Research Report

Chapter 1
INTRODUCTION
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION TO REPORT
The topic that I have chosen for my research report is Role of Microfinance to Empower Women in Pakistan; A case study of NWFP. Microfinance plays an important role in improving the living standard of the people especially the poor. For example to eradicate poverty and hunger, achieve universal primary education, promote gender equality and empower women, reduce child mortality and to develop a global partnership. However, this research is based on microfinance in general, with a special focus of its impact on women empowerment.
1.2
BACKGROUND OF STUDY
Microfinance is relatively a new term. But most societies have a long background of traditional or informal saving and credit arrangements. Microfinance is the provision of financial services (whether loans, deposit accounts, insurance or otherwise) to poor and low-income individuals and households. The thing that distinguishes microfinance from the traditional financial services, aside from the small sums of money involved, is the absence of any collateral as security for loan. The outbreak given to microfinance in a real sense was by Grameen Bank of Bangladesh in 1980s. And this model remains central to microfinance today. MUHAMMED YUNUS, the founder of Grameen bank believes that charity is not an answer to poverty, but it only helps poverty to continue. In fact it creates more dependency and reduces the motivation to stand on its own. So Grameen brought credit to the poor, WOMEN, the illiterate and to the people who did not know how to invest money and earn income.
1.3
PURPOSE OF REPORT
To find out is microfinance in real terms working on authorization and development of women of Pakistan and in specific N.W.F.P?
Main purposes of this research report are as following.
Role of Microfinance to Empower Women of Pakistan; A Case study of NWFP
Chapter 1
INTRODUCTION
To find out if microfinance is increasing womens income levels and control over income leading to greater levels of economic independence? To find out if an access to networks and markets giving wider experience of the world outside the home, access to information and development of other social and political roles? To find out is there any difference made in the field of employment generation of female? To find out the impact on the economic development of the province by empowerment of women through microfinance? To find out any more general improvements in attitudes to womens role in the household and community?
1.4
SCOPE OF WORK
In order to have a more focused study, I have focused my work on the women of NWFP. Studying different micro-finance institutions that provide micro-finance facility to both the rural and urban sector women.
1.5
METHODOLOGY OF REPORT
Methodology of my research work will be based on the secondary data from the following sources: Journals Internet Newspapers Magazine
1.6
SCHEME OF THE REPORT
This report will be divided in four sections. SECTION 1: Introduction to Research Report SECTION 2: Literature Review SECTION 3: Analysis SECTION 4: Findings and recommendations.
Chapter 1
INTRODUCTION
1.7
LIMITATIONS OF STUDY
The basic limitation which I am facing in this research report is that microfinance is relatively a new term, so there is not much awareness regarding among people this program.
Secondly role of women in N.W.F.P is not recognized much in any field of life. So not much relevant data is available.
Thirdly time factor, is a great limitation but full efforts will be made to reduce this limitation.
Fourthly due to unstable conditions of our country people especially women are not motivated to start any work.
Chapter 2
LITERATURE REVIEW
CHAPTER 2
LITERATURE REVIEW
According to Zaman 2001, Simanowitz and Walker 2002 microfinance and microfinance institutions have played valuable roles in reducing the vulnerability of the poor, through asset creation, income and consumption smoothing, provision of emergency assistance, and empowering and emboldening women by giving them control over assets and increased self-esteem and knowledge. Several recent assessment studies have also generally reported positive impacts. According to Kabeer 2000 empowerment is defined as the processes by which women take control and ownership of their lives through expansion of their choices. Thus, it is the process of acquiring the ability to make strategic life choices in a context where this ability has previously been denied. The core elements of empowerment have been defined as agency (the ability to define ones goals and act upon them), awareness of gendered power structures, self-esteem and self-confidence. 1 Research done by UNDP (United Nations Development Programme), UNIFEM (United Nations Development Fund for Women), and the World Bank, among others, indicates that gender inequalities in developing societies inhibit economic growth and development. For example, a recent World Bank report confirms that societies that discriminate on the basis of gender pay the cost of greater poverty, slower economic growth, weaker governance, and a lower living standard of their people. The UNDP found a very strong correlation between its gender empowerment measure and gender-related development indices and its Human Development Index. Overall, evidence is mounting that improved gender equality is a critical component of any development strategy.2 As CIDA (Canadian International Development Agency) recognizes in its gender policy, Attention to gender equality is essential to sound development practice and at the heart of economic and social progress. Development results cannot be
1
http://www.unescap.org/drpad/publication/bulletin%202002/ch6.pdf World Bank, Engendering Development: Through Gender Equality in Rights, Resources and Voice Summary (Washington, D.C.: World Bank, 2001); www.worldbank.org/gender/prr/engendersummary.pdf.
Chapter 2
LITERATURE REVIEW
maximized and sustained without explicit attention to the different needs and interests of women and men.3 It is generally accepted that women are disproportionately represented among the worlds poorest people. In its 1995 Human Development Report, the UNDP reported that 70 percent of the 1.3 billion people living on less than $1 per day are women.4 According to the World Banks gender statistics database, women have a higher unemployment rate than men in virtually every country.5 In general, women also make up the majority of the lower paid, unorganized informal sector of most economies. These statistics are used to justify giving priority to increasing womens access to financial services on the grounds that women are relatively more disadvantaged than men. Microfinance has come to play a major role in many gender and development strategies because of its direct relationship to both poverty alleviation and women.6 According to Susy and Lisa the basic theory is that microfinance empowers women by putting capital in their hands and allowing them to earn an independent income and contribute financially to their households and communities. This economic empowerment is expected to generate increased self-esteem, respect, and other forms of empowerment for women beneficiaries. Involvement in successful income-generating activities should translate into greater control and empowerment. One of the often articulated rationales for supporting microfinance and the targeting of women by microfinance programs is that microfinance is an effective means or entry point for empowering women. By putting financial resources in the hands of women, microfinance institutions help level the playing field and promote gender equality. Access to resources alone does not automatically
3
Canadian International Development Agency (CIDA), CIDAs Policy on Gender Equality (Hull, Canada: CIDA, 1999). 4 UNDP, 1995 Human Development Report (New York, UNDP, 1996). 5 World Banks Web site at genderstats.worldbank.org. 6 Cheston, Susy and Lisa Kuhn, 2002. Empowering women through microfinance, unpublished background paper for the Microcredit Summit + 5, New York, 10-13 November, available at <http://www.microcreditsummit.org/papers/papers.htm>.
Chapter 2
LITERATURE REVIEW
translate into empowerment or equality, however, because women must also have the ability to use the resources to meet their goals. In order for resources to empower women, they must be able to use them for a purpose that they choose.7 According to the statement from the Fourth United Nations World Conference on Women Empowerment of women and gender equality are prerequisites for achieving political, social, economic, cultural, and environmental security among all peoples. So womens empowerment is a critical part of sustainable development. Yet microfinances great potential to empower poor women to a large extent often goes unrealized. Although studies show that microfinance can and does empower women, it has the potential to empower many more, even more greatly.8 According to Maria Otero, President and CEO of ACCION International "a sustainable institution that empowers women can do so by first paying attention to the following: 1. Understand the characteristics of women's economic activity: (for example, smaller businesses than men, smaller cash flow, more likely reaches a smaller market) 2. Know the skill and time constraints of women (less literacy, fewer marketable skills, and domestic and child care responsibilities)."9 According to Working Women Forum evidence suggests that participation in microfinance programs may give women the means to escape from abusive relationships or limit abuse in their relationships. Working Women Forum found that 40.9 percent of its members who had experienced domestic violence stopped it because of their personal empowerment, while 28.7 percent were able to stop it through group action.10
7
Cheston Susy and Lisa Kuhn, 2002. Empowering women through microfinance, unpublished background paper for the Microcredit Summit + 5, New York, 10-13 November, available at <http://www.microcreditsummit.org/papers/papers.htm> 8 Beijing Platform for Action, Fourth United Nations World Conference on Women (Beijing, 1995), paragraph 41. 9 E-mail message to Cheston Susy and Lisa Kuhn from Maria Otero, President and CEO of ACCION International, on 6/27/02 10 Working Womens Forum, 22.
Chapter 2
LITERATURE REVIEW
According to Annette Brooke Micro Finance programmes have generally targeted women as clients because women's performance on repayment often proves to be better than men. They are also more likely to invest increased income in the household and in the family's well-being. Most important, microfinance can empower women to become more assertive, which is a good thing. Women are then more likely to be participative in family and community decisions.11 Linda Mayoux in her e-paper of Micro-finance and the empowerment of women concludes that womens empowerment needs to be an integral part of policies. Empowerment cannot be assumed to be an automatic outcome of micro-finance programmes, whether designed for financial sustainability or poverty targeting. According to Linda Mayoux (1997) microfinance programmes targeting women have been a welcome corrective to previous neglect of women's productive role. For some women in some contexts microfinance programmes have indeed set in motion a process of empowerment.12 Noeleen Heyzer of UNIFEM (United Nations Development Fund for Women) 'Micofinance is about much more than access to money. It is about women gaining control over the means to make a living. It is about women lifting themselves out of poverty and vulnerability. It is about women achieving economic and political empowerment within their homes, their villages, their countries.'13
11
In her speech on microfinance to House of Commons (Westminster Hall) http://www.libdems.org.uk/home;sphinx_search?q=microfinance+and+women+empowerment 12 Mayoux L (1997) The Magic Ingredient? Microfi nance and Womens Empowerment, A Briefi ng Paper prepared for the Micro Credit Summit, Washington 13 Part of the paper 'Empowering Women with Micro credit ' presented by the Micro credit Summit Campaign to the Beijing +5 Conference in New York June 2000
Chapter 2
LITERATURE REVIEW
Malhotra (2002) emphasises that even after identifying empowerment as a primary development goal, neither the World Bank nor any other major development agency has developed a rigorous method for measuring and tracking changes in levels of empowerment.14
14
Malhotra A, Schuler S, and Boender C (2002) Measuring Womens Empowerment as a Variable in International Development, Gender and Development Group, World Bank, New York
Chapter 3 TOPIC
OVERVIEW OF
CHAPTER 3
OVERVIEW OF TOPIC
3.1 BACKGROUND
The concept of microfinance is not new. Savings and credit groups that have operated for centuries include the "susus" of Ghana, "chit funds" in India, "tandas" in Mexico, "arisan" in Indonesia, "cheetu" in Sri Lanka, "tontines" in West Africa, and "pasanaku" in Bolivia, as well as numerous savings clubs and burial societies found all over the world. Formal credit and savings institutions for the poor have also been around for decades, providing customers who were traditionally neglected by commercial banks a way to obtain financial services through cooperatives and development finance institutions. One of the earlier and longer-lived micro credit organizations providing small loans to rural poor with no collateral was the Irish Loan Fund system, initiated in the early 1700s by the author and nationalist Jonathan Swift. Swift's idea began slowly but by the 1840s had become a widespread institution of about 300 funds all over Ireland. Their principal purpose was making small loans with interest for short periods. At their peak they were making loans to 20% of all Irish households annually. In the 1800s, various types of larger and more formal savings and credit institutions began to emerge in Europe From 1870, the unions expanded rapidly over a large sector of the Rhine Province and other regions of the German States. The cooperative movement quickly spread to other countries in Europe and North America, and eventually, supported by the cooperative movement in developed countries and donors, also to developing countries. In Indonesia, the Indonesian People's Credit Banks (BPR) or The Bank Perkreditan Rakyat opened in 1895. The BPR became the largest microfinance system in Indonesia with close to 9,000 units. In the early 1900s, various adaptations of these models began to appear in parts of rural Latin America. While the goal of such rural finance interventions was
Chapter 3 TOPIC
OVERVIEW OF
usually defined in terms of modernizing the agricultural sector, they usually had two specific objectives: increased commercialization of the rural sector, by mobilizing "idle" savings and increasing investment through credit, and reducing oppressive feudal relations that were enforced through indebtedness. Between the 1950s and 1970s, governments and donors focused on providing agricultural credit to small and marginal farmers, in hopes of raising productivity and incomes. These subsidized schemes were rarely successful. Rural development banks suffered massive erosion of their capital base due to subsidized lending rates and poor repayment discipline and the funds did not always reach the poor, often ending up concentrated in the hands of better-off farmers The outbreak given to micro finance in a real sense was by Grameen Bank of Bangladesh in 1980s. Among the clients of this bank 94% were women, which reflect Dr. Yunuss philosophy that women show more responsibility towards family prosperity and development. The history of microfinance institution in PAKISTAN is dated back to 2000 around nine years back, when the first ever microfinance bank was established under Khushhali bank ordinance 2000.
3.2
MICROFINANCE DEFINATIONS
According to Grameen foundation microfinance is sometimes called banking for the poor, microfinance is an amazingly simple approach that has been proven to empower very poor people around the world to pull themselves out of poverty. Relying on their traditional skills and entrepreneurial instincts, very poor people, mostly women, use small loans (usually less than US$200), other financial services, and support from local organizations called microfinance institutions (MFIs) to start, establish, sustain, or expand very small, self-supporting businesses. Microenterprise access to banking services (MABS) defines microfinance as an economic development approach intended to benefit low-income groups. The term refers to the provision of financial services to low-income clients, including the
Role of Microfinance to Empower Women of Pakistan; A Case study 10 of NWFP
Chapter 3 TOPIC
OVERVIEW OF
self-employed. Financial services generally include savings and credit, and some microfinance organizations also provide insurance and payment services. Wikipedia defines microfinance as a term for the practice of providing financial services, such as microcredit, microsavings or microinsurance to poor people. By helping them to accumulate usably large sums of money, this expands their choices and reduces the risks they face. Robinson also provides a definition of Micro-Finance as , Micro-Finance refers to small-scale financial services for both credits and deposits that are provided to people who farm or fish or herd; operate small or micro-enterprises where goods are produced, recycled, repaired, or traded; provide services; work for wages or commissions; gain income from renting out small amounts of land, vehicles, draft animals, or machinery and tools; and to other individuals and local groups in developing countries, in both rural and urban areas. Schreiner and Colombet (2001, p.339) define microfinance as the attempt to improve access to small deposits and small loans for poor households neglected. Another fairly precise definition of Micro-Finance by CGAP (Consultative Group to Assist Poor) of Pakistan Micro-Finance is the supply of the loans, savings, and other basic financial services to the poor. According to microfinance gateway site microfinance means providing very poor families with very small loans to help them engage in productive activities or grow their tiny businesses. Over time, microfinance has come to include a broader range of services (credit, savings, insurance, etc.) as we have come to realize that the poor and the very poor that lack access to traditional formal financial institutions require a variety of financial products. Hulme and Mosley (1996) say that when loans are associated with an increase in assets, when borrowers are encouraged to invest in low-risk income generating activities and when the very poor are encouraged to save; the vulnerability of the very poor is reduced and their poverty situation improves this is microfinance.
Chapter 3 TOPIC
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3.3
MICROFINANCE AND MICROCREDIT
Microcredit is the extension of small loans to very poor people for selfemployment projects that generate income, allowing them to care for themselves and their families. In other words Microcredit is a small amount of money loaned to a client by a bank or other institution. Microfinance, on the other hand, is used in a broader sense and refers to the supply of financial services to poor individuals or groups of individuals that do not have access to formal financial services. The extension of small loans to entrepreneurs too poor to qualify for traditional bank loans is also part of microfinance. The objective of the process is for the borrowers to meet the needs of their households or their micro enterprises. Microfinance has proved to be an effective and popular measure in the ongoing struggle against poverty, enabling those without access to formal lending institutions to borrow and start a small business. Definitions differ of course, from country to country. Microfinance refers to loans, savings, insurance, transfer services, microcredit loans and other financial products targeted at low-income clients.
3.4

