Social Impact Assessment of Microfinance Programmes
by
S Akbar Zaidi and
Haroon Jamal, Sarah Javeed and Sarah Zaka,
with support from
Shafi Ahmed, Mansab Ali, Riaz Hussain and Amima Sayeed
Draft Report
Study Commissioned by and Submitted to the European
Union-Pakistan Financial Services Sector Reform Programme,
Islamabad, April 2007
Executive Summary
Introduction and Methodology
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There are numerous assumptions which have been made about what microfinance
can do and has done. However, there is insufficient empirical evidence to support
most of the claims. This is the first Study of its kind and scale in Pakistan, which
attempts to quantify and demonstrate some of the outcomes from microfinance
interventions.
Estimates show that around 300,000 individuals, many of them women, have
benefited from non-governmental disbursement of microfinance. A number of
NGOs working in the microfinance sector in Pakistan have gained national and
international recognition for their work and have formed a forum called the
Pakistan Microfinance Network, where issues and ideas are discussed and
exchanged.
Despite recent growth, the forms of institutions which provide microfinance in the
formal sector are limited: there are formal, full service broad spectrum providers,
MFIs which provide a number of formal sector financial services, and
microfinance is one such activity; full service microfinance specialists, which take
on savings and provide microcredit and may be involved in other microfinance
activities as well; restricted service microfinance broad spectrum, institutions
which provide some microfinance services along with other services; restricted
service microfinance specialists, which provide only some microfinance services,
mainly credit, and not other services such as savings; an, apex institutions which
lend on to NGOs which may provide microfinance services specifically or along
with other services.
It is important to state, that the term ‘microfinance’ has been used interchangeably
with ‘microcredit’ in Pakistan, largely because other services and products in the
sector have been far less developed than credit. Savings and insurance, for
example, are still in their infancy as far as their provision by microfinance
institutions is concerned, and even some microfinance banks have been slow to
evolve their savings instruments and potential. Debate about microfinance in
Pakistan, continues to be largely about microcredit.
Six microfinance institutions have been selected to participate in this study on the
basis of the following criteria. They have at least three year’s continuous work
experience in microfinance and a strong business plan for the next three years;
they have a portfolio of at least 2,000 active borrowers; have audited accounts for
the last three years; and are willing to participate in this social impact assessment
study. The group of six institutions cover a range of sizes, ownership patterns,
source of funding, lending methodology, programme area, organizational
structure, borrowers, communities etc.
The literature on Impact Assessment Methodologies underscores the pitfalls of
undertaking studies in which an attempt is made to observe, leave alone quantify,
the ‘impact’ of any intervention in order to address poverty. IA experts caution
researchers about making grand statements and reaching firm, final, conclusions
based on the quantification based on many measurables. In the case of softer
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indicators which are more difficult to measure and quantify – such as
‘empowerment’ – they are doubly cautious and suggest that one always needs to
be tentative in suggesting that they can ‘prove conclusively’, that such-and-such
poverty alleviation or microfinance institution, had a quantifiable impact on
members or recipients of an intervention.
This Study is designed to establish plausible association between changes
identified and participation in the microfinance programme. However, it is
important to state that the observation, leave alone the quantification of impact, is
often difficult to capture and quantify.
Studies have shown that impacts on enterprise profits may occur early and then
taper off within the first year or two of microfinance programme participation.
Other impacts, for example the accumulation of selected household assets, may
take as long as three to five years of microfinance programme participation to
happen. Other studies show that social impacts (such as changes in women’s
mobility) are likely to take longer to occur than economic impacts (such as
changes in income).
While the huge potential of microfinance is always acknowledged, studies on the
impact of microfinance conclude that it is unclear whether microfinance
contributes to a reduction in poverty or is the most efficient method to reduce
poverty without additional measures in areas such as education, health and
infrastructure. Moreover, it is recognised that ‘impact’ takes some years to work
its way through into the lives of beneficiaries, and contradictory or ‘mixed’ results
are not uncommon.
The methodology for this Study is based on the Difference-in-Difference
approach, which compares the difference between income for participants and
non-participants in treatment sites/locales, with the same difference in income in
control sites/locales. This is the best method for undertaking such an exercise and
better than taking one which focuses on programme participants and new/likely
participants – the Pipeline Approach – which has an in-built bias as many of the
new clients are already ‘sold’ on the issue of and efficacy of microfinance.
Along with the quantitative questionnaire, the Study also included questions about
the perceptions of borrowers and non-borrowers in order to understand how they
see the impact of the intervention. In many cases, perceptions seems to be very
different from ‘hard data’ and ‘facts’. Since we use Mixed Methodology, we not
only capture the quantitative side through our questionnaire, but also include
extensive Focus Group Discussions with clients, borrowers, non-borrowers, those
who have left the programme – so-called ‘drop-outs’. We also conducted
substantial Institutional Reviews which are based on interviews and give yet
another dimension to the Study.
The six MFIs chosen for the Study, with their characteristics were: Orangi
Charitable Trust (OCT), urban, Sindh, not simply concerned with poverty
alleviation, but also entrepreneurial and economic development, individual
lending; Sindh Agricultural and Forestry Coordination Organization (SAFWCO),
rural, Sindh, poverty alleviation and income earning focus; Kashf, Lahore, urban,
peri-urban, exclusively women, poverty alleviation, gender empowerment,
economic security; National Rural Support Programme (NRSP), the largest rural
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support programme in every province of the country, multi-sectoral with
microfinance being one of its important, though not exclusive, activities – we look
at the NRSP microfinance programme in the Punjab and Sindh, as well as the
NRSP’s Urban Poverty Alleviation Project (UPAP); Akhuwat, urban, Punjab, an
Islamic microfinance provider, based on the zero-interest principle; and Asasah, a
Lahore-based MFI which is different from the others because its financing
structure represents fully commercial funding.
It is important to state and highlight the fact, that all the six institutions which
agreed to participate in this Study, did so completely voluntarily. They agreed to
open up their offices, their records and gave us unprecedented and complete
access to their staff and clients. Their willingness to be part of this Study and their
full cooperation with the Team, reflects very highly on the maturity and
confidence that members of the microfinance sector in Pakistan have about their
programmes.
Each institution has a separate mission statement, style of management, different
set of priorities, etc., hence, comparison, if made at all, must be made with
considerable caution. The intention of this Study as specified by the client, was
not to compare or evaluate the performance of MFPs in Pakistan, and the design
of the Study does also not provide for such comparison.
Asasah
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Asasah was started in 2003 with the objective to enhance micro productivity and
alleviate poverty. Asasah was established with a 100 percent commercial
financing structure and was registered in December 2003 as a non-profit
Company by Guarantee under Section 42 of the Companies Ordinance 1984.
Initially Asasah had no donor funding available and paid a very high interest on
its commercial finance, therefore, sustainability became a major focus. Asasah
now has 27 branches, over 25,000 active members and has disbursed over Rs.457
million and has a recovery rate of 100 percent.
Asasah’s mission is quite broad and comprehensive and states that its objectives
are to: improve living standards of people below the poverty line through the
provision of diverse economic, educational and information services; safeguard
the interest of donors, financial institutions and individuals interested in poverty
alleviation; improve community well-being, and balance the interests of
stakeholders by encouraging participation; and, keep employees motivated and
ensure continuous achievement of objectives through staff capacity building.
Asasah uses the Grameen Bank methodology for its group lending of the
protective and productive loans and monitors each individual client to assure
portfolio quality and verify loan usage. Asasah asserts that it lends to households
who have sufficient skills but insufficient resources. Furthermore, Asasah
believes that female empowerment lies in having a say in important household
decisions, which are traditionally under a man’s domain in Pakistan.
Consequently, Asasah works to correct these imbalances by disbursing the loans
only to women, but making both spouses responsible for fulfilling the terms and
conditions.
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Since Asasah has been in operation just a few years, 86 percent of its clients are
still only in their first or second loan cycles. Clearly, any ‘impact’ of the
intervention by microfinance institutions, is highly tenuous, and at best, slight and
partial. We would expect little to have changed in a matter of two years.
Most of Asasah’s clients, all of whom are women, are involved in ‘business/retail
shops’ or ‘cottage industries’; the perceptions of clients over the loan cycle about
how well they eat, seem to suggest that the longer they stay with the programme,
the greater the perceived impact in terms of improvement in quality of life and
diet, on their lives. On most welfare questions, the longer they have been with the
programme, the better they think they are doing; with numerous small and large,
official and donor programmes funding microfinance, there is a huge amount of
information available about microfinance services and results from Asasah
confirm this view that a large proportion of Non-Borrowers are aware of credit
facilities.
Asasah’s Active Borrowers have significantly higher Expenditure Per Capita and
Income Per Capita than do all other categories. This suggests that perhaps Active
Borrowers benefit from the microfinance intervention. However, in terms of
Housing variables, this difference is not at all significant, a result which is not
surprising, given the fact that investment in Housing takes large amounts of
capital and investment, and we do not envisage that clients of any microfinance
institutions will be significantly better-off in a couple of years to allow them to
divert excess capital to Housing.
The results do show that women in Asasah’s microfinance programme feel that
they are significantly more empowered in terms of Economic Empowerment and
in terms of Empowerment Related to Education and Health.
Orangi Charitable Trust
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The Orangi Charitable Trust (OCT) is an off-shoot of the Orangi Pilot Project
(OPP), a non-governmental development institution created in 1980 in the
squatter settlement of Orangi Town in Karachi. Respecting the entrepreneurial
spirit of people as articulated in OPP’s vision, all the programmes focus on
‘supporting effective existing structures’ instead of creating new structures which
would likely be unsustainable and counter-productive.
OCT started its microcredit servicing from 1987 with an aim to support the
existing businesses. The rationale being that micro enterprises in Orangi were not
able to access loans from commercial banks due to loan size, collateral
requirements and other considerations. The key objectives of OCT are to: provide
credit for the expansion of the existing micro-enterprises in urban communities;
provide credit for agro-inputs in rural areas; strengthen the capacity of NGOs and
CBOs to support micro-enterprises in the area through guidance and training; and,
provide lines of credit to trained NGOs/CBOs
OCT opted for a different paradigm for microcredit instead of seeing microcredit
as a direct tool for poverty alleviation. Contrary to other institutions, it provides
credit solely to facilitate the movement of entrepreneurs into better economic and
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social conditions. Consequently, it has not engaged in identifying the poorest of
the poor or empowering women, for instance, to bring about gender equity.
OCT does not envisage any major expansion in its direct operations, geographical
reach or client base. It works with a carefully selected and focused client base
within Orangi, with just a single office located in the building of OPP-RTI. The
total loan disbursed in Orangi between 1987- August 2006 amounts to Rs.
157,760,184 to 9,508 units. Out of these, as many as 7,301 units are closed and
2,207 units are open, which reflects on OCT’s resolve to keep its client base small
and manageable.
This portfolio is balanced by replication of its microcredit programme by
supporting NGOs/CBOs, where institutionalization becomes the core focus rather
than operational expansion. OCT is working with 47 NGOs/CBOs where a total
of Rs. 286,600,604 has been disbursed to 25,606 units till August 2006. Out of
this 13,926 units are closed while 11,680 are open in 433 areas and villages.
OPP-OCT is providing microcredit to existing micro enterprises at bank rate of
interest without collateral ranging from Rs. 2,000 to 50,000 with simple
procedures and documentation. There are eight different types of products that are
offered by OCT to its Orangi and non-Orangi clients. Loans to Schools; Loans to
Manufactures; Loan to Traders; Loan to Service Providers; Loan to upgrade
Thallas; Loans to Farmers and Fisher folk; Loan to Clinics; and Loan for
Livestock.
The recovery rates have not always been stable and positive. For instance, in the
first year 35 percent of clients defaulted causing 20 percent of amount loss.
Gradually, the trust in borrowers began to pay off and, indeed, clients followed
the principles of fair business deals. According to OCT’s data, the recovery rate
has improved tremendously over the years with the current rate at 97 percent.
OCT has aimed to reach sustainability since its inception and for this purpose, the
mark-up rates were kept equivalent to bank rates and operational expenses were
consciously kept low.
OCT is the only MFI in our sample which is a largely male client oriented. It also
has other characteristics which are dissimilar to other MFIs, particularly that it is
not in the business of poverty alleviation, as most other MFIs claim. Hence, its
criteria and standards are different as well.
Most of OCT’s clients are in the Business Retail Shop profession, and many of
the Non-Borrowers move from the category of Technical Service Provider and
Personal Community Service Provider to those who own Businesses or set-up
some sort of Cottage Industry. This suggests that credit is a constraint to
entrepreneurs who, once they receive the loan, may want to set up different sorts
of economic enterprises since their credit-constraint may have been released.
Borrowers’ perceptions about the positive Effect on the Quality of Life are high
as soon as the first loan is given and continue to rise thereafter. This trend is
found in most other indicators about perception as well, and most Borrowers
believe that the rise in Income and the improvement of Quality of Life can be
sustained over time. We found that OPP clients, who had been borrowing for 3
year or more, were spending more on food expenditure.
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Akhuwat
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Akhuwat was established in 2001 with the objective of providing interest free
credit to the poor so as to enhance their standard of living. Akhuwat derives its
name from ‘mua’khat’ or brotherhood, which was first exhibited by the citizens of
Madina when they shared their wealth with the ‘muhajirin’, the immigrants from
Makkah. The philosophy is based on the premise that poverty can only be
eliminated if society is willing to share its resources with the poor and needy. For
Akhuwat, microcredit is a means to an end and not an end in itself; the end is a
vibrant, economically strong society, based on sharing resources.
At present, Akhuwat has 13 branches in the Punjab and 7,150 active clients, and it
has disbursed over Rs 150 million over five years. To increase the outreach of
interest free loans, Akhuwat has partnered with individuals in other cities to start
similar initiatives. Akhuwat is rapidly gaining legitimacy and in the last one year,
FY 2005-06, its acceptance has increased immensely as the organization has
received donations worth Rs. 30 million.
Akhuwat’s management has stated, that ‘the Programme is non-political and non–
sectarian. Muslims from all sects are welcome in the mosques. There is no gender
discrimination in the mosque. Women also come to mosques to get loans.
Christians are also welcome in mosques. Akhuwat derives its inspiration from the
Islamic spirit of mua’khat but its message is for all people of this country. Quite a
large number of borrowers are Christian who are given loans in mosques.
Akhuwat also works in a church in collaboration with Christian religious leaders’.
Akhuwat started lending with the group methodology in 2001 and introduced
individual loans in 2003. The current plan is to phase out group loans and
concentrate on individual lending. As of June 2006, Akhuwat has not formed any
new groups and is waiting for the end of the loan cycles of those formed earlier.
The reason for phasing out group loans is that the group leaders were found to
manipulate their position and extort money from the borrowers for group
membership.
Akhuwat’s Group lending programme only focused on women who were
organized in Self Help Groups (SHGs) of 10 members each and thus relied on
social collateral. In each group a president and a manager were elected through
consensus and the group collectively had to save Rs.3,000 before it could become
eligible for receiving loans.
While the loan has no interest on it, there is a belief that some of the cost of the
credit has to be transferred to the clients or they would not value the loan and it
will be like a free meal. So, five percent of the loan is charged as a membership
fee and this makes the process professional and is not seen as charity since people
demand better services when they pay the fee.
Akhuwat has a large portfolio of individual lending with a total of 14,711
beneficiaries and it has devised a rigorous appraisal method to ensure maximum
recovery. In 2005, individual loan disbursements grew by almost 390 percent and
in 2006 they grew by 135 percent. A prominent feature of individual loans is that
they are marketed through mosques and the disbursement of the loans also takes
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place in mosques. Each branch is associated with a particular mosque and is
located within or just outside the mosque’s premises.
When loans are renewed, the main aspects looked at are how the loan was used
and whether it has benefited the borrower. The loan is renewed only if he was
regular in returning the instalments, if he used the loan correctly and if it
benefited him and his household in the final analysis. On average, about 40
percent of clients are given loans again based on their need and how they used the
loan and whether it benefited them or not. Like mainstream MFI’s Akhuwat does
not work on minimizing dropout clients as it wants to reach out to a large number
of people.
Akhuwat also has liberation loans, of which there have been more than 700.
These people were paying interest at 100 to 200 percent, which translates to Rs
2000 to 3000 per month. By availing a liberation loan, they have been able to get
rid of this exploitation. They are also said to feel empowered and socially
integrated. There are also loans for health, education and a daughter's marriage,
which are supposed to have had a phenomenal impact.
The organization’s performance on profitability and sustainability has been
steadily improving. However, as Akhuwat does not charge any interest on its
loans, and only charges a membership fee of 5 percent, it is unable to cover its
costs which stand at 7 percent. Nonetheless, as Akhuwat increases its outreach it
will be able to lower the cost and in time will be able to cover its operating
expenses.
Since Akhuwat has been in operation just a few years, almost all of its clients are
still only in their first or second loan cycles. Clearly, any ‘impact’ of the
intervention by microfinance institutions, is highly tenuous, and at best, slight and
partial. We would expect little to have changed in a matter of two years, and so
find not much significant difference between Active Borrowers, Pipeline
Borrowers and Non-Borrowers. Most of Akhuwat’s clients, are involved in
‘business/retail shops’ or are ‘personal community service providers’. The results
suggest that the Per Capita Income of Active Borrowers is greater than it is of
other categories. However, on the basis of the Official Poverty Line, only 15
percent of Akhuwat’s clients fall below this threshold, implying that like almost
all MFIs in our sample, Akhuwat is concentrating on that category of client who
is above the Poverty Line. The Health and Education characteristics of all three
categories, as in the case of most other MFIs in urban areas, are not very different
from each other.
The perceptions of clients over the loan cycle about how well they eat, seem to
suggest that the longer they stay with the programme, the greater the impact in
terms of improvement in quality of life and diet, on their lives. This result is
similar to that of other MFIs. On most welfare questions, the longer they have
been with the programme, the better they think they are doing.
Sindh Agricultural and Forestry Workers Coordinating Organization
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Concerned about the poverty stricken lives and social marginalization of their
community, a group of five activists came together in 1986 to bring about social
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and economic change in their surroundings. This group was then known as Samaj
Sudhar Adabi Idara and undertook small scale social work like arranging for
medical and health camps and distributing books amongst poor students.
Long and intensive reflections led to the establishment of the Sindh Agricultural
and Forestry Workers Coordinating Organization (SAFWCO) in 1990. Registered
under the Societies Registration Act XXI of 1860, SAFWCO kept rural
development as its key priority. As a result, it started addressing cross-cutting
issues including conditions of peasants and rural women, education, the role of
feudal lords, the political situation in the area, unemployment, water logging and
salinity, low wages and housing.
Starting from Rs. 5,000 for goat-rearing and home-based poultry, SAFWCO
initiated its microcredit programme in 1993-94. The expansion of the portfolio
and credit line has been gradual and firmly grounded in the contextual needs of
the communities SAFWCO is catering to. SAFWCO’s concept of microcredit is
the extension of small loans to entrepreneurs too poor to qualify for traditional
bank loans. It also ensured a more integrated approach towards meeting
organizational mission and targets.
SAFWCO articulates its principles and policies for microcredit as: affordable
services for low-income groups; greater outreach to the general public; minimal
risks for new entrepreneurs; loan pay back systems are nurturing towards small
businesses; increased and easily accessible opportunities for the economically
disenfranchised groups to support them in gaining economic power.
SAFWCO provides both group and individual loans. Loans are made to
established groups of both men and women, comprised of three to six individuals,
that have been operating for over a year. For credit and saving activities, villages
are identified on the basis of their socio-economic situation. For the savings
programme, monthly meetings are conducted to collect savings, with a minimum
voluntary contribution of Rs.20. The programme is operated through COs, which
collect deposits, and manage the savings records and passbooks. Communities are
also encouraged to utilise their savings through their village development
organisation as internal lending.
The socio-economic status, soundness of business proposal and social collateral
are the most important criteria for selecting individuals and groups for loans.
Loan delinquencies of over one month can result in the disqualification of an
entire village for further loans. This ban is lifted only when all arrears are cleared
either by the individual or the group of guarantors. According to the management,
the loan recovery rate averages 95 percent for men and 99 percent for women. An
operational reason for encouraging women clients is also because they not only
ensure that instalments are paid on time, but also take responsibility for
appropriate and effective utilization of the credit. Consequently, SAFWCO has
brought flexibility in its lending strategy where credit is given to female units
which can involve other family members in its use.
The average retention rate is 60 percent with variations across districts and
communities. Of the 40 percent that drop-out, SAFWCO’s management reports,
that these do not qualify as drop-outs because they return after a gap of 12-18
months.
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We find that more than 85 percent of SAFWCO clients belong to the first three
loan cycles, which will have a bearing on our attempt to capture the extent of
‘impact’. A large proportion of Borrowers, whether they are older (Active)
Borrowers or new (Pipeline) Borrowers, have as their professions/business the
classification ‘Livestock Management’, while most Non-Borrowers are ‘Personal
Community Service Providers’. This finding related to Livestock Management
may suggest that in the case of SAFWCO clients, many want to enter the
Livestock business but are resource/credit constrained. Once they have access to
credit, a large proportion of them are likely to opt for Livestock Management.
One important and interesting finding, is the substantial number of households
who are part of the SAFWCO microfinance programme, who are below the
Official Poverty Line.
The perceptions of clients and non-clients show a number of features. The longer
Borrowers stay with the programme, the larger proportion feel that they are
better-off and that the Quality of their Lives has improved; most say they eat
better and they feel that this improvement in their Quality of Life can be
sustained. Most Non-Borrowers are aware of SAFWCO’s microfinance
programme, and most Non-Borrowers also feel that there is an overall
improvement of the Quality of Life on account of taking the loan – New
(Pipeline) Borrowers in particular, have a very positive perception about the
consequences of the programme, and so do those Non-Borrowers who are located
in the same area where the programme functions.
The results from the estimation show that one area where SAFWCO is having a
clear impact is women’s empowerment. Old borrowers perform significantly
better on all indices compared to other respondents. On the overall index old
borrowers score 10 points higher than other respondents. Old borrowers also
perform better than pipeline clients in the single difference estimates on 3 indices
of empowerment. Furthermore, young borrowers also do significantly better on
the income empowerment index in both single and double difference estimates.
National Rural Support Programme and the Urban Poverty Alleviation Project
National Rural Support Programme
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The National Rural Support Programme (NRSP), is Pakistan’s largest multisectoral rural development programme, established in 1991 by the Government of
Pakistan. At present, it is operational in 35 districts, has 110 field offices and 13
Regional offices that reach out to 620,330 people directly, and many more
indirectly. Programme districts are selected according to district poverty ranking
from data available from national level surveys conducted by government and
international organizations, and distributed among other Rural Support
Programmes (RSPs) like the Sarhad and Punjab Rural Support Programmes
(SRSP and PRSP). The poor in the area are targeted according to the local
community assumptions with poor households identified by the communities
themselves in respective localities. NRSP’s main programmes focus on social
mobilization, infrastructure development and microfinance and enterprise
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development. NRSP's mandate is to help alleviate poverty by harnessing people's
potential and undertaking development activities in Pakistan
The main objective of NRSP is to create a
countrywide
network
of
grassroots
level
organizations to enable rural communities to plan, implement and manage
developmental activities and programmes for the purpose of ensuring productive
employment, alleviation of poverty and improvement in the quality of life. The
guiding tenets of NRSP’s philosophy are to organize rural communities develop
their capital base at the local level through savings and credit schemes, support
human development endeavours and link the communities with the government
service delivery departments, donors, NGOs and the private sector.
NRSP manages one of Pakistan's biggest microcredit portfolios, with 109,614
active loans as of July 2005. As part of its holistic approach, NRSP provides
various financial services to the members of COs in rural areas to help them
implement their Micro Investment Plans (MIPs). These services include: Micro
Credit - individuals through groups and Village Banking; Micro Insurance hospitalization and accidental death; Savings - COs keep their savings in
commercial banks or they invest these in Community Physical Infrastructure.
Microcredit is a major component of NRSP focusing on improving livelihoods. It
is reported to be the largest credit programme in the country after the Agriculture
Development Bank, having so far disbursed Rs. 7 billion in loans since 1995.
Loans are provided to both men and women for entrepreneurial business projects
or for other income generating activities, such as small businesses or investment
in livestock.
The credit process begins with an initial instalment of Rs.10,000, followed by
further instalments of Rs. 5,000. The interest rate is 10-11 percent over the 12
months credit cycle. However, after the inclusion of the processing fees, the rate
rises to 21 percent. The recovery rate is claimed to be almost 100 percent.
Each Community Organization is encouraged to collect some amount from its
members and put these savings in a Bank account. During the year 2004-05, the
CO members saved a total of Rs. 71.91 million. Of this amount, men’s COs saved
Rs. 63.81 million and women’s COs saved Rs. 8.10 million. However, there is no
hard and fast rule regarding the savings mechanism. A few COs also have a
‘committee’ system, whereby, savings are rotated among the members similar to a
committee system.
NRSP provides credit to the members of the COs and the credit groups through a
solidarity group approach. Although, NRSP does not have a preconceived
package, credit is given for any income generating purpose. Other than this
purpose credit is not targeted for any other use. According to NRSP, this
encourages the COs to utilize natural resources and human capital.
Unlike many other microcredit programmes, the NRSP credit programme gives
loans to both men and women. The programme feels that the ratio of men and
women clients actually reflects community demands and behaviour. According to
the programme figures for 2004-05, Rs. 1,552,335,800 was disbursed, of which
83 percent was loaned out to men and 17 percent to women. Furthermore, as the
programme purpose is to focus on improving the household livelihood conditions,
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the gender of the borrower is not a major determinant. Most of the loans taken by
women are actually utilized for the male family member’s income generation
activities.
The majority of the NRSP loans are used for agriculture and livestock purposes,
with 60 percent of the loans for agriculture purposes, 19 percent for livestock and
21 percent for entrepreneur development. More than 50 percent of the NRSP
programme area comprises arid zones and rain fed areas of the country taking in
view the main mandate of the organization to eradicate poverty.
The habit of saving is a prerequisite for CO membership, as is regular attendance
in the fortnightly meetings. Once the members’ savings (which are deposited in a
bank account in the name of the CO) reach a substantial amount the process of
internal lending begins with the unanimous will of the CO. The CO then forms a
credit committee, which appraises the loan requests. The CO extends credit to its
members from its saving pool on its own terms and conditions. NRSP trains the
COs in accounting and financial management.
From our sample, we observe that about one-fifth of NRSP clients are in the
fourth and greater loan cycle. A large majority of NRSP Active Borrowers are
involved in Agriculture in Crop Production, as well as in Livestock Management.
Active Borrowers have higher average Income Per Capita and Expenditure Per
Capita than other categories. Both the Expenditure Per Capita and Income Per
Capita for Active Borrowers is higher than it is for Pipeline and Non-Borrowers
and this difference is statistically significant. Similarly, the Value of Household
Assets and the Household Asset Score are both greater for Active Borrowers and
here again, this difference is statistically significant. Both these sets of data may
suggest that NRSP Active Borrowers are ‘better-off’ than the new clients and
non-clients.
In most urban MFIs, we observe in the case of Women’s Economic
Empowerment, that Active Borrowers were far ‘better-off’ than new clients and
Non-Borrowers. In the case of NRSP, we do not get this result perhaps due to
greater rigidity in the social structure in rural Punjab where women are less
physically and socially mobile.
Our results show that NRSP is having a positive and significant effect on income
and total expenditure. Young borrowers have 26 percent higher income than other
respondents -- overall their household income is 32 percent higher and the per
capita income is 24 percent higher, however these variables are not significant in
the single difference estimation. We can see a positive impact on old borrowers
on all measures of income in both single and double difference estimations. In the
DID estimations, active borrowers have 90 percent higher income, household
income is 48 percent higher and per capita income is 40 percent higher.
The results on the income variables do show a positive impact on NRSP clients,
however this impact has not translated into higher spending on education and
saving. Higher spending on these latter variables is important to develop human
capital and reduce vulnerability.
xii
Urban Poverty Alleviation Project
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UPAP began its operations in June 1996 in the urban and peri-urban areas of
Rawalpindi and Islamabad. Having successfully established UPAP as a
microcredit delivery model, NRSP decided to initiate UPAP operations in some of
Pakistan’s major cities. The first expansions were in Faisalabad and Karachi in
2002. The programme has since expanded to Multan and Lahore.
UPAP establishes low cost settlement offices and disburses credit to women using
the ‘solidarity group’ method. Three or more women can form a group. The credit
facility can be used for family enterprises. Men can also use the facility but they
must be family members whose income comes into the hands of the borrowers.
This strategy has saved UPAP from major incidents of fraud or default. Alongside
the solidarity group approach, UPAP also adopted the individual approach on the
pattern of the Orangi Charitable Trust, to cater to the needs of small-scale
entrepreneurs and manufacturers who do not live in areas where there is a UPAP
settlement office.
As many as 83 percent of those sampled were in their first three loan cycles, and
most of these had little or no education. The largest share of Active Borrowers,
Pipeline Borrowers and Non-Borrowers, all seem to undertake similar sorts of
business activity, such as having a Retail Shop or then they are Personal
Community Service Providers. Unlike many of the other MFIs studied where we
find some sort of shift in business activity on account of the loan, in the case of
UPAP, we get the sense that most businesses continue after the loan and are
consolidated, rather than switched.
The percentage of Borrowers below the Official Poverty Line, in line with most of
the other MFIs in the sample, is only 19 percent. The one category in which
UPAP Active Borrowers have significantly better results, is that of Women’s
Empowerment. In terms of Economic Empowerment and Income Empowerment,
the difference is significant.
Out results show that UPAP has had some positive impact on educational
expenditure and assets for old borrowers. The results for empowerment are the
most significant in the double difference estimation but as the member dummy is
also positive and significant in some of those regressions we can conclude that
both active borrowers and pipeline clients are more empowered than their
neighbours.
Kashf
•
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Kashf Foundation, a non-profit microfinance institution started in Lahore in 1996.
It was founded after being inspired by the success of the Grameen Bank. Kashf
started with the mission to ‘provide quality and cost effective microfinance
services to low income households especially women in order to enhance their
economic role and decision making capacity’.
In September 2006, Kashf celebrated its 10 year anniversary with
accomplishments such as being one of the first sustainable MFIs in Pakistan,
providing loans to over 250,000 poor households with plans to reach 850,000
xiii
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•
clients by 2010. Over the years Kashf has received many awards for its
performance.
Kashf started with micro loans for women; however, with the changing needs of
the market it has also started offering larger individual loans for micro
entrepreneurs. In the past year Kashf has rapidly expanded its branch network and
from 35 branches at the end of 2005, it has increased it to 70 branches at the end
of 2006, and they are planning to open 50 more branches in 2007.
Kashf started its microfinance programme in Lahore, however, now it has
expanded to Kasur, Gujranwala, Faislabad, Karachi, Khushab and their
surrounding areas. Most of these branches are for the General Loan category,
though six have a specialized section for the Individual Loan category.
Kashf’s group lending programme is a Grameen Replication, adopting the classic
Grameen Bank model with some adaptations. Kashf provides one basic loan,
called the General Loan (GL), for 12 months at a flat interest rate of 20 percent
per annum. All members are women and each borrower belongs to a group of five
borrowers, and together five of these groups form one centre. Members repay
their loans in bi-weekly centre meetings attended by Kashf loan officers. There is
no collateral, therefore, the centre takes collective responsibility for loan
repayment.
Kashf lends to married, divorced or widowed female clients. Divorced and
widowed clients are encouraged in the Group lending approach so that they can
earn for themselves by starting a business or by increasing their current business
portfolio.
From the pool of potential clients, individuals who fall within the Kashf poverty
criteria of household income between Rs.4-10,000, have a low asset base and high
dependency ratio, are encouraged to organize themselves into groups and centres.
The purpose of the General Loan (GL) is to invest in income generating activities
and can be used for an existing business or a new one. The loan size begins with
Rs.10,000 and has a ceiling of Rs.25,000, the loan is repayable over 24
instalments in the course of 1 year at a service charge of 20 percent. Successive
loan cycles entitle clients to an accretion in loan amounts of up to Rs.4,000
depending on their absorptive capacity.
The GL comprises about 87 percent of the product wise share. According to
Kashf this loan is utilized both by women who aspire to establish a small business
for themselves or others who pass it on to their husbands/sons to diversify
household income sources.
The Emergency Loan (EL) is a service that is available to existing Kashf clients,
who are already availing a general loan. The Business Sarmaya loan is intended
for the ‘missing middle’ of the market, i.e., both men and women with running
businesses who demonstrate a financial need for working capital and/or fixed
assets. Small entrepreneurs are provided with access to capital in addition to
advisory support for their respective ongoing businesses that can include trade,
production and services.
Savings is a completely voluntary product. It is a service that the customers can
decide not to avail at all. Despite the fact that it is a voluntary act and there is no
interest paid by Kashf on the amount saved, the amount of savings held by
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clients’ amounts to Rs.5.6 million with an average deposit size of Rs.53. The
average deposit size has been falling, even though savings would be expected to
cater for emergencies and investment for lifetime events.
It is obligatory upon all Kashf clients to take insurance. Insurance charges are 1.5
percent of the loan amount (General Loan) and are taken up-front when the loan is
disbursed. This insurance facility applies in case of accidental or natural death of
the client. Its benefit includes the writing-off of the outstanding loan amount and
the family receives Rs.7,500 to cover for funeral expenses.
Kashf has brought down its drop out rate considerably. For 2006 it was around 9
percent.
Since Kashf is one of the oldest MFIs in Pakistan, it is one of those which has
clients in its third cycle and beyond. About a third of Kashf’s sample is in its
fourth (or longer) loan cycle, which makes Kashf one of the best MFIs to
undertake an impact assessment analysis.
The average Income Per Capita and the Expenditure Per Capita for Active
Borrowers is much higher for Active Borrowers than for all other borrowers. The
value of Household Assets of Active Borrowers are also much higher than all
others. However, as in the case of the targeting of the ‘Official Poor’, i.e., those
below the Official Poverty Line, very few of Kashf’s clients fall below that Line.
Results showing the perceptions of Borrowers on the impact the programme is
having on them, reveals, as it does in most other MFI cases, that as the number of
loan cycles increase, in general, so does the positive perception about impact.
This is not a surprising result, as one would expect that someone will stay on with
a programme only if their real or perceived quality of life has improved. If they
felt that their lives were not improving, they should have left the programme.
