Utilizing Remittance As A Source Of Micro Financing

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My patial findings from my research topic

My patial findings from my research topic

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  • 1. Utilizing Remittance as a source of Micro Financing
    A study on UK NRB remitters’ investor market
    By JameRasheed
  • 2. Research Objective
    To determine if remitters in UK can play a part in supporting micro financing projects in Bangladesh
  • 3. Research Questions
    Analyse the investment pattern of Bangladeshi remitters living in UK.
    Assess the interest in investing in micro financing projects in Bangladesh by UK remitters.
    Create a typology of strategies which can encourage UK NRB investors in participating in investing in Bangladesh.
  • 4. General Sources of Finance for Micro Finance Projects
    Donor and government grants and soft loans
    demand deposits, passbook savings, time deposits, etc
  • 5. Evolution Process of Microfinance Financing
    Microcredit uses the graduation principle
    Size of repeat loans increases according to repayment record
    Sustaining the program through new funds
    Debt capital
    Short term borrowing
    From commercial and central banks
    Long term borrowing
    From well developed capital markets
  • 6. Similarities and Differences between Remittance and Micro Finance Approaches & Outcomes
    Both provide financial freedom
    Micro Finance has a structured process of investment
    Remittance is unstructured and individualistic
    Both aim for alleviation of poverty
    Micro finance addresses betterment of society
    Remittance addresses individuals
    Both derive their sources from an ideology of charity and philanthropy
    Both have the same end game
    Microfinance is a source of credit
    Remittance is a source of savings
  • 7. Remittance and Employment
    Remittance flow has been constantly rising. In fact, 2008 saw the highest recorded flow of remittances, despite the recession –related level off of employment abroad
  • 8. WB Estimate of Average Remittance Transaction Size
  • 9. WB Estimate of Average Transaction Size
    About two-thirds of 20 villages from 10 district suggested that the remittance is received by Bank Draft
    However, 16 percent of that sample remit money initially into a third party account from where it is distributed to the beneficiary
    24 percent send money through hundi process then through formal channels.
  • 10. Research Sampling Process
    The sample was selected through the snow ball sampling method
    The sample size was 20 respondents who had established restaurants in UK from the Sylhety community
    The questionaire was based on the US AIDS remittance data mining system
  • 11. Average ticket size per corridor in BDT (3 month)
    BRAC Bank Ltd
  • 12. General remittance utilizing pattern from UK
  • 13. General investment pattern of remitters in UK
  • 14. Why Fixed assets?
    Land value always appreciates
    It is generally stable and lucrative
    Can be turned into a fixed source of income
    Bangladesh's high population rate ensures rising demand for land thus increasing the price.
  • 15. Religion as a criterion for investment
    A research conducted by DFID in 2005 identifies that Zakat was the prime means of investment from UK . However, this is usually done as there are no known other favourable investment tool available to a remitter.
  • 16. Interest in investing in micro- financing projects in Bangladesh
  • 17. Governments ability in reducing poverty
  • 18. Investing in government and private sector for MFI projects
  • 19. Trust factor between government and private sector MFI
  • 20. Expectation on the rate of return on MFI projects
  • 21. BB initiative to remitters investment
    Tax haven for remitter investment
    FC and NFCD account
    WEDB Bond (provides return)
    USD Premium Bond (provides return)
    NITA account (investors account on share market, bonds etc)
  • 22. Conclusion
    UK remitters have the highest potential to invest in micro financing projects provided there is a return.
    The currency conversion rate makes it feasible to have the high investment potential in generating investment funds.
    Though religion is a factor in the investment decision there is an interest in getting a return on investment even if its relatively less.
    There is a high probability of remitter investment in the private sector as opposed to the government sector.
  • 23. Recommendation
    Create a separate fund in the foreign currency reserve for development purposes.
    New development bond or WEDB that can be sold to remitters and generate separate fund for development with return on ROI
    Direct deposited fund directly for the MFI’s with minimal governmental involvement.
  • 24. Potential lacking of the survey
    An adequate number of respondent to create a potential link between religious views and investment in Bangladesh.
    Types of preferred investment by remitters and their expected return.
    Specific investment climate by remitters to initiate investment in Bangladesh.
  • 25. The End