SOURCES OF MICROFIANANCE
Formal institutions - i.e. rural banks and cooperatives. Semiformal institutions - i.e. non government organizations. Informal sources - i.e. money lenders and shopkeepers.
There are three types of sources of microfinance
Institutional microfinance includes microfinance services provided by both formal and semi-formal institutions. Microfinance institutions are institutions whose major business is the provision of microfinance services.
3.5

MICROFINANCE ACTIVITIES
Small loans typically for working capital. Informal appraisal of borrowers and investments. Collateral substitute, such as group guarantees of compulsory saving. Loan disbursement and monitoring.
Microfinance activities generally include:
Chapter 3 TOPIC
OVERVIEW OF
Secure saving products.
3.6
MICROFINANCE PROVIDERS
Microfinance providers are called micro-finance institutions and include NGOs, savings and loan cooperatives, government banks, commercial banks, and nonbanking financial institutions. Microfinance providers are of various types. The criteria for distinguishing these service providers are based on the following points: Provision of microfinance services to the business start-ups coming out of unemployment, or to businesses already existing but requiring working capital, or capital for expansion. Services provided: only microfinance or also non-financial services. Legal form and ownership of the microfinance services provider Mission statement: position on the continuum between outreach and sustainability. Scale of operations. Link to banks. Link to other enterprise creation agents (Chambers). Link to Government agency supervising self-employment program.
CRITERIA FOR THE PERFORMANCE EVALUATION OF MICROFINANCE PROVIDERS The following factors indicate the success of a micro-finance service provider: The outreach of the micro-finance services provider to the targeted population, Performance in terms of outreach targeting client selection lending technology and financial innovations
Chapter 3 TOPIC
OVERVIEW OF
And, the financial sustainability of the micro-finance service provider.
Chapter 3 TOPIC
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3.7
CLIENTS OF MICROFINANCE
Microfinance clients are often described according to their poverty level vulnerable non-poor, upper poor, poor, very poor. This can obscure the fact that microfinance clients are a diverse group of people and require diverse products. While women clients make up a majority of clients - and in some instances comprise 100 percent of an MFIs customers, 33 percent of all microfinance clients are men. These clients operate small businesses, work on small farms, or work for themselves or others in a variety of businesses fishing, carpentry, vegetable selling, small shops, transportation, and much more. Some of these microfinance clients are truly entrepreneurs they enjoy creating and running their own businesses. Others become entrepreneurs by necessity when there are few jobs available in the formal sector. Table 3.1: Clients of microfinance in Pakistan
Active Clients 2008-Q2 2008-Q3 Increase (Net) 1,754,118 1,871,508 117,390 7 Value (Pkr Millions) 19,648 21,427 1779 9
Increase (%) Source: Micro watch 2008 for PMN
3.8
MICROFINANCE BANKING
Microfinance banking is the provision of financial services to the poor through simplified transactions. Microbanking is not a new topic in the sustainable/ development community or in the world in general. What is beginning to gain a strong footing is the idea that microbanking and microfinance initiatives can break from traditional non-profit or government subsidized programs and become forprofit enterprises.
3.9
HISTORY OF MICROFINANCE BANKING
As discussed above microfinance has existed in many forms in early times from century to century. A very early form of microcredit took place in Ireland in the 1700s where at its peak, 20% of households obtained these small loans.
Chapter 3 TOPIC
OVERVIEW OF
The modern concept of microcredit was developed in the mid-1970s by U.S.educated professor of economics, Muhammad Yunus. In 1974, Professor Yunus work in Bangladesh (one of the worlds poorest and famine-ravaged countries), is highlighted as the first modern day use of microcredit. Yunus discovered that the smallest loan could make a huge difference to an individuals life. The first loan was for US $27 to a woman who made bamboo furniture to support her family, which Yunus paid for from his own pocket. In fact, 94% of all microcredit loans are made to women. The reason is that women typically undertake projects that benefit the entire family. Microcredit enables those in the developing world who rely on the informal economy to improve their lives. It prevents these people from being trapped in a poverty cycle and enables them to obtain low interest loans which can be used to improve their lives. Professor Yunus realized that large financial institutions were unwilling to make these small loans because they perceived poor people as posing a high risk of default and viewed the costs and lack of infrastructure as barriers to entry. In 1976, Yunus opened the Grameen Bank to make small loans to poor Bangladeshis and, over a 16 year period, US $3 billion was loaned to 2.4 million borrowers. Despite the concerns of the large international banks, repayment rates have remained at over 95%. Such high repayment rates may be explained by Grameens use of a system of solidarity groups. Solidarity groups are informal groups that together apply for loans and whose members act as guarantors for the repayment of the loan. In this way, a group of people can benefit from the loan while decreasing the risk of default to the bank. The success of Grameen Bank has stimulated many similar ventures in both the developing world as well as industrialized countries such as the USA.
Chapter 4
MICROFINANCE COMPARATIVE EXPERIENCE
CHAPTER - 4
MICROFINANCE COMPARATIVE EXPERIENCE OF SOUTH ASIAN COUNTRIES