Most important, however, is the hugely significant improvement in Per Capita
Income, Per Capita Expenditure, Value of Household Assets, etc, which accrues
to Kashf clients compared to those who are new to the programme or do not
belong to it
Perhaps the most surprising and unexpected results on impact, which relate to not
Kashf alone but to almost all MFIs, relates to the decrease in women’s
empowerment in most cases. Although, there is a significant (positive) difference
at the Women’s Economic Empowerment level between Active Borrowers and
the other three categories, in the case of other types of Empowerment, such as
Income, Assets, Health and Education, we find that those women who have not
joined the programme are ‘better-off’. What this may suggest, is that while
women begin to take decisions related to Economic issues far more
independently, perhaps they compromise the additional income earned by
allowing their spouses/sons to control this income
The regression results show that Kashf borrowers, both young and old are doing
well with regard to income and expenditure as compared to other respondents and
this has also had a positive impact on assets and schooling of girls. On the other
hand Kashf borrowers do not score well on the empowerment indices, but in
general all individuals who self-select themselves into borrowing have high score
on the indices.
xv
Conclusions
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We have looked at six microfinance institutions which are fairly (and in some
cases, radically) different from each other. Hence, the repeated warning about the
need to examine each MFI separately based on what it does, rather than to
compare the results and make statements that such-and-such MFI has the greatest
impact on its clients. Each microfinance institution has some sort of impact which
others may not have.
All previous studies which have examined ‘impact’ of poverty alleviation
interventions – microfinance being one such important intervention – warn about
problems with data and methodology. This is why there have been so few impact
assessments of microfinance interventions, and the ones that have been
conducted, have all been criticised for some short-coming or the other. Perhaps
the main reason why impact assessment studies have been difficult, is that it takes
many years before impact can be observed and quantified, if at all, convincingly.
Clearly, on all counts, one has to be fairly cautious about reading impact
assessment studies, whether they show a positive effect, a negative effect, or no
effect, despite many years’ of intervention. It may still have to take some years
when the methodology improves to be able to actually capture impact.
Although in some areas and sectors and with regard to some microfinance
institutions, one finds signs of positive ‘impact’, the single most important finding
from this Study is that the social and economic impact on the lives of those who
take credit, for the most part, is limited.
We do not say that the impact of microfinance interventions is negative; what we
do say is that the impact from microfinance is ‘not positive enough’, and that we
are not in a position to state categorically, that microfinance has a positive impact.
We do find improvement in the lives of many borrowers, but this improvement is
not significant enough. This result may also mean that, perhaps, we need some
additional interventions, along with microfinance, to make a significant impact on
poverty.
The greatest impact that we do find in most indicators, is amongst microfinance
institutions which have been providing credit for many years. This result, while
perhaps not unexpected, leads to questions about differences in management style
and structure being significant factors in suggesting impact, rather than just the
extended time spent with clients.
The second observation from our survey relates to the greater impact observed on
account of loan size. A larger loan size – or at least a loan size above a minimum
– has a greater impact than does a small loan amount.
Our results suggest that a longer relationship with microfinance and/or higher
amounts of credit, will have a greater impact, clearly not a very surprising or
unintuitive result.
With the exception of only one MFI, all the MFIs state that they are in the
business of poverty alleviation. In their Mission and Vision statements, they all
state that their microfinance (and in the case of one MFI, its development-related
interventions) are all for the poor and that their clientele is also from the ‘poor’.
However, if an objective criterion for poverty is used, such as the Government of
xvi
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Pakistan, Official Poverty Line – Rs 1,000 per capita – then, very few clients can
officially be called ‘poor’. Our results show that only 23 percent of urban
Borrowers – 65 percent of our sample – are below the Official Poverty Line
(OPL). On the other hand, 50 percent of the Non-Agricultural Rural Borrowers
and 61 percent of the Agricultural Borrowers, are below the Official Poverty Line.
Clearly, by the criterion of the Official Poverty Line, the clients selected by
urban-based MFIs belong to the ‘non-poor’.
The one overall surprising result from the survey has been the finding that the
microfinance interventions do not seem to have a significant positive impact on
the different aspects of Women’s Empowerment. We had expected far more
positive results in this regard, but with very few exceptions, the results show that
not only has there been little improvement, in some noticeable cases, Women’s
Empowerment has deteriorated after joining a programme. While we realise that it
is very difficult to capture and quantify indicators like ‘Empowerment’, this
result, no matter how tentative, is cause for concern and needs to be addressed by
MFIs. Changes in Empowerment take much time and social conditions inhibit
improvement more so than in the case of income enhancement.
Recommendations: If staying power matters as the longer the microfinance
institution stays with its clients and the greater the likelihood of impact being
observed and measured, an institution should stay the course with its clients and
develop their clientele over a longer period of time. Linked with the time factor, is
that of loan size. Perhaps MFIs should raise the loan size for their clients sooner
and more substantially so that the loan amount makes a difference. Since all MFIs
state that they are intervening in the market to ‘alleviate poverty’, they need to
clearly state what those poverty criteria are, whether they are following the
Official Poverty Line criteria, or whether they are developing their own criteria.
Whatever they do, they should state where their poor lie in terms of the poverty
line, who they are, and what determines the definition of the ‘poor’ for them.
They need to assess their own performance with these sets of criteria.
We did not find much impact on education or health, even though there is some
impact on income for older MFIs. This probably suggests that specific measures
for these social services need to be taken. The simple view that microfinance will
sort out everything is too simplistic; if these services are not available or of decent
enough quality, microfinance will not help very much. Maybe the MFI's could
link-up with government or other NGO programmes on these social issues and
improve these services in their own areas and for their clients. Since on the
Empowerment factor most results have been unimpressive, there is a need for
each MFI which claims that it also has Empowerment as an objective, to evaluate
its methodology of intervening on this count.
xvii
Acknowledgements
We would like to thank the staff and management of all the six microfinance institutions
who voluntarily participated in this extensive Study. Without their unconditional support,
we could not have carried out this Study. They allowed us complete access to their
clients, staff, offices and documents as and when requested. The fact that the MFIs
allowed us such access and support, is an indicator that the microfinance sector in
Pakistan has come of age and gained a great deal in self-confidence, and is willing to
learn from undertaking such an extensive external assessment. We thank the staff,
management and the clients of Akhuwat, Asasah, Kashf, the National Rural Support
Programme (and their Urban Poverty Alleviation Project), Orangi Charitable Trust and
the Sindh Agricultural and Forestry Workers Coordinating Organization. All the
organisations are also thanked for providing comments on an earlier draft.
We also gratefully acknowledge the extended help by Dr Ghazala Mansuri of the
Development Research Group of the World Bank, Washington, DC, at each stage of the
Study. She helped all of us envision the design of the Study and was a constant source of
advice and help in the evaluation phase of the Study.
Mr Awais Butt, formerly of the European Union-Pakistan Financial Sector Services
Reform Programme, was the main instigator for this Study and has played an active role
from the inception to its final phase. We thank him greatly for his advice, suggestions and
guidance.
Finally, the Draft Report of this Study underwent a detailed and intensive round of Peer
Reviewing by experts in the field. We greatly acknowledge the extensive comments
made by Dr Sajjad Akhtar, Director, Centre for Research on Poverty Reduction and
Income Distribution (CRPRID) Islamabad, Syed Mohsin Ahmed, General Manager,
Pakistan Microfinance Network, Islamabad, and Syed Hashim, CGAP, Washington. We
feel that their comments have helped a great deal in improving the quality of this Final
Report.
xviii
Contents
Executive Summary
Acknowledgements
Chapter One:
Introduction and Background
1.1
Introduction
1.2
The Magic Bullet of Microfinance
1.3
The Terms of Reference and Aims of the Study
Chapter Two: Methodology and Sample Selection
2.1
Impact Assessment Methodologies
2.2
Methodology for the Study
2.3
Process of Selection of MFIs for Study
2.4
Study Sample
2.5
Estimations
2.6
Format and Structure of the Report
Chapter Three:
Asasah
3.1
Institutional Review
3.1.1 Background and History
3.1.2 Organizational Structure
3.1.3 Lending Methodology
3.1.4 Loan Products
3.1.5 Operations
3.1.6 Financial Management
3.2
Survey Results
3.3
Regression Analysis
3.4
Focus Group Discussions
Appendix
Chapter 3
Chapter Four: Orangi Charitable Trust (OCT)
4.1
Institutional Review
4.1.1 Background and History
4.1.2 Philosophy and Scope of Services
4.1.3 Organizational Structure
4.1.4 Programmatic Portfolio
4.1.5 Lending Methodology and Selection Criteria
4.1.6 Portfolio Performance and Loan Recovery Ratios
4.1.7 Institutional Development and Future Expansion
4.2
Survey Results
4.3 Regression Analysis
4.4 Focus Group Discussions
Appendix
Chapter 4
xix
Chapter Five: Akhuwat
5.1
Institutional Review
5.1.1 Background and History
5.1.2 Organizational Structure
5.1.3 Lending Methodology
5.1.4 Loan Products
5.1.5 Operations
5.1.6 Financial Management
5.2
Survey Results
5.3
Regression Analysis
5.4
Focus Group Discussions
Appendix
Chapter 5
Chapter Six:
Sindh Agricultural and Forestry Workers Coordinating
Organization (SAFWCO)
6.1
Institutional Review
6.1.1 Background and History
6.1.2 Scope of Services
6.1.3 Organizational Structure
6.1.4 Programmatic Portfolio
6.1.5 Lending Methodology and Selection Criteria
6.1.6 Portfolio Performance and Loan Recovery Ratios
6.1.7. Client Loyalty and Drop Outs
6.1.8 Institutional Development and Future Expansion
6.2
Survey Results
6.3
Regression Analysis
6.4
Focus Group Discussions
Appendix
Chapter 6
Chapter Seven:
National Rural Support Programme (NRSP)
7.1
Institutional Review
7.1.1 Background and History
7.1.2 Mission, Vision and Purpose
7.1.3 Objective
7.1.4 Approach
7.1.5 Social Mobilization: NRSP’s Vision for Rural Development
7.1.6 Microfinance Enterprise Development Programme
7.1.7 Application of the new Model
7.1.8 Appraisal Process
7.1.9 Principles of Recovery Monitoring and Dropouts
7.1.10 Characteristics of credit staff
7.1.11 Village Branches
7.1.12 Internal Controls
7.2
Urban Poverty Alleviation Project (UPAP)
7.3
NRSP Survey Results
7.4
NRSP Regression Analysis
xx
7.5
7.6
7.7
UPAP Survey Results
UPAP Regression Analysis
Focus Group Discussions
7.7.1 NRSP
7.7.2 UPAP
Appendix
Chapter 7
Chapter Eight:
Kashf
8.1
Institutional Review
8.1.1 Background and History
8.1.2 Organizational Structure
8.1.3 Lending Methodology
8.1.4 Products
8.1.5 Operations
8.1.6 Financial Management
8.2
Survey Results
8.3
Regression Analysis
8.4
Focus Group Discussions
Appendix
Chapter 8
Chapter Nine: Conclusions
Bibliography
Appendix
Questionnaire
xxi
Chapter One: Introduction and Background
1.1
Introduction
The Government of Pakistan’s microfinance strategy has been formulated to address
three main goals, viz.: to deal with and reduce the large development deficit that exists in
the country, and in particular to reduce the high prevalence of poverty, estimated at about
one-third Pakistan’s population; to promote the empowerment of women by encouraging
them to undertake income generating projects in order to become self-sufficient and
financially more independent; and, to support and encourage the small and medium
enterprise sector. The government’s Poverty Reduction Strategy Paper (PRSP) articulated
in 2003, and its Medium Term Development Framework 2005-10 (MTDF), both address
the key problem of poverty in the country and consider microfinance as a critical tool to
make progress in all three areas mentioned above – for excellent background studies on
the microfinance sector in Pakistan in recent years, see in particular, Hussein and
Hussain, (2003); and Oxford Policy Management, (2006) .
In the 1980s, the non-governmental Aga Khan Rural Support Programme (AKRSP) was
set-up in the northern region to build community-based organizations and infrastructure,
and assist in resource mobilization through credit and savings. The success of the AKRSP
led to the creation of Pakistan’s other (national and provincial) Rural Support
Programmes, which constituted the main mechanism and approach to microfinance
during the 1980s and part of the 1990s. Those RSPs made a major contribution to the
microfinance sector by accessing lines of credit from commercial banks to provide
microcredit to low-income people living in rural areas; both savings from the community
and loans to them consisted of the strategy of these RSPs. However, the success of the
RSP model led to some concern that the microfinance sector in Pakistan had been
constrained by the design of the developmental organisations which were providing
microfinance services as an ‘add-on’, rather than as a specialised service. Alternatively,
the Orangi Pilot Project/Orangi Charitable Trust (OPP/OCT) developed an individual
lending methodology adapted to urban low-income areas, by targeting entrepreneurs in
the Karachi region. In the 1990s, learning from international best practices, NGOs
specialized in microfinance started their operations, such as Kashf Foundation. The
outreach of microfinance institutions and other rural organizations providing financial
services has, until recently, been limited due to a narrow institutional base, slow progress
on sustainability and efficiency benchmarks.
Since 2000, the microfinance landscape in Pakistan has changed considerably. This
change can be credited primarily to the government’s growing interest in the
microfinance sector. The Micro Finance Institutions (MFIs) Ordinance 2001 was
promulgated by the Government of Pakistan to support the development of the
microfinance sector by introducing the concept of microfinance banks. Under this
ordinance, microfinance banks created with the necessary amount of capital, can offer
microfinance services, including savings deposits, to the general public. In addition, the
State Bank of Pakistan (SBP) introduced additional prudential regulations related to
microfinance operations. This ordinance and the relevant prudential regulations of the
SBP, regulate the First MicroFinanceBank (which evolved through the AKRSP) and the
Khushhali Bank, as well as a number of newly emergent private sector specialised
microfinance banks, a recent and important initiative in the sector. In the banking sector,
a public commercial bank specialises in serving women, where the First Womens Bank is
active in microfinance, while the Bank of Khyber in the North West Frontier Province
(NWFP) had developed new products and partnerships with NGO and RSPs in order to
serve lower income groups. While there have been many notable successes in the
microfinance sector in Pakistan over the decade, there has also been some attrition in the
sector, where some institutions have given up on their practice of delving in the
microfinance sector.
When financial sector reforms were initiated in 1999, the government realised that it
would have to take a fresh look at Pakistan’s financial sector examining new ways of
reaching clients, especially the poor and those involved in the dynamic Small and
Medium Enterprises (SMEs) sector. With the growing privatisation and liberalisation of
the financial sector, and with the recognition that the private sector too, needs to play a
role in the poverty reduction strategy, reforms, particularly those pertaining to credit
liberalisation, were initiated with the help of private sector banks and non-bank
institutions. A Microfinance Sector Development Programme (MSDP) was initiated in
which the public and the private sector were expected to play important roles
independently, as well as in the form of public-private partnerships.
A major outcome of this initiative was the setting up of the specialised microfinance
Khushhali Bank in 2000 by the government, under a public-private partnership
programme which took the lead in retailing microfinance services across Pakistan. In
addition, the government also encouraged the private sector to set up microfinance banks,
with the result that six microfinance banks became operational during 2001-07. More
recent applications for setting up microfinance banks have also been received by the
government and are under process for licensing. Within four or five years, the outreach of
the microfinance banks has reached half a million households, although still only onetwelfth of the estimated six million households who could access microfinance
institutions. Government trends and expectations suggest that by 2010, the outreach will
increase to about half of the target households.
The Government of Pakistan estimates that small and medium enterprises constitute 30
percent to the manufacturing sector, as much as 99 percent of the nearly 2.3 million
enterprises in the country, contribute 7 percent to GDP, and generate 25 percent of
manufactured exports. It believes that the SME sector has until recently, been neglected
with low investments in infrastructure, skills and investment, and feels that insufficient
credit to the sector, has been a cause for this. With sixty percent of the labour force selfemployed, the government has felt that there is a need to provide credit to SMEs in the
guise of microfinance. The Pakistan Poverty Alleviation Fund (PPAF), the National
Rural Support Programme (NRSP), the Provincial Rural Support Programmes (PRSPs),
as well as the First MicroFinance Bank, have provided microfinance for micro-level
entreprises and for the self-employed.
2
The Pakistan Poverty Alleviation Fund (PPAF) was established in 1997 as a not-forprofit private company sponsored by the Government of Pakistan and funded by the
World Bank, inspired by the success in Bangladesh of PKSF, which has a more narrow
focus on microfinance. The PPAF was established to help the poor by enabling them to
gain access to resources for their productive self-employment, to encourage them to
undertake activities of income generation and poverty alleviation, and for enhancing their
quality of life. As an Apex fund, PPAF disburses soft loans to a myriad of microfinance
organisations in Pakistan. It also provides grants on a cost-sharing basis for development
of small scale community infrastructure, and strengthens development and microfinance
institutions by supporting their capacity building activities. The resource base of PPAF
consists of an endowment from the Government of Pakistan of Rs. 500 million, and a
World Bank credit of US$ 90 million. Half of the World Bank funds must be used for
microcredit and enterprise development. Total income for 2003 was Rs. 230 million, an
increase of 59 percent over 2002. Government figures reveal that by the end of December
2004, PPAF had extended its outreach to 95 districts through 45 partner organisations, of
which ten were catering exclusively to women. It had disbursed 507,000 loans, of which
45 percent were to women. PPAF figures show, that it has provided Rs 5.587 billion for
microcredit and enterprise development and Rs 1.789 billion for infrastructure projects
benefiting more than 7.7 million individuals.
While the government has been a recent entrant into the field of microfinance, the private
and NGO sector has been providing credit to users for many years. NGOs, particularly
those that are based in urban or peri-urban areas, have been providing microcredit to
women and other small entrepreneurs. Estimates show that around 300,000 individuals,
many of them women, have benefited from non-governmental disbursement of
microfinance. A number of NGOs working in the microfinance sector in Pakistan have
gained national and international recognition for their work and have formed a forum
called the Pakistan Microfinance Network, where issues and ideas are discussed and
exchanged. Both private and nongovernmental groups, as well as the government itself,
have begun to realise the potential and efficacy of microfinance, and some private sector
concerns are also considering entering the microfinance sector purely for profit motives,
having understood that there is a very large demand for credit which needs to be met, and
where users are willing to pay a high price for the use of financial capital.
Although large numbers and trends over time have been shown in the paragraphs above,
it still needs to be stated that the sector in Pakistan is rather small. This means, that the
forms of institutions which provide microfinance in the formal sector are limited: (i) there
are formal, full service broad spectrum providers, MFIs which provide a number of
formal sector financial services, and microfinance is one such activity – the Bank of
Khyber is such an MFI; (ii) another category is full service microfinance specialists,
which take on savings and provide microcredit and may be involved in other
microfinance activities as well – such as the First Microfinance Bank, and Tameer Bank;
(iii) another category is restricted service microfinance broad spectrum, institutions
which provide some microfinance services along with other services – the NRSP,
Thardeep and other RSPs fall in this category; (iv) the fourth category is restricted service
microfinance specialists, which provide only some microfinance services, mainly credit,
3
and not other services such as savings – Kashf, is a good example, and; (v) apex
institutions – like PPAF – which lend on to NGOs which may provide microfinance
services specifically or along with other services (Oxford Policy Management, 2006).
1.2
The Magic Bullet of Microfinance
Since the beginnings of the (still embryonic) microfinance sector have their roots in rural
development projects funded by donors, this has had, and continues to have, an impact on
the nature of discussion around the microfinance sector, as well as around rural
development and poverty alleviation strategy in rural areas in Pakistan, more generally.
The Aga Khan Rural Support Programme’s development model has been replicated all
across Pakistan, and since microcredit became a major instrument in dealing with the
problems of the rural poor, it is assumed by all the actors in the microfinance sector, that
principally, microcredit should be used to reduce the near 30 percent poverty – much of it
rural -- in the country. This central belief, albeit largely unsupported by data and
evidence, informs most of the debate around microfinance in Pakistan. In fact, one can
argue as well, that research related to microfinance to support or dispel many of the main
assumptions about microfinance, is woefully lacking, and hence many presumptions
remain untested, as pointed out clearly by Hussein and Hussain (2003).
Along with poverty alleviation, microfinance in Pakistan has been seen as an important
instrument for gender empowerment. The Government of Pakistan and the various rural
support programmes feel that by providing credit to women which they use for income
generation and for consumption purposes, the social and economic status of women in the
household and in the community, can be improved. This is again one of the accepted
truths that has emerged as conventional wisdom about the microfinance sector in
Pakistan, although capturing and measuring ‘empowerment’ and emancipation is a
particularly difficult task.
It is important to state, that the term ‘microfinance’ has been used interchangeably with
‘microcredit’ in Pakistan, largely because other services and products in the sector have
been far less developed than credit. Savings and insurance, for example, are still in their
infancy as far as their provision by microfinance institutions is concerned, and even some
microfinance banks have been slow to evolve their savings instruments and potential.
Debate about microfinance in Pakistan, continues to be largely about microcredit.
While there are numerous assumptions about what microfinance can do – poverty
alleviation, women’s empowerment, eradication of unemployment, etc – there is not
sufficient research which supports all these claims. Some partial research, both in
Pakistan and abroad might suggest that microfinance works for some people under
certain conditions, the jury is still out about it really being the Magic Bullet – see the
summary and evaluation of studies conducted in Hussein and Hussain (2003). Hence the
need for continuing research, looking at the main assumptions of what microfinance can
do, becomes essential.
4
Indeed, Hermes and Lensink (2007) make the important point that, many advocates of
microcredit ‘argue that microcredit can help to substantially reduce poverty’ on the
assumption that ‘access to credit can contribute to a long-lasting increase in income by
means of a rise in investments in income generating activities …; it can contribute to an
accumulation of assets; it can reduce vulnerability due to illness …’ (p. 463), they also
make the crucial point that, ‘it is surprising that there are only a few solid empirical
studies available on the possible poverty reducing effects of microcredit’ (p. 464).
1.3
The Terms of Reference and Aims of the Study
The Terms of Reference for this Study were as follows:
Assessment of the social impact of microfinance programmes (group and
individual lending) of Microfinance Institutions/NGOs/Microfinance Banks on
borrowers, communities and on the institutions themselves, and whether these
MFIs are achieving their social missions.
Microfinance Institutions (MFIs) have predetermined social missions for their
microfinance programmes/interventions such as poverty alleviation, empowering
poor women, provision of financial services to people disqualified from the formal
financial market, development of micro-enterprises for poverty alleviation and
strengthening economic development of the poor. The social impact assessment of
these MFIs will cover the relevance of operations/programmes to their
goals/missions and use this information to improve the social and financial
performance of institutions. The contractor will select SIX (6) MFIs for this
intervention covering at least two (2) provinces and the selection criteria of MFIs
for this action will be as follows:
• At least 3 years continuous work experience in microfinance and a strong
business plan for next 3 years;
• MFI enjoys a portfolio of at least 2000 active borrowers;
• Has audited accounts for the last 3 years;
• Is willing to undergo the social impact assessment of its microfinance operations
and to use the information for performance improvement.
The group of six institutions must cover a range of sizes, ownership patterns,
source of funding, lending methodology, programme area, organizational structure,
borrowers, communities etc.
While the Terms of Reference state clearly, that the ‘the contract’s objective is to
measure the social impact of microfinance programmes (group and individual lending) of
Microfinance Institutions/NGOs/Microfinance Banks on borrowers, communities and
institutions themselves and to assess whether these institutions are successful in their
missions’, we felt that this was a good opportunity to go beyond these goals and make
extensive use of the space available to do research to address numerous issues which are
often overlooked.
Firstly, while looking at the Social Impact of Microfinance Programmes, we will also
looked at Economic Impacts of these programmes, apart from the Social Impact – see
5
below. While we examined the traditional forms of Social Impact – in terms of
empowerment, improvement and use of social sector facilities on account of
microfinance, better indicators of health and education, etc – we also examined the
income effects of microfinance, impacts on employment, impact on economic activity,
and these factors having an impact on the community (apart from what are considered
‘Social’ impacts). Much of our analysis is based on estimating the nature, and where
possible, extent, of the economic impact of microfinance interventions.
Secondly, we also looked at the need for and possibility of other microfinance services, in
particular Savings. Most studies show that the poor need Savings support and institutions
perhaps more than simply credit facilities, but for numerous reasons, MFIs are not able to
support such endeavours. In order to have a good microcredit programme, often Savings
facilities become equally important.
There are numerous assumptions which have been made about what microfinance can do
and has done. However, there is insufficient empirical evidence to support most of the
claims. This is the first Study of its kind in Pakistan which attempts to quantify and
demonstrate some of the outcomes from microfinance interventions. Moreover, it also
looks at how communities around MFIs and around borrowers, react to an MFI
intervention – this has not been done in the past. We also examine the institutional form
of the MFIs who agreed to be part of the programme, examining how they work in the
community and in the larger environment.
6
Chapter Two: Methodology and Sample Selection
2.1
Impact Assessment Methodologies
The literature on Impact Assessment (IA) Methodologies underscores the pitfalls of
undertaking studies in which an attempt is made to observe, leave alone quantify, the
‘impact’ of any intervention in order to address poverty (or any other goal). IA experts
caution researchers about making grand statements and reaching firm, final, conclusions
based on the quantification based on many measurables. In the case of softer indicators
which are more difficult to measure and quantify – such as ‘empowerment’ – they are
doubly cautious and suggest that one always needs to be tentative in suggesting that they
can ‘prove conclusively’, that such-and-such poverty alleviation or microfinance
institution, had a quantifiable impact on members or recipients of an intervention.
Moreover, experts also present a menu about methodologies and suggest that the choice
of methodology – whether it is a qualitative or quantitative study, and whether it is a
large or small one – depend on a number of critical factors which determine the choice of
methodology most appropriate to the organisation and to the nature of the intervention.
The first concern which most experts on Impact Assessment Methodologies with regard
to microfinance interventions have, relate to the size/scale of the study that the
researcher/s want to undertake (see amongst many: Ravallion, 2006; World Bank, 2005;
Barnes and Sebstad, 2000; Sebstad, 1998; Mosley, 1998; Hulme, 1997; and, Hulme and
Mosley, 1996). Size/scale, in most cases, is determined by cost and by the time available
to undertake the study. IA studies can be very costly and some very large and costly
studies, running into many hundreds of thousands of dollars (or reportedly, in one case,
more than one million US dollars – Montgomery, 2005); or, they can be smaller ones,
which cost less than $ 100,000. The classification of most types of studies, depending on
their size based on costs, is usually Large (Higher-Cost), Medium or Small (Lower
Cost).The type of the study – whether it is a large survey based study, or whether it is
based on Focus Group Discussions, or simply on Rapid Appraisal methodologies – also
varies, often along with objectives, programme contexts and the availability of finances
and skilled resources. Hence, despite the fact that there are numerous concerns and issues
which relate to the impact itself once the study is complete, it is important to know that
often the design of the study itself can be constrained by a number of conditions. This is a
major reason why Hermes and Lensink (2007) argue that, ‘it is surprising that there are
only a few solid empirical studies available on the possible poverty reducing effects of
microcredit’ (p. 464).
Most experts recommend Mixed Methods for IA, i.e., when quantitative and qualitative
methodologies are both used – something that our study also does. Both, a quantitative
survey, with econometrics analysis in which the direction, nature and extent of impact or
change are measured is employed, as are Focus Group Discussions – the narratives,
stories, etc – which give the numbers a more human face. Often the stories contradict the
‘hard data’ since the methodology for both is different, but both have their own particular
value and contribution. One needs to consider both when making any sort of analysis.
7
Ideally, baseline studies and panel data are recommended so that one can capture the
trend and secular impact of the intervention so that one can compare before-and after
scenarios. But, unfortunately, most MFIs or researchers do not have the luxury of having
such data and they have to make do with cross-sectional data captured at one point in
time.
The IA should be designed to establish plausible association between changes identified
and participation in the microfinance programme. Towards this end, quantitative and
qualitative studies should be based on a longitudinal design, if possible, to obtain more
reliable measures of change. If a longitudinal design is not possible, the quantitative
assessment should concentrate on variables for which recall data are easily obtainable and
generally reliable. It should employ a comparison group, preferably a quasi-experimental
design control group of micro-entrepreneurs, to provide a basis for associating change
with participation in the microfinance programme. In onetime studies it is essential that
information on changes over a designated timeframe be gathered; it is not valid to
compare the current status of clients with non-clients and claim that the better results
among clients are due to programme participation. Rather, one assesses trends or changes
over a period of time between clients and non-clients in order to make a case that the
differences identified between the two groups are a result of programme participation. A
quantitative assessment should have a sample size that is large enough to ensure effective
use of control variables, account for refusals and non-finds, and allow for invalid data
issues, but small enough to fit the budget. Here is where trade-offs are required between
the number of variables, margin of error, confidence interval, and budget. (Barnes and
Sebstad, 2000, p. 8)
Barnes and Sebstad (2000) make the important point, that ‘in choosing variables, it is
important to consider the timeframe required for impacts to manifest themselves.
Previous studies have shown that different variables show change at different times. For
example, impacts on enterprise profits may occur early and then taper off within the first
year or two of microfinance program participation. Other impacts, for example the
accumulation of selected household assets, may take as long as three to five years of
microfinance program participation to happen. One recent study concluded that social
impacts (such as changes in women’s mobility) are likely to take longer to occur than
economic impacts (such as changes in income). Attention to temporal issues in measuring
variables in impact assessments (either through longitudinal designs or through the use of
recall data) is important for ensuring valid findings’ (p 37, emphasis added).
This is a particularly important point from the point of view of our particular study when
we present our results in the following chapters, since many of the MFIs in Pakistan are
relatively new – three or four years of operations only – and ‘impact’ will be difficult to
observe, leave alone, measure and quantify. Moreover, Hermes and Lensink’s (2007)
critical survey on the impact of microfinance, conclude that ‘its is unclear whether
microfinance contributes to a reduction in poverty or is the most efficient method to
reduce poverty without additional measures in areas such as education, health and
infrastructure’(p. 462). While they acknowledge the huge potential of microfinance, they
8
too argue that ‘impact’ takes some years to work its way through into the lives of
beneficiaries.
In the case of softer measures of impact, such as empowerment or social capital, there are
far greater words of caution, as not only are such changes difficult to observe and
quantify, they may take many years to change – (see Holvoet, 2005; Mahmud, 2003;
Mayoux, 2001). Moreover, Naila Kabeer (2005) has found the rather surprising result in
her analysis of findings from South Asia with regard to women’s empowerment, where in
some cases, ‘access to financial services was found to exacerbate domestic violence’ (p.
4715). With these many words of caution and advice, we present the methodology
adopted for our study.
2.2
Methodology for the Study
The first task was to undertake through an extensive survey, an assessment of the Social
and Economic Impact of microfinance on borrowers/beneficiaries. This was done in the
following manner. Once the six MFIs had been selected in consultation with ECPFSSRP, meetings were held with the concerned MFIs separately, and when necessary,
collectively, to discuss and devise the strategy and questionnaire instruments. A
representative sample keeping in mind the different types of MFIs and different types of
borrowers – geographical, urban/rural, gender, etc – was selected based on the
programme outreach of the partner MFIs. A randomly selected sample of
borrowers/beneficiaries was selected – see below.
Given the fact that we will had to use a cross-section (one-point-in-time) data, and given
the non-random placement of the programme and some self-selection of households in
the programme, we opted for the Difference-in-Difference approach used by Bret
Coleman (1999) which compares the difference between income for participants and nonparticipants in treatment sites/locales, with the same difference in income in control
sites/locales. This is the best method for undertaking such an exercise and better than
taking one which focuses on programme participants and new/likely participants – the
Pipeline Approach – which has an in-built bias as many of the new clients are already
‘sold’ on the issue of and efficacy of microfinance (see Khan, 2004). However, as each
Chapter on each specific MFI shows, we present both the Difference-in-Difference
results as well as the Single Difference results, and state why there is a difference in each
set of results.
Clients/borrowers and non-clients were chosen from the same sites/locales, and nonclients of the MFI were also chosen from other sites/locales where the MFI does not
operate. This is the Difference-in-Difference approach which requires random selection
of treatment and control sites/locales (communities). The former are sites/locales
(communities) where the MFI has had its lending operations for some time and in which
some households have been clients as members of community organizations and others
are non-clients since they have not joined the community organizations. Control
sites/locales are those communities in which community organizations have been formed
(or even may not have been formed) but the MFI has not started its lending operations:
9
members of these organizations are the future clients and others are non-clients. In the
urban areas, a related issue is the selection of sample of clients and non-clients since it is
difficult to differentiate between the treatment and control neighbourhoods or
communities. However, we were able to do this by trying, to the best of our knowledge
and of local knowledge, to identify like with like (Khan, 2004).
The social indicators we wanted to look at can be divided into two categories one, a
general category looking at education, health, and so on, while the other category pertains
to empowerment, such as women's role in household economic decision-making,
purchasing power, financial independence, control on income and savings and control on
loan.
Hence, the first strand of the Study is an Economic and Social Impact Assessment on
borrowers/non-borrowers living in MFI areas and those not living there. The specific
questionnaire and variables to be captured will be based on existing international best
practices in measuring the Economic and Social Impact of MFIs, tailored to Pakistani
conditions. There have been at least three large Economic and Social Impact Assessments
of MFIs in Pakistan – one of Khushhali Bank and two on Kashf, albeit all with some
weaknesses (see Zaka, 2006; Montgomery 2005; Zaidi 2003) – and we hope be able to
match the international best practices in research on the impact, along with the recent
Pakistani studies.
Along with the quantitative questionnaire, the study also includes questions about the
perceptions of borrowers and non-borrowers in order to understand how they see the
impact of the intervention. In many cases, as we show in the chapters that follow,
perceptions seems to be very different from ‘hard data’ and ‘facts’. Since we use Mixed
Methodology, we not only capture the quantitative side through our questionnaire, but
also include extensive Focus Group Discussions with clients, borrowers, non-borrowers,
those who have left the programme – so-called ‘drop-outs’. We also have substantial
Institutional Reviews which are based on interviews and give yet another dimension to
the study.
2.3
Process of Selection of MFIs for Study
Once the Study had been initiated, discussions were held between the Consultant and the
European Union PFSSRP in order to identify six microfinance providers who represent
the broad spectrum of microfinance provider in the country and fulfil the requirement
which shows that there is diversity in our choice. Eleven MFIs/MFPs were identified as
potential institutions who could participate in the Study. All those MFPs approached
showed an initial interest to participate, subject to some final conditions, such as the
finalisation of the methodology, questionnaire, etc. After discussions between the
Consultant and the EU-PFSSRP, a final list of institutions was prepared and they were
invited to join in the Study.
We identified MFIs from two provinces, Punjab and Sindh. The MFIs approached and
their main characteristics were: Orangi Charitable Trust (OCT), urban, Sindh, not simply
10
concerned with poverty alleviation, but also entrepreneurial and economic development,
individual lending; Sindh Agricultural and Forestry Coordination Organization
(SAFWCO), rural, Sindh, poverty alleviation and income earning focus; Kashf, Lahore,
urban, peri-urban, exclusively women, poverty alleviation, gender empowerment,
economic security; National Rural Support Programme (NRSP), the largest rural support
programme in every province of the country, multi-sectoral with microfinance being one
of its important, though not exclusive, activities – we look at the NRSP microfinance
programme in the Punjab and Sindh, as well as the NRSP’s Urban Poverty Alleviation
Project (UPAP); Akhuwat, urban, Punjab, an Islamic microfinance provider, based on the
zero-interest principle; finally Asasah was chosen, which is a Lahore-based MFI and is
different from the others because its financing structure represents fully commercial
funding.
