Rural credit to reduce extreme poverty: an overview of the Projek Ikhtiar Experience in Peninsular Malaysia

Abstract

We did not set out to replicate Grameen Bank. Rather we wanted to find out whether the Grameen Bank Approach (GBA) could bring about further substantial decline in extreme poverty in rural peninsular Malaysia, i.e., whether it could complement existing government poverty reduction programs. Malaysia is not a desperately poor country like Bangladesh; it is a middle-income developing country. But we suffer from unequal development, and persistent poverty in the rural sector. Some 40-50% of rural households still live below the official poverty-line income, and half of these are very poor. Our general objective was to see the GBA to poverty alleviation could result in a substantial reduction in this residual extreme poverty. if Specific targets of the 2. 1/2 year pilot project were to disburse its benevolent loans to at least 300 very poor households in the Northwest Selangor region, and to maintain a repayment rate of at least 90%. ACHIEVEMENTS 1. Target Group Reached By the end of June 1988, Projek Ikhtiar had 448 members from very poor, rural households in the Northwest Selangor region. 373 of these had borrowed more than ringgit $420,000 (about US$162,000) to finance additional income-generating activities. The average loan was therefore around ringgit $1130 (about US$434). The pilot project target of 300 very poor borrowers had been exceeded. (Appendix A) for Policy Research for making my participation in Projek Ikhtiar * Gratitude is expressed to Universiti Sains Malaysia and its Center State Government and Yayasan Pembangunan Ekonomi Islam Malaysia for possible; to the Asian and Pacific Development Center, the Selangor vital funding; to Grameen Bank for technical assistance, advice and and, most important of all, to our female Sahabat for demonstrating encouragement; to my Project staff for their essential contributions the credit worthiness of the very poor in peninsular Malaysia.