4.1 BANGLADESH
Bangladesh, with a population of more than 140 million, is one of the most densely populated countries (1061 persons per square kilometer) in the world. Poverty is pervasive. Almost half of the total population is still living below the poverty line - earning less than $1 a day. The various dimensions of the countrys poverty are manifested in terms of inequality in income distribution (in favor of urban areas), wage differentials between the formal and informal sectors, dramatic increases in the cost of living, less than adequate calorie intake by the vast majority of the population, unemployment and internal migration.
The government of Bangladesh faces an enormous challenge in reducing poverty. However, the government can not act alone as it can not command all the resources, personnel, administrative outreach or expertise necessary to maintain progress in poverty alleviation. The MFIs have taken a key role in poverty alleviation efforts and they have been providing credit to these poor people who lack savings and capital but want jobs in the farm and non-farm sectors. The origins of the current microfinance model can be traced back to action-research in the late 1970s to deal with the relief and rehabilitation needs of post-independence Bangladesh. At that time, many NGOs started as relief organizations but, over time, they turned into development organizations and gradually many of them have become MFIs by focusing on savings and microfinance programs. Microfinance was first initiated by Grameen Bank and was developed by a team led by Professor Mohammad Yunus. The early 1990s was a period of rapid expansion of the Grameen-style microcredit approach. The growth was picked up largely by a franchising approach whereby new branches replicated the procedures and norms that prevailed in existing branches. In the early 1990, unhindered experimentation in the fields led to a quiet resolution of the debate and the country experienced a massive expansion of microfinance activities during the 1990s.
Chapter 4
4.2
INDIA
The new generation microfinance was slow in coming to India. Low levels of grants to microfinance institutions, an unfavourable policy environment, substantial traditional banking infrastructure and a search for context specific solutions has constrained rapid scale up. The first breakthrough emerged from policy support to enable informal self help groups of 15-20 members (mainly women) to transact with commercial banks. These groups build up and rotate savings amongst themselves, open bank accounts and take responsibility for lending and recovering money financed by banks. With the missionary zeal of the National Bank for Agriculture and Rural Development (NABARD), insights gained by NGOs, the increasing enthusiasm of bankers and politicians and emerging successes in repayment and social impacts, this national movement now encompasses 1.4 million such groups (over 20 million members). At a time when many questioned the need for specialised microfinance institutions (MFIs) in India, the Small Industries Development Bank of India recognised the opportunity and started implementation of an ambitious national programme. Providing loan and capacity building support to MFIs and capacity building and rating support for sector development, this programme already supports 70 MFIs and has disbursed US$46 million. Assuming the entire poor population of India is potential microfinance clientele, the market size for microfinance in India is in the range of 58 to 77 million clients. If we assume that the low-income but economically active population including small and marginal farmers, landless agricultural laborers, and microentrepreneurs, are also potential microfinance clients, the annual credit demand goes up to an estimated 245.7 million individuals and USD51.4 billion Indian microfinance is dominated by two operational approaches: self-help groups (SHGs), and microfinance institutions (MFIs), in addition to a few cooperative forms. Today the SHG model, which links informal groups of women to the mainstream banking system, has the largest outreach to microfinance clients in the world. MFIs emerged in the late 1990s to harness social and commercial funds available for on-lending to clients. Today there are over 1,000 Indian MFIs. And
Chapter 4
almost 3 million SHGs have linked to nearly 500 banks since the program started, reaching over 11 million households across. Microfinance programs have been increasingly pomoted in India for their positive economic impact and the belief that they empower women. Within the South Asian context, women empowerment is a process in which women challenge the existing norms and culture, to effectively improve their well-being. Most microfinance programs target women with the explicit goal of empowering them. However, their underlying premises are different. Some argue that women are amongst the poorest and the most vulnerable of the underprivileged. Others believe that investing in womens capabilities empowers them to make choices, which will contribute to greater economic growth and development. Finally, some proponents emphasize that an increase in womans resources results in higher well-being of the family, especially children. Women empowerment is essentially through two mechanisms direct and indirect empowerment effects. The direct empowerment through microfinance takes place, when women become members of a group and/or when they are exposed to training or workshops leading to greater awareness creation. It is difficult to say which factors are more important for empowering women. The differences in pace of empowerment might be a result of various factors: household and village characteristics, cultural and religious norms within the society, behavioral differences between the respondents and their family members; and the kind of training and awareness programs that women have been exposed to. For SHG programs, the results seem to indicate that the minimalist microfinance approach is not sufficient. Additional services like training, awareness raising workshops and other activities over and above microfinance programs that merely focus on financial services are also an important determinant of the degree of its impact on the empowerment process of women.
4.3
SRI LANKA
Microfinance, one of the widely accepted instruments for poverty alleviation throughout the world, has been used in Sri Lanka spanning for over several
Chapter 4
decades. Despite the long history and the large number of institutions providing microfinance services particularly to the poor, there is limited knowledge on the impact of microfinance on poverty alleviation in Sri Lanka. Currently, there is a wide range of institutions that are involved in providing microfinance services to low income groups. These include hundreds of local and international NonGovernmental Organizations (NGOs), commercial banks (both state-owned and private) and development banks such as the Regional Development Banks (RDBs) and the Sanasa Development Bank (SDB). Despite the large number of institutions involved in providing microfinance facilities in Sri Lanka, their impact on reducing poverty or improving household welfare is not very clear. Only a few studies have been undertaken to assess how microfinance has impacted on poverty and living conditions of the households in Sri Lanka. The core problem is the poor quality of the microfinance services offered, indicated by insufficient outreach, low repayment, low cost efficiency and financial products which are not client driven. This seriously threatens the sustainability of the offered financial services and their outreach to poorer households, micro and small enterprises. The main causes of the poor performance of MFIs lie in the inadequate qualification of the MFI staff and the fact that the Government of Sri Lanka has not yet designed a national sector policy for a sustainable microfinance sector. Another problem lies in the lack of a cohesive regulatory and supervisory structure which encompasses all MFIs. However, most NGOs engaged in microfinance are neither regulated nor supervised although most mobilize savings deposits from the public. These institutions are weakened by politically motivated debt relief, often ahead of elections, and presently as a consequence of the tsunami disaster, which seriously destroy the repayment culture among its clients. Further cause lies in the insufficient infrastructure for training, further education and advisory services to provide immediate and relevant practical advice.
4.4
NEPAL
Nepal has developed a considerable history in microfinance activities. The official policy recognition of the importance of this sector in poverty alleviation came in
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the Sixth Plan (1980/1 - 1984/5.) Programmes to ensure that the poor, and particularly poor women who traditionally have not had access to formal credit. Since 1991 the momentum in this sector has increased considerably, resulting in the emergence of various issues potentially hindering the successful long-term provision of financial services to the poor. This has led His Majestys Government (HMG), supported by USAID, to seek proposed solutions and recommendations for the continued and expanded provision of microfinance in Nepal. In particular, it is necessary to identify which models work best for both expansion and sustainable provision of microfinance services to those who need it most -- rural poor women. Microfinance programs are currently being promoted as a key strategy for simultaneously addressing both poverty alleviation and women's empowerment. Women make up 52% of Nepals population and have a life expectancy of 53.4 years (1991 figures), making Nepal one of only three countries in the world where females life expectancy is lower than that of males. UNICEF (1996) estimates less than 18% of Nepali women are literate. Women work on average 3-4 hours more per day than males, but their land holdings are marginal, and income levels and formal labor force participation are 20% lower than that of males. Women are predominately confined to agriculture, account for the majority of unpaid family workers, and are heavily concentrated in low-paid jobs. The aggregate data depict womens contribution to be heavily focused: 86% of all domestic work and 57% of subsistence agricultural activities. Women work mostly as semi-skilled or unskilled general wage workers. Less than 5% of civil servants, elected leaders, or judiciaries are female. In addition, women in Nepal cannot inherit property, have little access to education, information or credit and have less control than males in their households over economic decisions. Providing immediate and sustained assistance to women in the field of small and micro enterprises and microfinance is a key factor to facilitate economic upliftment and the empowerment of women.
4.5
MALAYSIA
Malaysia is classified as an upper middle income country by the World Bank. Malaysia has a modern financial system with a diverse range of institutions, both
Chapter 4
private and public, including Islamic banks. Microfinance is the provision of a broad range of financial services such as deposits, loans, payment services, money transfers, and insurance to poor and low-income households and their microenterprises. Microfinance is not new in Malaysia. It has been operated by credit unions, and co-operative banks. Majlis Amanah Rakyat (MARA), council of trust to the Bumiputera and Credit Guarantee Corporation (CGC) are some of the pioneers to introduce microfinance loans to its borrowers. Malaysia's dominant MFI, Amanah Ikhtiar Malaysia (AIM), was established in 1987. Up to 1998 it made some 103,000 loans and disbursed a total of RM 328 million ($86 million at the current exchange rate). Some 80 per cent or more of all funds loaned were for economic purposes, the remainder for 'social' purposes (Sukor Kasim 2000). AIM's activities have been directed almost entirely to the alleviation of poverty among poor Malaysia. It was set up with a charter 'to disburse small loans on reasonable terms exclusively to the very poor households to finance additional income generating activities but for all practical purposes has confined its attention to the Bumiputera, the indigenous (principally Malay)people. Table 4.1: Micro-Finance clients in six countries in South Asia Country Bangladesh India Nepal Pakistan Sri Lanka South Asia 1. Microfinance clients (Millions) 16.00 15.00 0.50 0.58 2.50 34.70 2. Comparative figures 13.30 1.63 0.16 0.50 0.37 23.09
Source: Column 2 data collected by the World Bank for a forthcoming report.
Chapter 5 PAKISTAN
MICROFINANCE IN
CHAPTER 5
MICROFINANCE IN PAKISTAN
Pakistan is among the largest potential microfinance markets in the world with an estimated potential microfinance market of 10 million adults. This conservative estimate is likely to expand dramatically with Pakistans high population growth rates. The provision of small scale credit has been present in Pakistan for many decades but modern-style microfinance began in the late 1990s. In 1999, the Government of Pakistan made microfinance an explicit priority in its official Poverty Alleviation Strategy. This contributed to a massive up-front investment of at least US $400 million from 1999 to 2005 largely funded from multilateral resources such as the World Bank and the Asian Development Bank. As a newcomer to microfinance, Pakistan has learnt the importance of establishing an enabling environment for microfinance from global experiences. It now has: A supportive regulatory window for specialized Microfinance Banks (with 6 obtaining licenses). An apex funding organization for microfinance (Pakistan Poverty Alleviation Fund). A well organized national association for microfinance providers (Pakistan Microfinance Network). Pakistan is among very few countries that have comprehensive financial transparency reporting on a large majority of its microfinance sector. The microfinance market in Pakistan remains a single product market with most services being micro-credit loans from US$170 to US$300 for livestock, trade or agriculture. More recently, the more aggressive institutions have begun offering a wider set of credit services such as consumption loans and larger individual loans for small businesses in urban markets. Savings services have not been emphasized until more recently as newly licensed Microfinance Banks, which can intermediate savings, have paved the way for the expansion of micro-savings. Some institutions have begun providing micro-insurance and remittances as well.
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5.1
MICROFINANCE PROVIDERS IN PAKISTAN
The Pakistan Microfinance Network (PMN) is a network of organizations engaged in micro-finance and dedicated to improving the outreach and sustainability of micro-finance services in Pakistan. 5.1.1 MFB
Microfinance Bank licensed and prudentially regulated by the State Bank of Pakistan to exclusively service microfinance market. 5.1.1.1 Khushhali Bank Limited Initialized in 2000, Khushhali Bank Limited was established as a part of the Government of Islamic Republic of Pakistan's Poverty Reduction Strategy and its Microfinance Sector Development Programme (MSDP). MSDP was developed with the assistance of Asian Development Bank. With its headquarters in Islamabad, Khushhali Bank Limited operates under the supervision of the State Bank of Pakistan and various central (Commercial) banks are its shareholders. Its mandate is to retail microfinance services and to act as a catalyst in stabilizing the country's newly formed microfinance sector. 5.1.1.2 Tameer Microfinance Bank Limited TAMEER is a Microfinance bank set up by a group of highly experienced bankers committed to go where no (commercial) bank has gone before. It is a private commercial Microfinance bank licensed by the State Bank of Pakistan under the Microfinance Ordnance 2001. Tameer serve low-income, salaried, self-employed and micro entrepreneurs with a range of financial products designed to allow them to grow their businesses and produce significant economic multiplier effects throughout the local economies. They also provide home improvement products and term deposits. 5.1.1.3 Pak Oman Microfinance Bank Limited Pak Oman is a nation wide microfinance bank with a paid up capital of RS 500 million. Sponsors are Govt. of Sultanate of Oman with shareholding of 67% and Pak Oman Investment Company with 33% shareholding. The basic function of
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organization in itself contributes towards a social cause its believe that Pak Oman Microfinance Bank as a member of society has a moral obligation to do more to help society deal with its problems and to contribute to its welfare. They are continuously looking for opportunities to take steps that shall contribute to the wellbeing and interests of society. One such step towards this cause is with there alliance with GSK by way of this alliance, they shall be promoting medical and health awareness to the poor masses residing in localities surrounding there branches, and in addition shall be providing preventive medicines at discounted prices (in installments in cases) to there clients. 5.1.1.4 Rozgar Microfinance Bank Ltd. (RMFB) Rozgar Micro Finance Bank Ltd (RMFB) was incorporated at Karachi as a public company limited by shares, under the Companies Ordinance, 1984. It was inaugurated by the Prime Minister, Mr. Shaukat Aziz on January 04, 2005 and it commenced operations on April 8, 2005. The bank has an authorized capital of Rs. 250,000,000/- divided into 25,000,000 ordinary shares of Rs.10/- each. It has a paid-up capital of Rs.100,000,000/- which has been fully subscribed by the directors and their friends. Empowering women to achieve economic and social emancipation Ensuring financial services at the bottom of the empowerment ladder Recognizing every single human being as a potential and creditworthy entrepreneur. Providing basic training in micro-enterprise initiation; managing funds and savings concepts; simple book-keeping and accounting; economic and social strategies. The Bank has so far disbursed loans of Rs. 144.033 million to 7487 borrowers as on 29-02-2008 with an average loan size of Rs. 26,332. 5.1.1.5 Network Microfinance Bank Limited
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Network Microfinance Bank Limited started its operation on 1st January 2005 as a Public Limited Company listed on Karachi Stock Exchange. It is in-fact a transformation of Network Leasing Corporation Limited, having the privilege of being regarded as the micro leasing pioneer in Pakistan since its inception in 1995. The bank's main focus is on poverty alleviation by providing access to the poor to micro finance facility whereby they could establish their new micro enterprise or bring improvement in their existing business. The bank is concentrating on two main areas i.e. providing of financial services for mobilization of small savings and extending help to poor entrepreneurs including women through individual and group based financing to support income generation on sustainable basis, so as to bring improvement in their quality of life. The banks strategy is well aligned with the national policy development on poverty alleviation as well as with Pakistan Poverty Alleviation Fund working under the aegis of the Government of Pakistan and the World Bank. 5.1.1.6 First Microfinance Bank The First MicroFinanceBank Ltd. of Pakistan (FMFB-P) established in 2002 as the first private sector micro-finance bank in Pakistan, is a premier noncommercial bank licensed by the State Bank of Pakistan under the regulatory framework of the Microfinance Institutions Ordinance 2001. FMFB has recently been ranked as 14th amongst the top 100 Micro-Finance Institutions in the world by CGAP. In a short span of six years, FMFB has established 89 automated branches all over Pakistan, of which more than 57% branches are in rural areas. The Bank has reached out to thousands of poverty-stricken households by disbursing over 340,000 loans amounting to US$ 88.25 million. The Bank reaches out to the poorest segments of society. Given that 71% of poor in Pakistan are women, FMFB has focused on providing financial services to women and as a result, about 40% of FMFB borrowers are women entrepreneurs. With the vast majority of the poor residing in the rural areas of Pakistan, over 70% of the cumulative loan amount disbursed is in rural areas. FMFB has 89 branches spread over 39 districts and 10 regions all across Pakistan.
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5.2
MFI
Microfinance institution providing specialized microfinance services 5.2.1 Akhuwat Akhuwat was established in 2001 with the objective of providing interest free credit to the poor so as to enhance their standard of living. At that time Dr. Saqib was working at the Punjab Rural Support Programme (PRSP) and found the 20 percent interest charged on the loans, disturbing. One reason was the fact, he felt, that it was in direct conflict with the teachings of Islam, and the other was that in the formal banking sector the interest was much lower, which was available to creditworthy affluent individuals. Therefore, he wanted to start a microfinance programme where the loans were in the form of Qarz-e-Hasna. Akhuwat was formed and the first loan was given out to a woman. Akhuwat derives its name from mua-khaat or brotherhood. At present, Akhuwat has 17 branches in the Punjab and 7,150 active clients, and it has disbursed over Rs 150 million over five years. 5.2.2 Asasah
Asasah is one of the fastest growing microfinance institutions in Pakistan working to provide financial services to households of micro-entrepreneurs. The word Asasah literally translates to assets from the Urdu language and the vision for this MFI is to enhance micro-productivity and eradicate poverty. Asasah employs group lending methodology and believes that female empowerment is a powerful catalyst for positive social change. Hence, for this reason 100% of Asasahs clients are women. Asasahs methodology provides women with flexibility to invest in their business or their family business.. Asasah had 28,424 clients, 28 branches and 316 staff members. Asasah presently operates in the province of Punjab of Pakistan. 5.2.3 Kashf Foundation Inspired by the success of the Grameen Bank, Kashf Foundation (meaning miracle or revelation i.e. a process of self-discovery) began in 1996 as an action research program focusing, for the first two years, on determining and understanding key factors having an impact on the demand for microfinance services by poor women.
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The Foundation addresses social needs of women through a creative and interactive economic empowerment strategy including non-financial and financial services, which are delivered in a financially and operationally sustainable manner. Kashf is now considered one of the leading microfinance providers in Pakistan, increasing rapidly its outreach and sustainability while maintaining a very low risk on its loan portfolio and constantly improving its services through innovation. Kashf operates in the poorest urban slums and poverty-ridden areas in districts of the Punjab province and in Karachi in Pakistan. Kashf Foundation was the first specialized Microfinance institution in Pakistan, it was the first Microfinance institution targeting only women from low income communities and it was also the first Microfinance institution to charge a sustainable price for its services. 5.2.4 Orangi Pilot Project (OPP)
The Orangi Pilot Project refers to a socially innovative project carried out in 1980s in the squatter areas of Orangi, Karachi, Pakistan. It was initiated by Akhtar Hameed Khan.Innovative methods were used to provide adequate low cost sanitation, health, housing and microfinance facilities. The project also comprised a number of programs, including a people's financed and managed Low-Cost Sanitation Program; a Housing Program; a Basic Health and Family Planning Program; a Program of Supervised Credit for Small Family Enterprise Units; an education Program; and a Rural development Program in the nearby villages. On the success of its five basic programs of low cost sanitation, housing, health, education and credit for micro enterprise, in 1988 OPP was upgraded into three autonomous institutions. OPP-Research and Training Institute (RTI) manages the low cost sanitation, housing, education, and research and training programs. OPP-Orangi Charitable Trust (OCT) manages the micro
enterprise credit program. OPP-Karachi Health and Social Development Association
(KHASDA) manages the health program.