Hence, we had in our selection of MFPs, institutions from Sindh and the Punjab; MFPs
which undertook group lending and those which lent to individuals; those that lent only to
women and those that did not discriminate on the basis of gender; MFIs which claimed
that they charged no interest and those which charged a considerable rate of interest; rural
and urban based MFIs; and, multi-development institutions and specialised microcredit
providers. What we do not have in our category, is a microfinance bank. Given the
criteria that were specified in the Terms of Reference for the selection of the MFIs for the
Study, only two banks were eligible, viz., Khushhali Bank and the First Microfinance
Bank. We decided not to approach Khushhali Bank since they had recently been subject
to a huge impact evaluation (Montgomery, 2005) and hence were suffering from
‘evaluation/assessment fatigue’. We approached the First Microfinance Bank, who turned
our request down and showed their inability to join the Study. Hence, sadly, we do not
have a microfinance bank as a partner in this Study.
It is important to state and highlight the fact, that all the six institutions who agreed to
participate in this Study, did so completely voluntarily. They agreed to open up their
offices, their records and gave us unprecedented and complete access to their staff and
clients. Their willingness to be part of this Study and their full cooperation with the
Team, reflects very highly on the maturity and confidence that members of the
microfinance sector in Pakistan have about their programmes.
2.4
Study Sample
At the first stage of sampling, the following branches (groups of persons with
homogenous socio-economic characteristics) from each microfinance institution were
chosen purposely, depending upon the scale of operation, geographical coverage of
institution, time constraint and logistics.
11
Microfinance
Institutions
OCT
SAFWCO
Akhuwat
Asasah
Kashf
NRSP
UPAP
Branch
District/City
Orangi Town
Shahdadpur – Urban
Shahdadpur – Rural
Bhit Shah
Township
Data Darbar
Yadgar
Kot Radhakishan
Raiwind
Karim Park
Kahana
Chunnian
Chakwal
Doltala
Bhundi
Hasilpur
Noorani Basti
Bazarta Line
Dhok Ratta
Muslim Colony
Karachi
Shahdadpur
Shahdadpur
Matiari
Lahore
Lahore
Lahore
Lahore
Raiwind
Lahore
Lahore
Kasoor
Chakwal
Gujer Khan
Rahim Yar Khan
Bhawalpur
Karachi
Karachi
Rawalpindi
Islamabad
At the second stage, regular borrowers were selected randomly from the MFI record of
open cases. It was decided to include all borrowers who had obtained loans during
January 2005 and April 2006 and were paying loan instalments. After compilation of data
obtained from the MFI, randomization software (www.randomizer.org) was used to draw
the sample of active borrowers.
A valid control group is the holy grail of any microfinance impact assessment and must
have participants who possess the same ‘entrepreneurial spirit’ as those in the treatment
group that receive the loans. One way is to take new entrants in the MFI programme as
the Control Group, whereas the veteran participants with two or more years experience
with the MFI are considered to be the Treatment Group. The methodology then attributes
any difference between these groups to the MFI, since the new entrants have received
little or no treatment from the MFI, but the veterans have received two or more years of
loans. This study considers accepted borrowers-to-be (Pipeline Borrowers) as a part of
the Control Group. Accepted borrowers, who either have not yet received the loan or
received the loan after April 2006, were compiled from the MFI data and a random
sample was drawn. To avoid ‘contamination’ and ‘locational’ biases, non-borrowers were
also chosen both from the project area and from non-project (similar) areas. The randomwalk method was adopted to select non-borrowers. Thus, the control group of the study
12
consists of ‘borrowers-to-be’, non-borrowers from project area and non-borrowers from
new designated project areas or similar non-project areas.
Ideally under the best conditions for the purposes of our Study, we wanted to include in
our sample those new or Pipeline Borrowers who had been accepted as likely and
potential new clients by the MFI and whose applications had been accepted, but had not
been granted a loan as yet. However, we found that in the case of all our MFIs, the
application procedure, approval of the loan and the disbursement of the loan, all took just
a few days, or a couple of weeks at most, and this did not allow us to capture ‘pure’ new
Pipeline Borrowers. Hence, we had to opt for those borrowers who had very recently
been granted a loan.
The statistically optimal sample size depends on the desired effect size (e.g., a 10 percent
increase in income), the variance of the outcome, and the tolerance for error in assigning
statistical significance to the change in outcome. Outcomes in microfinance evaluations
can be both continuous (e.g., change in income) and binary (e.g., P1, the probability of no
longer being below the poverty line). Using binary outcomes can be easier since the
variance [(P1) (1-P1)] is entirely determined mathematically from the mean. The variance
is ideally applied in sample size determination by information available from other
surveys (or pilot surveys) that have been conducted in a similar setting. Unfortunately, it
is difficult to find out a systematic study in the Pakistani context showing the mean and
variances of various microfinance impact indictors. Therefore, in the absence of any prior
value or judgment regarding the variance of any impact indicator, it is best to choose a
value of 0.5 for P1. This is recommended because the variance of indicators that are
measured as proportions reach their maximum as they approach 0.5. This will ensure an
adequate sample size irrespective of what the actual value of P1 is. Nonetheless, this may
also result in samples that are larger than needed in the event that the actual value of P1 is
very different from 0.5.
Based on standard parameters of a 95 percent level of significance (Zα=1.645) and 80
percent power (Zβ = 0.84) and assuming a variance 0.25 and 10 percent of tolerance error,
a sample of 154 emerges from the following formula.
n = (Zα+ Zβ)[σ2/δ2]
However, it was decided to enumerate 90 respondents for the Control Group from each
selected MFI branch (project area). The Control Group includes 30 new borrowers or
accepted borrowers (Pipeline Borrowers), 30 Non-Borrowers from same (project) area
and 30 Non-Borrowers from project designated new area or project-similar area. For
comparison, a sample of 80 borrowers (Treatment Group) was drawn, whom we have
called ‘Active Borrowers’. Thus a total of 170 respondents were chosen from each MFI
selected branch – see Table below.
In order to ensure that the target sample size for the survey was reached, allowances for
non-response and non-traceability are usually made during the calculation of sample
sizes. This normally involves increasing the sample size by a non-response insurance
13
factor. For this survey, the sample was drawn with the allowance of 20 percent. The
realized sample information is provided in the following table.
Table – 2.1
Study Sample
Respondent Category
Borrowers
Number of
Branches
Regular
New
Non-Borrowers
Same
Areas
New
Areas
Overall Sample
20
3393
1597
588
601
607
Microfinance
Institutions
OCT
SAFWCO
Akhuwat
Asasah
Kashf
NRSP
UPAP
1
3
2
3
3
4
4
170
505
340
510
510
680
678
81
241
160
237
239
324
315
29
85
60
92
91
108
123
30
89
60
90
90
118
124
30
90
60
91
90
130
116
In order to understand the questionnaire, a three day comprehensive training programme
was given to all enumerators and their Supervisors, first in Karachi, and then later at each
city/area where the survey was held. Each section of the questionnaire was studied for
clarification of the questions. After this training session, for better understanding and
practice, the enumerators were given two blank questionnaires to be filled from two
borrowers of MFIs in their areas and were asked to return the next day. The filled
questionnaires were evaluated and marked, and the mistakes/misunderstandings during
the interviews identified. Once again, with the help of slides, the Trainers went through
the complete questionnaire and clarified the questions. Once they had complete
understanding of the questionnaire, each enumerator was asked to interview another
enumerator. In this way, they had far greater understanding and fluency about the
questions. The enumerators who performed the best in the training sessions, were then
selected. Each set of teams conducting the survey, had at least one woman enumerator.
This process was followed through in Karachi and at all other locations where the survey
was conducted.
Once the locations/Branches had been identified and selected, each MFI was requested to
provide a full client list with loan cycle for that Branch. Following the sampling process
explained above, we selected the respondents and their ‘neighbour’ for the survey. In
most cases, each team of surveyors went to the homes of the identified respondents and
14
conducted the survey there; in some cases, the interviews were conducted at the
workshop/shop of the client. For the most part, five clients were interviewed by each
survey team in any day. Often repeated visits were required in order to complete the full
questionnaire.
2.5
Estimations
The impact estimation in this study follows Coleman’s methodology (1999) where he
compares mature microfinance borrowers in treatment areas with new would be
borrowers in control areas. This is done to control unobservable factors such as
entrepreneurial spirit and risk preferences that lead to selection bias. Non borrowers have
also been included to control for endogenous factors. The logic behind the latter point is
that MFI’s might view some villages/locales as more entrepreneurial and thus might start
lending there before other areas as a prudent business step rather than on a random basis
and lead to programme placement bias. But looking at the neighbours allows us to control
for the heterogeneity in the two areas. In our model difference in the length of time that
borrowers have been taking loans has also been taken into account by using loan cycle
dummies or splitting up the sample into young and old borrowers. With these
assumptions, impact can be measured by a single impact equation such as:
Yij = Xijα + Vjβ + Mijγ + Tijδ +vij
(1)
Yij is an outcome on which we measure impact for household i in village j, Xij is a vector
of household characteristics, Mij is a membership dummy variable equal to 1 if household
i self-selects into the credit programme, and 0 otherwise; Tij is a variable to capture the
treatment effects on households that self selected themselves into the programme and
already are accessing loans and Vj is a vector of village characteristics. Mij can be thought
of as a proxy for unobservable characteristics that lead households to self-select into an
MFI program. The coefficient δ on Tij is the main parameter of interest and measures the
average impact of the programme. A positive and significant δ would indicate that
microfinance is having a beneficial effect on the borrowers. Coleman asserts that if
programme placement is random than the above equation should yield efficient and
unbiased estimates.
Coleman’s model is based on the Difference-in-Differences (DID) methodology which is
explicitly designed to overcome the potential ambiguities of the single-difference studies.
The essence of the difference-in-differences approach is to try to account for the “other”
forces by also examining the outcomes for a control group that does not receive the
treatment but that presumably is affected by these other forces. However, DID also has its
drawbacks like failure to take into account externalities and spill over effects, and the
differencing nets out the effect of the comparison group, the neighbours in this case.
An issue that came up during surveying was that it was difficult to find Pipeline
Borrowers as all MFIs in our sample were disbursing new loans within 15 days.
Consequently, some of the respondents in the Pipeline category had already received
15
loans and might have increased consumption due to better liquidity. This aspect would
lead to a smaller value of δ or the impact reported on the variable of interest.
Furthermore, the areas in which our selected MFIs were working were predominantly
urban areas; in fact a large proportion of their work was within the same urban centres of
Lahore and Karachi. This caused problems in selecting the control groups and localities
as there are almost 90,000 borrowers in Lahore with 66 MFI offices while in Karachi
there are over 22,000 borrowers with 46 MFI offices 1 . Therefore, the knowledge and
accessibility of microfinance in these areas is enormous. This made it impossible to find
areas which were unexposed to microfinance and therefore precision of δ might be
compromised. However, effort was made to find control areas where microfinance was
not pervasive so that we could compute δ with accuracy.
The final estimation equation is as follows:
Yij = Xijα + Cijβ + Mijγ + Tijδ +vij
(2)
Equation (2) is similar to equation (1), except for the dummy C equal to 1 for clients and
matched neighbours and equal to 0 for the pipeline clients and their matched neighbours.
This dummy will take into account the heterogeneity between the two groups specified
above and the localities they live in. In addition to the DID estimates we will also report
the Single Difference estimates which compare only the active borrowers and the pipeline
clients as all conditions of the DID model are not strictly met due to problems with data
collection as mentioned above.
The equation used for estimation of Single Difference is
Yij = Xijα + Tijδ +vij
(3)
Where δ is the parameter of interest and captures the impact experienced by active
borrowers on different outcomes as compared to pipeline clients.
2.6
Format and Structure of the Report
After the first Chapter on the introduction and background to the study, followed by this
second Chapter on methodology and sample design, we move on to the results
component of the Report. Our results are presented for each of the participating
institutions separately in the next six chapters – Chapter 3-8 – where we show the results
for each institution. Our interest (and that of the EU-PFSSRP as they state in the Terms
of Reference) is focused not on a general, broad, social and economic impact analysis on
microfinance interventions in Pakistan, but on the impact of specific institutional
interventions. Hence, we do not analyse pooled data for the study, but present our results
separately in each Chapter. However, the concluding last Chapter, does present some
1
Pakistan Microfinance Network, “Microwatch: A quarterly update on Microfinance in Pakistan” Issue 01:
October 2006
16
general results and observations based on the earlier chapters. Each Chapter on the six
institutions begins with a detailed Institutional Review/background to the MFI – as per
required Terms of Reference – before we begin to describe and analyse our results. Each
Institutional Review is based on interviews and an analysis of published and unpublished
reports from the organisation.
In Chapters 3-8, we discuss all relevant results and observations in the main text of each
chapter and show some key data in tabular form as part of the main text. However, given
the abundant and rich data that we have collected, we feel that this data should also be
available in the public domain so that those interested could look at the data in more
detail. Hence, each of the institution chapters carries an Appendix which contains
additional data, not all of which is discussed in the text. The questionnaire used for the
survey is also reproduced as an Appendix to the main Report.
While it is natural that numerous comparisons are going to be made between
chapters/institutions on the basis of data provided and results produced, however, a few
words of caution are necessary before one draws too many comparisons. Each institution
has a separate mission statement, style of management, different set of priorities, etc.,
hence, comparison, if made at all, must be made with considerable caution. Perhaps the
most important and marked difference between the MFPs, is that they have been around
for different periods, most for just a handful of years. With the exception of Kashf and
the Orangi Charitable Trust – both of which are fundamentally different from each other
for numerous reasons, anyway – most of the urban MFPs from our sample have been
around for less than half the time-span of either Kashf or OCT. Clearly, as we emphasise
in a number of places in this Report, to observe, leave alone measure, impact takes many
years. Hence, these words of caution. The intention of this Study as specified by the
client EU-PFSSRP, was not to compare or evaluate the performance of MFPs in
Pakistan, and the design of the study does also not provide for such comparison.
Each of the Chapters 3-8, should be read as a ‘stand-alone’. They follow a similar format,
with an Institutional Review highlighting the background and history of the institution, its
goals and missions, its form of functioning and loan-disbursement and operation systems,
followed by the survey results and the quantitative sections, followed by extensive
accounts and commentary of the Focus Group Discussion. However, while the Chapters
follow a similar format, they are quite different in content, design and they way they have
been written. One major reason for this is that, the descriptive and analytical qualitative
part of the Chapters – Institutional Review, Focus Group Discussion – are written by
different individuals reflecting differences in style, approach and understanding. While an
attempt has been made to streamline the format in all the Chapters, we have decided to
allow for the particular styles of different writers to come through. This reflects their
particular concerns, and since these writers researched each institution and conducted
discussions and interviews, we feel that their opinions and observations should be heard
the way they want to express them. Hence, a further cautionary note on comparing
Chapters and institutions.
17
Chapter Three:
Asasah
3.1
Institutional Review
3.1.1
Background and History
Asasah was started on 1 March 2003 by Tabinda Jaffrey, its Chief Executive Officer
(CEO), with the objective to enhance micro productivity and alleviate poverty. Asasah
was established with a 100 percent commercial financing structure and was registered in
December 2003 as a non-profit Company by Guarantee under Section 42 of the
Companies Ordinance 1984. The most interesting aspect of Asasah is its business
approach to microfinance. Initially it had no donor funding available and paid a very high
interest on its commercial finance, therefore, sustainability became a major focus. In
addition, Tabinda Jaffrey, the CEO of Asasah had spent seven years working on the
Executive Committee of Kashf Foundation and felt the approach taken by them to be
‘very slow and cautious’ and wanted to take a different route. Thus with her business and
finance background, microfinance experience and the availability of only commercial
funding, the CEO set up Asasah and treated it as a profit-oriented business with the aim
of achieving viability and sustainability rapidly.
The result is that in three and a half years, Asasah has 27 branches, over 25,000 active
members; it has disbursed over Rs.457 million and has a recovery rate of 100 percent –
see Appendix. Its Operational and Financial Self Sustainability stands at 78 percent and it
aims to reach 100 percent sustainability by December 2007. In June 2005, Asasah
completed its pilot project in which it launched 5 products, streamlined all processes and
systems and developed an operational manual.
Asasah’s mission is quite broad and comprehensive and states that its objectives are to:
¾ Improve living standards of people below the poverty line through the provision
of diverse economic, educational and information services
¾ Safeguard the interest of donors, financial institutions and individuals interested
in poverty alleviation
¾ Improve community well-being, and balance the interests of stakeholders by
encouraging participation
¾ Keep employees motivated and ensure continuous achievement of objectives
through staff capacity building
Asasah started operations from commercial funders, who still remain its primary
investors. The Chief Executive Officer stated that it was a difficult task to convince
commercial institutions to invest in Asasah and to assure them that their investment will
yield decent returns. The first investor who became interested after months of persuasion
was First Elite Capital Modarba. They pledged Rs.7 million for 1,000 clients to Asasah
and gave them a year to complete the disbursement. Asasah managed to loan out the
money in three months and its recovery was 100 percent. After this success, other
1
investors and donors became interested and decided to invest in Asasah. Currently, the
largest funding comes from the Pakistan Poverty Alleviation Fund, followed by First
Elite Capital Modarba and Orix Leasing. (See Appendix for funding breakdown)
Asasah has a range of products designed for the very poor to non-poor micro
entrepreneurs, who have modest capital requirements, which are not met by commercial
banks – see Appendix. Asasah’s philosophy is that the first step is to make a household
economically sustainable and after that, matters such as health and education should be
tackled. Therefore, Asasah targets the active poor who have skills but lack funds and
provides them with micro loans. It also focuses on women’s empowerment as it plays a
pivotal role in the social and economic uplift of a household.
3.1.2
Organizational Structure
The main governing body of Asasah is a six member Board of Directors, who come from
various backgrounds. Their experience ranges from research on enterprise development
to working in Information Technology. Two members are from Save the Children, which
is a long term strategic partner of Asasah. The members meet quarterly or more
frequently, if required. Currently, Asasah is hoping to diversify the Board and increase
the members so that the vision of the organization can be enhanced.
Apart from the Board of Directors, Asasah has a Steering Committee comprised of all its
Department Heads, which is in-charge of decision making and gives a strategic direction
to the organization – see Appendix. The Steering Committee meets twice a month. An
Operations Committee is also present and comprises of senior staff involved in
operations, such as the Area Managers and the CEO. This committee oversees all the
different operations of Asasah and meets on a regular basis.
The organization is led by the CEO, who is supported by the Steering and Operations
committees. There is no operations department at the Head Office and the
operations/field staff forward queries and problems to the concerned department from
which they need assistance. The Organizational Structure is attached in the Appendix.
The department most closely involved with the field operations is the Quality Assurance
Department, involved in both screening and monitoring. Recently, a marketing
department has been set up to build marketing capabilities of all the field staff and to
ensure that all branches implement the marketing strategy. At the branch, the Branch
Manager (BM) is the Head of Operations and four Loan Officers, called Community
Development Officers or CDO’s report to him/her. Apart from the operations staff,
branches also have an Accountant and an Office Boy. Each BM reports to an Area
Manager (AM), who report to the CEO.
3.1.3
Lending Methodology
Asasah uses the Grameen Bank methodology for its group lending of the protective and
productive loans and monitors each individual client to assure portfolio quality and verify
loan usage. Asasah asserts that it lends to households who have sufficient skills but
2
insufficient resources. Furthermore, Asasah believes that female empowerment lies in
having a say in important household decisions, which are traditionally under a man’s
domain in Pakistan. Consequently, Asasah works to correct these imbalances by
disbursing the loans only to women, but making both spouses responsible for fulfilling the
terms and conditions. The women who are the members can either use the loan
themselves or can pass it on to their husbands. By keeping this option open, Asasah
claims that it gives women leverage and allows them to participate in the household
decision-making. Asasah further believes that the mindset of men has to be changed for
women to become empowered; hence, husbands have to attend a pre-disbursement
meeting in which they are informed about the rules and regulations of the organization
and are asked to sign the loan application. Only after the husbands have agreed with the
policies, are loans disbursed. Asasah says that the reason for involving men and making
them jointly responsible for the loan was important so that husbands would not come and
take their wives forcefully away from the meetings accusing them of neglecting their
domestic duties. However, by making them jointly responsible, they do not behave in a
negative manner. It also furthers Asasah’s mission of improving community well-being
as men-folk also participate and are made aware of the process.
Asasah uses two tools from the CGAP 1 targeting tools to select clients. One is the
Housing Index 2 and the other is the Means Test 3. Asasah Management feels that income
is not a reliable indicator, and therefore look at the state of the house and
assets/resources. When a new branch is opened, an area survey is undertaken and after
earmarking the areas with active poor, the marketing of the loan products is started. This
involves talking to crowds in marketplaces, meeting socially prominent people like
doctors who meet a large number of people on a daily basis and hosting community
meetings. At all these places the CDOs take down contacts of all those people who are
interested in taking loans.
If 25-30 applicants live within 2-3 streets of each other and fulfil other guidelines put
forward by Asasah then a Unit is formed. After the unit formation, the unit committee is
chosen by the members, which consists of one Unit Manager and five Group Leaders,
who are in charge of 5-6 members each. The prerequisites of being a member of the unit
committee require members to exhibit leadership qualities and to be financially better off
than the other unit members. The group leaders are responsible for getting the recovery
from their respective group members, however, in cases of default, the whole unit has to
contribute and in this manner social collateral comes into play.
If the Unit and the unit committee are approved by the BM then the CDO proceeds to
form-filling and member-screening. For filling the forms, it is necessary that there is a
pair of CDOs and the forms of all the applicants are filled in the presence of other unit
1
Consultative Group to Assist the Poor: a consortium of 33 public and private development agencies.
It is an index using the structure of the house to differentiate between economic levels of households and
identify those who are poor.
3 A list of a small number of indicators collected through simplified household poverty surveys that are
combined to create an index to give a reliable assessment of the poverty level of an individual household.
2
3
members to make sure that all the information is correct. In case the loan amount for an
applicant is more than Rs.19,000 then the CDO has to physically verify the business as
well. The documents required for the application are papers pertaining to their residence,
utility bills and NIC (National Identity Card) copies. The CDO has to undertake a
complete scrutiny of the applicant’s house, work and income, as well as that of other
household members. If the member was with another MFI earlier, they have to hand in
their record from the last loan as well. Once this process is complete, the CDO passes the
applications to the BM, who reappraises them.
The BM has to look through the papers of all the applicants and physically verify the
applications of the unit committee and one to two members from each of the groups.
Therefore, approximately 50 percent of the applicants are personally verified by the BM.
For the Unit Committee screening the BM and CDO have to ensure that they own a
house, are physically fit and active, responsible, and are economically better than the
other members. Once the BM is satisfied with the unit, he calls the Male Unit
Recognition Meeting, where the male members are explained the whole process and rules
of the organization and are asked to sign on the application form. After this the BM calls
the Female Unit Recognition Meeting, where they are tested on the policies and
procedures of Asasah and sign the application forms. At this meeting, the members also
have to give in the loan processing fee and the insurance premium. This step is followed
by disbursement of the loan within the next 5 days.
Repeat clients also go through a thorough re-screening even though their past record is
available. Asasah wants to make sure they used the loan correctly and that there are other
sources of income for the household in case the business fails so that they can recover
their money.
3.1.4
Loan Products
Asasah’s product mix targets a range of people around the poverty line as shown in
Figure 3.1. The protective loan is for the extreme poor, the productive loan for the
moderate poor, and the other products for those above the poverty line, but nonetheless
still vulnerable – see Appendix.
4
Figure 3.1: Asasah’s Target Market
Asasah’s Target
Market
P
O
V
Destitute
Wealthy
Extreme
Moderate
Vulnerable
Non-Poor
E
R
T
Y
3.1.4.1 Protective Loan
This loan was started in the summer of 2006 and is for the extremely poor households
who are earning less than Rs.2,000 a month. The product is still in its pilot phase and
given to groups of 25-30 women. The purpose of the loan is to protect households from
poverty and starvation. The loan size ranges from Rs.3,000 to Rs.8,000 and can be used
to fulfil basic needs. The duration of the loan is 12 months with an interest of 20 percent
and the instalments have to be paid fortnightly. According to Asasah, the main objective
of this loan is to bring the poorest of the poor in the economic mainstream by helping
them initiate a micro productivity process at the household level and that this bottom
category of the poor does not feel neglected and deprived. Once a member completes the
protective loan cycle, she becomes eligible for a productive loan.
By September 2006, Asasah had given out 1,772 loans and disbursed around Rs.10
million. The average loan size (ALS) of this category stands at Rs.5,840 and is only 12
percent of GNP per capita. Therefore, we can see that this loan category is for the bottom
poor who have restricted absorptive capacity.
3.1.4.2 Productive Loan
Asasah started its operations with this product; this loan is available to all members who
meet the basic criteria of those who are in the moderately-poor to poor category, which is
in the range of Rs.3-7,000. These members can keep renewing their loans till they reach
financial sustainability or cross the poverty line. The loan duration is 12 months with
fortnightly instalments and an interest of 20 percent. The loan size ranges from Rs.1025,000 and is simultaneously disbursed to all group members. The size of the group is
between 25-30 women. The loan also includes a one-month grace period. The productive
loan can only be utilized for income generation purposes like starting a new business or
expanding an old one.
5
To be eligible for the loan, the individual should not own more than an acre of land, have
taken a loan from any other institution and should have been living in their present
accommodation for more than a year if they own it, and three years if they rent it. In the
first loan cycle the amount given is between Rs.10-15,000, in the second cycle it is
between Rs.15-20,000; in the third cycle it is Rs.25,000.
To receive this loan the woman or the person she plans to pass on the loan to, should
either have a running business or past work experience. There must be other people
earning in the household so that in case the business fails the loan can still be repaid. The
CDO has to evaluate that there are good opportunities for the proposed business in the
area and that a market is nearby. For repeat clients, their repayment record should be 100
percent and their attendance at meetings must be more than 85 percent. The CDO also
has to evaluate that the loan was properly used and not spent for consumption purposes.
All applicants have to pay a loan processing fee of Rs.50 and 1 percent as insurance fee.
Till September 2006, Asasah had given out 29,719 productive loans and disbursed more
than Rs.394 million. The average loan size is Rs.13,268 and is 28 percent of GNP per
capita.
3.1.4.3 Small Business Finance (SBF)
This loan caters to micro entrepreneurs with established businesses and old clients who
have completed their first cycle of productive loan and have a vibrant business with
potential. Husbands and sons of old clients can also apply for this loan. The loan period
of SBF is 12 months and the loan size ranges from Rs.26-50,000. The loan includes a
one-month grace period and is simultaneously disbursed to all group members. The size
of the groups is small as compared to the productive loan and consists of 5-10 members
and they can be either men or women. Small business finance loan can be increased by
Rs.5-10,000 in each successive loan cycle.
The conditions for this loan include a proper business location either owned by the
applicant or rented. The Inventory turnover should be twice the amount of the loan and
the business should have been running since a year. The documents required include
proof of ownership of the business location, accounts pertaining to the business for the
last month and an assurance letter from the guarantor.
The appraisal process includes a preliminary form filled by the CDO which is rechecked
by the Branch Manager and then forwarded to the Internal Audit Department at the Head
Office. Staff at the head office evaluate the application and decide on the proper loan
amount. The applicant has to pay Rs.50 as the loan processing fee. While 1 percent is
charged as insurance premium if the amount of the loan is less than Rs.30,000 and 2
percent if it is more than that.
The SBF is predominantly marketed in urban areas. Recently, Shorebank provided
training to SBF staff on specific issues about small businesses such as turnover, debt
capacity and ratio analysis. Due to the different appraisal methodology of SBF, Asasah
has separated SBF from productive loan branches. They have established three branches
6
for SBF, two in Lahore and one in Kasur and plan to open another two in the next six
months. By September 2006, 232 SBF loans had been given out with an ALS of
Rs.38,444 and total disbursements of almost Rs.9 million.
3.1.4.4 Livestock Finance (LVF)
This loan is for clients who already have a livestock business and it is to enable them to
further invest in livestock and enhance their income by selling dairy products. Individuals
who apply for this loan must have taken the productive loan first. The appraisal
procedure and the documents required are the same as that of the SBF. The loan size
ranges from Rs.30-70,000 with a 20 percent interest rate. The loan is given to either men
or women in groups of 5-10. The instalments have to be paid fortnightly and each
member in the group should have a separate guarantor. A loan processing fee of Rs.50
and 2 percent insurance premium is charged.
Asasah had given out 34 Livestock loans till September 2006 with an ALS of Rs.40,147.
Approximately Rs.1.4 million has been disbursed.
3.1.4.5 Freedom Loan
This loan is for people who have borrowed from moneylenders and are paying exorbitant
interest rates and are trapped in a vicious cycle and unable to repay the principle. The
amount of the loan is decided after scrutinizing the individual and his case and a
personalized product is created. The interest charged is 20 percent and the loan is
approved by the Head Office. This is not a mainstream product and is only offered on a
case-to-case basis.
3.1.4.6 Micro Leasing
Asasah introduced a micro leasing facility to its members for leasing equipment,
machinery or any other operational tool they may need to enhance their income. This
product was being offered in collaboration with Orix leasing. The loan range was from
Rs.40-300,000 and for equipment the interest rate charged was 16 percent while for
vehicles it was 18 percent. A processing fee of 1 percent was also charged and the
product was offered in groups of 5 to 8 people or individually, and had to be repaid in 2
to 3 years. The documents required were ownership or rent agreement papers for the
business/production location, utility bills for the last 3 months and Bank Statements for
the past 6 months. The applicant had to pay 10 percent of the leased asset in advance and
had to provide two guarantors.
Asasah has revamped this product and will offer it independently and not in collaboration
with Orix Leasing. Offering the product with Orix was leading to complications and
Asasah has researched the market again and will pilot it soon with new features.
3.1.4.7 Micro Saving
Asasah asserts that saving is a basic tool for poverty alleviation and helps in building
confidence of members and provides ‘the feel good factor’, which is essential for
developing a positive mindset for risk takers. Furthermore, they say microfinance
research indicates that saving is an essential measure for meeting emergencies and
7
managing contingencies, allowing women a viable way of storing assets in their own
right.
Therefore, Asasah gives its clients the option of opening a joint savings account with
their husbands. The account must be opened with a minimum of Rs.50 and any amount
can be deposited/withdrawn at anytime by both of them. The withdrawals can be of any
amount at Asasah’s own branch or up to Rs.2,000 at a community meeting. If a family
falls ill and needs money, the Branch Manager him/herself is supposed to go and give the
client their savings and the clients can repay their instalments from their savings if they
wish to do so.
3.1.4.8 Micro Insurance
Asasah offers life insurance to members, which provides coverage for them and the main
breadwinner of the family. It is mandatory for all members to purchase the life insurance
policy by paying 1 percent of the loan amount if it is less than 30,000 and 2 percent if it is
more than that. For the protective loan the clients pay only Rs.150. In case of accidental
death or permanent disability of the member or her spouse, the policy covers the
outstanding loan and provides Rs.5,000 towards funeral expenses. This service is being
offered in collaboration with EFU, an insurance firm.
3.1.5
Operations
3.1.5.1 Human Resources
Asasah has a staff of 370 of which approximately 65 percent are females. Asasah is quite
determined about investing and building the capacity of its staff. It is one of the core
points of Asasah’s mission and tries to provide and create various opportunities for its
staff. It also assists staff in pursuing further education and provides them with financial
assistance and paid study leave.
Asasah has set up a training department and every CDO before starting his/her work in
the field goes through a seven day training course which includes discussions,
presentations and hands-on training. Such training courses, according to Asasah, improve
the morale of the workforce and also enhance their analytical and communication skills.
It increases the understanding of policies and procedures, and helps improve
standardization across branches.
Generally, Asasah tries to fill positions through internal promotions, especially for
operational staff. Operational staff members start as interns after a rigorous selection
process. CDO salaries include a 40 percent incentive component to bring in two groups
per month, recover 100 percent of the amount due and keep their documentation up to
date. They are also given a quarterly reward for their performance. Furthermore, they
undergo a combination of training, monitoring and incentives which enhances their
productivity. Asasah believes that a trained staff is very important for portfolio quality.
Once a CDO has been on the job for a year and a half he is promoted as Assistant Branch
Manager and later promoted to a BM. Assistant BMs and BM both regularly receive
training at the training centre. Asasah plans to promote BMs to Area Managers and AMs
8
to Regional Managers as the organization expands. Due to this, Asasah turnover is only
2-3 percent and staff seldom leave according to their own will and this attests to their
mission of keeping employees motivated.
Staff for new branches are hired by advertisement on cable, college notice boards,
hospitals and bank notice boards. New staff first start as interns and if their performance
is adequate, they are made permanent. In case any employee is not performing well they
are put on probation for 3 months. If their performance does not improve they are given
long leave. Asasah’s management tries to evaluate the problem thoroughly before
dismissing any staff.
The educational requirement for a CDO is Intermediate or Matric with experience.
Positions of BMs are only filled through internal promotion. Asasah does not hire local
staff and bring CDOs from other areas as they feel the locals put too much pressure on
CDOs from their own areas.
The target for CDOs is to handle 400-450 clients, and for each branch that translates to
1800 clients. However, currently the caseload per CDO is 232 and the reason is the
expansion plans due to which new CDOs have been hired who have not reached their
productivity potential. The borrowers per staff are 67 and this is also much lower than the
industry average of 147. Again the reason is that Asasah has been expanding staff for the
expansion plans and in time as outreach increases, the statistics will improve as well.
Previously, at the branch there used to be 10 CDOs and they could only mobilize four or
five groups and the BM also had trouble handling the large number of subordinates. With
the new arrangement of four CDOs, incentives make staff more efficient and also ensure
that BMs can effectively monitor the portfolio and resolve outstanding staff concerns.
3.1.5.2 Strategic Initiatives
Asasah has an aggressive marketing strategy and employs various forms of electronic and
print media to market its products. Some of the methods used are TV cable
advertisements, brochures, banners, stickers, staff in uniform, wall-chalking and
standardized branch appearance. CDOs gather crowds in market areas and hold
community meetings and advise them to tell their neighbours as well. Furthermore, at
each branch only two products are offered so that specialized services can be provided.
Asasah regularly undertakes market research to see what products are being demanded in
the market. The outcome of this research has been the Livestock loan, Micro Leasing and
Small Business Finance. Currently two more products are under study, one is a loan for
education expenses and the other is for health expenses.
The motivation behind introducing new products has always been demand in the market.
