ISLAMABAD: The microfinance sector has registered a 19.3 per cent increase in active borrowers and 31.2 per cent growth in gross loan portfolios during the fiscal year 2014, revealed a World Bank Report.
The report further revealed that Pakistan has achieved some progress in financial discipline and improvement in various sectors as compared to the previous year performance. Microfinance has significance contribution in bringing changes in social livelihood of poor segment of society. Such people don’t have access to formal banking system and they greatly benefit from microfinance institutions, which are flourishing in Pakistan. Microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services.
As sector developer, Pakistan Poverty Alleviation Fund (PPAF) is playing a vital role in improving access of the poor to it in districts across the country. The organization so far has disbursed over 7.1 million microcredit loans with 59 per cent women beneficiaries. Funds available for on-lending have been successfully utilized while 80 per cent of the funding has been deployed in rural areas. Main focus has been to expand and upscale products and initiatives piloted previously in order to provide holistic financial and business development services to the communities at large while remaining focused on promoting international best practices in corporate governance, strengthening risk management systems, promoting technological innovations and expansion of demand based client centric products while ensuring responsible business conduct and impact at the client level.
The microfinance through PPAF has been engaged in up-scaling of agriculture, dairy and livestock, poultry and embroidery value chains. These value chains are now assisting an increased number of poor entrepreneurs in building livelihoods, removing barriers to inputs, increasing knowledge of the clients in the area of utilization of modern techniques and creating linkages with market players. Resultantly, beneficiaries are able to increase incomes, efficiency and productivity. Such contributions greatly help in reducing poverty, which badly affected low and middle-income groups.
For example, embroidery value chain in district Haripur was up-scaled and the project included provision of microfinance loans to home-based women entrepreneurs along with training to develop their skills to produce a wide a range of products. Moreover, backward and forward linkages with suppliers and designers were created. The intervention resulted in significant increase in profits earned by the beneficiaries; 450 women have reported that they were able to earn revenue of up to Rs11 million within a year.
Similarly, poultry and livestock products for beneficiaries of embroidery value chain are also being implemented in order to diversify and increase their income streams through creation of sustainable business opportunities for the women entrepreneurs. The poultry and livestock products entail loan products enabling the women to purchase chickens, goats and cattle. Through this program, the women entrepreneurs are being provided with basic as well as advanced best practices training on poultry and livestock management.
Livestock value chain model is being piloted in Jacobabad, Sindh for 500 farmers. They are being provided with a larger size loan facility, and are currently are being organized in to groups with simultaneous profiling of their farms and animals. The agriculture-value chain model is being implemented in Gujranwala to strengthen economic base of more than low-income 3200 farmers with timely access to easy and cost-effective financial and non-financial services, capacity building initiatives and access to upstream/downstream markets.
According to a report, the PPAF has introduced crop micro-insurance product based on crop yield for farmers participating in agriculture-value chain in Bahawalpur where 20,000 acres of land is being insured under crop micro-insurance for 5,000 farmers. In the same, efforts are underway to provide health insurance product particularly to benefit communities in rural and remote areas with limited access to medical facilities.
Empowering women through designing of tailored products has always been an area of prime focus of the microfinance initiatives. In pursuance of this goal, PPAF a program has been initiated to provide access to finance for women entrepreneurs complemented with a range of non-financial services. This program is focused on providing loan facilities for the female clients to start a new business. The program has been up-scaled in Bahawalpur, Multan, Gujrat and Sialkot districts targeting 2280 women. Additionally, skill development training for 1700 women have been conducted besides establishment of their linkages with market and collaboration with trade institutes for sustainable business enterprises. The PPAF, main provider of microfinance through its partners, has initiated a pilot/action research on Asset Backed Lending (ABL) in Haripur and Sialkot. As the requirement for capital increases, risk as perceived by Microfinance Institution also increases.
SOURCE: Daily Times (Pakistan)
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