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Each institution has its separate board of directors and mobilizes its own funds. Development is self financed by the people. OPP institutions provide social and technical guidance and credit for micro enterprise. 5.2.5 Sindh Agricultural And Forestry Workers Coordinating Organization (SAFWCO)
It started its developmental journey from a small initiative, launched in 1986 by a group of five social activists led by Mr. Suleman G. Abro. Concerned about depleting sources of livelihood and employment, increasing poverty and social deprivation in rural Sindh. SAFWCO initiated a process of social mobilization in District Sanghar initially. From beginning, social mobilization has been a key aspect of SAFWCO's development strategy. SAFWCO started its activities with an objective to facilitate people's participation in development on self help basis; and facilitating to build institutional infrastructure in their villages to achieve the goal of sustainable development. The main aim of the program is to mainstream rural poor into socio-economic development and reduce their vulnerability. Since 2000, SAFWCO has created a three-pronged approach to poverty alleviation, given below: 1. 2. 3. Social Development and Services Economic Development Services Human and Institutional Development Services
The management of SAFWCO focuses on providing poor people of rural Sindh a platform for socio-economic development and supporting them to reduce their vulnerability.
5.3
RSP
Rural support programme running microfinance operation as part of multidimensional rural development programme.
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5.3.1
National Rural Support Programme
Established in 1991, NRSP is the largest Rural Support Programme in the country in terms of outreach, staff and development activities. It is a not for profit organization registered under Section 42 of Companies Ordinance 1984. NRSP's mandate is to alleviate poverty by harnessing people's potential and undertake development activities in Pakistan. It has a presence in 32 Districts in all the four Provinces including Azad Jammu and Kashmir through Regional Offices and Field Offices. NRSP is currently working with more than half a million poor households organized into a network of more than 29,000 Community Organizations. With sustained incremental growth, it is emerging as Pakistan's leading engine for poverty reduction and rural development. 5.3.2 Sarhad Rural Support Programme Microfinance Program
Approach to rural development in the northern mountain regions of Pakistan in the eighties, Sarhad Rural Support Programme (SRSP) is registered under company's ordinance 1984; SRSP is the largest non-profit/non-government organization of NWFP. SRSP from its experience and understanding of the target group understands that poverty reduction can may be in the form of imparting skill enhancement training with low cost training programs, providing financial support in the form of loans, improving physical infrastructure by not only constructing farm to market roads but also fulfilling the dire need of rural water supply and proper sanitation. Moreover, providing assistance in developing social infrastructure is also necessary to address the issue of poverty especially in rural areas. SRSP has its microfinance operations spread currently in 60 union councils of the 8 districts of NWFP Over Rs. 500 million disbursed since inception of MF programme to almost 50,000 men and women members. The average loan size is approx. Rs. 10,000. Rs. 212 million (58% women) has been disbursed under the new programme started since October 2004. 11 Village banks of which 8 are women have been established in 11 union councils covering almost 120 community organizations.
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5.3.3
Thardeep Rural Development Programme
Thardeep Rural Development Programme (TRDP) is a non-profit organization, registered under the societies Act, working in the rural areas of Tharparkar, Mirpurkhas, Dadu and Khairpur districts of Sindh, Pakistan. The programme is aimed at facilitating the rural communities in a way that they can be empowered to secure their rights with command over resources and capabilities to manage the process of sustainable development. Thardeep also extends services in the areas of primary health care, education and water. One of its programme is Micro Credit & Enterprise Development (MED) Unfortunately, in developing countries like Pakistan, the access and availability of capital is very limited. In order to alleviate conditions of poverty it becomes crucial to inject credit into the rural economy to enable the poor to meet their essential credit needs. To combat the growing menace of rural unemployment, the MED Section of TRDP reaches the rural poor and small entrepreneurs to provide an easy access of credit and enhance opportunities for people to increase their capital for establishing or expanding income generating activities. 5.3.4 Punjab Rural Support Program
Punjab Rural Support Program was the latest of the RSPs until SRSO was established in 2003. PRSP's activities are confined to 8 regions of the Punjab, namely: Lahore, Sahiwal, Sargodha, Faisalabad, Gujranwala, Multan, Muzaffargarh, and Sialkot, covering a total of 20 districts. The PRSP has developed strong links with the Punjab Government and is currently implementing a number of projects including community primary schools, small village infrastructure, natural resource management and innovative initiatives such as village electrification and provision of primary healthcare. PRSP has developed a strong partnership with the Pakistan Poverty Alleviation Fund (PPAF) to expand its outreach.
5.4
NGO
Non-government organization running microfinance operations as part of multidimensional developed programme
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5.4.1
Center for Women Co-operative Development
While the World is focusing on uplifting of 100 million poor above poverty line through Micro finance. The biggest challenge faced by Micro finance organizations in Pakistan is of sustainability, which cannot be achieved without expanding out reach and more comprehensive financial and business plans. Another important area which need immediate attention is the need for support services for business development to micro finance borrower, without which the pace of poverty alleviation will remain slow. LAHORE. 5.4.2 Taraqee Foundation
Taraqee Foundation is a National level NGO working for poverty alleviation since the last 14 years. Currently it is serving in 13 districts of Balochistan and NWFP through its 35 offices with the support of 625 staff members. It started off its journey with meager resources as a Community level Organization when established in 1994. TF is now an eminent NGO of Balochistan with enough resources to provide need-based services to marginalized communities in Balochistan and NWFP. It is estimated that since its inception, TF has been able to benefit more than one million people through its different programs. 5.4.3 Sungi Development Foundation (Group Lending)
The program was started on a theme of saving first-credit later; which reflects the importance of community saving for their economic uplift. The major responsibilities: To support in mobilization of community savings. Credit disbursement to the of village committee members for economic or critical social needs. Training to the communities for financial management (Saving, Credit and Entrepreneur ship" 5.4.4 Vocational Skill Enhancement Support. Khwendo Kor
Khwendo Kor (KK) is a non profit, non government and non partisan organization striving for development of the women and children, strong families and
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MICROFINANCE IN
communities progressive society. KK is a Pushto word meaning Sister's Home. The organization came into being in February 1993 and is registered under Societies Registration Act. 1860. One third of Pakistans population lives below the poverty line. Women are among the poorest owing to many reasons, including, lack of mobility and cultural constraints. One of its programme is Women Micro Enterprise Development. The WMED component of KK supports village women in enhancing their skills and entrepreneurship potential. They are provided with credit and their linkages with markets are established. This leads to confidence building, increase in their mobility and self-reliance. This activity has resulted in raising the income level of the families and especially has improved the women access to the economic resources. It is important to note that a much larger number is involved if one considers the benefit received by the families of these women entrepreneurs. 5.4.5 Community Support Concern
Is a non-governmental, non-profit organization; born in 1989 has been working for social uplift of the society, mainly the rural & semi urban communities. It started working with Education and Health and has paved way for integrated approaches. CSC has adopted participatory approaches right from planning to implementation, involving communities at every level. This led the organization to have very deep roots in the communities. Women and adolescents have always been receiving priority attention in CSCs programs. Ever since its inception, CSC has empowered thousands of women economically and socially. Huge number of adolescents have been empowered and made to adopt a healthy lifestyle. Men were never ever neglected in CSCs programs, leading towards an attitudinal change. Its objective are To awake, educate motivate and organize communities for their improved quality of life or living standards. To enable and encourage communities to become self reliant. To train the women as agents of change for socioeconomic development.
At present CSC is working in District Lahore, Kasur, Multan, D G Khan & Sheikhupura & intends to focus on Southern Punjab in the next five years.
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5.4.6
DAMEN (Development Action for Mobilization & Emancipation
DAMEN (Development Action for Mobilization & Emancipation) is a non-profit, non-governmental organization established in May 1992 working for alternative development at grass-root level in Pakistan.DAMEN visualizes Development as a process of capacity building of the people in order to empower them to solve their socio-economic problems through collective action and their own participation. DAMEN concentrates on the social and economic uplift of communities, especially in rural areas/urban slums, by encouraging people to ascertain their own needs. This leads to build capacity and local resources to an extent that enables them to eradicate the real and most tangible problems. The emphasis of the Organization therefore is on such programs that: Concentrate on activities for integrated, self-reliant and long-term development of the communities through various programs of education and health. Enhance the cause of women development by initiating programs for income generation, provision of credit and awareness of their legal and basic rights. Train and support human resources for devising, implementing and overseeing development projects and programs. DAMEN is presently working in 3 districts of Punjab namely, Lahore, Shiekhupura and Qasur. 5.4.7 Aga Khan Agency for Microfinance
Since its establishment in 2005, the Aga Khan Agency for Microfinance (AKAM) has taken over 25 years of microfinance activities, programmes and banks that were administered by sister agencies within the Aga Khan Development Network. The underlying objectives of the Agency are to reduce poverty, diminish the vulnerability of poor populations and alleviate economic and social exclusion. AKAM is a not-for-profit, non-denominational, international development agency created under Swiss law. Its headquarters are in Geneva, Switzerland. It is
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governed by an independent Board of Directors. The Chairman of the Board is His Highness the Aga Khan. 5.4.8 SWWS
Swabi Women Welfare Society was established in November 1991. At the time of inception it was no more than a group of progressive and dedicated volunteers who could not bear the grim realities about the women health, illiteracy and poor social and economic status. To increase women access to financial resources micro-credit Programme was started. SWWS facilitate group formation and builds capacities of the beneficiaries as well as link them with mainstream financial institutions. Women are mobilized to open bank accounts. By June 2007, total 1223 women and 220 men benefited from this programme. And they were provided Rs.19991000/- as micro credit. 5.4.9 Bangladesh Rural Advancy Commission
Bangladesh Rural Advancy Commission one of the largest MFIs in the world and is a leader in linking to the microfinance to capital markets In April 2007, it signed a memorandum of understanding with the Government of Pakistan to work in the fields of microfinance, education, and health. BRAC is now in the start-up phase of our microfinance programme in two provinces - Punjab and North-West Frontier. It is gaining substantial local knowledge and experience of implementing microfinance in Pakistan as well as increasing the capacities of national staff to be able to scale up the programme in the near future.
5.5
CFI
Commercial financial institution providing microfinance services as separate function. 5.5.1 Orix Leasing Pakistan Limited
Micro Finance ORIX provides reliable short to medium term financial products for the establishment and growth of micro businesses and enterprises. The microfinance programme is targeted to strengthen the economic base of urban and rural poor by increasing income earning members of a community. Micro
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Leasing Financing is provided to micro entrepreneurs on a profit-making basis all over the country. Under the micro leasing scheme for equipment and machinery, ORIX finance productive assets like generators, photocopiers, lathes etc. 5.5.2 Bank of Khyber
Bank of Khyber started a new unit called micro finance unit was instituted in November 1999, which presently functions as Micro Finance Department (MFD) under the umbrella of Credit Division. BOK aims to be the largest Micro Finance provider in NWFP on sustainable basis. Our main Objective is providing access to financial services to the low income and disadvantaged segment of the society to raise their standard of living with specific emphasis upon women. The pursuit of this objective will significantly contribute to the improvement of employment opportunities, income generating activities and subsequently poverty alleviation. Pursuing its objective the BOK provides micro enterprise and group loans for existing and new enterprises engaged in value addition process, requiring technology improvement or working capital 5.5.3 First Women Bank Limited
FWBL launched a small loan facility for women from low-income groups with an initial allocation. Of Rs. 30(m) by using a group guarantee NGO warranty or personal surety from- two Government officials Approximately 11,000 women have benefited from this scheme in the last 13 years. Chart 5.1: TOTAL MFP IN PAKISTAN
10%
20%
40% 13% MFB MFI RSP
17%
NGO
CFI
Chapter 6
MICROFINANCE AND WOMEN EMPOWERMENT
CHAPTER 6