Asasah regularly holds Focus Group Discussions to gauge client satisfaction. The idea
behind SBF’s launch was an individual contacting them for a loan. Asasah undertook
research on the idea and found good prospects for it. Similarly, when poorer people asked
for loans, those that did not satisfy the conditions for the productive loan, the protective
9
loan was launched. Micro Leasing was offered when they reviewed the portfolio of
productive loans and saw that almost 50 percent of the loans were used for purchasing
assets. The LVF was offered when clients in a Focus Group mentioned that they used the
productive loan for the down-payment of livestock and then borrowed from other sources
to pay instalments. From this they realized that a larger-sized loan for livestock was
needed in the rural areas.
Asasah has a dedicated department for product development and currently, Asasah wants
to research an education loan as people have been approaching them for it. Another loan
that Asasah wants to offer is for health but that will be in the future sometime. Asasah’s
plan is to offer these specific products rather than offer an emergency loan. Asasah’s
management says that health and education are the two main reasons for which clients
take out their savings and they will offer specific products rather than an allencompassing emergency loan. They keep analyzing how loan and savings are utilized so
that they know what the needs of their clients are.
Asasah also monitors the social performance of its clients as it has sections on education,
household status and resources in their application forms. With each successive cycle,
Asasah knows how improvements in these indicators have taken place. This process is
known as ‘Internal Monitoring’ in the microfinance literature and is different from impact
assessments (Hulme, 1999).
Asasah has established a productivity/training centre to enhance the productivity of
employees at all levels. Asasah believes in the continuous capacity building of its
employees and invites consultants and academicians to train staff. They also offer the
training facility to other social organizations. Asasah wants to set up a research
department and a Social Performance System so that it can be used to improve products
and services. Other than capacity building, the measures taken to retain staff and keep
them motivated are internal promotions, financial assistance for education and an open
door policy practiced by the management.
The challenge faced by Asasah is to reduce costs and decentralize operations, as many
loans are still being approved from the Head Office. However, to do this Asasah will
have to formulate robust monitoring. They also need technical assistance to improve the
rural operations and an automated system to track and manage portfolio
3.1.5.3 Geographical Coverage
Asasah works primarily in urban and semi-urban areas of the Punjab. In 2005, it initiated
expansion in heavily populated rural markets as well, and plans to expand further in the
rural areas. When Asasah started, they asked a statistician to work out the areas where
there was need for microfinance based on census data. Based on the need document,
Asasah sends out research teams to do a full fledged investigation.
Asasah has a comprehensive strategy for identifying new areas and opening new
branches. A team comprising of 8-10 staff members is put together who travel to a
research area chosen by the operations committee and approved by the CEO. They
10
undertake thorough research which entails filling 16 forms on different aspects of the
area such as the number of bank accounts, phone connections, and health centres and so
on. The research team also talks to different prominent people in the area like the Nazim,
maulvis and midwives who have knowledge about the local area and population.
Once the area has been thoroughly researched a report is put together by the team and
sent for approval. If the branch is approved by the CEO and the funding partners, a
building near a main road is rented so that a bank and local transport are close. After that
a process of hiring staff is undertaken. The target market in the area is identified by
interviewing locals. This is important as it determines the products that will be marketed
in the area.
Till 2008 Asasah plans to keep focusing on expanding in the Punjab and plans to open a
total of 69 branches and then move on to other provinces. It has also identified potential
areas within the Punjab where new branches will be opened during 2007. Asasah plans to
open branches first at the district level, next at the tehsil level and finally at the sub-tehsil
level. Expansion in other provinces will be based on the market potential and the risk and
funding status. Asasah plans to reach 100,000 clients by the end of 2007 and 500,000 by
2011. For Asasah, growth is important as that is the only way it can achieve
sustainability.
3.1.5.4 Competition and Expansion strategy
Asasah started with an ambitious plan and has grown rapidly over the years. In the first
year it disbursed loans to almost 4,500 individuals which is higher than the average loans
given by other MFIs in their first year 4. The main challenge for Asasah has always been,
and still is, funds, and in the initial years only commercial sources of funding were
available which were very expensive. For Asasah, donor funds would be the cheapest
option but relying on them will hamper expansion plans, therefore, commercial funds
from financial institutions have been borrowed. To ease the funding constraints, Asasah
should work to develop more relationships with donors like Deutsche Bank who have a
Microcredit Development Fund, which can give guarantee to commercial banks on their
behalf.
The initiatives Asasah plans to take for growth are to continue with its aggressive
marketing strategy through electronic and print media so that it can target a large number
of potential clients. Asasah has established 32 branches (list in Appendix) and this
network will be helpful in scaling up operations. Moreover, as clients successfully finish
the productive loan cycle they become eligible for specialized products, so operations
have been streamlined to ensure that before the loan cycle ends, applications for
specialized products are initiated to avoid customer attrition. Furthermore, Asasah plans
to train operational staff to be customer-oriented and ingrain a culture of customer
relationship management in them. It also plans to provide training on competitors so that
they can better attract customers.
4
Pakistan Microfinance Network, “Customized Performance Report: Asasah 2004”
11
Other growth initiatives include working with Shorebank International to offer a package
of services to clients, including Business Development Services and Microfinance Plus,
which includes social services. It is planning to start a pre- and post-natal care centre with
the help of Save the Children, however it is a priority to offer the services in a sustainable
manner perhaps using a fee-based mechanism.
For urban growth, Asasah plans to focus on SBF and micro leasing so that it is not in
direct competition with other MFI’s. However, it feels that the majority of the growth
will be from rural areas as there is a great demand potential and not too much
competition, but will focus on non-farm business as agriculture is risky. Asasah realizes
that due to the huge market potential, other MFI’s do not pose a serious threat and their
presence is beneficial as it saves time in educating clients as they have already been
exposed to microfinance. Asasah sees competition as an opportunity to learn and improve
from and to keep them motivated.
However, the CEO says that government schemes and mushroom organizations which
have funding for a couple of years spoil the market because they are not interested in
sustainability and spoil the attitude of customers by not recovering loans.
3.1.5.5 Policy Environment
The Chief Executive Officer, Tabinda Jaffery feels that the policy environment is much
more conducive now for MFIs than earlier as the State Bank and Pakistan Microfinance
Network are taking active measures. Seminars and conferences regularly take place and
commercial banks are much more accommodating. However the main problem is that
they cannot lend on the clients’ savings deposit with them as they are not a bank. While
setting up an MFI Bank is very expensive and requires a minimum equity of Rs 500
million and the transformation is very tedious as well. The CEO feels that local donors
should set up a dialogue and provide technical assistance and give guarantees to
commercial banks on behalf of MFIs that are doing well so that they are not constrained
for funds. Asasah has great difficulty in securing funds as it is only 80 percent sustainable
even though its PAR at 30 is zero percent.
3.1.5.6 Dropouts
Asasah is very particular about client satisfaction and therefore has a drop out rate of 8
percent, which is low compared with the industry average. If the drop out rate is broken
down by urban and rural areas, then it is around 20 percent in urban areas due to
competition and less than 5 percent in rural areas. The concept of client satisfaction is
incorporated in staff trainings and special modules on Customer Relationship
Management and Positive Mental Attitude are covered. The management constantly
stresses on both staff and client retention so that the organization can grow soundly.
Asasah does its best to minimize drop-outs by a customer oriented approach. They try
their best to keep their good clients and if their need for a small loan ends, they move
them up to a more specialized product. If they require even larger loans, they refer them
to one of their funding partners such as First Elite Capital.
12
According to Asasah the only time a client exits is when he dies or his record is so
horrific that they are not willing to entertain him/her. Generally if a client’s record is not
good, they put their subsequent loan approval on hold for 6 months or so. After that if
group members are ready to give a guarantee on their behalf, then they will offer them a
loan, otherwise they will not. To motivate clients to stay with them they also provide
them training, like the signature training before loan disbursement. They are also
planning to focus on Microfinance Plus, which is an initiative to bundle social services
with microfinance. The strategy is to offer a whole package of services with various
kinds of loans so that they do not have to go to other MFIs.
3.1.5.7 Operational Systems
Asasah does not have a computerized MIS system and all the operations are recorded
manually. However, it is planning to design a system and the organization realizes that an
automated portfolio tracking system is becoming critical as it is expanding. Therefore, an
independent consultant has been hired to identify Asasah’s need for developing an
appropriate MIS. In 2003 due to funding constraint, Asasah did not start with a
computerized MIS, now FFSP has supported them and is helping them set up the system.
The accounting and operational data on disbursement and outreach is sent to the Head
Office weekly for consolidation. However, the recovery status is reported to the head
office daily by the branches.
3.1.5.8 Audit System and Financial Planning
Asasah has a very thorough screening system for its clients. They believe that 80 percent
chances of delinquency can be reduced by proper screening before giving the loan.
Therefore, they have a long list of instructions for the appraisal process and CDOs
undertake 100 percent physical verification of clients, the BM reappraises 50 percent of
the clients while the AM repeats appraisal of 30 percent of the unit members. Other than
the above procedure, the QAD checks all of the first 10 units formed of each new branch.
The QAD is the main arm of the organization overseeing operations and has two sections,
one is monitoring and the other is disbursement. The disbursement section is in-charge of
tracking quality of service delivery, formation process of groups and adherence to
lending procedures at Asasah’s branches. The monitoring section is responsible for
tracking portfolio quality, they stay in the field through-out the year and at the end of
each month submit a report to the CEO.
The AM spends one day out of the week in a different branch under his management,
where he/she oversees all functions and sends a report to the QAD. The disbursement
section at the head office receives all the documents when a new unit is formed. They
recheck the documents and insure that the quality of the unit is according to Asasah
standards. The disbursement section can also visit any unit in the field at anytime and
cancel any member if they are not up to mark.
Apart from all these checks, there is also an internal audit department that has to audit all
branches every 6 month to ensure the quality of financial statements, branch income and
13
expenditure and to see that conditions for different products are being met. An external
auditor also audits the branches annually.
3.1.5.9 Portfolio Performance
Asasah has excellent credit performance with a repayment rate of 100 percent and a PAR
at 30 days of zero percent. This puts them head and shoulders above the industry average
of 3.2 percent. The loans are written off in the accounts at 90 days, however, they are not
taken off from the individual branch’s accounts. Asasah has a strict policy of zero
tolerance on delinquency. The head office receives daily reports from branches about any
repayment issues, which are immediately followed up by the head office and concerned
branch staff.
The portfolio geographical diversification is increasing as Asasah is expanding and
presently they are working in 9 districts. Portfolio diversification in terms of the different
businesses Asasah lends for is given in Figure 3.2 and is fairly diversified.
Figure 3.2
Distribution of Loans by Sector
5%
6%
1%
30%
45%
3.1.6
13%
Agriculture
M anufacturing
Services
Trade and Commerce
Handicrafts
Dairy
Financial Management
3.1.6.1 Funding Mobilization:
For its operations, Asasah has obtained loan funds from a combination of eight
commercial and donor organizations. Funding details are attached in the Appendix. At
the end of each year, Asasah sends its business plan for the next year to all of their
funding partners. The donors then pledge the amount of money they are willing to invest
for the coming year. The commercial investors provide funds at an interest of 10-13
percent and the donors at 8-10 percent. The current breakdown of funding is given in
Figure 3.3.
14
Figure 3.3
Funding Sources
NGO
5%
Donors
36%
Financial
Institutions
59%
In 2002 when the State Bank of Pakistan decreased the interest rate, it was then that First
Capital became interested in Asasah. It took 6 months more to convince the next investor,
Orix Leasing. However, overtime as Asasah performed well other investors showed
interest. In October 2005, Save the Children chose Asasah as a long term strategic partner
as they believed Asasah to be one of the leading MFIs in Pakistan. Asasah looks to gain
international recognition and exposure to best practices and access to additional funding
for rapid expansion from the partnership. While, Save the Children will further its
Economic Opportunities programme which focuses on creating sustainable incomes for
mothers and their children by supporting MFIs.
Over the years due to Asasah’s noteworthy performance the attitude of commercial
investors has improved. At the beginning, First Elite Capital provided finance at an
interest of 15 percent with a financing limit of Rs 7 million. However, by March 2006,
they decreased the interest to 12 percent and raised the finance limit to 20 million.
Similarly, Orix Leasing decreased interest from 12 to 10 percent over the years and
increased the finance limit to Rs 20 million.
The latest Bank that has pledged funds to Asasah is Zarai Taraqeeati Bank Limited
(ZTBL) and the amount they will be extending is Rs.300 million. However, as Asasah
cannot provide security for the funds, the clients will be a part of ZTBL’s portfolio.
3.1.6.2 Asset, liability and equity composition
Asasah’s asset utilization in its loan portfolio is around 50 percent while the average for
the industry is 42.5 percent and cash in hand and in the bank is 36 percent. The capital
asset ratio for 2006 was 2.35 percent and shows the inadequacy of capital faced by
Asasah. On the liability and equity side, Asasah is in a dire situation. It has made a loss of
Rs.15 million since 2003, as it is not sustainable as yet. The main liability for Asasah
which constitutes 97 percent of the total liabilities is the funds it borrows to finance the
loan portfolio as its equity was only Rs.7 million as of September 2006. The major chunk
of income for Asasah is from the loans disbursed and in FY2006 it was Rs.24 million.
Asasah has to pay a large amount for the mark up on money it borrows to lend out and
for FY2006 it was Rs.12 million. However, the major expense for the organization was
on personnel and amounted to Rs.36 million.
15
3.1.6.3 Profitability and Sustainability
As Asasah started operations on the basis of commercial funding and received the funds
at a high interest, it focuses firmly on returns and sustainability. Asasah’s goal is to
achieve 100 percent sustainability by the end of December 2007. In four years, Asasah’s
operational self sufficiency is at 76 percent, while financial self sufficiency is at 75
percent while that for the industry in Pakistan is 61 percent. The trend chart for
sustainability over the years is as shown in Figure 3.4.
Figure 3.4
Sustainability
80
Percentage
78
76
74
72
70
68
66
Jun-04
Jun-05
Operational Self Sustainability
Jun-06
Sep-06
Financial Self Sustainability
In terms of profitability, Asasah has a negative adjusted Return on Assets of –8 percent,
though it has improved by 5 percent during the course of the year. This is similar to the
industry average of -7.2 percent. Cost per unit of money is Rs.0.46 and Asasah can work
to bring this down. Asasah’s main problem is that its costs are huge due to the high
interest they pay on the funds they borrow. If they could secure guarantees which would
lower the mark up on the loans they could reach sustainability sooner.
3.2
Survey Results
In this section we present the results from our survey for Asasah. The results are based on
the data collected on the basis of the questionnaire – see Appendix of the Report. A select
few of the results are presented here in table form, in the main text of this Chapter, while
the substantial majority of tables are presented in the Appendix to the Chapter. The
Appendix to this Chapter contains the largely ‘descriptive’ tables and results, while the
tables which are part of the text in this Chapter, are the more ‘analytical’ tables. In the
Appendix to this Chapter, there are far more tables than those on which we offer
comments in the text. Many of these tables are simply informative and so we do not
discuss them in the Chapter. They are being provided for the reader’s own interest and
perusal. Only the more interesting, striking or pertinent results and tables from the
Appendix are discussed in the text.
As we show in Chapter 2, the survey was conducted across four types of populations for
the purposes of the Study. Two of the categories are ‘clients’ or ‘borrowers’, while the
other two are ‘non-clients’. In the borrower/client category, there are two types of clients,
the ‘Active Borrowers’ and the ‘Pipeline Borrowers’. The former category that of ‘Active
16
Borrower’, is that client who has been in the programme of the MFI for longer than ten
months; s/he may have been a client for some years in their nth loan cycle or may have
even been a client in their first year. ‘Pipeline Borrowers’ are classified as those new
clients who had joined the programme of the MFI a few months – usually between 1-4
months – of the start of our survey. There are also two categories of ‘Non-Borrowers’,
one which are selected from the neighbourhood of the old Active Borrowers, and the
other from the neighbourhood of Pipeline Borrowers. Ideally, and in the best case
possible, the Active Borrower and the Pipeline Borrower (and their neighbours) should
have been chosen from ‘old/established’ areas where the MFI has been working for some
years, and ‘new’ areas where they are about to enter and identify and enlist clients.
However, in many cases this was not possible since most MFIs did not have exclusively
‘new’ areas identified, and we were forced to take Active Borrowers and Pipeline
Borrowers, and both sets of their neighbours, from the same locality/area. Nevertheless,
this does not undermine our results which are presented in this Section. In some cases we
present results where we compare the Active Borrower with Pipeline Borrowers, and in
some cases we compare both Active Borrowers and Pipeline Borrowers with the two
combined categories of neighbours, that of Non-Borrowers.
In the case of Asasah, we were lucky enough to be able to distinguish between old and
new areas, and the Active Borrowers were interviewed in their branches of Yadgar,
Raiwind and Kot Radhakrishan. The ‘new’ areas where Asasah has only recently started
work where our survey was conducted, were Gujranwala and Kamoke. The neighbours
from both ‘old’ and ‘new’ areas constitute our ‘Non-Borrower’ category.
We first discuss results based on tables presented in the Appendix to this Chapter.
Since Asasah has been in operation just a few years, 86 percent of its clients are still only
in their first or second loan cycles. Clearly, any ‘impact’ of the intervention by
microfinance institutions, is highly tenuous, and at best, slight and partial. We would
expect little to have changed in a matter of two years, and to find not much significant
difference between Active Borrowers, Pipeline Borrowers and Non-Borrowers. Most of
the tables in the Appendix suggest so as well.
Most of Asasah’s clients, all of whom are women, are involved in ‘business/retail shops’
or ‘cottage industries’ – Table A.3.2.4 – although what is interesting, is that there are
fewer Non-Borrowers who are involved in the former category, suggesting that perhaps
once women acquire a loan, they move on to setting up or expanding a ‘business/retail
shop’. Amongst the numerous similarities between all three categories, one which Table
A.3.2.9 shows, is that around 70 percent of girls and 85 percent of boys, irrespective of
them being a member or not, attend school, and that vaccination levels are also similarly
high. Table A.3.2.12 shows that almost all women, irrespective of their relationship to
Asasah, have an additional source of household income, other than what they themselves
earn.
The perceptions of clients and non-clients about various aspects of their lives, make
interesting reading. Table A.3.2.26 on the perceptions of clients over the loan cycle about
17
how well they eat, seem to suggest that the longer they stay with the programme, the
greater the perceived impact in terms of improvement in quality of life and diet, on their
lives. On most welfare questions, the longer they have been with the programme, the
better they think they are doing. However, even more interesting is Table A.3.2.29, where
the perceptions of Non-Borrowers are tabulated. What is particularly noteworthy in this
table is, that those Non-Borrowers who are in the ‘new’ area where Asasah has just
entered, have a far better perception of the impact of the microfinance programme, than
did Non-Borrowers who were in the same locality as those who were ‘Active Borrowers’.
As we show in Chapter 2 in the Methodology Section, in the first-best state, a key
requirement of impact studies is that clients-to-be or new clients, not be ‘contaminated’
with news and information of microfinance activities. However, as we argue, in urban
Pakistan today, this is not possible, since with numerous small and large, official and
donor programmes funding microfinance, there is a huge amount of information available
about microfinance services. Table A.3.2.27 confirms this view that a large proportion of
Non-Borrowers are aware of credit facilities.
Since Asasah has been giving credit for just a few years and is one of the more recent
MFIs, the data we present below cannot be based on a distinction of loan cycle, as it can
in the case of older MFIs. Hence, for the purposes of the newer MFIs like Asasah, we can
club all Non-Borrowers along with the new clients (‘Pipeline Borrowers’) and make
some comparisons with Active Borrowers.
Table 3.1 shows that Active Borrowers have significantly higher Expenditure Per Capita
and Income Per Capita than do all other categories. This suggests that perhaps Active
Borrowers benefit from the microfinance intervention. While Table 3.2 shows that the
difference between Asasah’s Active Borrowers and all others in terms of Housing
variables, is not at all significant, a result which is not surprising, given the fact that
investment in Housing takes large amounts of capital and investment, and we do not
envisage that clients of any microfinance institutions will be significantly better-off in a
couple of years to allow them to divert excess capital to Housing.
Table – 3.1
ASASAH – Economic Status
Variables
Expenditure Per Capita
Per Capita Food Expenditure
Income Per Capita
Household Asset Score
Value of household assets
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
Standard
Deviation
1402
1247
697
662
1601
1431
7.54
7.06
256158
278576
572.0
518.7
285.0
298.6
771.1
676.3
2.0
2.3
384073.3
275880.1
t-value
Significance
Level
3.225
.001
1.417
.157
2.656
.008
2.465
.014
-.717
.473
18
Note: There are 237 and 273 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 3.2
ASASAH – Housing
Variables
House owners
Person per room
Houses with baked bricks
Houses with RCC Roof
Houses with Cemented Floor
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
Standard
Deviation
89.45
89.01
3.5265
3.3917
92.41
94.14
34.60
35.53
40.93
48.72
.30783
.31333
1.72231
1.77734
.26548
.23532
.47670
.47949
.49274
.50075
t-value
Significance
Level
.160
.873
.867
.387
-.782
.435
-.220
.826
-1.765
.078
Note: There are 237 and 273 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
With most children going to school in all categories, as we show above, the impact of
microfinance on is negligible. However, what is surprising from Table 3.3 is that the
Monthly Expenditure of those in the programme is significantly lower than those who are
new or not part of the programme. Also, it is quite curious that the difference in the
proportion of children going to Private Schools is significantly lower for Active
Borrowers than it is for new or Non-Borrowers.
Table – 3.3
ASASAH – – Children’s Education
Variables
School Going Children %
School Going Children - Boys %
School Going Children - Girls %
Children going to Private School %
Monthly Expenditure on Education
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
85
84
82
83
70
72
39
50
227
308
Standard
Deviation
t-value
Significance
Level
23.2
23.2
33.2
31.3
42.2
38.8
46.6
46.7
263.2
395.2
.187
.852
-.145
.885
-.406
.685
-2.168
.031
-2.100
.037
Note: There are 237 and 273 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
19
In terms of Household Assets, the only significant difference seems to be that Active
Borrowers have Refrigerators, and that far fewer of them have sewing machines than all
other categories – Table 3.4. Table 3.5 on the other hand shows that the Monthly Sales of
Active Borrowers are significantly higher than all others.
Table – 3.4
ASASAH – Household Assets Ownership
Variables
Own House
Refrigerator
Colour TV
Motor Cycle
Washing Machine
Sewing Machine
Bed with Foam
Gold
Mobile phone
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
88.61
88.28
42.19
26.37
76.37
71.06
11.39
09.16
73.84
68.13
84.81
91.94
26.16
27.84
19.41
17.58
46.41
39.56
Standard
Deviation
.31839
.32227
.49491
.44147
.42570
.45431
.31839
.28895
.44044
.46682
.35968
.27270
.44044
.44903
.39634
.38137
.49977
.48988
t-value
Significance
Level
.116
.908
3.815
.000
1.355
.176
.831
.406
1.414
.158
-2.541
.011
-.425
.671
.530
.596
1.561
.119
Note: There are 237 and 273 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant at least at 90 percent level of
significant. The negative t indicates that average value of category 2 is greater than the average
value of category 1.
Table – 3.5
ASASAH – – Business Assets
Variables
Monthly Sale [Rs.]
Value of Assets - Shop/Workshop
Machinery
Instruments
Other
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
15149
12702
8836
3712
4131
8131
1085
863
7156
217
Standard
Deviation
t-value
Significance
Level
8230.3
9856.2
36281.6
15203.8
15361.7
48773.8
3622.2
3336.6
44166.9
1344.0
3.016
.003
2.128
.034
-1.211
.226
.721
.471
2.595
.010
20
Note: There are 237 and 273 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Perhaps the most positive and encouraging results relate to issues about Women’s
Empowerment as they do for most MFIs – Table 3.6. However, before we begin to
celebrate this outcome, we need to temper our enthusiasm by reminding ourselves, that
these sets of questions have non-quantitative answers and are opinions of the
respondents. Nevertheless, the results do show that women in a microfinance programme
feel that they are significantly more empowered in terms of Economic Empowerment and
in terms of Empowerment Related to Education and Health.
Table – 3.6
ASASAH – Women’s Empowerment
Variables
Category
Economic Empowerment
Score out of 14
Income Empowerment
Score out of 5
Assets Empowerment
Score out of 8
Empowerment
Related
Education and Health
Score out of 10
Social Empowerment
Score out of 10
Mean
Standard
Deviation
t-value
Significance
Level
Active Borrowers
New and Non-Borrowers
8.1059
5.7718
3.29174
3.06896
8.012
.000
Active Borrowers
New and Non-Borrowers
2.1525
2.4191
1.51378
1.52024
-1.919
.056
Active Borrowers
New and Non-Borrowers
1.5424
1.4896
1.79192
1.48916
.350
.727
Active Borrowers
5.8178
2.81725
2.835
.005
New and Non-Borrowers
5.1494
2.31177
2.829
.005
Active Borrowers
New and Non-Borrowers
4.0551
4.2739
1.82918
1.63290
-1.379
.169
with
Note: There are 237 and 273 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
3.3
Regression Analysis
There are weaknesses in using bivariate analysis, as we do above, since it does not allow
us to examine the nature of the impact, and hence, we use multivariate regression
analysis, which allows us to look at impact controlling for other related variables. These
two sets of analysis also explain why we often get contradictory findings.
The impact model estimated for Asasah is
Yij = Xijα + Cijβ + Mijγ + Tijδ +vij
21
Where Yij is an outcome on which we measure impact for household i in locality j, Xij is
a vector of household characteristics,5 Cij is a dummy equal to 1 for active borrowers and
their matched neighbours and 0 otherwise, Mij is a membership dummy variable equal to
1 if household i self-selects into the credit programme, and 0 otherwise; and Tij is a
variable to capture the treatment effects on households that self selected themselves into
the programme and are already accessing loans. T is also a dummy variable equal to 1 for
active borrowers and 0 otherwise. As 86 percent of Asasah clients in our sample are
either in their first loan cycle or second, we do not control for number of loans taken as
there are not significant differences between the clients in the two different loan cycles.
The coefficient δ on Tij is the main parameter of interest and measures the average impact
of the programme. A positive and significant δ would indicate that microfinance is
having a beneficial effect on the borrowers.
A Single Difference equation is also estimated to assess impact between active borrowers
and the pipeline clients. The form of the equation is as follows and the variables are
defined as stated above.
Yij = Xijα + Tijδ +vij
The results from the estimation for δ are given in Table 3.7. The majority of the results in
our regressions were insignificant. One significant result in our DID estimation was that
active borrowers save less than other categories of respondents (-265; p=0.06). This
might be due to the fact that they have to give in the loan instalment on top of their other
expenditures and this leaves them with little money to save every month. The other
results from DID estimation that are significant all relate with empowerment. We find
that on average active borrowers score 5 points more on the Overall Empowerment Index
compared with other respondents (4.7; p=0.004). Active borrowers also perform better on
three other empowerment indices as listed in the results table (Economic Empowerment
1.3, p=0.02; Asset Empowerment 0.46, p=0.08; Empowerment related to health and
education 2.38, p=0.00).
However, in the single difference estimates the empowerment results are not significant
except for social empowerment and on that index active borrowers perform worse than
pipeline clients (0.89; p=0.00). The difference between single difference and DID
estimates implies that both active and pipeline borrowers as a group are more empowered
than the non-borrowers. This is validated by the significance of the member dummy (M)
in the DD estimates on empowerment indices as it captures the impact of unobservable
variables (e.g. preferences) that are common to those respondents that self-select
themselves into a microfinance programme.
The other estimates that are significant in Single Difference estimation pertain to
educational expenditure and school enrolment. The treatment dummy on educational
expenditure is -97.28 which is significant at the 5% level and implies that active
5 For Asasah seven household characteristics were included in the regression out of 15 tested through
ANOVA.
22
borrowers spend less on education by almost Rs.100 compared to pipeline clients.
Furthermore, the percentage of children enrolled in schools especially girls of active
borrowers are on average less than that of pipeline clients (-11,3; p=0.035, Girls’
Enrolment -11.95; p=0.038). These are comparable to the survey results discussed in the
last section.
Table 3.7: Regression Results for Asasah
Single Difference
1
Dependent Variable
Coefficient t-value
Log(Respondent Income)
0.07
1.16
Log(Household Income)
-0.012
-0.31
Log(Per Capita Income)
0.018
0.36
Log(Total Household Expenditure)
0.002
0.95
Log(Food Expenditure)
0.033
0.66
Educational Expenditure
-97.28
-2.23
Health Expenditure
47.22
1.90
Savings
-161
-1.61
Cumulative Asset Value
-24830
-0.69
Children Enrolled in School(%)
-11.3
-2.11
Boys Enrolled in School(%)
-7.98
-1.52
Girls Enrolled in School(%)
-11.95
-2.09
2
Women's Empowerment (Overall Index)
-0.46
-0.51
Economic Empowerment
0.34
0.92
Income Empowerment
0.12
0.66
Asset Empowerment
-0.17
-0.90
Empowerment related with Education and
Health
0.15
0.53
Social Empowerment
-0.89
-4.51
**
*
**
**
***
Double Difference
Coefficient t-value
0.15
1.41
0.047
0.77
0.063
0.81
0.021
0.37
0.019
0.25
75.72
1.12
2.7
0.05
-268
-1.88
-25852
-0.66
1.08
0.13
6.86
0.87
-6.5
-0.73
4.7
2.92
1.31
2.27
0.22
0.71
0.46
1.75
2.38
0.35
*
***
**
*
4.82 ***
0.96
1 Significant at 10%(*), Significant at 5%(**), Significant at 1% (***)
2 Score based on 47 questions, the other idices listed below are a breakdown of this index. Refer to
questionnaire for detail.
Health Expenditure is also significant in the Single Difference estimation and shows that
microfinance has had a positive impact for active borrowers (47.22, p=0.10). On further
analysis of the data we find that pipeline clients are spending the least amount on health
when compared to other respondents.
In the DID regression, the member dummy was significant for all measures of income
and for total expenditure, implying that the unobservable factors such as entrepreneurship
has a positive impact on the above mentioned outcomes over and above that of access to
microfinance. One of the variables controlled for in the regressions was the number of
earners in the household and that was significant in 8 out of the 18 DID regressions. It
was positively associated with household income, per capita income, total expenditure,
food, asset value, and some of the empowerment indices. Another variable controlled was
the gender of the household head with a dummy, which took a value of one for female
headed households. This was significant and negatively associated with the income and
expenditure measures implying that female headed households are poorer; however, it
was significant and positively associated with most of the empowerment indices meaning
that they were more liberal as it would be expected.
23
3.4
Focus Group Discussions
This section discusses the client feedback of microfinance institutions and the various
coping mechanisms at the local level in terms of financial transactions. Information has
been gathered primarily through Focus Group Discussions with beneficiary groups in
randomly selected programme localities. Some additional information has also been
gathered through discussions with the respective programmes’ field and programme staff.
Three focus group discussions were held in the Asasah localities, one each in urban areas
of Lahore, Kasur and Raiwind. Each group had 6 to 8 participants.
Client Profile
Most of Asasah clients had small enterprises working within their homes. Out of 22
participants in the three focus groups, five women were housewives while the remaining
were doing some kind of business. The housewives had taken loans for contribution in
their husband’s businesses. Borrowers were 1st to 3rd cycle categories, but there were very
few variations in their responses in context of their credit cycles.
A significant impact was reported in the income levels after receiving the credit, and
women narrated astute business sense in expansion of their enterprise after the Asasah
loan and its utilization in scaling up their business.
Prior to Asasah interventions, the women of these localities had no relationship with any
other financial or microcredit institution. Women felt that the banking systems were too
tedious and they lacked the time and the knowledge in dealing with such procedures.
‘The Bank procedures are too lengthy and tedious. Firstly, we don’t know much about
how a bank credit system works. Then their procedures and screening process is very
lengthy and the recovery process is also very long resulting in additional debt on the
client. So Asasah suits our needs as not only is it accessible, but also because the loan
can be repaid within a year.’
(FGD Participant, Chowk Yaadgar, Lahore)
Savings are an integral part of the Asasah programme and women can save whatever
amount possible for them with their group leader. Other than that, women in all the areas
saved petty amounts for urgent needs and also depended on Asasah savings for
emergency purposes or even planned requirements. Informal borrowing from relatives
and friends was also a common trend in case of an emergency.
In Kasur and Lahore, many participants said that they participated in the committee
system in addition to Asasah savings. As a result many had bought televisions,
refrigerators, DVD players, etc, from their savings.
‘I plan to buy a motorbike for my son next eid from my savings.’
(Participant, Shahbaz road, Kasur)
24
Jewellery and livestock were generally perceived as assets, which could be sold with
immediate remuneration during a crisis.
Clients in Lahore said that Kashf also worked in their community, but they preferred
Asasah as they have had a good relationship with the organization and found no reason to
shift from their programme to another one. They also felt that the Kashf programme was
more difficult and less flexible in its approach.
Clients’ Feedback
The most frequent and prominent point mentioned in all three areas was the attitude of
the Asasah staff. Women said the staff attitude was very positive and understanding,
which was one of the main reasons for their continued relationship with the organization.
‘Asasah staff go door to door to explain their entire programme to the people. They are
polite, give respect to everyone and try to cooperate in which ever way possible.’
(Participant, Chowk Yadgaar, Lahore)
The flexible programme approach was anther major incentive. Clients did not feel under
pressure to pay back at designated dates and could avail easier provisions according to
their personal situations. If a borrower felt that the twice-a-month instalment was too
burdensome, she could pay once a month, while many clients also expressed that they
preferred the twice-a-month instalment, as it reduced the amount of the recovery.
‘Once- a- month recovery is easier for those people who depend on monthly salaries as
they can pay after receiving their pay checks. In case of twice-a-month it gets quite
difficult as in the middle of the month there is not sufficient amount to pay for the
instalments from the household budget.’
(Participant, Chowk Yadgaar, Lahore)
A noticeable number of clients also mentioned that the group size was not a major
determinant and the number of members could range between 20 to 25 women.
‘In fact, Asasah even agrees to less than 20 members in case there are not adequate
number of women in the group. That is good, because otherwise, it would be difficult for
many women to access this service.’
(Participant, Raiwind)
Many women were of the view that the loan amount should be larger for mature clients as
more investment is required as business expands. The small business finance loan of the
programme required a collateral in the form of house ownership registration or some
other asset deed, which many clients did not have. The clients felt that such regulations
should be done away with considering the economic situation of the borrowers in their
areas.
25
‘Next time I want a Rs. 100,000 loan, but I live in a rented house and do not have any
other asset which can be handed over as a collateral. I think they should trust their
mature clients and give more flexibility for bigger credit amounts as well like they do
with smaller amounts.’
(Participant, Chowk Yadgaar, Lahore)
‘We can feel the difference in our economic status after the Asasah loan. If we get a
larger loan amount, the situation will further improve, therefore, we feel that the loan
amount should be increased so that we can put in more into our businesses.’
(Participant, Raiwind, Lahore)
There were a few voices among the participants, who mentioned that a lower interest rate
and a longer loan recovery period of 18 months would provide them with a cushion to
further improve their income levels.
