Epsilon Archive for Student Projects

Abstract

Microfinance is becoming a tool of poverty reduction in Pakistan and Bangladesh, given the high rates of poverty in these countries. Poverty is greater in the rural agricultural sector where peoples’ livelihood is dependent on agricultural activities. Furthermore, the agricultural sector in the two countries is still underdeveloped. This study examines the role of agricultural microfinance services and products to assess whether microfinance is contributing to rural agriculture and rural development in Pakistan and Bangladesh, where a majority of the populations are located and their livelihood dependent on agriculture. Accordingly, the study examines rural agricultural needs and demands in the two countries and the role of microfinance in addressing them. Mostly based on secondary data sources, the study compares the two countries along certain indicators generated by the framework developed. This framework integrates the concepts of rural agriculture, rural development, poverty reduction and microfinance, which serves as the analytical toolkit. The study shows that the two countries share similar characteristics in terms of rural agriculture, rural development and even needs of this sector. The analysis of specific indicators reveals differences between the two countries in terms of microfinance outreach. One of the conclusions is that microfinance is more developed and extensive in rural outreach in Bangladesh than in Pakistan.