Microfinance and Women Empowerment are strongly related. Microfinance programs specially designed for women can alleviate poverty among women, can help them in attaining financial-self sufficiency and this way can lead to women empowerment by reducing gender inequality. Microfinance for Women is an important issue in todays' world as there is no doubt that proper microfinance facilities can lead to women empowerment. But, even today women's accessibility to microfinance services are quite less as compared to that of men.
6.1
MICROFINANCE PROGRAMS FOR WOMEN
In the 1970s, women movements were taking place in different parts of the world. These movements made it clear that non availability of loans and credits were posing serious problems for women in earning income through self employment. After this realization, significant number of measures were taken to raise the availability of credit for the women. Many Women's Organizations across the world included savings activities and microfinance activities in their work programs. In the 1980s, many new microfinance institutions emerged through out the world. The most significant of them was Grameen Bank of Bangladesh. According to a study, almost 97% borrowers of this microfinance institution are women. The 1990s saw further emergence of many micro-finance programs which were specially designed for women. The microfinance facilities were made available for women on a greater extent as it was found that women have a record of high repayment rates.
6.2
PERSPECTIVES OF MICROFINANCE PROGRAMS TARGETING WOMEN

were taking place all over the world in order to achieve three objectives which were Poverty Alleviation, Financial Self-Sustainability and
The increasing number of Microfinance Institutions and Microfinance Programs
Chapter 6
Women Empowerment. But, in each of these objectives special focus was on providing microfinance facilities to women. When, the microfinance programs targeted poverty alleviation, it was found that level of poverty was even higher in women and women were more suffering from poverty as they had a strong responsibility towards the well being of their respective families. When, the microfinance programs concentrated on attaining financial selfsustainability, then also the major focus was on women because it was already proved that women maintain higher loan repayment rates and the economic activities of women contribute significantly to the economic growth of the country. In case of Women Empowerment objective of microfinance programs, it was quite obvious that the main focus would be on women. Different, microfinance programs were specially designed for women to reduce gender inequality and to establish human rights. The increased focus on women for micro-finance has been supported by certain reasons and assumptions as follows: Women's human rights: Official commitments to gender equity and gender mainstreaming on the part of most governments, donor agencies, NGOs and the Microcredit Summit Campaign itself. Financial sustainability: Increasing evidence in micro-finance of much higher repayment and savings discipline among women than men. Poverty reduction: Increasing evidence that not only are women overrepresented amongst the poorest people, but they are also more likely than men to spend their incomes on the welfare of children and dependents. Therefore poverty reduction programmes which target women are likely to be more effective.
6.3
WOMEN EMPOWERMENT
Women's empowerment has five components: women's sense of self-worth; their right to have and to determine choices; their right to have access to opportunities and resources; their right to have the power to control their own lives, both within
Chapter 6
and outside the home; and their ability to influence the direction of social change to create a more just social and economic order, nationally and internationally. Women empowerment takes place when women challenge the existing norms and culture, to effectively improve their well being.
6.4
ROLE OF MICRO-FINANCE IN WOMEN EMPOWERMENT (THE CASE OF PAKISTAN)
Women are vital contributors to the economic survival of poor households and family reliance on womens earnings increases with the extent of poverty. A survey showed that the earnings of women in poor households of Karachi which is the largest city of Pakistan with a population of about 14 million comprised half of the total family income. Despite being active participants in the economically productive process, their efforts remain invisible and are not represented in the economic decision making. In the rural areas, the weight of poverty falls most heavily on women who have a very low level of education and who are subject to a multitude of cultural and other social constraints. A comparison of Male and Female Human Poverty index (HPI) indicates that women in Pakistan have always been poorer, less healthy and less educated than men. It is estimated that 42% of the 22.8 million economically productive persons in agriculture are females, where more than 38% of these are unpaid family workers as compared to 6% who are self-employed. Empowerment and developing an environment for women to work and contribute in improving the economic condition of their families has become a priority in Pakistan. And with the availability of micro-financing for those that are otherwise ineligible to use the regular banking channels for funding the small business ventures, the situation is gradually improving. Former Governor State Bank of Pakistan Dr Shamshad Akhtar in her keynote address at a seminar on Beyond Charity: Commercial Opportunities in Micro and Small Lending recently organized by USAID & Shore Bank International at Islamabad, said that at present six Micro Finance Banks with a combined network of 92 branches and 145 service centers were operating throughout the country. She stressed the need for promotion and development of microfinance sector to alleviative poverty in the country.
Chapter 6
6.5
WOMEN EMPOWERMENT AS A RESULT OF MICROFINANCE
Here are few points which show us that the microfinance is an effective tool for women empowerment. In a survey, 86% of clients of different microfinance institution of Pakistan clients claim that they have more self-confidence as they feel they have more control over their lives. Impact on Womens Involvement and Status in the Community Several microfinance and micro enterprise support programs have observed improvements in womens status in their communities. Contributing financial resources to the family or community confers greater legitimacy and value to womens views and gives them more entitlements than they would otherwise have. Women said they get more respect and participation in household activities from their spouses and relatives than in past. And they felt of some use to their family in hard times. Microfinance has not only empowered individual woman but with her, her family too. Due to women working, and increased income from their businesses due to micro-finance, they can now afford better education, health-care, and improved nutritional level for her children in particular and their family as a whole. Male dominance in negative manner has decreased and the domestic fights due to financial problems have also decreased Empowerment as a result of participating in a micro-finance program has made women politically more aware. By giving vote according to what they feel, not just following the foot steps of their husbands or males. After joining the microfinance program women felt a sense of responsibility towards society.
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Women became aware of the outside world and saw that they are not the only victims of poverty, which gave them encouragement to fight against their problems.
There are instances where women who used to work outside their home on daily wages; now work at home after borrowing micro-loans, as they can now afford the raw materials or other equipments needed to work on their own. This enables them to work as well as to take good care of their home and children.
Chapter 7 ANALYSIS
CHAPTER 7
ANALYSIS
7.1 OUTREACH DISTRICTS OF MICROFINANCE IN N.W.F.P
N.W.F.P is relatively a backward province of Pakistan, here gender discrimination is on its peek, women are not given their rights, so when half of the population of this province is not working as they should have because of norms and culture of society how can one expect that this province will be economically stable. In N.W.F.P total number of 8 microfinance providers provide services of microfinance. In which just one NGO that is KK (Khwendo Kor) is wholly and solely working on women empowerment in Peshawar. KB is working hard to introduce the concept of women empowerment by providing its services, encouraging people especially women to play their role. Then rural support programs like NRSP and SRSP are also working to provide microfinance to the people of this province and enlighten them with the benefits of women working and sharing the responsibilities. Here is the table which shows how much microfinance has penetrated in N.W.F.P, and how many MFP are working, and what the number of active borrowers in different districts is. Table 7.1
District Abbottabad BATGRAM CHARSADDA
Outreach Of Microfinance in N.W.F.P Districts