26
Appendix Chapter 3
A 3.1.1 Institutional Snapshot
Indicators
Age
Members outstanding
Active borrowers
Branches
Districts covered
Total disbursements (Rs)
Average loan disbursed (Rs)
Account officers (loan officers)
Total employees
Employee turnover (%)
Borrowers per account officer
Total income(Rs)
Operational self-sufficiency (%)
Financial Self-sufficiency (%)
Adjusted Return on assets (%)
Portfolio yield (%)
Cost of borrowings
Operational Efficiency
Portfolio at risk (>30 days) (%)
Cost per unit of money disbursed
2006
4
31,763
25,081
27
9
457 million
13,078
200?
345
2
232
37 million
76
75
-8
37.9
11
0.54
0
0.46
A3.1.2 Products Profile
Loan Product
Purpose
Term/Duration
Loan size
Interest rate
(percent)
Repayment term
Processing Fee
Savings
Insurance
Protective
Loan
Fulfil basic
needs
12 months
Rs.3,000 to
Rs.8,000
20
Productive Loan
Income
Generation
12 months
Rs.10,000 to
Rs.25,000
20
Small Business
Finance
Small Business
Development
12 months
Rs.26,000 to
Rs.50,000
20
Livestock
Finance
Dairy Sector
Investment
12 months
Rs.30,000 to
Rs.70,000
20
Fortnightly
Rs.50
Voluntary
1% of loan
Fortnightly
Rs.50
Voluntary
1% of loan
Fortnightly
Rs.50
1-2% of loan
Fortnightly
Rs.50
2% of loan
27
A3.1.3 Funding Sources
Funds
Commercial Funding
Crescent Leasing Ltd.
Deutsche Bank
First Elite Capital Modarba
Orix Leasing Pakistan Limited
Pak Oman Investment
Sub – Total
Donor Funds
Grameen Trust Bangladesh
Orangi Charitable Trust -OCT/OPP
Pakistan Poverty Alleviation Fund
Swiss Agency for Cooperation and
Development
Save the Children ,USA
Sub Total
Total
Number of
Loans
Cumulative Principle
Disbursed
Mark-up
Rate
741
46
8,698
5,527
473
16,624
9,547,000
1,730,000
112,89,130
74,412,000
5,356,000
219,320,130
12%
2%
12-13%
10-12%
12%
100
1,581
13,304
36
1,165,700
19,762,000
175,080,000
1,351,000
4%
16.4%
6-8%
--
1,257
15,139
31,763
14416000
196,088,700
415,408,830
--
28
A3.1.4 Organizational Structure
Board of Directors
Operations Committee
CEO
S
C
Area
Research
Manager
D
Branch
t
Finance
Department
t
Finance
Marketing
Internal Audit
Quality
Department
Accounts
Assurance
Monitoring
Manager
Assistant
Branch
Branch Manager
Accountant
Community
Development Officer
29
D
Disbursemen
A3.2 Survey Results – Tables
Table – A.3.2.1
Sample Information
[ASASAH]
Respondents
Respondent
Category
%
510
100.0
237
46.5
New Borrowers
92
18.0
Non-Borrowers (Same Area)
90
17.6
Non-Borrowers (New Area)
91
17.8
Active Borrowers
Table – A.3.2.2
Sample Information
[ASASAH]
Borrowers
Loan
Taken
%
329
100.0
One
173
52.6
Two
111
33.7
Three
31
9.4
Four
14
4.3
Table – A.3.2.3
Respondent Characteristics - Education
[ASASAH]
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
Total
NonBorrowers
237
92
181
510
46.5
18.0
35.5
100.0
76.4
79.3
68.0
73.9
Primary
11.4
12.0
12.7
12.0
Middle
8.9
1.1
9.9
7.8
Metric
2.5
5.4
7.2
4.7
.4
1.1
1.7
1.0
Formal Education No Education
Inter
Graduate and above
Technical Training No Training
Have Training
.4
1.1
.6
.6
99.6
98.9
98.9
99.2
.4
1.1
1.1
.8
30
Table – A.3.2.4
Respondent Characteristics - Nature of Business
[ASASAH]
Respondent Category
Pipeline
Borrowers
Active Borrowers
Respondents
Total
NonBorrowers
237
92
181
510
46.5
18.0
35.5
100.0
29.5
30.4
18.2
25.7
Business (Vendor without fixed outlet)
8.9
7.6
14.4
10.6
Goods Supplier
4.2
6.5
1.1
3.5
19.4
16.3
35.9
24.7
6.8
6.5
2.2
5.1
Cottage Industry
20.3
21.7
23.8
21.8
Transport Service Provider
11.0
10.9
4.4
8.6
Business (Retail Shops with fixed outlet)
Personal Community Service Providers
Technical Service Provider
Table – A.3.2.5
Household Demography
[ASASAH]
Respondent Category
Active
Borrowers
Respondents
Family Size
Average Family Size
Dependency Ratio
Pipeline
Borrowers
NonBorrowers
Total
237
92
181
510
46.5
18.0
35.5
100.0
1-3 Person
6.8
6.5
10.5
8.0
4-6 Person
48.9
34.8
43.1
44.3
7-9 Person
36.3
52.2
37.6
39.6
More than 9
8.0
6.5
8.8
8.0
6
7
6
6
101.53
94.38
91.30
96.60
31
Table - A.3.2.6
Housing Characteristics - Quality
[ASASAH]
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
Total
237
92
181
510
46.5
18.0
35.5
100.0
House owners
89.5
94.6
86.2
89.2
Person per room
3.53
3.55
3.31
3.45
Houses with baked bricks
92.4
97.8
92.3
93.3
Houses with RCC Roof
34.6
39.1
33.7
35.1
Houses with Cemented Floor
40.9
63.0
41.4
45.1
Table - A.3.2.7
Housing Characteristics - Services
[ASASAH]
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
Total
NonBorrowers
237
92
181
510
46.5
18.0
35.5
100.0
Houses with telephone
3.4
2.2
4.4
3.5
Houses with electricity
99.2
98.9
97.2
98.4
Houses using gas for cooking
51.5
84.8
62.4
61.4
Houses using flush system
92.8
98.9
95.0
94.7
Table - A.3.2.8
Household Economic Status
[ASASAH]
Respondent Category
Active
Borrowers
Respondents
237
Pipeline
Borrowers
92
NonBorrowers
Total
181
510
46.5
18.0
35.5
100.0
Income Per Capita
1601
1539
1376
1510
Expenditure Per Capita
1403
1336
1202
1320
698
648
668
678
18
18
35
24
8
8
7
7
256159
309257
263237
267913
5000
0
The Official Poverty Line is taken as Rs 1,000 per capita per month – see Montgomery (2006).
12692
11333
Per Capita Food Expenditure
Poor Households (% below Official Poverty Line)
Household Asset Score
Value of household assets
Average Indebtedness
32
Table - A.3.2.9
Child Education
[ASASAH]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
Overall
NonBorrowers
School Going Children %
85
84
85
85
School Going Children - Boys %
82
81
84
82
School Going Children - Girls %
70
73
72
71
Children going to Private School %
39
50
50
45
Monthly School Fee per Child
65
74
90
76
Tuition Fee per Child
40
54
58
49
Transport Fee per Child
Monthly Expenditure on Education
0
0
5
2
227
322
299
272
Figures are Averages
Table - A.3.2.10
Child Immunization
[ASASAH]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
Overall
NonBorrowers
Complete Course
79.1
84.3
74.5
78.4
Incomplete Course
20.9
13.7
24.5
20.9
2.0
1.0
.7
No Vaccination
Only for household having children less than 5 years
Table - A.3.2.11
Health Expenditure
[ASASAH]
Respondent Category
Active
Borrowers
Members reported illness (Last 30 days)
Monthly Expenditure on Health
Pipeline
Borrowers
NonBorrowers
Overall
2
2
2
2
199
180
488
301
Figures are averages
Table - A.3.2.12
Sources of Household Income
[ASASAH]
Respondent Category
Active
Borrower
s
Pipeline
Borrowers
Overall
NonBorrowers
33
Income Per Capita
(%) Income from Main occupation
Secondary occupation
1601
1539
1376
1510
77
68
60
69
0
0
0
0
22
32
39
30
Pension
0
1
1
0
Inland Remittances
0
0
0
0
Overseas Remittances
0
0
0
0
Rental Income
0
0
0
0
Other Earners
Figures are averages
Table - A.3.2.13
Household Consumption Pattern
[ASASAH]
Overall
Respondent Category
Active
Borrowers
Expenditure Per Capita
Pipeline
Borrowers
NonBorrowers
1403
1336
1202
1320
Per Capita Food Expenditure
698
648
668
678
(%) Expenditure on FOOD
50
49
56
52
Education
3
4
3
3
Health
3
2
3
3
Electricity
7
6
8
7
Gas
2
3
3
2
Telephone
1
1
1
1
Rent
2
1
3
2
Travelling
3
2
4
3
22
17
0
14
0
2
1
1
4
4
2
3
- Fruits (days)
4
3
2
3
- Eggs (days)
4
5
3
4
Repayment of Loan
Saving
Consumption Last 30 days
- Meat (days)
Figures are averages
34
Table - A.3.2.14
Household Assets Ownership
[ASASAH]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Own House
88.6
93.5
85.6
88.4
Refrigerator
42.2
27.2
26.0
33.7
Colour TV
76.4
83.7
64.6
73.5
Motor Cycle
11.4
13.0
7.2
10.2
Prize Bond
1.3
.6
Washing Machine
73.8
79.3
62.4
70.8
Sewing Machine
84.8
93.5
91.2
88.6
Bed with Foam
26.2
39.1
22.1
27.1
Gold
19.4
22.8
14.9
18.4
Mobile phone
46.4
50.0
34.3
42.7
Urban Property
Figures are average percentage
Table - A.3.2.15
Business Characteristics
[ASASAH]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
Family Workers (engaged in business)
1
1
Permanent on Monthly Salary
2
1
Permanent on Daily Wages/Piece Rate
2
6
Seasonal/Occasional
Monthly Sale [Rs.]
Value of Assets - Shop/Workshop
NonBorrowers
1
1
2
1
3
2
3
3
3
15150
17327
10352
13840
8837
2391
4384
6094
Machinery
4131
19690
2256
6272
Instruments
1085
1395
593
966
Figures are averages
35
Table - A.3.2.16
Women’s Empowerment
[ASASAH]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Number of Respondents
236
92
149
477
Economic Empowerment - Score out of 14
8.1
7.7
4.6
6.9
Income Empowerment - Score out of 5
2.2
2.1
2.6
2.3
Assets Empowerment - Score out of 8
1.5
1.7
1.4
1.5
5.8
5.5
4.9
5.5
4.1
5.0
3.8
4.2
Empowerment Related with Education and Health - Score out of 10
Social Empowerment - Score out of 10
Figures Average Score except number of respondents
36
Table - A.3.2.17
Women’s Empowerment - Economic Aspects
[ASASAH]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
236
92
149
477
Do you take decisions on the aspects of
purchase, modification or repair of house?
39
25
20
30
Do your husband discuss with you when
decision on modification/repair of house is
made
60
85
67
67
Do you take decisions on the purchase or
sale of livestock?
20
22
12
18
Did your husband discuss with you before
sale or purchase of livestock?
39
26
18
30
Do you purchase your dresses for the
family?
79
87
70
78
Do you purchase the utensils for your
family?
79
87
75
79
Do you purchase gold and jewellery for
your family?
37
33
13
29
Do you take decisions on borrowing
money?
57
46
26
45
Do your husband discuss with you on the
issues of borrowing money?
66
66
51
61
Do you spend money you have borrowed?
47
29
10
32
Do you repay the money you have
borrowed?
63
55
11
45
Do you take decisions on transactions
involving household Equipments?
60
46
26
47
Do you have any debt in your name?
87
84
6
61
Do your husband discuss with you when he
has made the debt?
79
79
51
70
Figures are percentages except number of respondents
37
Table - A.3.2.18
Women’s Empowerment - Income
[ASASAH]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
236
92
149
477
Do you have your own income?
30
24
66
40
Do you spend it for the family yourselves?
35
27
62
42
Do you need the permission of your husband
to spend your income?
25
34
28
27
Do you get any part of your family income
or husbands income to your hands
regularly?
49
43
42
46
Do your husband discuss with you when he
spends income for the family requirements?
77
79
64
73
Figures are percentages except number of respondents
Table - A.3.2.19
Women’s Empowerment - Assets
[ASASAH]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
236
92
149
477
Do you possess any household asset?
15
11
14
14
Do you have cash savings in your own
name?
22
29
28
25
Do you operate Bank account in your
name?
1
1
1
1
Do you pledge, Sell, or exchange any
of the above said assets yourself?
15
8
15
14
Do your need permission from your
husband to sell, pledge, exchange any
of the assets?
22
35
21
24
Do you have purchased land in your
own name?
12
1
1
6
Is the house you stay registered in
your name?
14
15
13
14
Is the house you stay registered in
your and husband name?
55
67
44
54
Figures are percentages except number of respondents
38
Table - A.3.2.20
Women’s Empowerment - Health and Education
[ASASAH]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
236
92
149
477
Do you take decisions on the issues of your
children education?
47
34
26
38
Do your husband consult with you when he
takes decision on the education of children?
72
80
61
70
Do you think you can decide on how many
children you can have?
41
42
24
36
Do you think you can decide on the spacing
between children?
53
42
38
46
Do you think that you can decide on the
treatment of your and your family member
illness?
46
40
38
42
Do you think you can decide on the method
of treatment for your family members?
55
50
50
52
Do you think you can decide on the type of
contraceptive to be used?
31
21
21
26
Do your husband discuss with you on the
issues of health aspects of children?
78
78
77
78
Do you have any choice of food prepared
and served in your home?
79
80
78
79
Are you able to take care of the nutritional
requirements of your self, family and
children?
80
84
80
81
Figures are percentages except number of respondents
39
Table - A.3.2.21
Women’s Empowerment - SOCIAL Aspects
[ASASAH]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
236
92
149
477
Are you free to go out and visit your
friends and relatives with out permission?
68
85
77
74
Do you have the choice of the dresses you
wear?
81
99
94
89
Do your husband impose his religious
beliefs on you and make you accept them?
5
8
2
4
Do you have any association with political
parties?
3
3
1
3
Do you participate in voting and other
democratic procedure?
46
57
59
52
Do your husband impose her political
ideas on you and make you accept them?
3
5
5
4
Do you participate in the meetings of NGO
programmes or in other social events?
59
74
35
54
Do your husband prevent you from
participating in such programmes?
14
12
6
11
Do you take decisions on the marriage of
your son-daughter?
53
70
43
53
Do your husband discuss with you on the
issues of the marriage of children and
close relatives?
75
87
61
73
Figures are percentages except number of respondents
40
Table - A.3.2.22
Borrowers - Loan Amount Used by:
[ASASAH]
Respondent Category
Active
Borrowers
Borrowers
Loan was Self
used by:
Spouse with your suggestion
237
92
329
72.0
28.0
100.0
34.2
16.3
29.2
58.6
62.0
59.6
2.2
.6
7.2
19.6
10.6
Spouse without your suggestion
Other Members
Total
Pipeline
Borrowers
Figures are column percentages except number of borrowers
Table - A.3.2.23
Borrowers - Loan Amount Used For:
[ASASAH]
Respondent Category
Active
Borrowers
Borrowers
Loan was Business Activity
used for:
Repayment of debts
Pipeline
Borrowers
Total
237
92
329
72.0
28.0
100.0
95.8
96.7
96.0
3.3
2.7
.8
Consumption
2.5
Marriage of Daughter/Son
.6
.8
.6
Figures are row percentages except number of borrowers
Table - A.3.2.24
Borrowers’ Perceptions - Getting Loan
[ASASAH]
Number of Borrowers
237
Loan utilized for same purpose (%)
100
Loan sufficient (%)
100
Time Obtaining Loan (Months)
36
Expenditure incurred (Rs.)
Problems in Obtaining Loan (%)
136
No Problem
93.7
Collateral
3.0
Delay in Payment
2.1
Too many Meetings
2.1
Too many visits
.8
Figures are averages
41
Table - A.3.2.25
Borrowers’ Perceptions - Coping Strategy
[ASASAH]
Loan Taken
One
Number of Borrowers
Two
81
Sale of asset/Sale of Animals
Three
111
Overall
Four
31
14
237
3.7
.9
Borrow loan from relative/friends
77.8
91.0
71.0
42.9
81.0
Borrow loan from Microfinance
38.3
19.8
45.2
85.7
33.3
1.2
.9
Borrow loan from Commercial
Banks
Borrow
from
Moneylender/Commission agent
1.7
.8
1.2
.4
Reduce Consumption Expenditure
1.2
2.7
Search for extra work
1.2
3.6
6.5
3.0
Extra hours in existing occupation
4.9
6.3
3.2
5.1
3.2
.4
1.7
Have Enough Saving
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
Table - A.3.2.26
Borrowers’ Perceptions - Impact
[ASASAH]
Loan Taken
One
Number of Borrowers
Two
Three
Overall
Four
81
111
31
14
237
Effect on quality of Improved
life
No Change
92.6
95.5
93.5
100.0
94.5
7.4
4.5
6.5
Family eat your fill
As much as wanted (all types)
46.9
38.7
58.1
92.9
47.3
As much as wanted (not all types)
50.6
60.4
38.7
7.1
51.1
100.0
87.8
Have more to eat now
Sometimes felt hunger
2.5
.9
3.2
Have more to eat now
76.5
91.0
100.0
Have more to eat in earlier times
Family health
1.7
2.5
.9
1.3
Equal
21.0
8.1
11.0
Health is better now
70.4
79.3
1.2
3.6
28.4
17.1
96.3
99.1
3.7
.9
Health was better earlier
Equal
Sustainable
in income?
5.5
increase Yes
No
80.6
85.7
76.8
7.1
2.5
19.4
7.1
20.7
100.0
100.0
98.3
1.7
Figures are column percentages except number of respondents
42
Table - A.3.2.27
Non-Borrowers’ Perceptions - Getting Loan
[ASASAH]
Respondent Category
NonBorrowers
(Same Area)
Number of Non-Borrowers
Aware about credit facility
NonBorrowers
(New Area)
Overall
90
91
181
100.0
100.0
100.0
Yes
67.8
63.7
65.7
No
31.1
36.3
33.7
16.7
31.9
24.3
6.7
11.0
8.8
Do not need
Amount of Instalment is high
Interest is high
5.6
6.6
6.1
Regular payment is difficult
28.9
12.1
20.4
Do not know office address
2.2
2.2
2.2
Do not like to borrow
2.2
1.1
Applied for
2.2
1.1
Religious Reason
2.2
1.1
Figures are column percentages except number of respondents
Table - A.3.2.28
Non-Borrowers’ Perceptions - Coping Strategy
[ASASAH]
Respondent Category
Overall
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
92
90
91
1.1
2.2
1.1
Borrow loan from relative/friends
88.0
98.9
83.5
90.1
Borrow loan from Microfinance
33.7
11.0
15.0
4.4
1.8
New
Borrowers
Number of Non-Borrowers
Sale of asset/Sale of Animals
Reduce Consumption Expenditure
1.1
Search for extra work
1.1
Extra hours in existing occupation
4.3
Have Enough Saving
273
.4
1.1
1.8
1.1
.4
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
43
Table - A.3.2.29
Non-Borrowers’ Perceptions - Change
[ASASAH]
Respondent Category
Number of Non-Borrowers
Effect on overall quality of Improved
life
Deteriorated
No Change
Family eat your fill?
Have more to eat r?
NonBorrowers
(New Area)
92
90
91
273
97.8
35.6
63.7
65.9
8.9
12.1
7.0
2.2
54.4
24.2
26.7
As much as wanted (all types)
62.0
11.1
48.4
40.7
As much as wanted (not all types)
38.0
80.0
39.6
52.4
Sometimes felt hunger
6.7
12.1
6.2
Often felt hunger
1.1
Have more to eat now
Have more to eat in earlier times
Equal
Family health ?
Overall
NonBorrowers
(Same Area)
New
Borrowers
Health is better now
Health was better earlier
Equal
.4
91.3
31.1
61.5
61.5
1.1
10.0
12.1
7.7
7.6
57.8
26.4
30.4
76.1
31.1
49.5
52.4
1.1
10.0
11.0
7.3
22.8
57.8
39.6
39.9
Figures are column percentages except number of respondents
44
Chapter Four: Orangi Charitable Trust (OCT)
4.1
Institutional Review
4.1.1
Background and History
The Orangi Charitable Trust (OCT) is an off-shoot of the Orangi Pilot Project (OPP), a
non-governmental development institution created in 1980 in the squatter settlement of
Orangi Town in Karachi. The OPP was formed by the legendary social scientist, Dr.
Akhtar Hameed Khan, who worked in Comilla Academy in Bangladesh. With Dr. Khan’s
vision, OPP’s work fostered a culture of reflection and self-help amongst the enterprising
poor. Respecting the entrepreneurial spirit of people as articulated in OPP’s vision, all the
programmes focus on ‘supporting effective existing structures’ instead of creating new
structures which would likely be unsustainable and counter-productive. Moreover, on the
basis of thorough reflections, action research and analysis, the Project encouraged local
people to generate solutions, develop programmes, run, manage and fund them. While
building technical and strategic capacities for this to happen was realized upfront, Dr.
Khan was also clear that OPP’s success was largely dependent upon the strengthening of
neighbourhoods and communities as well.
Although OPP designed innovative programmes and facilitated their implementation with
considerable success, for e.g. development of sanitation and sewerage infrastructure,
processes were considered fragmented and tactical, more than strategic. When years of
research insights and lessons were synthesised, OPP identified four main issues of Katchi
Abadis. These included (a) sanitation and housing quality (b) employment (c) health (d)
education. While people were organizing themselves and responding to issues, clearly it
was not enough. It was realized that without technical and managerial guidance, and
stable credit support, the solutions will always be sporadic and random. In 1987, the OPP
upgraded itself into four autonomous institutions to improve the quality and scope of
planning and implementation. These were:
•
•
•
•
4.1.2
The OPP-RTI (Orangi Pilot Project – Research and Training Institute) dealing
with sanitation, housing , education, research and training;
The Orangi Charitable Trust (OCT) for microcredit servicing;
Karachi Health and Social Development Association (KHASDA) looking at
health; and
The OPP Society which channelizes funds to the above three institutions.
Philosophy and Scope of Services
OCT started its microcredit servicing from 1987 with an aim to support the existing
businesses. The rationale being that micro enterprises in Orangi were not able to access
loans from commercial banks due to loan size, collateral requirements and other
considerations. The key objectives of OCT are to:
•
Provide credit for the expansion of the existing micro-enterprises in urban
communities
Provide credit for agro-inputs in rural areas
Strengthen the capacity of NGOs and CBOs to support micro-enterprises in the
area through guidance and training
Provide lines of credit to trained NGOs/CBOs
•
•
•
OCT opted for a different paradigm for microcredit instead of seeing microcredit as a
direct tool for poverty alleviation. Contrary to other institutions, it solely provides credit
to facilitate movement of entrepreneurs poor into better economic and social conditions.
Consequently, it has not engaged in identifying the poorest of the poor or empowering
women for instance, to bring about gender equity. OCT specifically focuses on equity
and how relevant opportunities can be made available to those who put efforts.
This approach is in line with OPP’s self-help doctrine where individuals and communities
are encouraged to take charge of their own lives. OCT management explains that the
approach is responsive to the dynamics of ‘market economy’ because ‘credit is not a
welfare activity.’ Therefore, OCT focuses on facilitating its clients and partners in better
functioning in the market economy by making them self-reliant, competent and
strategically savvy.
From 1987-1991, OCT solely provided credit services to people based in Orangi with
functional enterprises. In 1990, M. A. Imtiazi, Secretary General of BCCI (now INFAQ
Foundation), urged OCT to extend help to micro-entrepreneurs living in areas outside
Orangi. Simultaneously, the World Bank selected OCT as one of its major microfinance
projects. Since then, INFAQ Foundation has donated Rs. 27.85 million and World Bank
Rs. 8.95 million as revolving fund. These donations made it possible to issue loans to
small entrepreneurs living in Karachi, to small farmers, herders and traders of Karachi
villages and to NGOs in districts of Sindh, Punjab and NWFP.
OCT does not envisage any major expansion in its direct operations, geographical reach
or client base. It works with a carefully selected and focused client base within Orangi,
with just a single office located in the building of OPP-RTI. The total loan disbursed in
Orangi between 1987- August 2006 amounts to Rs. 157,760,184 to 9,508 units. Out of
34943
35000
30000
25606
25000
21757
20000
Served Units
13684
11922
15000
13186
Closed Units
Open Units
9337
10000
8073
5000
1264
2
0
Orangi
Outside Orangi
Total
these, as many as 7,301 units are closed and 2,207 units are open, which reflects on
OCT’s resolve to keep its client base small and manageable. This portfolio is balanced by
replication of its microcredit programme by supporting NGOs/CBOs, where
institutionalization becomes the core focus rather than operational expansion. OCT is
working with 47 NGOs/CBOs where a total of Rs. 286,600,604 has been disbursed to
25,606 units till August 2006. Out of this 13,926 units are closed while 11,680 are open
in 433 areas and villages.
Figure 4.1: Total Units Served by OCT
Table 4.1: NGOs supported by OCT
Number of NGO/CBOS
Number of Areas covered
Sindh
31
255
Punjab
14
153
NWFP
1
3
Balochistan Total
1
47
12
421
4.1.3 Organizational Structure
The project area of Orangi with a population of one million is divided into four zones. A
supervisor is responsible for each zone whereas five account officers manage the
accounting, and monthly printouts of account sheets help supervisors to check defaults.
OCT management was reorganized in April 1996 where the post of Joint Director was
abolished. The sections were: loans, accounts, recovery and training. The Vice-Chairman
of OCT became the coordinator. The trustees are the Chairman and Vice-Chairman. The
organizational culture is very informal which allows the clients to identify with OCT staff
and strengthen their relationship.
4.1.4
Programmatic Portfolio
OPP-OCT is providing microcredit to existing micro enterprises at bank rate of interest
without collateral ranging from Rs. 2,000 to 50,000 with simple procedures and
documentation. There are eight different types of products that are offered by OCT to its
Orangi and non-Orangi clients. The details are as follows:
•
Loans to Schools: There are over 750 schools in Orangi, two-thirds of which are
unsustainable with 50-500 students charging very low fees. The quality of
education as well as the infrastructural conditions of such schools is dilapidated.
Therefore, two types of credit have been introduced: loans with service charge for
physical upgradation, and teacher’s training to mid and higher level schools.
There are 665 schools which have received loans amounting to Rs. 19,352,981.
Loans without service charges are provided to 57 small schools totalling Rs.
1,054,710 for physical up-gradation. Six units are open and the recovered amount
is Rs. 1,001,610.
3
•
Loans to Manufactures: Orangi Town is bubbling with entrepreneurial spirit with
family units and individuals involved in various small-scale manufacturing. For
supporting these businesses so that they can expand and be sustaining, loans to
manufacture products are given. Commonly, loans are given to Banarsi Cloth
weavers, garment factories and leather work producers, stitching centres,
automobile and auto spare parts workshops, furniture makers and many others.
Till August 2006, a total of Rs. 78,164,872 loans has been disbursed.
•
Loan to Traders: Retailers and traders are also extensively supported by OCT.
Almost one-third of clients served constitute traders running general stores,
medical stores, electrical shops, confectioners, butchers, etc. The total amount
disbursed is Rs. 154,158,305.
•
Loan to Service Providers: A total amount of Rs 49,935,027 is disbursed as
loans to service providers like beauticians, hoteliers, transporters, etc.
•
Loan to upgrade Thallas: 93 percent of Orangi’s houses have been built with
financial and technical assistance from local building component manufacturing
yards operated by entrepreneurs. These yards exist in all the neighbourhoods and
are known as thallas, their owners take on house-building contracts or supply
masons as needed by other contractors. Although the emergence of thallawalas
has contributed to improving the construction and housing quality in Pakistan,
however, due to limited perspective, their technical designs and services were
considered to be generally very archaic or outdated. Therefore, OPP-RTI offered
carpentry and masonry skill training and technical advice. Loans were provided
for improving the technology used by thallawalas such as mechanizing the blockmaking process, developing prefabricated roofs and floor slabs, etc. This technical
advice and credit has helped at least 60 thallawalas who now employ over 300
persons with the upgradation and expansion of their services. A total loan of Rs.
2,385,100 is provided to 135 thallawalas.
•
Loans to Farmers and Fisher folk: This is another major product of OCT with
10,758 units served (roughly one-third of total) with loans of Rs. 121,381,603
across Sindh. These loans are given mainly through farmers’ collectives and
NGOs for the purchase of seeds, fertilizers, pesticides, tractor hiring, etc, thus
supporting them from crop sowing to cutting and selling. The size of loan is
determined by the type of crop and area of crop. Loans have also been given for
paving water channels, installing electrical pumps for water-logged farms and fish
farming.
•
Loan to Clinics: OCT provides loans to upgrade physical spaces and technical
equipment of health facilities in and outside Orangi. Almost 198 clinics have been
supported through loans of Rs 3,928,400.
4
•
Loan for Livestock: OCT also supports livestock farming and diary business
especially through its partner NGOs. A total loan of Rs. 14,381,603 has been
disbursed to 1,709 units.
Loan Types as % of Total Portfolio
Thalla, 0.53
Clinic, 0.88
livestock, 3.2
School, 4.8
Manufacturing ,
17.5
Services , 11
Farming &
Fisherfolk, 27.4
Trading, 34.7
Manufacturing
Farming & Fisherfolk
Trading
Services
School
livestock
Clinic
Figure 4.2
4.1.5
Lending Methodology and Selection Criteria
As mentioned in previous sections, OCT only provides loan to individuals primarily
because of the culture of Orangi town and also because group repayments have higher
rates of defaulting. Reaching this procedure and clarity, however, was no mean feat. It
took almost 16 years of experience and lessons-learnt by implementing its microcredit
programme, that OCT finally settled on its current strategy. In the beginning, loans were
given to individual entrepreneurs selected and supervised by OCT managers. This was
effective only till the number of borrowers were limited. Supervision and tracking
became a logistic and financial nightmare as OCT’s clients grew in number and spread
geographically. A simplistic solution was applied and numbers of supervisors were
increased. This however posed a challenge of judicious use of discretionary powers.
During 1991-94, OCT was faced with a difficult scenario where its managers were giving
out loans in great numbers across Karachi city. In 1996, the system nearly collapsed with
sky-rocketing defaulters and umpteen cases of misuse of discretion. For saving the
programme, the number of borrowers and staff was curtailed extensively. The evolution
of loan management system went through four distinct faces that are outlined below:
4.1.5.1 Phase 1: Loans through Social Organizers/Supervisors
Supervisors recommended loan application upon a quick visit to the borrower’ enterprise
whereas the final decision was made by the Director and Joint Director when two to three
applications were received. In reality, loans were approved solely on supervisor’s
recommendation. Account keeping was also manual.
5
Thalla
Several flaws surfaced when the system was implemented in Orangi only. The
programme started in all areas of Orangi with a population of over 1 million. It was
humanly impossible for the supervisors to make informed decisions about all borrowers.
Therefore, a rise in bad clients, difficulties in loan recovery and weak supervision, were
the obvious outcomes of this system. Manual accounting made it impossible to check
status especially when roles and responsibilities of teams were also not defined or
distributed.
4.1.5.2 Phase 2: Loans through Extension (1993-95)
Addressing the flaws, the second phase had properly distributed sections and hence, roles
of supervisors. Four sections were formed separately dealing with loans, accounts,
recovery, and training and extension.
In this phase, maximum loan size was also defined along with the recovery period while
credit was only distributed in Orangi. Agents were selected amongst good clients who
helped in selecting new borrowers and credit recovery. Disbursement through checks was
introduced along with a computerized accounting system. These changes helped OCT in
improving the recovery rates, client selection, operational efficiency and information
based decisions. Moreover, a clear division of work strengthened the team’s collegiality
and job satisfaction.
In 1995, the programme was reviewed again and it was found that some of the extension
activities were not based on credible information. Also agents having active businesses
were not able to respond to all the loan requests directed to them. Moreover, the time for
payments and number of instalments were not feasible for clients or the organization.
4.1.5.3 Phase 3: Loans through Good Clients (1996-99)
To respond to the pressing logistical and HR constraints, the lending methodology was
reviewed again. This time, OCT approached all good clients with an opportunity for them
to identify two borrowers from their vicinity. The nature and frequency of meetings with
borrowers were changed extensively. Initially, monthly meetings didn’t get a positive
response; however, in 8-9 months, borrowers were more forthcoming. Loan decisions
were institutionalized by forming a loan committee which approved loans through
consensus. Most importantly, the number of instalments was reduced to ten for efficient
recovery while reduction in service charges was also offered with early repayments.
These changes made the process more streamlined and transparent. Also the circle of
trusted clients became stronger and more effective. However, in 2000 multiple
complaints were received that the number of instalments are too few and difficult to pay
for.
4.1.5.4 Phase 4: Re-verification of Loans (2000 onwards)
The loan recovery period was extended to fifteen months. Also, to meet the increased
demands for credit in local markets, it was decided that loans could be processed if
6
guarantees of two local entrepreneurs are given. The other steps of loan application are
elaborated above.
The loaning process constitutes simple steps summarized below:
•
•
•
•
•
•
•
•
4.1.6
The loan application form issued by the office on request, is checked.
Assessment of the loan application is carried out by the field supervisor
The loan application is verified by the field supervisor.
The loan committee then reviews the loan application and approves or
disapproves through consensus.
After approval, an agreement is signed by the client. Two working witnesses are a
requirement of the agreement. These are usually the loaners from OCT with good
credit history.
The loan is disbursed through cheque. The approved application is fed into the
computer.
A ledger account is created and the balance regularly updated and reviewed.
Instalments are paid at the office where an entry is immediately made in the
computers and a receipt issued.
Portfolio Performance and Loan Recovery Ratios
The recovery rates have not always been so stable and positive. Even before coming into
existence, OCT recognized the threats any credit programme in Pakistan was subjected
to: the corruption of financial institutions and the corruption of the borrower. The first
threat was internal which was managed by meticulous monitoring and relentless selfappraisals and minute documentations. This in-depth scrutinizing of loans and recoveries
safe-guarded internal integrity of the microcredit programme, and there were no issues
created by staff performance.
However, more complex issue were to limit the cases of dishonesty, corruption and
blackmailing. The risk increased owing to the political influences and law and order
situation in Karachi, and Orangi in particular. Again, OPP’s founding principles
generated a firm belief amongst the staff that if they were honest and fair in their business
dealings, this will eventually be matched by the borrowers. OCT approached the issue
with an understanding that any delinquent loans reflects on organizational weakness and
not that of the borrowers. Therefore, it was hoped that OCT staff would learn to pick and
maintain a growing circle of honest clients. While this was seen as a rigorous route to
staff capacity building, the first two years were indeed patience testing. For instance, in
the first year 35 percent of clients defaulted causing 20 percent of amount loss.
