The Additional Financing: Second Poverty Alleviation Microfinance Project (Microfinance II) aims to alleviate poverty by diversifying micro credit operations to reach underserved segments of the urban poor. Initiated in August 2007, the additional financing part of the Project, aims at assisting rickshaw pullers, other non-motorized vehicles drivers, and poor owners to switch to alternate professions and restore their income and livelihood affected by ban on non-motorized vehicles in major roads of Dhaka city. The project also aims to build institutional capacity of the implementing agency - Palli Karma-Sahayak Foundation (PKSF), the participating Partner Organizations (POs) and the poor borrowers.
The project, designed to be implemented over two years, is funded by the World Bank (US$ 15 million). Initially the project had a delayed start due to administrative processes at the ministry as well as implementing agency level. In the face of continuing challenges, such as providing business development skills training, awareness building for improvement of livelihood, and finally, assisting the non-motorized vehicle drivers and poor owners, the implementation progress has been slow. In order to accelerate the pace of implementation , PKSF proposed certain measures such as, extending the project area to cover the entire Dhaka city, using more options for skill development training, including the regular urban poor in the project, and extending the project closing date.
Three of the four measures were adopted, deferring the consideration for extension of the project closing date. Since adoption of the new measures in October 2008, the pace of project implementation has picked up, especially in the area of skill development training. Results from the ground indicate that around 15% of the borrower households have completely eliminated dependence on income from rickshaw pulling and another 30% - 35% have engaged themselves in new professions but still supplement household incomes with rickshaw pulling/non-motorized vehicle driving. Besides, livelihood trainings have increased general awareness among the rickshaw pullers and the poor owners.
Recently, PKSF has withdrawn their request for an extension of the project closing date, on the ground that it would not make a difference in terms of improving quality of implementation, as inherent challenges relating to project design and structural constraints would persist. Therefore, the project will close on June 30, 2009, as scheduled. IDA hopes that the lessons learned through implementing this project would be internalized in PKSF’s institutional learning and help not only in carrying forward the Microfinance II project but also in designing future poverty alleviation projects with similar challenges.