MFP KB SRSP KB BRAC KB NRSP 2 20 860 13,071 2,151,787 129,624,789 Branches 3 Active borrowers 6180 Gross loan portfolio 23,072,747
CHITRAL
BOK FMFBL
8827
181,667,305
D.I. KHAN
BOK KB
5776
70,090,953
Chapter 7 ANALYSIS HARIPUR SRSP KB KARAK KOHAT KB BOK KB SRSP KOHISTAN MALAKAND MANSHERA MARDAN KB KB NRSP KB POMFB BOK KB NRSP MINGORA BOK KB NOWSHERA BRAC KB NRSP SRSP PESHAWAR BOK BRAC KB OLP SRSP NRSP KK SHANGLA SWABI KB KB NRSP SWWS SWAT NRSP 9 3563 34,802,697 1 13 1189 11434 4,894,701 113,288,572 13 18136 162,026,641 18 18,029 132,503,405 2 1929 20777185 45 33301 387,190502 3 4322 20541414 1 20 368 11,476 664800 157,294,916 1 3 2167 5565 15,496,442 34767888 4 4568 53658772
Source: Micro watch 2008 for PMN
Chapter 7 ANALYSIS
7.2
MFPs WITH LARGEST GEOGRAPHIC SPREAD IN N.W.F.P
Khushhali bank is the MFB with largest spread in N.W.F.P working in 16 districts; it has not only largest geographical spread in N.W.F.P but all over Pakistan with total branches of 113 in 89 districts. On 2nd number is NRSP with an outreach of 6 districts which are Charsadda, Malakand, Mardan, Nowshera, Peshawar, Swabi and Swat. NRSP is also country wise largest with an outreach of 55 districts in Pakistan. SRSP is another rural support program working in 5 districts of N.W.F.P, Abbottabad, haripur, kohat, Nowshera and Peshawar.
Table 7.2: MFPs With Largest Geographic Spread IN N.W.F.P
S. No. 1 2 3
MFP KB NRSP SRSP
District 16 6 5
7.3
LARGEST MICROFINANCE PROVIDERS OF N.W.F.P
The largest microfinance providers of N.W.F.P are NRSP and KB according to number of active borrowers; they are not just the largest according MFP of N.W.F.P but also in Pakistan. Table 7.3: S. No 1 2 Largest Microfinance Providers of N.W.F.P MFP NRSP KB Active Borrowers 604,776 377,486
7.4
ACTIVE BORROWERS GENDER (N.W.F.P)
OF
MICRFINANCE
BY
N.W.F.P is relatively a backward province of Pakistan in terms of economic and social condition; it has less literacy rate as compared to Punjab and Sindh. Here concept of empowerment is not known, women working is not socially acceptable. It is not easy to intervene in a sensitive issue like women empowerment in such a conservative area where women interaction even with
Chapter 7 ANALYSIS
outside women is looked with suspicion. If we look at the borrowers, female borrowers percentage is less as compared to male, and it even fell more in the last year. This is probably due to the unstable conditions of this province which is getting worse with time. It was 39% in year 2007 and it fell to 36% in year 2008 (statistic till June 2008). Although women repayment rate is higher than male but still their percentage is less as compared to men. Graph 7.1: Active Borrowers by Gender
100% 80% 60% 40%

61% 39% 36%
64%
female male
20% 0%
2007
2008
7.5
TOP 5 MFPs OF N.W.F.P
First Microfinance Bank Limited, National Rural Support Program, Khushhali Bank, Bngladesh rural Advancy commission, and Bank of Khyber are top five MFP in term of increase in active borrowers in year 2008. Figure 7.2: TOP 5 MFPs of NWFP: Increase in active borrowers (Net)
BOK BRAC KB NRSP FMFBL 0 5 10 15 20 25 30 35
MFP
increase (000's)
Chapter 7 ANALYSIS
Table 7.4: Percentage of Women Clients in Different MFP (N.W.F.P) S. No. 1 5 2 3 4 MFP KK SWWS SRSP NRSP KB Female Percentage 100% 84% 58% 46% 34%
7.6
SUCCESS STORIES OF MICROFINANCE WOMEN EMPOWERMENT NWFP
Virtually every MFI has a stack of case studies which focus on success stories. Most show how womens lives have been transformed with the provision of a loan they have invested in their own businesses. There is the dramatic impact on increase in income and well-being. The position of women in the society and economy of NWFP is particularly constrained in relation to enterprise development. Cultural norms limit their mobility outside of the homestead to engage in economic activities such as production and trade. It's not just the fact that these areas are so much more conservative and women are not seen anywhere and are bound by tradition not to venture out of their homes, it's just that it is so much harder. There are additional problems which include access to materials, access to market, lack of roads and communications, isolation from not just the rest of the country but even neighboring villages and towns in the winter months. Life in the north is very hard, the winters are long and severe, in most areas there is one seasonal crop, no industry, little or no tourism and people live not only in isolation from the outside world but in a state of abject poverty. The diversity of users' socio-economic circumstances even within what might appear to outsiders to be a homogeneous environment will affect demand for financial services. Even poor women will differ significantly in their socioeconomic status, lifecycle effects being a particular feature: the needs of young unmarried women will differ from those of young married women with growing families; and from the needs of older women with grown-up sons or those who are widows.
Chapter 7 ANALYSIS
CASE 1: National Rural Support Programme Ms. Samina Shaheen took a loan of Rs.30,000/- from NRSP in April 2007. Taking a loan was a first time experience for her and this brought her to her first ever contact with NRSP. Samina has put the loan amount in to her existing business of garment making. She has a small workshop next door to her place of residence. She runs this factory with the help of 6 employees. Samina buys all material locally. The garments are then stitched and embroidered and supplied to the local market as well as to some outlets up country. At times, she supplies to some shops abroad. She has been in this business for about 10 years. MUSSARIT NAZ runs two businesses from her home; a beauty parlour in which she is currently the sole employee and a shop selling clothes, bags and little knick knacks. She took a RS 30,000 loan from NRSP to buy cosmetics and electrical goods for her salon and to purchase cloth for her shop. Mussarit is hoping to improve business by running a publicity drive for her salon in her neighbourhood. Case 2: Swabi Women Welfare Society The woman, who is 22 years old, and lives in Swabi with her husband and three small children, described their main sources of cash income as the clerical salary her husband earns (Rs. 2000 per month) and her own occasional embroidery (Rs. 200-400 per month). Her husband went to market to purchase the two goats she bought with her loan of Rs. 4500. She carries out most of the tasks associated with the goats' upkeep and her husband provides loan repayment installments from his salary. Sometimes there are arguments with her husband when she needs cash. The goats themselves do not provide an income stream; in fact, one of them died. However, the remaining one is a source of milk for the children, and she hopes to earn some cash when she sells the animal. Although she very much values the savings component of the women's organizations work, she has had to oppose her brothers who advised her to deposit money in the bank to gain more interest. Another woman borrower, much better-off and living with her husband and three salaried sons. Her monthly income is over Rs. 4000. She received Rs. 5000 for rope-making (for string cots) and traveled to Faisalabad herself to purchase the raw material. The income she makes, which was not revealed, is controlled by her
Chapter 7 ANALYSIS
alone. She attends monthly meetings regularly and plans to apply for a loan for a bigger business. A third woman, 35 years old and an office-holder in the Swabi took a two-year loan of Rs5000 to start a shop. She lives with her five children. Her husband is employed as a daily laborer in Islamabad. He brings back Rs1300-1500 per month and she earns Rs320 per month for stitching clothes. Once this loan is repaid she plans to take another loan for livestock rearing. She is more confident that she will be allowed to manage the work involved herself. Case 3: First Women Bank Limited Sabiran Bibi has about seven acres of cultivable land on which they have cultivated rice these days. Their whole family works in the field at different phases of crop cultivation. Women's most important role is in the beginning of the cultivation and at the harvesting time. Sabiran Bibi availed a loan of Rs 5000 to purchase seeds and fertilizers for her crop. Her crop will be harvested in November. Sabiran, like many other women in rural areas is thrilled by the idea of a bank that is exclusively devoted to provide services to poor women. Samina Shafiq is a very enthusiastic young woman who is running this school with her husband in her own house. She is also teaching in ILO's NFE for carpet weaving children but in the morning she is running this school. FWBL provided her with a loan of Rs 8000 as she decided to renovate the school and purchase stationery items. She has about 200 children studying in her school. Azra was living below the poverty line and facing severe-financial problems. Her husband was a mechanic and earned a meagre wage of Rs. 3,000 a' month. To support her husband she decided to start a business of producing bags and related products. In 2003, she took a Micro-Finance Loan of Rs. 10,000 from FWBL. After acquiring the loan, she added a variety of bags and other accessories to her inventory and her business started flourishing. Today she is not only a successful entrepreneur but along with she is now able to provide her children quality education. She now owns two stalls at weekly bazaar.
Chapter 7 ANALYSIS
Case 4: Khushhali Bank Mrs. Sameena from Nowshera started her own business a couple of years back. Before that she went through financial hardships, as her husband, an ordinary plumber, earned only 3500-4000 PKR a month. It was very difficult for her to educate her daughters and pay for the household expenses including rent, with the monthly income of her husband. Therefore resolute in her mission to keep her daughters in school, Sameena decided to start her own business which she could manage from home in a small budget. She felt that the most viable option for her was to start a Beauty Parlour. After completion of a six-month course from a nearby Training Academy, she started her own parlour by the name of Muskan Beauty Parlour in her house. Her initial customers included those that she had already worked with during her training. In order to attract more customers, she started going to peoples houses to provide her parlour services and this coupled with positive word-of-mouth from her customers increased her permanent customer base to 15 and her monthly income to 3,000 PKR. With the grace of God and her own hard work, Sameena was able to increase her clientele to 40. With the increase in the number of customers, Sameena had to expand and upgrade her parlour for this reason Sameena approached Khushhali Bank Limited for a loan. The bank provided her with a loan of 10,000 PKR. With the help of the loan, Sameena introduced new services and techniques and her income rose from 3,000 to 7,000 PKR. With the increase in income Sameena is able to contribute not only to the household expenses, but also to provide quality education to her daughters. The key to Sameenas success has been her hard work, dedication, and her ability to market herself to potential customers. It helped her in growing her business and achieving her dreams of supporting her family and becoming an important member of her locality. All of Sameenas goals are directly linked to her economic condition, social status and her childrens education, and as such, her future plans include expanding her business to include bridal photo shoots and a training centre. She wants to make her parlour a high standard one. This will mean employing more people, thereby giving a chance to other girls of the locality to earn a livelihood and support their families.
Chapter 7 ANALYSIS
Case 5: Kashf Foundation. Baji Parveen, who believed self respect was far more important than accepting hand outs to meet adverse circumstances. Baji Parveens husband, when faced with the growing indignities of poverty and his inability to meet his familys needs, decided to take his own life. In the aftermath of this event, Baji Parveen was not only left with the social stigma of her husbands suicide but also with the responsibility of providing for her young children. As a consequence, many of her neighbors collected money to help her deal with her crisis, however, instead of spending this money on daily requirements, she decided to start her own business with the amount collected. This decision catapulted her into many unknown realms; she left the safe environs of her community and took a 350 kilometer journey to the north west of the country to the city of Peshawar. All around her was a terrain where women were barely visible, where their faces are forever shrouded by layers of tradition it was in such an environment that Baji Parveen struck her first business deal, negotiating with hardy Pathan traders to purchase fabric. She returned with this stock and managed to sell if for a small profit. Armed with confidence after this initial transaction, she learnt about Kashf Foundations loan programme and quickly enrolled herself as a member of Kashfs credit group. Today Baji Parveen has not only built her own house but most importantly has been able to educate her children children who had been orphaned so early on in their lives, instead of growing up on peoples hand outs now live with dignity on their mothers growing income.
Chapter 7 ANALYSIS
Microfinance success for a number of reasons. The first is that it is a true innovation in the development world. It was thought that very poor people couldnt afford to borrow money, they wouldnt be able to do anything with it, they didnt have the educational levels or the skill levels to be able to start businesses. Microfinance has proven that very wrong. In fact, theres a whole class of entrepreneurs among very poor people, and there are great examples of people starting all sorts of businesses. They have started a lot of home-based businesses, including buying a cow and serving the whole community with dairy products; buying chickens and providing the community with eggs; buying start-up materials for handicrafts. And there are cell-phone ladies roaming all over Africa who will buy a cell phone and go village to village lending out minutes on the cell phone and making a profit on that. There are many reasons why women have become the primary target of microfinance services. At a macro level, it is because 70 percent of the worlds poor are women. Women have a higher unemployment rate than men in virtually every country and make up the majority of the informal sector of most economies. They constitute the bulk of those who need microfinance services. Micro-finance is still in the initial stages of development in Pakistan, so a lot has to be done to improve its reach to the target groups and to improve the benefits that it can bring with its proper implementation. However, the people to whom this facility has reached; are getting the benefits. Through research, it does give an insight on the trends of borrowing, economic activities, level of borrowers satisfaction and benefits obtained from the micro-finance facility among women. The major findings are illustrated in the following pages:
7.7
WOMEN WITH MAJOR FAMILY-RESPONSIBILITIES
Most of female borrowers are middle aged and married. This shows that the micro-finance services are going in the right direction to help the female help their families, because these age groups can be marked as having higher responsibilities to support their families. It is difficult for a single person earning to make the both ends meet, so if the other family member also gets involved in some
Chapter 7 ANALYSIS
economic activity, it can make the life easier. In middle-aged groups of females, generally, the children are of school-going age, and mostly only the father is the earning member. In such a case, if the women have access to such smaller loans for starting or expanding business activities, it can increase the income of the family. Data from case studies shows that a large number of women generally claim that education of children is a high priority for them and that they borrow and save for childrens education. Women are usually the primary or sole family caretakers in many developing countries. Helping them gain additional daily income improves the condition of their entire household. Putting extra income in womens hands is often the most efficient way to affect an entire family, as women typically put their childrens needs before their own. Children are more likely to complete their education and escape the poverty trap than their parents are. Giving women access to microfinance loans therefore generates a multiplier effect that increases the impact of a microfinance institutions activities, benefiting multiple generations.
7.8 WOMEN SPEND MORE OF THEIR INCOME ON THEIR FAMILIES