Gradually, the trust in borrowers began to pay off and indeed, clients followed the
principles of fair business deals.
For microcredit given within Orangi, the total recovery is Rs. 170,994,150 where
recoveries in principal are 144,029,280 and recoveries as service charges are Rs. 26,964,
870. For loans issued outside Orangi through NGOs, total recovery made is equivalent to
7
Rs. 228,234,500 while recoveries in principal are 198,826,128 and service charges are
Rs. 29,408,372. While OCT’s PAR>30days for this year is not available, in 2005 it stood
at 6.3 percent. However, the write-off ratio has lowered almost by half from 6.4 percent
to 3.74 percent (source: PMN MIX Analysis). According to OCT’s data, the recovery
rates have improved tremendously over the years with the current rate at 97 percent.
Loan Recovery (1987-2006)
444205788
450000000
400000000
342855408
350000000
300000000
286600604
250000000
198826128
200000000
157605184
144029280
150000000
87774476
100000000
101315769
13541293
50000000
56373242
29408372
26964870
0
Total Loan
Repaid Principal
Orangi
Balance
Service Charges
Repaid
Outside Orangi
Figure 4.3
4.1.7
Institutional Development and Future Expansion
4.1.7.1 Diversification of Funding Sources
Honing the spirit of self-reliance, OCT started with a decision that it will not operate on
donor funding. Consequently, the funds were borrowed from national banks without any
concessions and then lent to family units without any delays or collateral. Since it worked
on a non-profit basis, OCT was able to take greater risks and bear losses of defaults and
bad debts. It was neither safeguarding the depositors as it didn’t accept any deposits nor
had to report profits because it didn’t have any shareholders either, and thus gave no
dividends.
However, a change in approach was necessitated by the growing demand for credit.
While the lending mechanisms were kept simple and free of red-tapism, OCT started
borrowing from various national and international banks and also accepted grants and
donations. An initial grant of Rs. 1.97 million from its parent body OPP was received of
which Rs. 1 million were pledged to National Bank for an overdraft facility. Amongst the
first few donors were the Federal Bank of Cooperatives, Swiss NGO Programme office
and NORAD.
8
CEBEMO, a Dutch funding agency, has been giving Rs. 80,000 for women entrepreneurs
while World Bank has generously supported OCT in creating a revolving funds. In 1995,
the Bank sanctioned an annual grant of Rs. 353,000 for appointing thirty loan-agents and
supervisors for loan groups, and the same amount for training other NGOs for replication
of the microcredit programme.
4.1.7.2 Financial and Operational Sustainability
OCT aimed to reach sustainability since its inception and for this purpose, the mark-up
rates were kept equivalent to bank rates and operational expenses were consciously kept
low. Within 3 years, the ratio of operational overheads to disbursed loan fell to 8.73
percent and then to 4.86 percent. The ratio of mark up to overheads increased to 128
percent in 1990 and then to 355 percent in 1994-95. For the year 2006-07, as its overhead
expense, OCT draws 3.7 percent of the loans and 45 percent from the service charges.
Operational Self Sufficiency (OSS) rates have grown consistently almost to double i.e.
from 83.30 percent in 2003 to 168.03 percent in 2005. Return on Assets and Equity rates
have also grown significantly from -3.19 percent ROA and -3.87 percent ROE in 2004 to
8.01 percent and 11.28 percent respectively.
The operational costs are low because of a very simple, lack-lustre approach to
microcredit with a strong support network. For instance, the core staff of OCT only has
16 members which is responsible for processing amounts of Rs. 20 million and over
1,000 accounts. The frugality of operations is enhanced by the computerized accounts
system where updated records help in monthly monitoring. Moreover, the World Bank
grant supported in hiring of loan agents who help in client selection and recovery.
Channelizing loans through 47 NGO/CBOs also reduces direct costs while the office
premises are free of cost, provided by OPP-RTI.
This has helped OCT become a self-sustained institution with a reserve fund of Rs.
35,500,000 made up from the mark-up received and savings from the grants received by
INFAQ Foundation. While few liabilities still exist, OCT has cleared its bank loans.
4.1.7.3 Management Information Systems and Research Functions
OCT presents a unique case as far as its MIS and its utilization are concerned. While all
accounts are computerized, they do not measure up to the standards of a full-fledged
functional MIS, despite the fact that the information utilization is extremely prudent and
across the board. The accounts section efficiently processes and records all information
pertaining to loan disbursement, operational expenses, prepares reports on annual budget
projections along with those on receipts and payments. Recovery officers also contribute
in record updation and later on, monthly and weekly status reports are circulated amongst
staff. All decisions are based on the trends analysis thus generated.
Partly because of the rich heritage of Dr. Khan and then through the institutionalization
of OPP-RTI, OCT is one of the few MFIs that have grounded their programme and
strategic direction in action research. OCT involves its staff and also encourages
9
independent research studies to be carried out on its project’s efficiency and
effectiveness. There have been several research based publications on the OCT
programmatic directions and its impact. The thorough documentation of portfolio and
strategy changes as well as lessons learned and the regular progress reports, provide
tangible evidence of the prevalent research culture.
4.2
Survey Results
In this section we present the results from our survey for OCT. The results are based on
the data collected on the basis of the questionnaire – see Appendix of the Report. A select
few of the results are presented here in table form, in the main text of this Chapter, while
the substantial majority of tables are presented in the Appendix to the Chapter. The
Appendix to this Chapter contains the largely ‘descriptive’ tables and results, while the
tables which are part of the text in this Chapter, are the more ‘analytical’ tables. In the
Appendix to this Chapter, there are far more tables than those on which we offer
comments in the text. Many of these tables are simply informative and so we do not
discuss them in the Chapter. They are being provided for the reader’s own interest and
perusal. Only the more interesting, striking or pertinent results and tables from the
Appendix are discussed in the text.
As we show in Chapter 2, the survey was conducted across four types of populations for
the purposes of the Study. Two of the categories are ‘clients’ or ‘borrowers’, while the
other two are ‘non-clients’. In the borrower/client category, there are two types of clients,
the ‘Active Borrowers’ and the ‘Pipeline Borrowers’. The former category that of ‘Active
Borrower’, is that client who has been in the programme of the MFI for longer than ten
months; s/he may have been a client for some years in their nth loan cycle or may have
even been a client in their first year. ‘Pipeline Borrowers’ are classified as those new
clients who had joined the programme of the MFI a few months – usually between 1-4
months – of the start of our survey. There are also two categories of ‘Non-Borrowers’,
one which are selected from the neighbourhood of the old Active Borrowers, and the
other from the neighbourhood of Pipeline Borrowers. Ideally, and in the best case
possible, the Active Borrower and the Pipeline Borrower (and their neighbours) should
have been chosen from ‘old/established’ areas where the MFI has been working for some
years, and ‘new’ areas where they are about to enter and identify and enlist clients.
However, in many cases this was not possible since most MFIs did not have exclusively
‘new’ areas identified, and we were forced to take Active Borrowers and Pipeline
Borrowers, and both sets of their neighbours, from the same locality/area. Nevertheless,
this does not undermine our results which are presented in this Section. In some cases we
present results where we compare the Active Borrower with Pipeline Borrowers, and in
some cases we compare both Active Borrowers and Pipeline Borrowers with the two
combined categories of neighbours, that of Non-Borrowers.
OCT is the only MFI in our sample which is largely male client oriented. It also has other
characteristics which are dissimilar to other MFIs, as the Institutional Review above
suggests, particularly that it is not in the business of poverty alleviation, as most other
10
MFIs claim. Hence, its criteria and standards are different as well. Table A.4.2.4 in the
Appendix suggests that most of OCT’s clients are in the Business Retail Shop profession,
and many of the Non-Borrowers move from the category of Technical Service Provider
and Personal Community Service Provider to those who own Businesses or set-up some
sort of Cottage Industry. This suggests that credit is a constraint to entrepreneurs who,
once they receive the loan, may want to set up different sorts of economic enterprises
since their credit-constraint may have been released.
There does not seem to be much significant difference in the Housing characteristics of
Borrowers and Non-Borrowers, except that the proportion of Borrowers owning their
own houses is much larger and significant than the other the categories – Table 4.1 and
A.4.12.6-7. Table 4.2, moreover, also suggests that the increased Income Per Capita of
Borrowers is significant as is Household Asset Score. The difference in Children’s
Education, not surprisingly, is not significant – Table 4.3.
Table – 4.1
OCT – Housing
Variables
House owners
Person per room
Houses with baked bricks
Houses with RCC Roof
Houses with Cemented Floor
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
87.6543
76.4045
2.5257
2.9274
98.7654
100.0000
37.0370
38.2022
93.8272
95.5056
Standard
Deviation
33.10104
42.69999
1.14251
1.45438
11.11111
.00000
48.59127
48.86349
24.21611
20.83546
t-value
Significance
Level
1.906
.058
-1.989
.048
-1.049
.296
-.156
.876
-.486
.628
Note: There are 81 and 89 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 4.2
OCT – Economic Status
Variables
Expenditure Per Capita
Per Capita Food Expenditure
Income Per Capita
Household Asset Score
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
1556.1118
1566.5866
865.3527
840.5838
3342.9662
2364.0743
8.78
7.98
Standard
Deviation
642.14860
726.74937
405.04234
424.03326
5298.92256
1522.35082
2.617
3.187
t-value
Significance
Level
-.099
.921
.389
.698
1.669
.097
1.779
.077
11
Value of household assets
Active Borrowers
New and Non-Borrowers
764140.1375
640551.1364
705735.90136
658642.96003
1.174
.242
Note: There are 81 and 89 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 4.3
OCT – Children’s Education
Variables
School Going Children %
School Going Children - Boys %
School Going Children - Girls %
Children going to Private School %
Monthly Expenditure on Education
Category
Mean
Standard
Deviation
t-value
Significance
Level
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
92.3000
93.9474
89.0351
91.8367
84.5417
83.5366
74.6863
72.2886
1042.5397
828.2239
16.89936
16.24048
29.58073
25.71263
27.61144
32.40841
39.81352
37.30486
2094.26249
886.42856
-.514
.609
-.472
.638
.150
.881
.355
.724
.768
.444
Note: There are 81 and 89 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Where there is a significant difference between Borrowers and the New and NonBorrowers, is in the type of Household Assets Owned. A greater proportion of Borrowers
have far greater assets than do New and Non-Borrowers – Table 4.4 and A.4.2.14.
Similarly, one finds a significant difference in the value of sales of Borrowers compared
to the other two categories – Table 4.5.
12
Table – 4.4
OCT – Household Assets Ownership
Variables
Own House
Refrigerator
Colour TV
Motor Cycle
Prize Bonds
Washing Machine
Sewing Machine
Bed with Foam
Urban Property
Gold
Mobile phone
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
90.1235
76.4045
70.3704
55.0562
82.7160
71.9101
45.6790
26.9663
3.7037
6.7416
75.3086
61.7978
76.5432
77.5281
48.1481
40.4494
14.8148
6.7416
55.5556
52.8090
74.0741
61.7978
Standard
Deviation
30.02057
42.69999
45.94683
50.02553
38.04643
45.19846
50.12330
44.62990
19.00292
25.21612
43.39028
48.86349
42.63685
41.97621
50.27701
49.35746
35.74602
25.21612
50.00000
50.20387
44.09586
48.86349
t-value
Significance
Level
2.401
.017
2.072
.040
1.678
.095
2.575
.011
-.880
.380
1.899
.059
-.152
.880
1.007
.316
1.713
.088
.357
.722
1.714
.088
Note: There are 81 and 89 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant at least at 90 percent level of
significant. The negative t indicates that average value of category 2 is greater than the average
value of category 1.
Table – 4.5
OCT – Business Characteristics
Variables
Monthly Sale [Rs.]
Value of Assets - Shop/Workshop
Machinery
Instruments
Other
Category
Mean
Standard
Deviation
t-value
Significance
Level
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
72512.35
31780.90
98950.62
145331.46
46222.22
47500.00
5167.22
6208.99
5143.21
81434.83
113642.201
33628.988
261506.114
376048.390
173470.963
171674.557
19804.367
19163.078
27743.828
741891.324
3.230
.001
-.925
.356
-.048
.962
-.348
.728
-.925
.356
Note: There are 81 and 89 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
13
Borrowers perceptions about the positive Effect on the Quality of Life are already high as
soon as the first loan is given and continue to rise thereafter – Table A.4.2.20. This trend
is found in most other indicators about perception as well, and most Borrowers believe
that the rise in Income and the improvement of Quality of Life can be sustained over
time.
4.3 Regression Analysis
There are weaknesses in using bivariate analysis, as we do above, since it does not allow
us to examine the nature of the impact, and hence, we use multivariate regression
analysis, which allows us to look at impact controlling for other related variables. These
two sets of analysis also explain why we often get contradictory findings.
The Difference in Differences (DID) impact model estimated for OCT is
Yij = Xijα + Cijβ + Mijγ + Tijδ +vij
Where Yij is an outcome on which we measure impact for household i in locality j, Xij is
a vector of household characteristics * , Cij is a dummy equal to 1 for active borrowers and
their matched neighbours and 0 otherwise, Mij is a membership dummy variable equal to
1 if household i self-selects into the credit programme, and 0 otherwise; and Tij is a
variable to capture the treatment effects on households that self selected themselves into
the programme and are already accessing loans. T is also a dummy variable equal to 1 for
active borrowers and 0 otherwise. The coefficient δ on Tij is the main parameter of
interest and measures the average impact of the programme. A positive and significant δ
would indicate that microfinance is having a beneficial effect on the borrowers.
To account for individuals who have been taking loans since a few years, we add
dummy to our regression. This dummy is for individuals who have taken more than
loans, and takes a value of 1 if they are in their third, fourth or fifth cycle and
otherwise. There were only 30 individuals in the sample who had taken more than
loans.
a
2
0
2
A Single Difference equation is also estimated to assess impact between active borrowers
and the pipeline clients. The form of the equation is as follows and the variables are
defined as stated above.
Yij = Xijα + Tijδ +vij
Unfortunately, we find no significant coefficients for δ in our regressions as reported in
Table 1. The only significant variable was the dummy for loan cycle on food expenditure.
In both single and double difference regressions we found that OPP clients, who had been
borrowing for 3 year or more, were spending more on food expenditure. In the double
*
For OPP two household characteristics were included in the regression out of 15 tested through ANOVA.
14
difference, we found that active borrowers were spending 22 percent higher on food than
all other respondents (p=0.075), while for single difference the value was 23% (p=0.071).
Table 1: Regression Results
Dependent Variable
Log(Respondent Income)
Log(Household Income)
Log(Per Capita Income)
Log(Total Household Expenditure)
Log(Food Expenditure)
Educational Expenditure
Health Expenditure
Savings
Asset Score
Children Enrolled in School(%)
Boys Enrolled in School(%)
Girls Enrolled in School(%)
Single Difference
1
Coefficient t-value
0.11
0.72
0.15
1.05
0.11
0.76
-0.07
-0.92
0.12
-1.33
45.00
0.27
-55.00
-0.38
335.00
0.71
0.64
0.95
-4.88
-0.50
-14.18
-1.24
-0.10
-0.01
Double Difference
Coefficient t-value
-0.20
-0.88
-0.04
-0.18
-0.08
-0.38
0.02
0.14
0.14
0.66
-526.00
-1.19
-265.00
-1.25
-269.00
-0.36
-0.66
-0.63
-15.00
-0.95
-25.85
-1.49
-12.30
-0.77
1 Significant at 10%(*), Significant at 5%(**), Significant at 1% (***)
4.4 Focus Group Discussions
This section discusses the client feedback of microfinance institutions and the various
coping mechanisms at the local level in terms of financial transactions. Information has
been gathered primarily through Focus Group Discussions with beneficiary groups in
randomly selected programme localities. Some additional information has also been
gathered through discussions with the respective programmes’ field and programme staff.
Group Composition:
• Focus group discussions were arranged with OCTs clients and non-clients in Orangi.
• A total of 20 males were interviewed. It was difficult for all the people to assemble at
any one place, therefore, small groups of 2-4 people were approached for comments
in different areas of Orangi. Direct discussion with female clients could not be
arranged due to a variety of reasons including festival celebrations. OCT provided
recent data on female clients and non-clients which was collected by its own team for
other research activities.
• Representation of non-clients was ensured. Out of 20 men, 5 were non-borrowers.
• Education level varied from matriculate to masters degree holders.
• The group had a mix of clients ranging from those in their eighth or ninth loan cycle
and those who were just one month old clients.
Involvement in microcredit programme – reasons and factors
• An overwhelming majority of clients mentioned expansion of business and
diversifying income generation as the key reason for which they sought loans. The
15
•
•
•
entrepreneurial culture in Orangi, endless demand, and OCT’s selection of the target
group, qualify this reason.
A few persons stated that they wanted to come out of low-paying jobs and start their
own business which is why they opted for these credit services. For instance, a video
shop keeper stated that he started working on a video shop at Rainbow centre at the
age of 18. After 5 years of work, he realized that he had the experience and ability to
start his own work rather than receive Rs. 100 per day. He did a quick market analysis
and found that there were no audio shops in Orangi. He rented a place from his
savings and started the business. The first loan he applied for was of Rs. 3000 to buy
more cassettes back in 1998. In another two years, with the advent of mobiles, cds,
and phone cards, he applied for a bigger loan to ensure that his shop served varying
needs of the customers. This experimentation was hugely successful, he was able to
pay off the loan rapidly and applied for an even bigger amount. In this way he
expanded the business and has now received Rs 40,000, which he plans to use for
buying the shop.
Data on women clients reveals support to the family as the main reason for taking a
loan. While the male family members were engaged in small-scale businesses or jobs,
they decided to use up their skills for providing for their families. Meeting
educational expenses of children was another reason commonly cited.
Paradoxically, the deteriorating law and order situation, especially during 1992-99,
and political clashes, became a strong factor due to which people opted for loans.
While the business activities plunged, the rate of lootings and forceful commissions
soared tremendously. As a result, people were unable to get their items sold on time
and had to take loans to get fresh stocks of clothes, food, general goods, etc.
Repayments of loans were difficult especially when they had to be returned in 10
months, and many family units suffered.
Loan Repayments and Social Collateral
• Participants were satisfied with the processing of loans and termed it as ‘efficient and
quick’. The new clients expressed their satisfaction with OCT’s policy of two
guarantors also. However, the clients who have received their 3rd or 5th loan
mentioned that OCT should not ask for two guarantors for every round especially
when the credit relationship is a long and positive one. Such clients also expressed a
desire for the loan amount to be increased beyond Rs. 50,000 along with an increase
in the number of instalments.
• A sense of collective responsibility could be seen amongst all clients when they were
asked about repayments. They said that OCT and its staff work selflessly for the
improvement of the entire area, and it is therefore mandatory for them to reciprocate
those efforts in some way. Timely payment is one such way. Clients between the ages
of 50-60 admired the sea-change OPP has brought in the area.
Impact on Quality of Life & Social Consciousness
• Clients attributed a peaceful and comparatively tension free lifestyle with the
economic stability brought about by OCT loans. They felt that they are better able to
take care of their families, spend time with their kids and have a social network
16
•
mainly because they don’t have to worry about the next day’s income. One
participant said, ‘many of our ambitions were fulfilled and the frustration level with
the government systems and injustices has reduced considerably because we know we
can do a lot better with little support.’ Women clients have also identified family
unity and harmony as a direct outcome of the OCT programme.
Orangi already has one of the highest literacy rates in Karachi. Therefore, the clients
were quite conscious of the importance of education, health, and political rights.
However, responses of clients revealed that hopes of improvement are not pinned
with the institutions or dominant system per se. Clients mentioned that they are
sending their children to English medium schools only for their own development and
enlightenment. They are very sure that they will not secure good jobs because of the
poor system and public services. It is for this reason children are engaged in family
enterprise and businesses. The culture of resilience, self-reliance and creative
enterprise emanates from the hardships faced during migration.
Non-Borrower’s Perspective
• A very strong reason for not taking any loans is the parallel, indigenous, system of
savings in Orangi town known as bisi or the committee system. Non-clients
mentioned that through committees they save up to triple the amount which is given
out by OCT. Interest free availability of money is another reason why committee
system is preferred over taking loans.
17
Appendix Chapter 4
A.4.1.1 Institutional Snapshot
Indicators
December 2006
Active borrowers (direct)
1264
Active Borrowers (through NGOs)
11, 922
Branches
1
Affiliate/Partner Organizations
47
Area covered (Direct)
Orangi, Karachi
Area/Districts Covered through Partners
Total disbursements(Rs.)
421 across Pakistan
436,084,838
Account officers (loan officers)
30
Total employees
16 core, 30 Loan
agents
n/a
Employee turnover (%)
Borrowers per staff
218
Borrowers per Loan officer
n/a
Total income(Rs.)
225, 064, 811
Total Assets (Rs.)
111,795,442.2
Capital/Asset ratio
67.47%
Operational self-sufficiency (%)
168.03
Financial Self-sufficiency (%)
35 †
Return on Assets (%)
8.01
Return on Equity (%)
11.28
Portfolio yield (%)
22.40
Average Loan Balance per Borrower
Rs. 14000
Operating expense/Loan Portfolio
3.7%
Portfolio at risk (>30 days) (%)
0.00%
Cost per borrower
23.5%
A.4.1.2 Product Profile
Loan
Product
Manufactur
ing Loans
Trading
Loans
Services
Loans
School
loans
Purpos
e
Income
Generation
Income
Generation
Income
generation
Physical
Infrastruct
ure
developm
ent and
training
†
Farming
and Fisher
folk loans
Income
generation
Loans for
Thallawal
as
Income
generation
Skills
building
and
infrastructu
re
Loan for
Clinics
Livestock
loans
Up
gradation
of
physical
and
technologi
Income
generation
Source: PMN 2003 Performance Indicators. Recent estimates not available.
18
improveme
nt
Term/D
uration
Loan
size
15 months
15 months
Rs.2000 Rs.50,000
Rs.2000 50000
Interest
rate
18%
Repay
ment
term
Savings
Insuran
ce
Monthly
Monthly
1% of loan
1% of loan
A.4.1.3
18%
Rs 2000.50,000
18%
Monthly
Rs.2000 50000
18%
Smaller
loans have
no service
charges
Monthly
Rs.2000
- 50,000
18%
15months
cal
facilities
15months
15 months
Rs.2000 –
Rs 50000
Rs.200050,000
Rs.2000 50000
18%
Monthly
18%
18%
Monthly
1% of
loan
Monthly
-
1% of loan
Structure of Microcredit Programme
CEO
Loan Section
Accounts Section
Loan Officer (01)
Loan Manager (04)
Assistant
Agents
Accounts Officer
Accountant
Computer Consultant
Computer Officer
Assistant
Recovery officer
Training Officer
Trainers
19
Table - A. 4.2.1
Sample Information
[OCT]
Respondents
Respondent
Category
%
170
100.0
Active Borrowers
81
47.6
New Borrowers
29
17.1
Non-Borrowers (Same Area)
30
17.6
Non-Borrowers (New Area)
30
17.6
Table - A. 4.2.2
Sample Information
[OCT]
Borrowers
%
110
100.0
One
45
40.9
Two
35
31.8
Three
22
20.0
Four
5
4.5
Five
2
1.8
Six
1
.9
Loan
Taken
Table - A. 4.2.3
Respondent Characteristics - Education
[OCT]
Total
Respondent Category
Active
Borrowers
Respondents
Proportion of Female
Formal Education
NonBorrowers
81
29
60
170
47.6
17.1
35.3
100.0
1.2
.6
No Education
19.8
13.8
18.3
18.2
Primary
11.1
20.7
16.7
14.7
Middle
28.4
20.7
18.3
23.5
Metric
22.2
24.1
31.7
25.9
Inter
13.6
17.2
13.3
14.1
Graduate and above
Technical Training
Pipeline
Borrowers
4.9
3.4
1.7
3.5
No Training
76.5
75.9
78.3
77.1
Have Training
23.5
24.1
21.7
22.9
20
Table - A. 4.2.4
Respondent Characteristics - Nature of Business
[OCT]
Total
Respondent Category
Active
Borrowers
Respondents
Business (Retail Shops with fixed outlet)
Business (Vendor without fixed outlet)
Goods Supplier
Personal Community Service Providers
Technical Service Provider
Cottage Industry
Pipeline
Borrowers
NonBorrowers
81
29
60
170
47.6
17.1
35.3
100.0
49.4
41.4
36.7
43.5
1.2
3.4
8.3
4.1
27.1
2.5
3.4
24.7
20.7
33.3
1.8
3.7
6.9
13.3
7.6
18.5
24.1
5.0
14.7
3.3
1.2
Transport Service Provider
Table - A. 4.2.5
Household Demography
[OCT]
Total
Respondent Category
Active
Borrowers
Respondents
Family Size
Average Family Size
Dependency Ratio
Pipeline
Borrowers
NonBorrowers
81
29
60
170
47.6
17.1
35.3
100.0
1-3 Person
7.4
3.4
1.7
4.7
4-6 Person
44.4
51.7
38.3
43.5
7-9 Person
23.5
27.6
36.7
28.8
More than 9
24.7
17.2
23.3
22.9
7
7
8
8
98.55
93.96
86.38
93.47
21
Table - A. 4.2.6
Housing Characteristics - Quality
[OCT]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
81
29
60
170
47.6
17.1
35.3
100.0
House owners
87.7
89.7
70.0
81.8
Person per room
2.53
2.68
3.05
2.74
Houses with baked bricks
98.8
100.0
100.0
99.4
Houses with RCC Roof
37.0
41.4
36.7
37.6
Houses with Cemented Floor
93.8
96.6
95.0
94.7
Table - A. 4.2.7
Housing Characteristics - Services
[OCT]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
81
29
60
170
47.6
17.1
35.3
100.0
Houses with telephone
18.5
17.2
18.3
18.2
Houses with electricity
92.6
100.0
98.3
95.9
98.8
100.0
100.0
99.4
100.0
100.0
98.3
99.4
Houses using gas for cooking
Houses using flush system
Table - A. 4.2.8
Household Economic Status
[OCT]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
81
29
60
170
47.6
17.1
35.3
100.0
Income Per Capita
3343
2603
2249
2830
Expenditure Per Capita
1556
1692
1506
1562
865
977
775
852
16
14
22
18
Per Capita Food Expenditure
Poor Households (% below Official
Poverty Line)
Household Asset Score
Value of household assets
9
8
8
8
764140
656541
632692
699403
22
Average Indebtedness
19300
6375
34028
25969
The Official Poverty Line figure is Rs 1,000 per capita per month – see Montgomery (2006)
Table - A. 4.2.9
Child Education
[OCT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
Overall
NonBorrowers
School Going Children %
92
90
96
93
School Going Children - Boys %
89
94
91
91
School Going Children - Girls %
85
71
93
84
Children going to Private School %
75
72
72
73
Monthly School Fee per Child
227
135
237
214
Tuition Fee per Child
72
70
58
67
Transport Fee per Child
25
3
38
25
1043
615
940
932
Monthly Expenditure on Education
Figures are Averages
Table - A. 4.2.10
Child Immunization
[OCT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Complete Course
78.2
91.3
72.1
77.5
Incomplete Course
16.1
8.7
23.5
18.0
4.4
4.5
No Vaccination
5.7
Only for household having children less than 5 years
Table - A. 4.2.11
Health Expenditure
[OCT]
Respondent Category
Active
Borrowers
Members reported illness (Last 30 days)
Monthly Expenditure on Health
Pipeline
Borrowers
NonBorrowers
Overall
3
2
3
3
4480
1813
4178
4071
Figures are averages
23
Table - A. 4.2.12
Sources of Household Income
[OCT]
Overall
Respondent Category
Active
Borrowers
Income Per Capita
(%) Income from Main occupation
Secondary occupation
Other Earners
Pipeline
Borrowers
NonBorrowers
3343
2603
2249
2830
67
74
66
68
7
4
8
7
25
19
25
24
Pension
0
0
0
0
Inland Remittances
0
0
0
0
Overseas Remittances
0
0
0
0
Rental Income
0
0
0
0
Figures are averages
Table - A. 4.2.13
Household Consumption Pattern
[OCT]
Overall
Respondent Category
Active
Borrowers
Expenditure Per Capita
Pipeline
Borrowers
NonBorrowers
1556
1692
1506
1562
Per Capita Food Expenditure
865
977
775
852
(%) Expenditure on FOOD
56
59
53
56
Education
7
6
7
7
Health
4
5
5
5
Electricity
4
3
5
4
Gas
2
2
2
2
Telephone
2
2
2
2
Rent
2
1
6
3
Travelling
6
8
6
7
12
9
2
8
7
5
5
6
Repayment of Loan
Saving
Consumption Last 30 days - Meat (days)
10
10
9
9
- Fruits (days)
10
8
10
10
- Eggs (days)
10
9
9
10
Figures are averages
24
Table - A. 4.2.14
Household Assets Ownership
[OCT]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Own House
90.1
89.7
70.0
82.9
Refrigerator
70.4
55.2
55.0
62.4
Colour TV
82.7
69.0
73.3
77.1
Motor Cycle
45.7
34.5
23.3
35.9
3.7
3.4
8.3
5.3
Washing Machine
75.3
55.2
65.0
68.2
Sewing Machine
76.5
75.9
78.3
77.1
Bed with Foam
48.1
34.5
43.3
44.1
Urban Property
14.8
17.2
1.7
10.6
Gold
55.6
58.6
50.0
54.1
Mobile phone
74.1
82.8
51.7
67.6
Prize Bond
Figures are average percentage
Table - A. 4.2.15
Business Characteristics
[OCT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Family Workers (engaged in business)
1
1
2
1
Permanent on Monthly Salary
3
3
2
3
Permanent on Daily Wages/Piece Rate
6
3
2
5
Seasonal/Occasional
2
4
Monthly Sale [Rs.]
72512
4
36569
29467
51188
Value of Assets - Shop/Workshop
98951
145966
145025
123232
Machinery
46222
17207
62142
46891
Instruments
5167
8172
5260
5713
Figures are averages
25
Table - A. 4.2.16
Borrowers - Loan Amount Used by:
[OCT]
Respondent Category
Active
Borrowers
Borrowers
Loan was used by:
Self
Total
Pipeline
Borrowers
81
29
110
73.6
26.4
100.0
100.0
100.0
100.0
Figures are column percentages except number of borrowers
Table - A. 4.2.17
Borrowers - Loan Amount Used For:
[OCT]
Respondent Category
Active
Borrowers
Borrowers
Loan was
used for:
Business Activity
Repayment of debts
Consumption
Pipeline
Borrowers
Total
81
29
110
73.6
26.4
100.0
92.6
93.1
92.7
1.2
6.2
.9
6.9
6.4
Figures are row percentages except number of borrowers
Table - A. 4.2.18
Borrowers’ Perceptions - Getting Loan
[OCT]
Number of Borrowers
81
Loan utilized for same purpose (%)
97
Loan sufficient (%)
100
Time Obtaining Loan (Months)
35
Expenditure incurred (Rs.)
Problems in Obtaining Loan (%)
309
No Problem
80.2
Collateral
9.9
Picture Requirement
1.2
Delay in Payment
9.9
Requirement of Utility Bill
1.2
Complicated Procedures
2.5
Staff Bad Behaviour
2.5
Too many Meetings
2.5
Too many Documentations
3.7
Too many visits
1.2
Figures are averages
26
Table - A. 4.2.19
Borrowers’ Perceptions - Coping Strategy
[OCT]
Loan Taken
One
Number of Borrowers
Two
Three
25
31
18
Sale of asset/Sale of Animals
16.0
6.5
11.1
Borrow loan from relative/friends
68.0
74.2
44.4
12.9
11.1
Borrow loan from Microfinance
Borrow loan from Commercial
Banks
Borrow from
Moneylender/Commission agent
28.0
Reduce Consumption Expenditure
Search for extra work
Extra hours in existing occupation
Have Enough Saving
Overall
Four
Five
4
Six
2
1
81
9.9
100.0
100.0
66.7
7.4
9.7
12.3
3.2
1.2
3.2
16.7
4.9
3.2
5.6
2.5
4.0
12.0
1.2
16.1
27.8
100.0
17.3
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
Table - A. 4.2.20
Borrowers’ Perceptions - Impact
[OCT]
Loan Taken
One
Two
Three
25
31
18
4
56.0
64.5
66.7
100.0
Deteriorated
8.0
9.7
No Change
36.0
25.8
33.3
As much as wanted (all types)
68.0
87.1
83.3
As much as wanted (not all types)
28.0
12.9
16.7
32.3
50.0
Number of Borrowers
Effect on quality of
life
Family eat your fill
Have more to eat now
Family health
Improved
100.0
4.0
24.0
Have more to eat in earlier times
12.0
6.5
5.6
Equal
64.0
61.3
44.4
25.0
Health is better now
20.0
32.3
38.9
75.0
Yes
No
2
Six
1
81
61.7
100.0
100.0
32.1
100.0
100.0
81.5
17.3
Have more to eat now
Equal
Five
6.2
Sometimes felt hunger
Health was better earlier
Sustainable increase
in income?
Four
Overall
1.2
8.0
75.0
100.0
35.8
7.4
100.0
56.8
30.9
11.1
4.9
72.0
67.7
50.0
25.0
100.0
100.0
64.2
68.0
83.9
66.7
100.0
100.0
100.0
76.5
32.0
16.1
33.3
23.5
Figures are column percentages except number of respondents
27
Table - A. 4.2.21
Non-Borrowers’ Perceptions - Getting Loan
[OCT]
Overall
Respondent Category
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
30
30
60
Number of Non-Borrowers
100.0
100.0
100.0
Yes
60.0
30.0
45.0
No
40.0
70.0
55.0
46.7
6.7
26.7
Interest is high
3.3
6.7
5.0
Regular payment is difficult
6.7
6.7
6.7
6.7
3.3
Aware about credit facility
Do not need
Do not know office address
Application Rejected
3.3
1.7
Religious Reason
3.3
1.7
Figures are column percentages except number of respondents
Table - A. 4.2.22
Non-Borrowers’ Perceptions - Coping Strategy
[OCT]
Respondent Category
New
Borrowers
Number of Non-Borrowers
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
Overall
29
30
30
89
Sale of asset/Sale of Animals
24.1
13.3
16.7
18.0
Borrow loan from relative/friends
62.1
63.3
76.7
67.4
6.9
3.3
10.0
6.7
13.3
4.5
3.3
5.6
Borrow loan from Microfinance
Borrow loan from Commercial
Banks
Reduce Consumption Expenditure
6.9
Search for extra work
Extra hours in existing occupation
Have Enough Saving
6.7
3.3
3.4
3.3
13.8
30.0
1.1
3.3
3.4
14.6
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
28
Table - A. 4.2.23
Non-Borrowers’ Perceptions - Change
[OCT]
Respondent Category
New
Borrowers
Number of Non-Borrowers
Effect on overall quality of
life
Family eat your fill?
