Resource information
Microfinance is often criticized for not
adequately addressing seasonality and hard-core poverty. In
Bangladesh, a program known as PRIME was introduced in 2006
to address both concerns. Unlike regular microfinance, PRIME
introduces a microfinance scheme that offers a flexible
repayment schedule and consumption smoothing, as well as
production, loans. It targets the ultra-poor, many of whom
are also seasonally poor, with a severe inability to smooth
consumption during certain months of the year. Besides
providing loans, PRIME offers extension and training
services. This paper uses a quasi-experimental survey design
to evaluate PRIME against regular microfinance programs. The
results show that PRIME is more effective than regular
microfinance in reaching the ultra-poor, as well as the
seasonal poor. PRIME also helps reduce seasonal deprivation
and extreme poverty. Although the program has demonstrated
its promise, it is too early to conclude whether the accrued
benefits are large enough to contain both seasonal and
chronic poverty on a sustained basis.