Women have been shown to spend more of their income on their households; therefore, when women are helped to increase their incomes, the welfare of the whole family is improved. Womens success benefits more than one person. Several case studies confirmed the well-documented fact that women are more likely than men to spend their profits on household and family needs. Assisting women therefore generates a multiplier effect that enlarges the impact on the economic conditions of society. Womens increased income benefits their children, particularly in education, diet, health care, and clothing
7.9
ACCEPTABLE BUSINESS SECTOR FOR FEMALE BY SOCIETY
Many cases have been recorded, where women have been able to cast away the shackles of mobility and travel regularly to bordering countries like Afghanistan or India to purchase tradable items like cloth, costume jewelry and tinsels. Most of the female belonged to retail business, and most of them used to sell cloths, bedsheets, cushions, electric appliances and other things on installments. Some of
Chapter 7 ANALYSIS
them were involved in value addition such as stitching, and in services such as beauty parlor business. Women choose the business in which higher return is associated and found the business easier way of earning money. As the nature of business of majority of the responding business-women is such that allows them to work single-handedly, therefore, even an expansion in business result in an increase in generation of much employment. That, in a rural and also an urban setting, there is a womens space (the domestic arena) and a male space (the public arena) and that gender relations are boxed into these spatial realities. However, when this myth is tested with the field reality; many such instances are found where women are transacting businesses and have been successful micromanagers, even when faced with many economic and social hurdles. Hundreds of women are actively working as commodity traders and shopkeepers even in South Asian villages.
7.10 PURPOSE BEHIND FEMALE WORKING

It was due to increase in inflation that it is difficult for one person to earn for the whole family so they started working to increase the income for their family. Women were working as they were widows and there was no one else to earn in their family, other working as their husbands bears the home-expenditures but they wanted to have a personal source of income so that they do not have to ask their husbands for daily expenses and that is the reason for their being in business. However, it was seen that they were spending their earnings not only on the different good or bad occasions in the family for which their husbands did not allow money but also for the better schooling and clothing of their children, which is again a help in lessening the financial burden of their spouses.
7.11 EFFICIENCY AND SUSTAINABILITY

It is found that womens repayment rates are typically far superior to those of men. Lower arrears and loan loss rates have an important effect on the efficiency and sustainability of the institutions. Studies have also found women to be more cooperative and prefer to work with them for this reason as well
Chapter 7 ANALYSIS
Most of the females had complete control over the loan amount they borrowed and they could utilize it the way they wanted without any interference from their spouse or any other family member.
7.12 EFFECTIVENESS OF INCREASED INCOME

The after doing the case studies, they provided the following utilities of the increased income as a result of micro-finance borrowing: a) Majority expressed that there is ease in bearing the day-to-day expenditures as compared to before borrowing. b) Some have managed to send their children to private schools considering it a better source of education. Some clients have also arranged tuition for their children from the increased income. c) A widow easily managed the wedding of her son and daughter due to increased income. d) Most of the women were pleased with the fact that they do not have to ask their husbands for day-to-day monetary requirements and they feel more liberty in spending their earnings according to their wishes. e) Some borrowers have managed to buy such appliances as refrigerator, airconditioner, and steel safe that they earlier could not afford.
7.13 CHANGE IN CONSUMPTION

A case study of BRAC showed that the impact on household consumption was twice as great when the borrowers were women. Women who participated in microfinance programmes increased their net wealth and their status within the household, and improved the lives of their children as well. All of the measures of impact of borrowing by women were significant; and the impact on consumption was about twice as great as it was for men. Borrowing also increased household net worth, with a greater effect for men than for women.
Chapter 8
FINDINGS
CHAPTER 8
FINDINGS
The findings of this research report can be summarized in this flowchart which shows how our economy boost due to women empowerment with the help of microfinance. Microfinance Women Empowerment Increase in employment Rise in Income level Better nutrition - Health opportunities - Access to education
In female economic participation - Gender equality - Role in family decisions
Fertility rate - in family well being Small population Size
Increase in productivity - in per capita income
Improvement in standard of living (SOL)
Better provision of health and education Services
Increase in consumption of goods and services -Aggregate Demand - in investment and employment opportunities -Aggregate Supply As a result economy grows
Chapter 8
FINDINGS
8.1
INCREASE IN EMPLOYMENT GENERATION
The result of case studies show that the microfinance clients having an additional member of the family join the labor force. Almost every second woman after establishing her business has hired an employee to help her. Which results in employment generation.
8.2
INCREASE IN INCOME LEVEL
After examining the impact of microfinance on incomes of women from case studies it is found that household income is derived from multiple sources particularly in the rural areas. A study conducted by KASHF foundation found that about 73% of micro-finance female clients reported an increase in income, in which 59% showed an average increase and 14% tremendous increase.
8.3
INCREASE IN FEMALE ECONOMIC PARTICIPATION
When women empowerment happens it encourages female participation in the economic activities. They realize their role and also come to know if they wont work they will never come out of their misery. While their participation increases in economic activities it leads to increase in gender equality and their role in family decisions.
8.4
INCREASE IN PRODUCTIVITY
When female economic activities will increase and whole population will participate in economic development without discrimination of male and female this will increase the productivity of a country. As a result per capita income will also increases.
8.5
HEALTH, NUTRITION, AND FERTILITY RATE
Role of Microfinance has significant and positive impact on schooling, especially for girls. Borrowing by women (but not by men) improved the nutritional status of both male and female children. Microfinance affected social variables, including childrens schooling, their nutrition and health, fertility and contraception use. With increase in knowledge fertility rate has also decreased.
8.6
IMPROVEMENT IN STANDARD OF LIVING
With increase in income the standard of living also get better. This was also because of reduction in fertility rate because of which population size decreases
Chapter 8
FINDINGS
which leads to better provision and education to service. With improvement in standard of living the consumption of goods and services increased. As a result aggregate demand of things also increase which is an indicating factor for flourishing economy.
8.7
INCREASE IN INVESTMENT AND EMPLOYMENT OPPORTUNITY
When standard of living increases, people have money so they start to save little by little. When saving happen people will have greater chance of investment, as a result of investment new projects start which increases the employment opportunities.
8.8
GENDER EQUALITY
By empowering women, they come to know about their rights, they know whats their role in society which gives them confidence, strength and motivation to work. They realize that they are not inferior to men which promotes gender equality.
8.9
IMPACT ON THE COMMUNITY AND WOMEN ROLE AND STATUS IN IT
Although leadership skills, self-confidence, and solidarity play an important role in changing womens role and status in the community, womens economic success plays a role in shaping the communitys perception of them as well. Several of the women have been invited to participate in community meetings because they are now in a position to contribute and are also now able to make contributions at funerals, a major symbol of social status among the people. Womens giving advice is another positive sign of empowerment for several reasons. First, women are learning and putting into practice what they learn. Furthermore, they are sharing their knowledge and helping others, which mean that the knowledge benefits of the program are having an impact beyond its members. Second, women have enough self-confidence to offer advice and assistance to others.
Chapter 8
FINDINGS
8.10 CHALLENGES FACED BY MICROFINANCE TO EMPOWER WOMEN