Overall
29
30
30
89
20.0
26.7
39.3
Deteriorated
3.4
33.3
20.0
19.1
No Change
24.1
46.7
53.3
41.6
As much as wanted (all types)
75.9
56.7
43.3
58.4
As much as wanted (not all types)
24.1
40.0
56.7
40.4
Have more to eat now
3.3
1.1
51.7
6.7
33.3
30.3
6.9
23.3
16.7
15.7
Equal
41.4
70.0
50.0
53.9
Health is better now
37.9
20.0
26.7
28.1
6.9
46.7
13.3
22.5
55.2
33.3
60.0
49.4
Have more to eat in earlier times
Family health ?
NonBorrowers
(New Area)
72.4
Improved
Sometimes felt hunger
Have more to eat r?
NonBorrowers
(Same Area)
Health was better earlier
Equal
Figures are column percentages except number of respondents
29
Chapter Five: Akhuwat
5.1
Institutional Review
5.1.1
Background and History
Akhuwat was established in 2001 by Dr. Amjad Saqib and his friends with the objective
of providing interest free credit to the poor so as to enhance their standard of living. At
the 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 1. With an initial donation of Rs.10,000, Akhuwat
was formed and the first loan was given out to a woman.
Akhuwat derives its name from ‘mua-khaat’ or brotherhood, which was first exhibited by
the citizens of Madina when they shared their wealth with the ‘muhajirin’, the immigrants
from Makkah. The philosophy is based on the premise that poverty can only be
eliminated if society is willing to share its resources with the poor and needy. For
Akhuwat, microcredit is a means to an end and not an end in itself; the end is a vibrant,
economically strong society, based on sharing resources.
For the initial few years Akhuwat was simply a philanthropic venture to see how interest
free microfinance would do, but by 2003, the donations had increased to Rs. 1.5 million
and the loan recovery rate was 100 percent. Consequently, it was decided to formalize the
organization and Akhuwat was registered under the Societies Registration Act of 1860.
At present, Akhuwat has 13 branches in the Punjab and 7,150 active clients, and it has
disbursed over Rs 150 million over five years. Over the years, Akhuwat has stayed true to
its mission of helping the underprivileged with interest free loans and provides various
loan products to meet the needs of its clients. To increase the outreach of interest free
loans, Akhuwat has partnered with individuals in other cities to start similar initiatives.
Akhuwat is rapidly gaining legitimacy and in the last one year FY 2005-06 its acceptance
has increased immensely as the organization received donations worth Rs. 30 million for
its noble cause.
Till 2003 Akhuwat worked on a small scale out of the PRSP office with Dr. Saqib and
one more employee handling the operations; but once the donations increased, the
organization was formalized and the first branch in Township, Lahore, was established,
1
Helping
someone
in
need
with
interest-free
loans;
these
are
preferred
over
charity.
which also became the head office. The loan product offered was the enterprise/family
loan which was for business purposes.
The main growth thrust for Akhuwat came in 2003 when the Governor of Punjab, Lt.
General (Retd) Khalid Maqbool, found out about their work and wanted to observe it in
practice. He visited Akhuwat and met with clients, which generated ample publicity. The
donations increased and so did the applications for the loans, and now approximately
1,000 new loans are given out every month in Lahore. Figure 5.1 shows the increase in
the number of loans over the years and from 2004 to 2005 the loans have increased by
almost 300 percent.
Figure 5.1
Number of Loans
5000
4398
4000
3135
3000
2000
1000
836
192
283
2002
2003
0
2004
2005
2006
Year
Akhuwat’s management has stated, that ‘the Programme is non-political and non–
sectarian. Muslims from all sects are welcome in the mosques. There is no gender
discrimination in the mosque. Women also come to mosques to get loans. Christians are
also welcome in mosques. Akhuwat derives its inspiration from the Islamic spirit of
mua’khat but its message is for all people of this country. Quite a large number of
borrowers are Christian who are given loans in mosques. Akhuwat also works in a church
in collaboration with Christian religious leaders’.
5.1.2
Organizational Structure
Akhuwat is governed by a Board of ten members, consisting of philanthropists, civil
servants and businessmen. The main responsibility of the internal governance rests with
the Board. Their role has been well defined in the Articles of Association and they
formulate and approve policies, and provide guidance and direction on different matters.
The Board meets quarterly to review operations and take policy decisions. Another
salient responsibility of the board is to provide marketing services for Akhuwat and
mobilize funds for loans. A Board review takes place every three years where a change in
board members might take place depending on the availability of the existing members
and the needs of the organization.
2
Akhuwat is run by Dr. Amjad Saqib who is the Executive Director, as well as the
Chairman of the Board. The organizational structure of Akhuwat (see Appendix) mainly
consists of the Operations department, and matters pertaining to the Human Resources,
IT and other issues are handled by the Programme Manager. This system works for
Akhuwat as it is still a small organization with a 52 person team. Apart from the
Programme Manager, the Executive Director is supported by a Finance Manager and an
Internal Auditor. Two advisors, for Finance and Credit, work on a voluntary basis and
meet with the Branch Managers on a monthly basis or more frequently if an issue comes
up. Dr Saqib and all the Board members have also worked on an honorary basis since the
beginning, as they felt drawing their salary out of donations would be inappropriate and
that it undermined their cause. Subsequently, the top management has no financial
interest and work purely out of benevolence. There are many other volunteers working
for Akhuwat who help in retrieval of payments and other matters. According to Dr.
Saqib, Akhuwat is a blend of volunteerism and necessary compensation.
As loans are interest free, it is imperative for Akhuwat to keep the costs low. Apart from
the fact that the senior management gets no remuneration, the organizational setup has
been kept very simple. The organization does not own any vehicle and the staff are
expected to go about on local transport or their motor-cycles, for which they are
reimbursed. The offices are small and simple, with very little furniture and ‘farshi’ 2
seating arrangements.
The Head Office also acts as one of the branches and is responsible for managing
individual loans. The Programme Manager leads a team of two Area Managers, each
responsible for four branches. Each branch is run by a Branch Manager, who leads a team
of 4-6 Unit Managers, who are responsible for the field operations of Akhuwat. Some
branches have a steering committee, comprised of 5-7 prominent individuals living in
that area and two from Akhuwat, generally the Area and the Branch Managers. The job
of the committee is to oversee all the functions of the branch and also to mobilize funds
in their respective areas.
5.1.3 Lending Methodology
5.1.3.1 Group Loans
Akhuwat started lending with the group methodology in 2001 and introduced individual
loans in 2003. The current plan is to phase out group loans and concentrate on individual
lending. As of June 2006, Akhuwat has not formed any new groups and is waiting for the
end of the loan cycles of those formed earlier. The reason for phasing out group loans is
that the group leaders were found to manipulate their position and extort money from the
borrowers for group membership. Most group members were selected on the basis of
their popularity in the locality and not on their genuine need for credit. The LO was also
sidelined by the President of the group and told that they themselves would take
responsibility of recovery and that the LO did not have to worry about it. Another
2
Seating arrangement on the floor with cushions and low tables.
3
problem of group lending is that meetings are weekly and if the recovery is not 100
percent then the whole group has to wait till the recovery is completed.
Akhuwat’s Group lending programme only focused on women who were organized in
Self Help Groups (SHGs) of 10 members each and thus relied on social collateral. In each
group a president and a manager were elected through consensus and the group
collectively had to save Rs.3,000 before it could become eligible for receiving loans.
After that, group members would receive loans by turn and as the responsibility of the
repayment fell on the whole group, it was prompt. The loan has no interest on it, but Dr.
Saqib feels that some of the cost of the credit has to be transferred to the clients or they
would not value the loan and it will be like a free meal. So, five percent of the loan is
charged as a membership fee and this makes the process professional and not charity as
people demand better services when they pay the fee.
In group lending, meetings are fortnightly, which allows for frequent interaction between
group members and Akhuwat staff. At the meetings, routine collection of loan
instalments and savings takes place as well as discussion of grievances and problems of
group members. The outcome of these latter discussions have been very constructive as
Akhuwat arranged for a tutor to coach community children during one summer and has
set up several health camps.
Figure 5.2
Disbursements
35
30.2
Millions
30
25
20
12.8
15
10
5
0.8
1.2 0.2
2.4 2.6
5.1
7.8
0
2002
2003
2004
2005
2006
Year
Group Loans
Individual Loans
5.1.3.2 Individual Loans
Akhuwat has a large portfolio of individual lending with a total of 14,711 beneficiaries
and it has devised a rigorous appraisal method to ensure maximum recovery. In 2005,
individual loan disbursements grew by almost 390 percent and in 2006 they grew by 135
percent as can be seen in Figure 5.2. A prominent feature of individual loans is that they
are marketed through mosques and the disbursement of the loans also takes place in
mosques. Each branch is associated with a particular mosque and is located within or just
outside the mosque’s premises. An introduction to the programme is given after prayers
when people have congregated there. According to Dr. Saqib, the decision was deliberate
as he states, ‘for far too long, we limited the use of mosques to just prayers. In between,
they are desolate. With our offices in mosques, we have saved tremendously on
4
operational costs. We don't pay rent or utility bills’. 3 Furthermore, it increases the
participation of people. It also attaches a religious sanctity to returning the loan on time
as the concept of accountability is intensified as it is a place of worship and also gives the
whole process a feel of ‘barkat’. 4 The management of Akhuwat believe, that ‘in a
Muslim society, mosque has always been a centre of community interaction. We also
want to utilize this institution for the betterment of people living around it. We also like
to work in churches as one of our branch was established in a famous church of Lahore’.
The loan process involves interested individuals submitting their application, which is
simply a letter requesting for a loan with their business idea, at the mosque or the branch.
After that the Unit Manager undertakes an economic and social appraisal of the applicant
which includes visiting and interviewing people at his residence, neighbourhood and
place of work. The applicant and the guarantors are interviewed at the mosque.
In the appraisal process the Unit Manager has to evaluate whether the applicant is
deserving and the rule used is that the household’s per capita income has to be less than
Rs.1,000. The business idea is evaluated to see if it is viable and whether it can generate
income beyond the household expenses of the individual so that he/she can easily repay
the loan. The applicant’s family is interviewed to make sure they know about the loan
and support the business idea and the applicant’s spouse has to sign the loan application.
Akhuwat believes that the support and involvement of the family is very important for
credit recovery and therefore, closely involves them in the loan disbursement process.
They view the family as a cohesive unit and involve everyone in the process. Akhuwat
believes that all household members work collectively to maximize the benefits for the
whole family. Therefore, recently the name of the individual loan for productive purpose
has been changed to ‘Family Loan’.
Once the Unit Manager completes the appraisal, he passes on the application to the
Branch Manager who undertakes his own appraisal of the applicant. Once that is
complete, the application is discussed at the meeting of the credit committee which
comprises of all the Unit Managers of the branch, the Branch Manager and the Area
Manager. In summary, the main aspects looked at before loan approval are the skill and
reputation of the applicant, whether he is below the poverty line and that he is not a
criminal nor a drug addict. If the credit committee approves the application, the loan is
disbursed to the applicant at the mosque. The appraisal process has to be completed by
the branch within 30 days.
Disbursement in mosques takes place twice a month and the borrower has to be
accompanied by one of his guarantors at the time. The other people present at the
disbursement include community members, and Akhuwat staff from the branch and head
office. However, before receiving the loan the applicant has to become a member of the
organization and that requires paying a membership fee equivalent to 5 percent of the
loan amount. In addition, the applicant also has to pay 1 percent of the loan amount to
3
4
Zofeen Ebrahim, “The microcredit success story”; Dawn, 5th February 2006
Blessing
5
buy insurance, which covers the risk of death or becoming handicapped. In case of death
the loan is written off and the family is provided Rs.5,000 for funeral expenses. If the
client was the only earning member of the household then the family is provided with
Rs.1,000 a month for three months to meet basic expenditures. If the client becomes
handicapped then again the loan is written off and he is provided a wheelchair.
Akhuwat’s management contemplated partnering with State Life Insurance Company for
insuring its clients but the Board rejected the proposition as the company did not invest
its money in accordance to the Shariah 5. Therefore, they simply kept the insurance
money in a current account though now they have moved it to MCB and Bank Alfalah
Islamic Banking.
Once the loan has been disbursed, the Unit Manager has to monitor the client with regular
visits to his residence and place of work. The loan repayment has to be submitted at the
branch by the 7th of each month. If a payment is not in by the 10th, the Unit Manager
visits the client a few times to remind him and if he still does not pay then the guarantors
are contacted and asked to make the payment. In case the client has a genuine reason for
not handing in the repayment he is given some leeway and a new date is set by which he
(or his guarantor) has to give in the loan instalment. The borrower, however, has to make
all payments by 30th of the same month as the Unit Manager has to closely monitor each
individual client, they are responsible for only 250 to 300 people. This is much lower
than what Loan officers handle in group lending methodology because in that they
manage groups as opposed to individuals.
When loans are renewed, the main aspects looked at are how the loan was used and
whether it has benefited the borrower. The loan is renewed only if he was regular in
returning the instalments, if he used the loan correctly and if it benefited him and his
household in the final analysis. On average, about 40 percent of clients are given loans
again based on their need and how they used the loan and whether it benefited them or
not. Like mainstream MFI’s Akhuwat does not work on minimizing dropout clients as it
wants to reach out to a large number of people.
Akhuwat also has liberation loans, of which there have been more than 700. These people
were paying interest at 100 to 200 percent, which translates to Rs 2000 to 3000 per
month. By availing a liberation loan, they have been able to get rid of this exploitation.
They are also said to feel empowered and socially integrated. There are also loans for
health, education and a daughter's marriage, which are supposed to have had a
phenomenal impact.
5.1.4
Loan Products
5.1.4.1 Family Loan
The most common loan type is the one for setting up or expanding a business, called the
Family Loan as explained in the last section and this comprises of 91 percent of the
5
Islamic Law
6
individual lending portfolio. The loan amount can range from as little as a few thousand
rupees to Rs. 25,000; the exact amount is decided by the credit committee based on the
need and business plan given by the applicant. The most common amount for the first
loan is Rs.10,000 and the instalments are Rs.1,000 every month. Usually an effort is
made that the instalment structure is such that the monthly payment comes out to be
Rs.1,000 a month so that it is easy to remember for the client. In subsequent loan cycles,
the amount of the loan is raised by Rs.2-3,000.
5.1.4.2 Liberation Loan
This loan is for people who have borrowed from moneylenders and are paying exorbitant
interest rates on the loan. Akhuwat pays off the principle amount in one go for the client
and then the client repays it to Akhuwat in instalments. It comprises 5 percent of the
Akhuwat loan portfolio as given in Table 5.1. Liberation loans are approved from the
head office and if they are unusually large, more than Rs.25,000; the Executive Director
approves it.
5.1.4.3 Housing Loan
A housing loan has also been offered since the last year and is in the range of Rs.4050,000 and has to be repaid in two years. This loan product has been offered in
collaboration with Al-Noor Umar Welfare Trust, another voluntary organization.
5.1.4.4 Other Products
The other products offered are Health, Marriage and Education loans. Although these are
non-productive loans, but important events can cause a major stress on the poor, therefore
they are being offered by Akhuwat. The maximum amount loaned is Rs.15,000 but
generally the amount is Rs.10,000. The loan for wedding expenses is specifically for
daughters or sisters of the poorest of the poor. These loans have to be repaid within the
year.
Table 5.1: Loan Portfolio Distribution
Loan Product
Enterprise
Liberation
Housing
Education
Marriage
Health
Total
Number of Loans
13,351
762
147
132
218
101
14,711
Portfolio %
91
5
1
1
1
1
100%
Akhuwat staff also provide technical training to its clients. They make the latest
knowledge and market information available to the clients so that they become more
efficient. Clients who lack expertise are taught and trained in the vocations of their
interest. They may do ‘internships’ with borrowers who are already running some
specific enterprises and are desirous of imparting skills to others. Akhuwat coordinates
7
activities with other NGOs and Social Welfare Organizations so that social services can
reach their own clients. Akhuwat focuses especially on education and health because
these are basic necessities and the right of every individual and have benefits beyond the
individual himself (externalities). Legal aid has also been provided to the needy by a
team of volunteer law students through one of the Board member who is a lawyer and
Principal at a local Law College.
5.1.5
Operations
5.1.5.1 Human Resources
Akhuwat has a low staff turnover rate which since December 2004 has been
approximately 3 percent. This reflects the high commitment and motivation of the staff.
Most of the staff has received thorough training in microfinance and related aspects.
Akhuwat has a well defined recruitment policy and vacant positions are filled with
suitable candidates having requisite qualifications. New hires start as interns and go
through an intensive three month training regimen before they are made staff members.
The educational level required for Unit Managers is Matric or F.A., while that for Branch
Managers is F.A. or B.Com., therefore it is relatively easy to find and retain staff.
Applicants for new jobs are generally found by word of mouth and by placing notices
outside branches.
Unit Managers get a bonus for 100 percent recovery in their monthly pay and if they have
disbursed more than 150 loans and are meeting their monthly target of disbursing 25
loans a month, they are eligible for an interest free loan to purchase a motorcycle.
Akhuwat also provides its staff with some medical facilities and educational allowance
for their children. Furthermore, staff members get an extra month’s salary every Eid.
Akhuwat maintains a well documented Manual covering operations, administration and
human resource issues. The management keeps adding new information to the Manual as
it becomes policy; Akhuwat started with a 15 to 20 page Manual and now have increased
it to approximately 60 pages. In the Manual, the job descriptions of all personnel are
clearly laid down as are branch administration guidelines. For Akhuwat, the Manual is
also a tool to pass on to other people/organizations interested in starting similar projects.
Table 5.2 shows the number of employees and borrowers per staff over the years. The
growth in employees started from the third year on and by March 2006, the number of
employees had risen to 45. The borrowers per staff are around 98, this is below the
industry average of 147, however, Akhuwat’s major portfolio is invested in individual
lending and that requires extra monitoring.
8
Table 5.2: Number of Employees and Borrowers per staff
Year No. of Employees Borrowers per staff
2002
3
64.0
2003
3
94.3
2004
12
69.7
2005
32
98.0
2006
45
97.7
5.1.5.2 Competition and Expansion Strategy
Akhuwat has shown rapid growth since 2003. In the last year alone it has opened five
new branches and expanded its client base by 4,000 clients. The organization has been
able to mobilize higher donations as people have learnt about its programme and
appreciate the nobility with which it is being run. It is based on Islamic values and
appeals to the religious minded.
The Board is responsible for reviewing the performance of the organization and in
deciding how to expand the outreach. However, growth is linked with the credit pool and
the amount of donations received is unpredictable. The growth plan for the current year
FY 2006-07 was to disburse 10,000 individual loans and open branches in eight new
cities. While the growth plan for the next year is to double the numbers achieved in this
year.
For expansion into other cities, Akhuwat is looking for partner organizations. The
partnership can vary from just providing funds to Akhuwat to run the operations, to
Akhuwat training the staff and setting up the branch and leaving the operations to the
partner organization. Ideally, Dr. Saqib envisages the future as one where Akhuwat
would play the role of an apex organization using its credit pool as equity to assist partner
organizations and help them run operations in cities outside Lahore. In this scenario,
Akhuwat can provide financial and technical support to its partners. For Dr. Saqib,
success is not confined to sustainability figures it also entails how widely the model is
replicated, and how effectively and efficiently the poor are served. ‘Numbers overwhelm
but saving the life of one person is akin to save entire mankind. While doing so, one must
also observe the limits set by Allah Almighty’. This is what Dr. Saqib and other Board
Members firmly believe. Currently, Akhuwat is in discussion with organizations in
Peshawar, Multan, Gujrat and Jhelum.
However, Dr. Saqib feels that their primary responsibility is to work in the areas of
Lahore, where he and other board members live. People of other areas should work in
their own locales. They do not feel pressure to grow as they are dependent on resources
donated by civil society. For Akhuwat, this work is a long term ongoing process.
Akhuwat management feels that they are not in competition with other MFIs because
they have a different model and they do not charge interest, nor do they take funds from
the same sources as other MFIs. Furthermore, the market is still quite open, so Akhuwat
does not feel threatened by competition from commercial players.
9
5.1.5.3 Policy Environment
As Akhuwat is registered as a society, it does not have to comply with the State Bank of
Pakistan’s regulations for MFIs. The rules for societies are not as stringent and Akhuwat
easily fulfils them. Recently, Akhuwat got a tax exemption certificate from the Pakistan
Centre of Philanthropy. It was awarded after a complete scrutiny of internal governance,
financial management and programme delivery of Akhuwat. Akhuwat is also registered
with the Pakistan Microfinance Network and has to share information with them on
certain indicators which promotes transparency of their operations. The only constraint
Akhuwat finds in the regulatory environment is that it cannot use the savings it collects
from its members for onward lending.
5.1.5.3 Operational Systems
Akhuwat has a computerized accounting and management system both at the Branches
and the Head Office. The system was borrowed from PRSP at inception and is still being
used. The software can generate 40 different kinds of reports for tracking operational and
financial performance on a regular basis along with efficient tracking of the overdue
portfolio. However, new software has been designed by the help of FFSP customized to
Akhuwat’s needs and is currently in the testing phase. The software is more
comprehensive and will be better suited to the microfinance operations of Akhuwat.
In terms of reporting, information from all the branches is sent to the Head Office for
consolidation. The branches send liquidity status and cash flow reports to the Head Office
on a weekly basis to enable it to monitor compliance with the cash reserve regulations.
The financial statements (balance sheets, profit and loss accounts), summary of loan
releases, list of current accounts and list of overdue and past-due accounts, are sent to the
Head Office on a monthly basis for monitoring and consolidation.
5.1.5.4 Audit System and Financial Planning
The organizational structure is well defined and the hierarchies provide various internal
checks. The Area Manager spends one day a week in branches under his control, while
the Programme Manager visits branches every 15 days. The Finance Manager visits the
branches monthly; the Internal Auditor audits the branches quarterly, while an external
auditor appraises the branches annually. The Executive Director makes surprise audits,
while the Steering Committee also has to oversee all the functions like credit quality,
recovery and so on. The finance and credit advisors also review the performance and
policies with all the branch managers on a monthly basis. Therefore, there is constant
inspection going on and the status of recoveries and targets is being checked. This also
prevents accounting errors and helps in identifying any misappropriation, leakage or
pilferage.
The finance department prepares the overall budget for the organization. All financial
transactions are properly maintained such as a cash book, salary ledger and so on. A
professional Chartered Accountant reviews the accounts annually. Budgets and financial
targets are set several times during the year based on available funding. As soon as funds
are available, Akhuwat tries to increase its target disbursement so that they are loaned
10
out. Targets are also set at the branch level, where Area and Branch Managers together
decide on the targets.
Budgets for all kinds of branch expenses, like telephone, stationary, and so on, are also
set and if these are exceeded, the branch staff has to pay them out of their own pockets.
Four of the branches are decentralized and they have to give out a minimum of 125 loans
to meet their expenses and to contribute (10) percent of their membership fees towards
the Head Office expenses. If they have left-over funds, then these are transmitted to the
Head Office every few months. The decentralized branches make their own cheque for
disbursement, can approve loans up to Rs.25,000 and take care of their own expenses.
The other branches send the approved applications to the Head Office, from where the
loan cheques are issued, as are their own salaries and other expenses. Gradually all
branches will be decentralized.
5.1.5.5 Portfolio Performance
The membership fees are the main funds from which operational expenses are met. They
help cover 76 percent of the expenses. Akhuwat, generally, does not use the grants it
receives to cover the operational costs, they are only used for onward lending. Therefore,
the 24 percent shortfall is covered by the Board of Directors. Akhuwat‘s percentage
recovery since it was established has been 99.7 percent and the PAR>30 is 0.1 percent.
This PAR>30 is a lot healthier than the industry average of 3.2 percent. Akhuwat’s Yield
on Portfolio is only 5 percent and lower than the industry average of 18 percent, but this
is understandable considering Akhuwat provides interest free loans. Akhuwat writes off
loans in its accounts after two years, however not in its operational records as they feel it
is their responsibility to get the money back.
The portfolio is geographically concentrated in the area of Lahore; however, Akhuwat
has opened some branches in other areas recently. In terms of the activities the loans are
given out for, the portfolio is reasonably diversified with loans given for rickshaws, fruit
and vegetable carts, grocery stores, establishment of PCOs, stitching, sewing, plumbing,
working as black smith, electrician, cobbler, barber, opening beauty parlours, preparing
leather goods, book binding, kite making, and so on.
5.1.6
Financial Management
5.1.6.1 Funding Mobilization
One of the key functions of the Board is to mobilize funds for Akhuwat. The Steering
Committee of each branch also has to undertake initiatives to mobilize funds. Every year
before Ramzan, the organization hosts a function for fund-raising and invites 500-1000
people. Akhuwat has been widely written about in the press and that has helped raise
funds as well. Akhuwat has a website with details on how to donate, so people who hear
and are interested in donating, can visit the website.
Akhuwat has an awareness campaign in which it sends letters requesting donations to
members of different associations such as the Chambers of Commerce. Some volunteers
11
are also working on a marketing plan for funds mobilization. The Board also tries to
identify partner organizations which can help with bringing in funds.
5.1.6.2 Asset, Liability and Equity Composition
Akhuwat’s asset utilization (percentage of assets comprising loan portfolio) is around 78
percent and this is better than the industry average of 42.5 percent. This high rate of asset
utilization will allow Akhuwat to increase its profitability rather than leaving the assets
idle as cash. Akhuwat has very few liabilities as it does not borrow to finance its
microfinance operations. Its operations are exclusively financed by grants and donations,
and over the years, Akhuwat has received more than Rs.60 million as grants. Last year
Akhuwat received almost Rs.30 million (Figure 5.3) in grants and this was an increase of
158 percent on the previous year.
Figure 5.3
Grants received
28.35
30
Millions
25
20
15
10.99
10
5
7.15
0.97
1.82
2002
2003
0
2004
2005
2006
Year
5.1.6.3 Profitability and Sustainability
The organization’s performance on profitability and sustainability has been steadily
improving. However, as Akhuwat does not charge any interest on its loans, and only
charges a membership fee of 5 percent, it is unable to cover its costs which stand at 7
percent. Nonetheless, as Akhuwat increases its outreach it will be able to lower the cost
and in time will be able to cover its operating expenses. Similarly, OSS and FSS were 77
percent for 2006 and show that Akhuwat is not sustainable at the present as it cannot
cover its operational and financial expenses. But, Akhuwat’s operational efficiency is
very high at 7.13 percent, while the industry average is 22.4 percent. In this regard,
12
Akhuwat is performing much better than its peers and due to this indicator, Akhuwat will
be able to achieve sustainability in time.
Akhuwat has an impressive lending model built on local traditions and it would be more
than 100 percent sustainable if it were charging interest on its loans as its recovery is
almost 100 percent, and operating expenses are very low. But the premise on which the
organization has been established, prohibits it to charge any interest; consequently, as
outreach increases over time and costs per borrower fall due to economies of scale,
sustainability will also increase.
5.2
Survey Results
In this section we present the results from our survey for Akhuwat. The results are based
on the data collected on the basis of the questionnaire – see the Appendix of the Report.
A select few of the results are presented here in table form, in the main text of this
Chapter, while the substantial majority of tables are presented in the Appendix of the
Chapter. The Appendix to this Chapter contains the largely ‘descriptive’ tables and
results, while the tables which are part of the text in this Chapter, are the more
‘analytical’ tables. In the Appendix to this Chapter, there are far more tables than those
on which we offer comments in the text. Many of these tables are simply informative and
so we do not discuss them in the Chapter. They are being provided for the reader’s own
interest and perusal. Only the more interesting, striking or pertinent results and tables
from the Appendix are discussed in the text.
As we show in Chapter 2, the survey was conducted across four types of populations for
the purposes of the Study. Two of the categories are ‘clients’ or ‘borrowers’, while the
other two are ‘non-clients’. In the borrower/client category, there are two types of clients,
the ‘Active Borrowers’ and the ‘Pipeline Borrowers’. The former category that of ‘Active
Borrower’, is that client who has been in the programme of the MFI for longer than ten
months; s/he may have been a client for some years in their nth loan cycle or may have
even been a client in their first year. ‘Pipeline Borrowers’ are classified as those new
clients who had joined the programme of the MFI a few months – usually between 1-4
months – of the start of our survey. There are also two categories of ‘Non-Borrowers’,
one which are selected from the neighbourhood of the old Active Borrowers, and the
other from the neighbourhood of Pipeline Borrowers. Ideally, and in the best case
possible, the Active Borrower and the Pipeline Borrower (and their neighbours) should
have been chosen from ‘old/established’ areas where the MFI has been working for some
years, and ‘new’ areas where they are about to enter an identify and enlist clients.
However, in many cases this was not possible since most MFIs did not have exclusively
‘new’ areas identified, and we were forced to take Active Borrowers and Pipeline
Borrowers, and both sets of their neighbours, from the same locality/area. Nevertheless,
this does not undermine our results which are presented in this Section. In some cases we
present results where we compare the Active Borrower with Pipeline Borrowers, and in
some cases we compare both Active Borrowers and Pipeline Borrowers with the two
combined categories of neighbours, that of Non-Borrowers.
13
We first discuss results based on tables presented in the Appendix to this Chapter.
Since Akhuwat has been in operation just a few years, almost all of its clients are still
only in their first or second loan cycles. Clearly, any ‘impact’ of the intervention by
microfinance institutions, is highly tenuous, and at best, slight and partial. We would
expect little to have changed in a matter of two years, and to find not much significant
difference between Active Borrowers, Pipeline Borrowers and Non-Borrowers. Most of
the tables in the Appendix suggest so as well.
Most of Akhuwat’s clients, are involved in ‘business/retail shops’ or are ‘personal
community service providers’ – Table A.5.2. In terms of Housing Quality – Table
A.5.2.6, there is very little difference between the three categories, nor is there in the
access to Services. This is not a surprising result since we expect most people to have
similar sort of residential facilities if they live in the same, or similar, neighbourhood.
Table A.5.2.4 shows the Economic Status of Akhuwat clients compared to their
neighbour Non-Borrowers, and the results suggest that the Per Capita Income of Active
Borrowers is greater than it is of other categories. However, on the basis of the Official
Poverty Line, only 15 percent of Akhuwat’s clients fall below this threshold, implying
that like almost all MFIs in our sample, Akhuwat is concentrating on that category of
client who is above the Poverty Line. The Health and Education characteristics of all
three categories, as in the case of most other MFIs in urban areas, are not very different
from each other.
The perceptions of clients and non-clients about various aspects of their lives, make
interesting reading. Table A.5.2.26 on the perceptions of clients over the loan cycle about
how well they eat, seem to suggest that the longer they stay with the programme, the
greater the impact in terms of improvement in quality of life and diet, on their lives. This
result is similar to that of other MFIs. On most welfare questions, the longer they have
been with the programme, the better they think they are doing. However, even more
interesting is Table A.5.2.29, where the perceptions of New (Pipeline) Borrowers are
tabulated. What is particularly noteworthy in this table is, that Pipeline Borrowers who
have just started in the programme a few months ago, have a very positive perception of
the impact of the microfinance programme.
As we show in Chapter 2 in the Methodology Section, in the first-best state, a key
requirement of impact studies is that clients-to-be or new clients, not be ‘contaminated’
with news and information of microfinance activities. However, as we argue, in urban
Pakistan today, this is not possible, since with numerous small and large, official and
donor programmes funding microfinance, there is a huge amount of information available
about microfinance services. Table A.5.2.27 confirms this view that a large proportion of
Non-Borrowers are aware of credit facilities.
Tables 5.2 to 5.7 in this Chapter confirm earlier argument that it is improbable that one
will see any impact between Active Borrowers and new entrants in the programme or
amongst Non-Borrowers. All three tables suggest that any difference between the two
14
categories, if any, is not significant. In fact, in no category do we find any significant
difference between those who have been in the programme for two years – Active
Borrowers – and those who are not in the programme.
As in the case of many MFIs, these results do not reflect upon the workings of Akhuwat
and nor does it show that microfinance does not work. Rather, as we argue in Chapter 2,
the time required for impact to be noticeably observed and quantified, is considerably
greater than the period most of our MFIs have been in business for.
Table – 5.2
AKHUWAT – Housing
Variables
House owners
Person per room
Houses with baked bricks
Houses with RCC Roof
Houses with Cemented Floor
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
Standard
Deviation
78.1250
76.6667
3.0216
3.5179
98.1250
97.7778
84.3750
79.4444
72.5000
63.3333
41.46966
42.41324
1.59794
2.09785
13.60667
14.78167
36.42322
40.52342
44.79162
48.32386
t-value
Significance
Level
.320
.749
-2.431
.016
.224
.823
1.174
.241
1.807
.072
Note: There are 160 and 180 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 5.3
AKHUWAT – Economic Status
Variables
Expenditure Per Capita
Per Capita Food Expenditure
Income Per Capita
Household Asset Score
Value of household assets
Category
Mean
Standard
Deviation
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
1422.3281
577.00095
1328.6200
542.99927
693.7873
347.77198
628.9586
329.48707
1531.3474
723.20244
1411.6488
624.06628
7.17
2.458
7.13
2.436
490050.2239
590787.49174
t-value
Significance
Level
1.542
.124
1.764
.079
1.638
.102
.154
.878
-.234
.815
15
New and NonBorrowers
506072.7273
586851.50630
Note: There are 160 and 180 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 5.4
AKHUWAT – Children Education
Variables
School Going Children %
School Going Children - Boys %
School Going Children - Girls %
Children going to Private School %
Monthly Expenditure on Education
Category
Mean
Standard
Deviation
t-value
Significance
Level
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
88.5638
89.4712
80.3571
86.5385
72.2222
70.9589
51.3514
54.2057
648.1802
683.7787
22.03045
22.88434
36.59394
31.56085
39.95302
41.65733
46.17955
45.45854
910.66177
749.64756
-.284
.777
-1.096
.275
.186
.852
-.475
.635
-.327
.744
Note: There are160 and 180 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Variables
Own House
Refrigerator
Colour TV
Motor Cycle
Prize Bonds
Washing Machine
Sewing Machine
Bed with Foam
Urban Property
Gold
Mobile phone
Table – 5.5
AKHUWAT – Household Assets Ownership
Category
Mean
Standard
Deviation
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
81.8750
77.7778
58.7500
55.5556
73.7500
73.8889
20.0000
21.1111
1.8750
1.1111
77.5000
72.7778
88.7500
81.6667
26.8750
34.4444
2.5000
2.7778
16.8750
17.2222
53.1250
51.6667
38.64347
43.00910
49.38299
49.82901
45.54009
44.04656
40.12559
40.92354
13.60667
10.51144
41.88934
44.63453
31.69727
38.80189
44.47015
47.65123
15.66151
16.47939
37.57069
37.86267
50.05893
50.11161
t-value
Significance
Level
.919
.359
.593
.554
-.029
.977
-.252
.801
.583
.561
1.002
.317
1.829
.068
-1.509
.132
-.159
.874
-.085
.933
.268
.789
16
Note: There are 160 and 180 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant at least at 90 percent level of
significant. The negative t indicates that average value of category 2 is greater than the average
value of category 1.
