total portfolio, the poor are not the target audience of BRAC Bank as it targets middle-class enterprises that could fulfil the criteria of BRAC bank. Furthermore, it found that the sustainable impact of SME loan on employment creation is a complex issue and depends on many factors such as type of enterprises, loan utilization time, age of the enterprise, growth in investment and capital, business environment etc.
Authors: Iglebaek, Monique; Matin, Imran
Type: Report
Year: 2004
