On microfinance in Pakistan

May 15, 2010

women cottonGiven the amount of negative news about Pakistan in the last few weeks,  it is good to see a report about something going reasonably well, with this article by the blog Changing up Pakistan on the country’s first microfinance institution. 

Modelled on the Grameen Bank set up in Bangladesh by Nobel Peace Prize winner Mohmmad Yunus,  the Kashf Foundation provides loans to Pakistani women to set up small projects which both bring them an income and enhance their status.

“Women in our society do not get the due acknowledgement they deserve for their contribution to the overall economy,” the blog quotes Kashf Foundation founder Roshaneh Zafar as saying.  “Time and time again, during my travels while I worked for the World Bank in Pakistan, women from all walks of life – rural women, urban women, educated women, illiterate women, working women, home makers – would tell me the same thing, that they wanted a better life for themselves and their families, however, they lacked economic opportunity.  This resonated across the country, from when I sat with shy and veiled women in Kalat in Balochistan to when I engaged with highly empowered and articulate women from the plains of the Punjab.

” The second was related to my own commitment.  I had grown up in a Pakistan where I had not faced any discrimination on the basis of gender.  I was and am strongly committed to the notion that we can build a world free of gender discrimination – that comes with two strategies, empowering women economically (providing them a financial voice) and investing in their social status (through education and health).”

Microfinance has become something of a political football in recent years, in part a victim of its own popularity.  In India, SKS Microfinance last month became the latest in a handful of such institutions to raise money on the stock market,   drawing criticism that it was seeking to profit from poverty.  In this post here on the Huffington Post,  Vivian Norris de Montaigu writes about the pitfalls of microfinance going commercial, quoting Yunus as saying that “we started microcredit to free people from the money-lenders, not to become the new money lenders.”

That said, it came relatively late to Pakistan, and in a country struggling to address the challenges of religious conservatism and Islamist militancy, it’s worth reading  about a project bringing economic empowerment to women.

Among the success stories, Kashf Foundation founder Zafar tells of a woman who began six years ago with a small spindle machine to spool thread, which she then packaged and sold to the local market. Now she has 20 women working for her, while her husband,  seeing the success of her business, left his job as a small time clerk and began working for his wife instead.

One comment

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[…] Where some MFIs have a strictly non-profit social motive such as poverty alleviation or female empowerment, others may cater to slightly higher-income-bracket individuals and thus may become for-profit […]

Posted by Protecting consumers of microfinance in Pakistan | East Asia Forum | Report as abusive

[…] Where some MFIs have a strictly non-profit social motive such as poverty alleviation or female empowerment, others may cater to slightly higher-income-bracket individuals and thus may become for-profit […]

Posted by Protecting consumers of microfinance in Pakistan : Microfinance Africa | Report as abusive

The Microfinance industry in Pakistan has indeed seen some very remarkable developments in the past few years. PPAF (Pakistan Poverty Alleviation Fund), the apex institution of the country wholesaling funds to civil society organizations, has developed a very organized network of partner organizations.
Also very interesting are individual organizational developments of organizations of the likes of CWCD, a Micro Enterprise Development Organization based in Lahore, who have come up with unique & interesting variations to the conventional Microfinance models, as well as the successful launch of their Islamic MF products (making them pioneers of Islamic MF in Pakistan). They have also very proudly challenged the Grameen & Kashf MF models at various Forums, which is quite unique, innovative & worth mentioning, as they have very successfully done so. CWCD’s Founder and Chief Executive Officer, Mrs. Farida Tariq, has introduced a new term of Potential Poor which negates the concept of Poorest of the Poor. Also instead of providing Life insurance (as in CWCD’s opinion death cases are even less than 1% of clients) CWCD offers health insurance for its clients.
Interestingly CWCD not only provides Micro Finance it also provides Business Development Services to its clients so as to promote their businesses and provide them access to markets. In 2008, CWCD became the first Microfinance Organization to successfully develop Islamic Microfinance products and procure funding from PPAF for their successful launch. Further interesting insights about the organization can be found on cwcd.org.pk.

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