Bangladesh’s Brac receives large aid boost from UK and Australia

Brac given £358m over five years to help meet millennium development goals and lift Bangladeshis out of extreme poverty

The Department for International Development (DfID) will funnel a significant portion of its aid to Bangladesh through Brac, one of the world’s largest NGOs, allowing it to decide how to spend the money.

Under a strategic partnership agreement signed on Wednesday, Brac will receive £358m over five years from DfID and AusAid, the Australian equivalent, to help Bangladesh reach its millennium development goals (MDGs).

The UK is set to spend an average of £250m in Bangladesh annually until 2015, when the MDGs expire. Under the agreement, Brac will receive, over the next five years, £226m from DfID and £132m from AusAid.

The deal was signed in London by Andrew Mitchell, the secretary for international development, John Dauth, the Australian high commissioner, and Sir Fazle Abed, the chairman and founder of Brac, formerly known as the Bangladesh rural advancement committee. DfID has worked with Brac before and the amount represents a slight increase in funding. This agreement, however, differs from past deals in which funds were targeted for specific programmes. This time, Brac will decide how to spend the money – within broad parameters.

Under the agreement, Brac will seek to help more than 1.3 million people in extreme poverty, support 680,000 children (60% girls) to receive primary education, provide contraceptive services to more than 15 million people and ensure that 2.9 million women are seen by skilled attendants during childbirth.

The agreement marks a big vote of confidence in Brac, a highly respected southern NGO, which is now taking its tried and tested anti-poverty strategies – developed over the past four decades in Bangladesh – to 11 other countries, including Afghanistan, South Sudan, the Philippines and Haiti.

“DfID and AusAid have funded our programmes in the past, but now it’s a strategic partnership where we use the money the way we want,” Abed told the Guardian before the deal was signed. Mitchell, who constantly stresses the importance of value for money of UK aid, expressed confidence that Brac can deliver.

“The British government and Brac have worked together for many years to lift some of the very poorest people in Bangladesh out of extreme poverty,” he said. “Brac has a proven track record of delivering results and value for money, and has robust financial management systems which enable it to account effectively for donor funds.”

Bangladesh has made good progress on MDGs such as reducing income poverty and child mortality, and enrolling nearly all girls and boys into primary school. It is still struggling, however, with key development challenges. The majority of people living in Bangladesh remain poor, with more than four in 10 living on less than $1.25 a day and more than three-quarters on less than $2.

The country has high mortality rates for pregnant women and newborns: every year, 120,000 babies die before they are one month old and 7,000 women die from pregnancy and childbirth complications. Brac, which has its roots in Abed’s efforts to provide relief after a devastating cyclone in 1970, works across the gamut of anti-poverty programmes, from education to microfinance to social enterprises.

One of Brac’s most novel programmes targets what it calls the ultra-poor, those so poor that they have no access to credit. Under the scheme, the poorest people in the village, who are usually women, are identified and given animals – a cow or a goat – and a cash stipend of 600 taka (£3.50) a month, plus 100 taka to be spent specifically on nutritious food such as lentils. They receive mentoring for two years, after which they are expected to become self-sufficient.

The approach reflects Abed’s outlook. Abed, 76, spoke of the key lessons he had learned over the years after giving up a job with Shell in Chittagong.

“Given the chance, most people tend to take the opportunity to participate in their own development, people want to improve themselves. Given the opportunity people do rise up,” he said, adding that organisation is crucial. “Organisation makes for efficiency,” he said. “Besides, individually people are powerless. Only when you are organised do you develop a sense of self-worth, then people take care of themselves. Brac creates the enabling conditions for people to organise themselves.”

The ultra-poor programme is highly labour intensive, involving the constant hand-holding of people often lacking self-confidence or the nous to deal with the authorities, but Abed argued it was extremely cost-effective. “The total cost is not that high, about $300 per family. The women become more active, eat better, save more,” he said. “It’s not just that they have more money, but they look after themselves better.”

Brac, which employs 100,000 people, spends $40m, or 10% of its expenditure, on the ultra poor, and Abed said he wants to spend a bigger percentage on the very poor, a wish that should be made easier with the money from the UK and Australia.

In its business plan, DfID said supporting Brac through a strategic partnership agreement would allow the NGO to continue to deliver tangible results for poor people in Bangladesh, while at the same time developing plans to reduce its reliance on external donor funds over time; continue to strengthen its internal systems; and seek ways to work more closely with the government of Bangladesh.

• This article was amended on 15 June 2012 to clarify that the special partnership agreement, worth £358m, represents just a slight increase in funding from past deals