Successes of SHG based Microfinance in Livelihoods attract additional World Bank funding

Microfinance Focus, Dec. 24, 2009: The World Bank  has approved an International Development Association (IDA) credit of US$100 million in additional financing for the Andhra Pradesh Rural Poverty Reduction Project, A program that has raised incomes of some 10 million rural women since its inception in 2003, when the original project was approved by the World Bank, according to a release. This is the second additional financing for this project and it will help scale up its impressive achievements to date.

The project “Andhra Pradesh Rural Poverty Reduction” has mobilized some 10 million poor women, or 90 percent of the poor in the project districts, into nearly 850,000 Self Help Groups. The groups have used seed money to pool resources and make small loans to help each other pay for education, medical treatment, food , and other small but important needs. The self-help groups have formed federations, leveraging their finances and influence, and even began to deliver insurance, ambulance, extension, commercial and government services, said the report.

“This program has had a remarkable impact on the lives of the rural poor in Andhra Pradesh,” said Roberto Zagha, World Bank Country Director for India. “We have seen incomes increase for close to 90 percent of poor rural households. This additional financing will help improve efficiency and effectiveness of the program by adopting new technologies and innovative service delivery models for achieving full inclusion of the poor households.”

“This additional financing will help build capacity of community institutions to enable them to deal more effectively with the commercial banks, the market institutions, public sector departments, and developing new partnerships with the cooperatives and the private sector,” said Parmesh Shah, World Bank Lead Rural Development Specialist and project team leader. “We expect this approach to bring even higher returns on the investments in the institutional platform of the poor already made. This phase will also work towards achieving significant decrease in malnutrition and maternal mortality for the rural poor”

The credit is provided by the International Development Association (IDA), the World Bank’s concessionary lending arm and has 35 years to maturity and a 10-year grace period.

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For more information about this project: Click

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