It does tend to reach those who are not among the poorest of the poor. If people are in a situation where their children are literally on the brink of dying from hunger or disease or starvation, or if theyre in a war-torn society, a small mircocredit loan is not on the forefront of their mind. Theyre probably thinking of survival. In that case, microcredit is perhaps not going to be so successful. The reasons for this are clear. The poorest need tiny loans which are not cost effective even for microcredit programs. The poorest also place the greatest demands on microcredit training programs, which makes the cost of lending even higher Though introduced late yet micro-finance sector in Pakistan is improving steadily. It is estimated that nearly seven million households in Pakistan need micro-finance services. However, so far, less than one million of these poor households have been served only. Investments may not turn a profit. In this event the money to repay the loan must come from reduced consumption or borrowing from some other source, usually on worse terms. Another problem is capture of the loans by male relatives. In some cases, male relatives use female borrowers as fronts to get relatively low interest loans. These loans may or may not be used to benefit the family, and the female borrowers rarely see any benefit at all. And yet, the women are still held responsible for repayment of the loans. Since large number of target clients live in villages and the lack of MFIs (specifically banks) in these areas restricts their reach to their target clients. The current Microfinance products do not necessarily target the bottom poor. Special research and innovative products that can target this group is required. Women experience poverty in diverse ways they are last to eat, the last to access health care, when the household falls into poverty they are the last to attend school. Women do not enjoy equitable access to vital assets such as land and water and services such as health care and education.
Chapter 9 RECOMMENDATIONS
CHAPTER 9
RECOMMENDATIONS
9.1 THE CULTURAL AND SOCIAL ENVIRONMENT
The cultural environment is a key factor in the economic and social empowerment of women. Social and cultural change does not happen quickly and easily. However, if we focus on women empowerment, it is possible to identify some general actions that can certainly improve the current situation. It is necessary to keep the door open to gender-sensitive men. They must be directly or indirectly involved in at least some of the womens group or MFI activities. Simple things, such as accompanying their wives to group meetings, may have a remarkable effect on both men and women, especially in very traditional rural contexts. Women feel that their husbands support them morally and men are exposed to some gender-related aspects of daily life that they are not attuned to.
9.2
GOVERNMENT POLICY
The impact of micro-finance will be much stronger if the national government adopts a policy for poverty alleviation and in favour of women. At the same time, strong public interventions in micro-finance may result in MFIs which are inefficient and not financially sustainable.
9.3
LEGAL FRAMEWORK
A non-discriminatory legal framework granting equal rights to men and women is necessary for micro-finance, which calls for flexible and non-traditional procedures. If women have no property rights or suffer discrimination in this respect and in regard to inheritance law and contract law, they cannot obtain financial resources or properly manage a microenterprise. A non-discriminatory legal framework requires social and cultural change, gender-sensitive decision makers and appropriate government policies.
9.4
COMPLEMENTARY SERVICES
The category of complementary services is very broad and diversified. The findings indicate that group meetings are vital for the empowerment of women;
they raise womens self-esteem and self-confidence. If the complementary category to training in marketing and business development, it can be concluded that these services are important for enterprise development. Demand for such services is not very high among women, possibly because MF clients do not expect them. Business development training could nevertheless play an important role in upgrading womens enterprise. It can also help avoid limited business expansion which stops when husbands use borrowed money for their own enterprise. Business development services are therefore important, but they should not necessarily be provided by financial institutions. If meetings strengthen womens empowerment, it can be concluded that those MFIs are to be encouraged who provide these complimentary services because they are more beneficial in terms of empowerment.
9.5
SIMPLE PROCEDURES BORROWING
FOR
MICRO-FINANCE
The lending procedures should be kept easier and simple for the poor people, so that access is not denied to the potential clients due to strict and difficult policies.
9.6
MICRO-FINANCE STAFF
There should be adequate number of staff for carrying out the micro-finance activities. It is also recommended that there should be separate office and field staff with close coordination on the progress of the clients. This will lessen the staff burden and improve the repayment rate. For female borrowers, female field staff is strongly recommended as the male staff cannot go into their homes that frequently, thus providing a hiding for defaulter female clients.
9.7
THE FUNCTION OF EDUCATION IS INDISPENSABLE
The first step in alleviating the poverty of women is to educate them. Education is the means by which women will be able to participate in an increasingly global economy, which requires a workforce with a minimum level of technical skills, literacy and managerial education. Literate women of a country become entrepreneurs.
9.8
OUTREACH SHOULD BE MAXIMIZED
More MFIs are needed to be launched or the branches of existing MFIs be opened in areas (villages) which lack access to this facility.
CONCLUSION
CONCLUSION
Lending money to women entrepreneurs in Pakistan is believed to be a risky and costly endeavor. MFIs use group collateral in most circumstances and this has been very successful among women clients. Micro-finance is not a new concept; however Pakistan has to go a long way in this sector. The findings presented in this section are according to the analysis done, in order to give the concluding remarks about the state of micro-finance services in NWFP, specifically and whole of Pakistan generally. It is seen that the microfinance providers see poor femaleS as their main target, but in the case of the NWFP under study, the result dont show this fact. Here the male micro-finance clients are in thousands whereas female clients were only few in number. However, the reasons behind these are numerous from the cultural impacts to the majority women not being business-minded due to perhaps certain constraints. However the trends are changing, and the second reason for less female clients is of less number MFP in NWFP. Third major reason of MFIs inability to attract more female clients is the lack of female staff, lack of technical expertise and the fact that they are located outside the villages and do not have real insight into the problems that new investors face. And another restriction is that in many rural areas credit is held in contempt because Islam forbids the use of interest in business transactions. However, despite the lower number of female clients, it has been observed that micro-finance borrowings has indeed a positive impact on the lives of poor people, where these borrowings have been properly utilized, and such clients are also able to repay their installments regularly. The acceptable repayment rate is largely due to the work MFIs do with borrowers organizations prior to lending, and to the advice and training that they give to their women clients. Therefore, as a whole, it can be said that the micro-finance facility has played a good role in improving the lives of people. In a concluding remark for the micro-finance industry in Pakistan, as found in literature review; bright prospects can be forecasted for the growth and success of this industry in Pakistan.
BIBLIOGRAPHY
BIBLIOGRAPHY
Cheston Susy and Lisa Kuhn, 2002. Empowering women through microfinance, unpublished background paper for the Microcredit Summit + 5, New York, 10-13 November, available at <http://www.microcreditsummit.org/papers/papers.htm> CODEC, (2000). Report on Womens Empowerment. Conroy, J. (2005). Microfinance in Malaysia: Time to Rebuild. Case study for Foundation for Development Cooperation. Available at http://www.microfinancegateway.com/content/article/detail/3238 Eoin, W. 2005. Microfinance, Available at http://www.dochas.ie/documents/MicroFinance_literature_review.pdf Expanding Microcredit Outreach to Reach the Millennium Development Goal Some Issues for Attention, by Muhammad Yunus (2003). Expanding Microcredit Outreach to Reach the Millennium Development Goal Some Issues for Attention, by Muhammad Yunus (2003). http://www.nek.uu.se/pdf/wp2007-24-pdf Hussein Maliha and Hussain Shazreh, (2003). The Impact of Microfinance on Poverty and Gender Eqity Approaches and Evidence from Pakistan, published paper for Pakitan Microfinance Network, Islamabad, 12-31 December, available at http://www.microfinanceconnect.info/user_articles_display.php?sno=39 Institute of Polices studies of Sri Lanka, Available at http://www.ips.lk/index.html Investing in least developed countries, Available at http://www.uncdf.org/english/index.php Kabeer, N, 1998. 'Money Can't Buy Me Love'? Re-evaluating Gender, Credit and Empowerment in Rural Bangladesh. IDS Discussion Paper 363. Brighton, England: Institute of Development Studies, University of Sussex. Kashf 1999, Impact assessment as a management and policy tool, Discussion Paper 3, Kashf Foundation, November.
BIBLIOGRAPHY
Kashf 2000, Social intermediation study: Exploring the relationship between micro-finance and social capital, draft, Kashf Foundation.
Mayoux,
L.
1998a.
Women's
Empowerment
and
Micro-finance
programmes: Approaches, Evidence and Ways Forward. The Open University Working Paper No 41. Paula Kantor,2000. Promoting Womens Entrepreneurship Development based on Good Practice Programmes: Some Experiences from the North to the South (Series on Womens Entrepreneurship Development and Gender in Enterprises WEDGE). PMN, (2008). Microwatch. Karachi. Ranjula Bali Swain and Fan Yang Wallentin, (2007). Does Microfinance Empower Women? Evidence from self help groups in India. Working Paper 2007:24. Sweden: Department of Economics, Uppsala University. Sabrina Maria, (2005). Nepal and Pakistan. Micro-finance and microenterprise development: Their contribution to the economic empowerment of women, SEED Working Paper No. 69 Siddiqui, H. (2006, June 12). Empowering women through microfinance. Available at http://www.cipe.org/blog/?p=215 Srinivasan, R and M.S Sriram. (2003). Available at http://www.iimb.ernet.in/~rsrini/Learn@MG/mrrtintro.pdf State Bank of Pakistan, (2005). First Quarterly Report Role of Microcredit in Poverty Alleviation. Karachi. available at http://www.sbp.org.pk/reports/quarterly/FY05/first/Special_2.pdf UNFPA, (1992). Guidelines on Women's Empowerment. New York http://www.khushalibank.com.pk http://www.tameerbank.com/ http://www.pomicro.com/ http://www.rozgar.com/ http://www.networkicrobank.com http://www.akdn.org/akam_pakistan.asp
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Research Report

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Chapter 1

Main purposes of this research report are as following.

Role of Microfinance to Empower Women of Pakistan; A Case study of NWFP

SCHEME OF THE REPORT

Role of Microfinance to Empower Women of Pakistan; A Case study of NWFP

Role of Microfinance to Empower Women of Pakistan; A Case study of NWFP

Role of Microfinance to Empower Women of Pakistan; A Case study of NWFP

Role of Microfinance to Empower Women of Pakistan; A Case study of NWFP

Role of Microfinance to Empower Women of Pakistan; A Case study of NWFP

Role of Microfinance to Empower Women of Pakistan; A Case study of NWFP

Role of Microfinance to Empower Women of Pakistan; A Case study 10 of NWFP

Role of Microfinance to Empower Women of Pakistan; A Case study 11 of NWFP

MICROFINANCE AND MICROCREDIT

There are three types of sources of microfinance

Microfinance activities generally include:

Role of Microfinance to Empower Women of Pakistan; A Case study 12 of NWFP

Secure saving products.

Role of Microfinance to Empower Women of Pakistan; A Case study 13 of NWFP

And, the financial sustainability of the micro-finance service provider.

Role of Microfinance to Empower Women of Pakistan; A Case study 14 of NWFP

Increase (%) Source: Micro watch 2008 for PMN

HISTORY OF MICROFINANCE BANKING

Role of Microfinance to Empower Women of Pakistan; A Case study 15 of NWFP

Role of Microfinance to Empower Women of Pakistan; A Case study 16 of NWFP

MICROFINANCE COMPARATIVE EXPERIENCE

MICROFINANCE COMPARATIVE EXPERIENCE OF SOUTH ASIAN COUNTRIES

Role of Microfinance to Empower Women of Pakistan; A Case study 16 of NWFP

MICROFINANCE COMPARATIVE EXPERIENCE

Role of Microfinance to Empower Women of Pakistan; A Case study 17 of NWFP

MICROFINANCE COMPARATIVE EXPERIENCE

MICROFINANCE COMPARATIVE EXPERIENCE

Role of Microfinance to Empower Women of Pakistan; A Case study 19 of NWFP

MICROFINANCE COMPARATIVE EXPERIENCE

MICROFINANCE COMPARATIVE EXPERIENCE

Role of Microfinance to Empower Women of Pakistan; A Case study 21 of NWFP

MICROFINANCE PROVIDERS IN PAKISTAN

Role of Microfinance to Empower Women of Pakistan; A Case study 24 of NWFP

enterprise credit program. OPP-Karachi Health and Social Development Association

(KHASDA) manages the health program.

Role of Microfinance to Empower Women of Pakistan; A Case study 28 of NWFP

National Rural Support Programme

Thardeep Rural Development Programme

Non-government organization running microfinance operations as part of multidimensional developed programme

Role of Microfinance to Empower Women of Pakistan; A Case study 30 of NWFP

Center for Women Co-operative Development

Role of Microfinance to Empower Women of Pakistan; A Case study 32 of NWFP

DAMEN (Development Action for Mobilization & Emancipation

Role of Microfinance to Empower Women of Pakistan; A Case study 33 of NWFP

40% 13% MFB MFI RSP

Role of Microfinance to Empower Women of Pakistan; A Case study 35 of NWFP

MICROFINANCE AND WOMEN EMPOWERMENT

MICROFINANCE AND WOMEN EMPOWERMENT

MICROFINANCE PROGRAMS FOR WOMEN

PERSPECTIVES OF MICROFINANCE PROGRAMS TARGETING WOMEN

The increasing number of Microfinance Institutions and Microfinance Programs

Role of Microfinance to Empower Women of Pakistan; A Case study 36 of NWFP

MICROFINANCE AND WOMEN EMPOWERMENT

MICROFINANCE AND WOMEN EMPOWERMENT

ROLE OF MICRO-FINANCE IN WOMEN EMPOWERMENT (THE CASE OF PAKISTAN)

MICROFINANCE AND WOMEN EMPOWERMENT

WOMEN EMPOWERMENT AS A RESULT OF MICROFINANCE

Role of Microfinance to Empower Women of Pakistan; A Case study 39 of NWFP

MICROFINANCE AND WOMEN EMPOWERMENT