The Chors (River Islands) of Bangladesh: A Real Challenge for the Financial Services Sector
By Tarek Kamal, Managing Partner
To say that life is difficult for the residents of the Chors (River Islands) of Bangladesh would be an understatement of the highest magnitude. Some Chors are more vulnerable to flooding and erosion. Continuously on the move, they are a resilient lot.
The picture above really drives home the issues felt by inhabitants of the Chors of Bangladesh. Using the GPS coordinates on the picture I took (above) when visiting the Chors on the Jamuna River during the floods, I was able to pinpoint that very spot on Google Maps. In the winter, I would have been on dry, but extremely fertile land which would be ideal for growing organic vegetables. Someone owns and farms that land when the water level comes down.
With the bane comes the boon. The floodwaters not only deposit silt and nutrients but also wash away the impurities. Although not much of the produce can be called organic due to the prevalence of chemical fertilizers and pesticides, every year brings a renewed opportunity for enlightened farming.
Many times more difficult than just living on the Chors is access to financial services. The seasonal nature of land, the risk of it being washed away completely and the scarcity of electricity supply (only solar home systems available in the Chors) prevent financial institutions operating there. The difficult access to the Chors around the year (each season bringing different challenges) acts as a further deterrent to the provision of financial services in that area.
However, opportunities abound for financial services institutions willing to take even a small step towards catering to their needs. Digital financial services with the security and convenience they offer to both the service providers and customers appear to be the way forward for any organization interested in developing a scalable business in the Chors.
Financial education and awareness building about the benefits of using formal financial services must be offered hand in hand with appropriate financial products. This is necessary not only for the Chor dwellers but also for the value chain players operating in the area. For the most part, the absence of financial services in the Chors has left the inhabitants and businesses blissfully unaware that the risks they have taken for granted can be mitigated through the use of digital financial services.
As I delve into this further as part of a consulting assignment I may change my opinion, but the Agent Banking model seems to be better suited for the Chors. This is due to the fact that any success achieved by financial services companies will be the result of significant advisory services provided face to face to Chor dwellers who tend to be less educated and almost certainly financially illiterate.
The unparalleled reach of mobile financial services has unfortunately only positively impacted P2P (person to person) and G2P (government to person) fund transfer as it is still considered expensive by businesses. The more ‘sophisticated’ products that can be piped through this conduit requires significant advisory services to all stakeholder and appropriate product development.
Over time, however, I expect to see a hybrid model incorporating the services provided by agent banking and mobile banking services. True impact will be achieved when Chor dwellers are able to demonstrate their cash flow to financial services providers through the formal financial statements generated from their mobile/agent banking accounts.
A follow on article, Financing the Chors (River Islands) of Bangladesh, can be found here.