Table – 5.6
AKHUWAT – Business Assets
Variables
Monthly Sale [Rs.]
Value of Assets - Shop/Workshop
Machinery
Instruments
Other
Category
Mean
Standard
Deviation
t-value
Significance
Level
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
16425.63
17655.22
33876.88
43542.78
4346.25
7421.67
3260.31
987.22
2250.00
2366.11
24327.233
19090.896
139085.496
247704.709
13594.093
42701.646
23963.757
3189.806
10711.922
12284.710
-.521
.603
-.436
.663
-.872
.384
1.260
.208
-.092
.926
Note: There are 160 and 180 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 5.7
AKHUWAT – Women’s Empowerment
Variables
Economic Empowerment
Score out of 14
Income Empowerment
Score out of 5
Assets Empowerment
Score out of 8
Empowerment
Related
Education and Health
Score out of 10
Social Empowerment
Score out of 10
Category
Mean
Standard
Deviation
t-value
Significance
Level
Active Borrowers
New and Non-Borrowers
8.1452
7.7500
3.59803
2.66145
.520
.604
Active Borrowers
New and Non-Borrowers
2.4516
2.3929
1.21030
1.39680
.203
.840
Active Borrowers
New and Non-Borrowers
1.4839
1.5000
1.58623
1.73205
-.043
.965
-.555
.580
.473
.638
with
Active Borrowers
6.8710
3.20084
New and Non-Borrowers
7.2500
2.48886
Active Borrowers
New and Non-Borrowers
4.5161
4.2857
2.07042
2.29100
17
Note: There are 160 and 180 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
5.3
Regression Analysis
There are weaknesses in using bivariate analysis, as we do above, since it does not allow
us to examine the nature of the impact, and hence, we use multivariate regression
analysis, which allows us to look at impact controlling for other related variables. These
two sets of analysis also explain why we often get contradictory findings.
The impact model estimated for Akhuwat is
Yij = Xijα + Cijβ + Mijγ + Tijδ +vij
Where Yij is an outcome on which we measure impact for household i in locality j, Xij is
a vector of household characteristics 6, Cij is a dummy equal to 1 for active borrowers and
their matched neighbours and 0 otherwise, Mij is a membership dummy variable equal to
1 if household i self-selects into the credit programme, and 0 otherwise; and Tij is a
variable to capture the treatment effects on households that self selected themselves into
the programme and are already accessing loans. T is also a dummy variable equal to 1 for
active borrowers and 0 otherwise. Apart from this a loan cycle dummy has also been
added for those respondents who are in their second loan cycle to see the marginal impact
of microfinance after the first year of borrowing. The coefficient δ on Tij is the main
parameter of interest and measures the average impact of the programme. A positive and
significant δ would indicate that microfinance is having a beneficial effect on the
borrowers.
A Single Difference equation is also estimated to assess impact between active borrowers
and the pipeline clients. The form of the equation is as follows and the variables are
defined as stated above.
Yij = Xijα + Tijδ +vij
The results from the estimation of δ are given in Table 5.8. The majority of the results in
our regressions were insignificant. One of the variables in DID estimation on which we
find a significant positive effect is household income for active borrowers (17%, p=0.07).
This result is also validated by single difference estimation (13%, p=0.047) and implies
that active borrowers have higher household income as compared to other respondents.
Another result that is significant in DID estimation is for food expenditure, active
borrowers spend 16% more on food than other categories of respondents (p=0.06).
6
For Akhuwat seven household characteristics were included in the regression out of 15 tested through
ANOVA.
18
The other results that are significant are for empowerment. In the double difference
estimation, economic empowerment is significant (3.85 pts; p=0.02) while in single
difference, social empowerment is significant (1.38 pts.; p=0.09). In the regressions on
overall, economic and income empowerment, the loan cycle dummy was significant
implying that clients who have borrowed twice are more empowered than first time
borrowers. Even though the percentage of female respondents in the active borrower
category was 47 percent, and in the other categories collectively it was 13 percent, we
still do not find a significant impact on most empowerment indices. In the pipeline
respondent category, the percentage of females was 17 percent as Akhuwat is phasing out
its group lending, which only caters to women, and is moving towards individual lending.
The other variable that came out significant in the regressions was the member dummy
for asset score (-0.99, p=0.029), implying that the individuals who self-select themselves
own fewer assets than their neighbours. This is understandable as building assets takes
time and to begin with maybe these individuals are poorer and that is why they have been
accepted by Akhuwat as clients. However, the loan cycle dummy for asset score is
positive and significant (0.88, p=0.03) implying that over time, the borrowers do end up
building assets, which are important to reduce vulnerability.
Table 5.8: Regression Results
Single Difference
1
Dependent Variable
Coefficient t-value
Log(Respondent Income)
0.12
1.35
Log(Household Income)
0.13
2.00 **
Log(Per Capita Income)
0.12
1.73 *
Log(Total Household Expenditure)
0.05
0.95
Log(Food Expenditure)
0.06
0.95
Educational Expenditure
133
0.98
Health Expenditure
-17.5
-0.28
Savings
7.8
0.05
Asset Score
0.49
1.23
Children Enrolled in School(%)
-0.62
-0.08
Boys Enrolled in School(%)
-0.72
-0.09
Girls Enrolled in School(%)
3.2
0.43
Women's Empowerment (Overall Ind
2.86
0.78
Economic Empowerment
1.13
0.9
Income Empowerment
-0.32
-0.68
Asset Empowerment
-0.55
-0.69
Empowerment related with
Education and Health
1.22
1.06
Social Empowerment
1.38
1.72 *
Double Difference
Coefficient t-value
0.1
0.98
0.17
1.80 *
0.16
1.56
0.03
0.42
0.16
1.75 *
330
1.54
135
1.23
-236
-0.85
0.44
0.73
10.4
0.90
20.8
1.47
9.2
0.84
4.07
0.81
3.85
2.36 **
-1.27
-1.61
-1.55
-1.59
1.66
1.37
0.84
0.89
1 Significant at 10%(*), Significant at 5%(**), Significant at 1% (***)
2 Score based on 47 questions, the other idices listed below are a breakdown of this index. Refer to
questionnaire for detail.
19
From these results we can judge that outcomes like income and food expenditure have
benefited from microfinance in the short term; however outcomes like asset accumulation
that take time, experience impact later.
5.4
Focus Group Discussions
This section discusses the client feedback of microfinance institutions and the various
coping mechanisms at the local level in terms of financial transactions. Information has
been gathered primarily through focus group discussions with beneficiary groups in
randomly selected programme localities. Some additional information has also been
gathered through discussions with respective programmes’ field and programme staff.
Two focus group discussions were conducted in the Akhuwat programme localities in
Lahore in the Township area and Shah Jamal. The participants were a combination of
male and female clients.
Client Profile
Akhuwat clients belong mostly to the low-income groups engaged in various small
enterprises and businesses. However, despite their low incomes of less than Rs. 5,000, the
majority of the participants said that they saved through the committee system. Very few
were actually putting money into the Akhuwat savings schemes, which indicates that
savings is not a significant part of the programme and is definitely not obligatory.
There was no formal relationship with any banking system prevailing among the people
in the two localities and people managed their financial requirements through relatives
and neighbours during times of need. The amounts saved through the committees were
either invested in enterprise development or other planned needs like buying motor
rickshaws or for marriages. A majority of the people did own a few assets that could be
sold or used as a backup for emergency purposes.
All clients reiterated that the Akhuwat credit programme has had a clearly positive
impact on their lives and their income levels had improved since taking up the credit.
Clients’ Feedback
Akhuwat, according to its programme philosophy, believes in a humanitarian vision and
mission as indicated by their clients, and is reflected in the attitude and behaviour of their
team members. People said that the staff were compassionate and polite in their approach
and tried to provide all possible support to them.
Although, borrowers were appreciative of the fact that this was an interest free
programme, they felt that some of the procedural requirements should be less tedious.
Many clients mentioned that the application process was too lengthy, while the policy of
presenting two witnesses twice in the credit amount disbursement process, was also
irksome.
‘People in our area are working class and need to be at their workplaces most part of the
day. Akhuwat wants two witnesses, who have to spend quite a few hours on behalf of the
20
client during the verification and disbursement process. When Akhuwat finally hands
over the credit amount, it is done in the mosque in the presence of the witnesses, which
makes the witnesses quite nervous at times. They should review this entire witness
process.’
(Male Participant, Township, Lahore)
According to some clients, it was also difficult to find people who are prepared to act as
guarantors on behalf of the borrower. Many times people were hesitant to verify and act
as witnesses for credit applications as they were scared that in case the borrower is unable
to pay back, Akhuwat would hold them responsible.
‘We have to beg people to come with us as a witness. Once I had to pay a witness Rs.
200, because he was a daily wager and could not go to work because of me.’
(Male Participant, Shah Jamal, Lahore)
One client mentioned that the membership rate was too high and should be brought down
(around 6.2 percent of the total loan cost); however, the other group members quickly
justified this rate on the basis that other than this there was no interest on the loan, which
was a major relief.
There are other MFIs also operational in the area. XX and YY ‘also provide credit but
their interest rates are much higher, and also the procedures are comparatively more
complicated. The Akhuwat methodology is more appropriate for people like us.’
(Male Participant, Shah Jamal, Lahore)
Presently, the productive loan category is the loan type most frequently provided by
Akhuwat. As a result, borrowers had a low awareness level about any other loan. Clients
said that they only knew that Akhuwat gave loans for productive purposes and not for
any other use.
21
Appendix Chapter 5
A 5..11 Institutional Snapshot
Indicators
December 2006
Members outstanding
14,711
Active borrowers
7,788
Branches
13
Districts covered
6
Total disbursements(Rs.)
156 million
Average loan disbursed(Rs.)
10,643
Account officers (loan officers)
40
Total employees
45
Employee turnover (percent)
2
Borrowers per account officer
97
Total income(Rs.)
4.6 million
Operational self-sufficiency (percent)
77
Financial Self-sufficiency (percent)
77
Adjusted Return on assets (percent)
-6.8
Portfolio yield (percent)
15
Cost of borrowings
0
Operating expense ratio
0.71
Portfolio at risk (>30 days) (percent)
0.1
Cost per unit of loan disbursed
0.07
A.5.1.2 Product Profile
Loan Product
Purpose
Family/
Enterprise Loan
Income Generation
Term/Duration
<18 months
Loan size
Rs.10,000 -Rs.25,000
Interest rate
Repayment term
Processing Fee
0
Monthly
5percent of loan
Savings
Insurance
Mandatory
1percent of loan
Liberation
Loan
Pay
off
Moneylender
Linked
to
Loan
Up
to
Rs.40,000
0
Monthly
5percent
of
loan
1percent
of
loan
Wedding/Education
Loan
To meet general
needs
<18 months
Housing Loan
Rs.10,000 -Rs.15,000
Up
Rs.50,000
0
Monthly
5percent
loan
1percent
loan
0
Monthly
5percent of loan
1percent of loan
Construction
<24 months
to
of
of
22
A.5.1.3 Branches
¾
¾
¾
¾
¾
¾
Lahore (8 Branches)
Faisalabad
Rawalpindi
Dijikot
Lodhran
Jahanian
Total: 13 Branches
A.5.1.4 Organizational Structure
Board of Directors
Executive Director
Internal Auditor
Program Manager
Finance Manager
Area Manager (2)
Accounts Officer
Branch Manager
(1)
Unit Manager (4-5)
23
Table - 5.4.2.1
Sample Information
[AKHUWAT]
Respondents
%
340
100.0
Active Borrowers
160
47.1
New Borrowers
60
17.6
Non-Borrowers (Same Area)
60
17.6
Non-Borrowers (New Area)
60
17.6
Respondent
Category
Table - A. 5.2.2
Sample Information
[AKHUWAT]
Borrowers
Loan
Taken
%
220
100.0
One
145
65.9
Two
61
27.7
Three
11
5.0
Four
3
1.4
Table - A. 5.2.3
Respondent Characteristics - Education
[AKHUWAT]
Total
Respondent Category
Active
Borrowers
Respondents
Proportion of Female
Formal Education
Technical Training
Pipeline
Borrowers
NonBorrowers
160
60
120
340
47.1
17.6
35.3
100.0
45.0
18.3
15.8
30.0
No Education
27.5
21.7
35.8
29.4
Primary
18.1
25.0
13.3
17.6
Middle
30.0
31.7
20.0
26.8
Metric
15.6
10.0
23.3
17.4
Inter
5.0
6.7
5.0
5.3
Graduate and above
3.8
5.0
2.5
3.5
95.0
100.0
90.8
94.4
9.2
5.6
No Training
Have Training
5.0
24
Table - A. 5.2.4
Respondent Characteristics - Nature of Business
[AKHUWAT]
Total
Respondent Category
Active
Borrowers
Respondents
Business (Retail Shops with fixed outlet)
Business (Vendor without fixed outlet)
Goods Supplier
Pipeline
Borrowers
NonBorrowers
160
60
120
340
47.1
17.6
35.3
100.0
33.8
26.7
44.2
36.2
6.9
15.0
17.5
12.1
2.5
1.2
.6
Personal Community Service Providers
Technical Service Provider
Cottage Industry
Transport Service Provider
35.0
45.0
22.5
32.4
5.6
3.3
5.0
5.0
14.4
8.3
8.3
11.2
3.8
1.7
2.1
Table - A. 5.2.5
Household Demography
[AKHUWAT]
Total
Respondent Category
Active
Borrowers
Respondents
Family Size
Average Family Size
Dependency Ratio
Pipeline
Borrowers
NonBorrowers
160
60
120
340
47.1
17.6
35.3
100.0
1-3 Person
6.9
3.3
5.0
5.6
4-6 Person
52.5
55.0
39.2
48.2
7-9 Person
34.4
33.3
39.2
35.9
More than 9
6.3
8.3
16.7
10.3
6
6
7
7
71.58
54.74
94.43
76.69
25
Table - A. 5.2.6
Housing Characteristics - Quality
[AKHUWAT]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
160
60
120
340
47.1
17.6
35.3
100.0
House owners
78.1
85.0
72.5
77.4
Person per room
3.02
3.14
3.71
3.28
Houses with baked bricks
98.1
100.0
96.7
97.9
Houses with RCC Roof
84.4
80.0
79.2
81.8
Houses with Cemented Floor
72.5
56.7
66.7
67.6
Table - A. 5.2.7
Housing Characteristics - Services
[AKHUWAT]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
160
60
120
340
47.1
17.6
35.3
100.0
Houses with telephone
17.5
20.0
20.8
19.1
Houses with electricity
98.8
96.7
97.5
97.9
Houses using gas for cooking
99.4
100.0
93.3
97.4
Houses using flush system
99.4
100.0
97.5
98.8
Table - A. 5.2.8
Household Economic Status
[AKHUWAT]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
160
60
120
340
47.1
17.6
35.3
100.0
Income Per Capita
1531
1394
1420
1468
Expenditure Per Capita
1422
1378
1304
1373
694
684
601
659
15
15
28
20
7
7
7
7
490050
573743
468407
498892
Per Capita Food Expenditure
Poor Households (% below Official
Poverty Line)
Household Asset Score
Value of household assets
Average Indebtedness
15900
33760
The Official Poverty Line is at Rs 1,000 per capita per month – see Montgomery (2006)
26616
26
Table - A. 5.2.9
Child Education
[AKHUWAT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
Overall
NonBorrowers
School Going Children %
89
91
89
89
School Going Children - Boys %
80
89
86
84
School Going Children - Girls %
72
62
75
72
Children going to Private School %
51
51
56
53
195
188
187
191
Tuition Fee per Child
76
95
58
72
Transport Fee per Child
21
24
28
24
648
636
704
667
Monthly School Fee per Child
Monthly Expenditure on Education
Figures are Averages
Table - A. 5.2.10
Child Immunization
[AKHUWAT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Complete Course
80.0
66.7
71.1
73.9
Incomplete Course
18.8
25.9
24.6
22.6
1.2
7.4
4.4
3.5
No Vaccination
Only for household having children less than 5 years
Table - A. 5.2.11
Health Expenditure
[AKHUWAT]
Respondent Category
Active
Borrowers
Members reported illness (Last 30 days)
Monthly Expenditure on Health
Pipeline
Borrowers
NonBorrowers
Overall
2
2
3
2
544
431
1362
830
Figures are averages
27
Table - A. 5.2.12
Sources of Household Income
[AKHUWAT]
Overall
Respondent Category
Active
Borrowers
Income Per Capita
(%) Income from Main occupation
Secondary occupation
Other Earners
Pipeline
Borrowers
NonBorrowers
1531
1394
1420
1468
77
75
79
77
1
1
1
1
21
22
17
20
Pension
1
1
2
2
Inland Remittances
0
0
0
0
Overseas Remittances
0
0
0
0
Rental Income
0
0
0
0
Figures are averages
Table - A. 5.2.13
Household Consumption Pattern
[AKHUWAT]
Respondent Category
Active
Borrowers
Expenditure Per Capita
Pipeline
Borrowers
Overall
NonBorrowers
1422
1378
1304
1373
Per Capita Food Expenditure
694
684
601
659
(%) Expenditure on FOOD
49
50
46
48
Education
6
5
6
6
Health
3
4
5
4
Electricity
8
8
9
8
Gas
4
3
4
4
Telephone
1
2
2
1
Rent
4
3
5
4
Travelling
4
4
4
4
11
8
0
7
2
1
3
2
4
4
5
4
- Fruits (days)
4
5
6
5
- Eggs (days)
5
5
7
6
Repayment of Loan
Saving
Consumption Last 30 days - Meat (days)
Figures are averages
28
Table - A. 5.2.14
Household Assets Ownership
[AKHUWAT]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Own House
81.9
86.7
71.7
79.1
Refrigerator
58.8
43.3
61.7
57.1
Colour TV
72.5
65.0
78.3
73.2
Motor Cycle
20.0
25.0
19.2
20.6
1.7
1.5
Prize Bond
1.9
Washing Machine
77.5
65.0
76.7
75.0
Sewing Machine
88.8
83.3
80.8
85.0
Bed with Foam
26.9
20.0
41.7
30.9
Urban Property
2.5
1.7
3.3
2.6
Gold
16.9
10.0
20.8
17.1
Mobile phone
53.1
50.0
52.5
52.4
Figures are average percentage
Table - A. 5.2.15
Business Characteristics
[AKHUWAT]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Family Workers (engaged in business)
2
1
1
2
Permanent on Monthly Salary
2
1
2
2
Permanent on Daily Wages/Piece Rate
3
2
1
2
2
2
Seasonal/Occasional
Monthly Sale [Rs.]
16426
11983
20491
17077
Value of Assets - Shop/Workshop
33877
6850
61889
38994
Machinery
4346
4492
8887
5974
Instruments
3260
913
1024
2057
Figures are averages
29
Table - A. 5.2.16
Women’s Empowerment
[AKHUWAT]
Respondent Category
Active Borrowers
Pipeline
Borrowers
Overall
NonBorrowers
Number of Respondents
62
9
19
90
Economic Empowerment - Score out of 14
8.1
6.3
8.4
8.0
Income Empowerment - Score out of 5
2.5
2.7
2.3
2.4
Assets Empowerment - Score out of 8
1.5
2.2
1.2
1.5
Empowerment Related with Education and Health
- Score out of 10
6.9
5.6
8.1
7.0
Social Empowerment - Score out of 10
4.5
2.8
5.0
4.4
Figures Average Score except number of respondents
30
Table - A. 5.2.17
Women’s Empowerment - Economic Aspects
[AKHUWAT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Number of Respondents
62
9
19
90
Do you take decisions on the aspects of
purchase, modification or repair of house?
45
56
53
48
Do your husband discuss with you when
decision on modification/repair of house is
made
69
44
68
67
Do you take decisions on the purchase or
sale of livestock?
26
37
26
Did your husband discuss with you before
sale or purchase of livestock?
42
11
53
41
Do you purchase your dresses for the
family?
84
89
89
86
Do you purchase the utensils for your
family?
89
67
89
87
Do you purchase gold and jewellery for
your family?
53
22
63
52
Do you take decisions on borrowing
money?
50
67
42
50
Do your husband discuss with you on the
issues of borrowing money?
69
22
84
68
Do you spend money you have borrowed?
37
22
47
38
Do you repay the money you have
borrowed?
40
67
26
40
Do you take decisions on transactions
involving household Equipments?
55
56
79
60
Do you have any debt in your name?
81
78
32
70
Do your husband discuss with you when he
has made the debt?
74
33
79
71
Figures are percentages except number of respondents
31
Table - A. 5.2.18
Women’s Empowerment - Income
[AKHUWAT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Number of Respondents
62
9
19
90
Do you have your own income?
31
56
21
31
Do you spend it for the family yourselves?
47
56
21
42
Do you need the permission of your husband
to spend your income?
45
33
68
49
Do you get any part of your family income
or husbands income to your hands
regularly?
47
78
47
50
Do your husband discuss with you when he
spends income for the family requirements?
76
44
68
71
Figures are percentages except number of respondents
Table - A. 5.2.19
Women’s Empowerment - Assets
[AKHUWAT]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
62
9
8
22
Do you have cash savings in your own
name?
15
22
11
14
Do you operate Bank account in your
name?
3
11
5
4
Do you pledge, Sell, or exchange any
of the above said assets yourself?
18
33
5
17
Do your need permission from your
husband to sell, pledge, exchange any
of the assets?
45
22
58
46
Do you have purchased land in your
own name?
5
22
Is the house you stay registered in
your name?
8
33
5
10
Is the house you stay registered in
your and husband name?
47
56
32
44
Do you possess any household asset?
19
Overall
90
8
6
Figures are percentages except number of respondents
32
Table - A. 5.2.20
Women’s Empowerment - Health and Education
[AKHUWAT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Number of Respondents
62
9
19
90
Do you take decisions on the issues of your
children education?
74
44
89
74
Do your husband consult with you when he
takes decision on the education of children?
79
67
84
79
Do you think you can decide on how many
children you can have?
56
56
84
62
Do you think you can decide on the spacing
between children?
53
33
74
56
Do you think that you can decide on the
treatment of your and your family member
illness?
60
67
58
60
Do you think you can decide on the method
of treatment for your family members?
58
56
63
59
Do you think you can decide on the type of
contraceptive to be used?
58
44
74
60
Do your husband discuss with you on the
issues of health aspects of children?
79
44
89
78
Do you have any choice of food prepared
and served in your home?
84
78
95
86
Are you able to take care of the nutritional
requirements of your self, family and
children?
85
67
95
86
Figures are percentages except number of respondents
33
Table - A. 5.2.21
Women’s Empowerment - SOCIAL Aspects
[AKHUWAT]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Number of Respondents
62
9
19
90
Are you free to go out and visit your
friends and relatives with out permission?
68
22
68
63
Do you have the choice of the dresses you
wear?
89
44
95
86
Do your husband impose his religious
beliefs on you and make you accept them?
6
22
7
Do you have any association with political
parties?
8
11
7
Do you participate in voting and other
democratic procedure?
69
56
84
71
Do your husband impose her political
ideas on you and make you accept them?
3
11
5
4
Do you participate in the meetings of NGO
programs or in other social events?
53
22
42
48
Do your husband prevent you from
participating in such programs?
31
11
53
33
Do you take decisions on the marriage of
your son-daughter?
50
44
58
51
Do your husband discuss with you on the
issues of the marriage of children and
close relatives?
74
33
95
74
Figures are percentages except number of respondents
Table - A. 5.2.22
Borrowers - Loan Amount Used by:
[AKHUWAT]
Respondent Category
Active
Borrowers
Borrowers
Loan was Self
used by:
Spouse with your suggestion
Other Members
Pipeline
Borrowers
Total
160
60
220
72.7
27.3
100.0
75.0
91.7
79.5
21.3
1.7
15.9
3.8
6.7
4.5
Figures are column percentages except number of borrowers
34
Table - A. 5.2.23
Borrowers - Loan Amount Used For:
[AKHUWAT]
Respondent Category
Active
Borrowers
Borrowers
Pipeline
Borrowers
Total
160
60
220
72.7
27.3
100.0
95.0
88.3
93.2
1.3
5.0
2.3
1.3
3.3
1.8
Marriage of Daughter/Son
.6
3.3
1.4
The use of other household members
.6
.5
Death/Illness of household members
.6
.5
Other
.6
.5
Loan was Business Activity
used for:
Repayment of debts
Consumption
Figures are row percentages except number of borrowers
Table - A. 5.2.24
Borrowers’ Perceptions - Getting Loan
[AKHUWAT]
Number of Borrowers
160
Loan utilized for same purpose (%)
99
Loan sufficient (%)
100
Time Obtaining Loan (Months)
35
Expenditure incurred (Rs.)
Problems in Obtaining Loan (%)
313
No Problem
93.8
Collateral
1.3
Picture Requirement
1.3
Delay in Payment
3.8
Figures are averages
35
Table - A. 5.2.25
Borrowers’ Perceptions - Coping Strategy
[AKHUWAT]
Loan Taken
One
Two
Three
Overall
Four
Number of Borrowers
95
51
Sale of asset/Sale of Animals
3.2
2.0
Borrow loan from relative/friends
72.6
82.4
81.8
100.0
76.9
Borrow loan from Microfinance
22.1
23.5
45.5
33.3
24.4
Reduce Consumption Expenditure
7.4
3.9
Search for extra work
2.1
Extra hours in existing occupation
1.1
3
160
2.5
5.6
1.3
.6
Have Enough Saving
12
11
2.0
9.1
1.3
1.1
.6
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
Table - A. 5.2.26
Borrowers’ Perceptions - Impact
[AKHUWAT]
Loan Taken
One
Effect on quality of
life
Family eat your fill
Have more to eat now
Family health
Two
Three
Overall
Four
Number of Borrowers
95
51
11
3
160
Improved
84.2
92.2
90.9
100.0
87.5
Deteriorated
6.3
No Change
9.5
7.8
9.1
72.7
3.8
As much as wanted (all types)
55.8
51.0
As much as wanted (not all types)
44.2
49.0
Have more to eat now
78.9
84.3
Have more to eat in earlier times
2.1
Equal
18.9
15.7
Health is better now
66.3
51.0
Health was better earlier
7.4
Equal
26.3
49.0
Yes
91.6
92.2
No
8.4
7.8
Sustainable increase
in income?
8.8
66.7
55.6
27.3
33.3
44.4
100.0
100.0
82.5
1.3
16.3
90.9
33.3
62.5
66.7
32.5
66.7
91.9
33.3
8.1
9.1
100.0
5.0
Figures are column percentages except number of respondents
36
Table - A. 5.2.27
Non-Borrowers’ Perceptions - Getting Loan
[AKHUWAT]
Overall
Respondent Category
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
60
60
120
Number of Non-Borrowers
100.0
100.0
100.0
Yes
55.0
63.3
59.2
No
45.0
36.7
40.8
35.0
30.0
32.5
Amount of Instalment is high
1.7
1.7
1.7
Interest is high
5.0
6.7
5.8
Regular payment is difficult
10.0
15.0
12.5
Do not know office address
1.7
3.3
2.5
Do not like to borrow
5.0
2.5
Do not know procedure
3.3
1.7
Aware about credit facility
Do not need
Amount of loan is very low
3.3
1.7
Figures are column percentages except number of respondents
Table - A. 5.2.28
Non-Borrowers’ Perceptions - Coping Strategy
[AKHUWAT]
Respondent Category
New
Borrowers
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
Overall
Number of Non-Borrowers
60
60
60
180
Sale of asset/Sale of Animals
1.7
1.7
1.7
1.7
Borrow loan from relative/friends
75.0
86.7
91.7
84.4
Borrow loan from Microfinance
18.3
6.7
3.3
9.4
3.3
8.3
Reduce Consumption Expenditure
Pull out children from school
Search for extra work
3.9
1.7
3.3
Extra hours in existing occupation
Have Enough Saving
.6
3.3
2.2
1.7
.6
8.3
2.8
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
37
Table - A. 5.2.29
Non-Borrower’s Perceptions - Change
[AKHUWAT]
Respondent Category
New
Borrowers
Number of Non-Borrowers
Effect on overall quality of Improved
life
Deteriorated
Family eat your fill?
Have more to eat r?
NonBorrowers
(New Area)
Overall
60
60
60
180
78.3
48.3
33.3
53.3
6.7
20.0
15.0
13.9
No Change
15.0
31.7
51.7
32.8
As much as wanted (all types)
46.7
55.0
26.7
42.8
As much as wanted (not all types)
51.7
28.3
68.3
49.4
Sometimes felt hunger
1.7
16.7
5.0
7.8
Have more to eat now
73.3
46.7
35.0
51.7
Have more to eat in earlier times
Family health ?
NonBorrowers
(Same Area)
1.7
18.3
20.0
13.3
Equal
25.0
35.0
45.0
35.0
Health is better now
63.3
43.3
30.0
45.6
1.7
18.3
18.3
12.8
35.0
38.3
51.7
41.7
Health was better earlier
Equal
Figures are column percentages except number of respondents
38
Chapter Six: Sindh Agricultural and Forestry Workers
Coordinating Organization (SAFWCO)
6.1
Institutional Review
6.1.1
Background and History
Concerned about the poverty stricken lives and social marginalization of their
community, a group of five activists came together in 1986 to bring about social and
economic change in their surroundings. This group led by Suleiman Abroo was then
known as Samaj Sudhar Adabi Idara and undertook small scale social work like
arranging for medical and health camps and distributing books amongst poor students.
However, the major gap between the scope of problems and scale of this initiative pushed
the group to join the Sindh Graduate Association which helped them in carrying out
social work on a larger scale. It was in 1990, during a medicine distribution campaign,
that a villager made the group members realize that the absence of basic facilities like
education, health, housing, sanitation form the core of issues resulting in increasing
poverty and social deprivation. Consequently, Suleiman and his friends started
contemplating on the need and outcomes of an integrated approach to rural improvement
which responds to all aspects of life.
The long and intensive reflections led to the establishment of the Sindh Agricultural and
Forestry Workers Coordinating Organization (SAFWCO) in 1990. Registered under the
Societies Registration Act XXI of 1860, SAFWCO kept rural development as its key
priority. As a result, it started addressing cross-cutting issues including conditions of
peasants and rural women, education, role of feudal lords, political situation in the area,
unemployment, water logging and salinity, low wages and housing. In the first two years,
SAFWCO launched projects on women’s health and education improvement with social
mobilization for collective action, as its main strategy. The scope further expanded when
torrential rains and floods of 1992 resulted in massive destruction of numerous villages in
District Sanghar. SAFWCO members surveyed the damaged area, captured the extent of
destruction through videos, and approached national and international donors for funds.
The International Development and Refugee Foundation (IDRF) on the recommendation
of South Asia Partnership Pakistan (SAP-Pk) provided financial support through which
SAFWCO constructed 250 houses in 15 villages. This not only earned a credible
reputation for SAFWCO amongst civil society organizations, local and provincial
governments, but also generated clarity and confidence internally amongst the team
members.
While securing the ownership of newly-constructed houses in the name of villagers under
the government’s Goth Abad Scheme, SAFWCO also realized that bringing villages back
to functional state will also entail some economic help. Starting from Rs. 5,000 for goat
rearing and home-based poultry, SAFWCO initiated its microcredit programme in 199394. The expansion of the portfolio and credit line has been gradual and firmly grounded
in the contextual needs of the communities SAFWCO is catering to. SAFWCO’s concept
of microcredit is the extension of small loans to entrepreneurs too poor to qualify for
traditional bank loans. It also ensured a more integrated approach towards meeting
organizational mission and targets.
SAFWCO works for the vulnerable and poverty-trodden communities of rural Sindh. In
order to bring these communities out of the abyss of poverty, it is necessary that they
should be given access to financial services for establishing their own businesses or
strengthening the already existent ones. In this context, the programme of microcredit has
proved successful in combating with the epidemic of poverty.
6.1.2
Scope of Services
SAFWCO was formed with a vision of building a sustainable, equitable and just society.
It envisions creating ‘sustainable communities achieving equitable economic, social,
political and cultural development through grass roots development institutions.’ In order
to meet its mission, the scope of SAFWCO’s programme is multi-sectoral. The following
is the brief synopsis of each portfolio:
•
•
•
•
•
Social Development Sector focuses on institutional building at the grassroots
level to support in bringing about a social change. It has social mobilization as a
core activity and entry point, followed by different development interventions
including social and physical service delivery projects, and coordinating and
networking, along with emphasis on gender balance and good governance
Education Development Programme aims at expanding and improving the
standard of primary education and promoting literacy, especially amongst
females, in rural Sindh. Working towards this aim, SAFWCO establishes formal
and non-formal educational institutions, particularly in less developed areas with
especial focus on girls' education. Moreover, for improving education quality, it
undertakes training and research activities with various stakeholders.
Health Sector Programme works with a mission to highlight and address issues
related to children's and women's health, environment, and health care that play a
significant role in affecting people's socio-economic life. It engages in health
education for the community, primary health care services in areas having no
health facility, and also prepares village volunteers as paramedical force
Community Physical Infrastructure Development (CPID) Programme support
rural communities in addressing their prioritized physical infrastructure needs.
The communities themselves implement these schemes following the preparation
of technical and social feasibilities as well as cost estimates by the program staff.
SAFWCO has an engineering and technical wing which ensures the feasibility
and quality of construction processes.
Credit and Enterprise Development Programme comprises 21-30 percent of
SAFWCO’s operations. SAFWCO’s concept of microcredit is the extension of
small loans to entrepreneurs too poor to qualify for traditional bank loans. The
goal is to enhance the socio-economic status of the vulnerable groups and
2
communities through sustainable economic development activities. Details of this
portfolio are presented below.
6.1.3
Organizational Structure
Under the leadership of the Chief Executive Director, each portfolio is headed by
Programme Managers who are responsible for the design, conceptualization and
coordination of their respective programmes. Implementation responsibilities are mainly
given to the field office teams which include the Programme Officer and Assistant
programme officers for each area. The client dealing and recovery process is managed by
the branch offices while the Head Office focuses on tracking the overall status of
operations. The operations of 3 Branch Offices are overseen by a Senior Manager who is
responsible for day-to-day guidance/decision making to all portfolios as well as the
administrative functioning of the office.
The management and leadership receives strong governance support from a General
Body of 29 members and more directly by the Board of Governors (see Appendix 1). At
present, SAFWCO operates with a workforce of approximately 350 persons across its 22
offices. It has dedicated a team of 63 members for its Credit and Enterprise Development
programme working in urban and rural areas.
6.1.4
Programmatic Portfolio
To meet the overall goals, the Credit and Enterprise Development programme constitute
of Microcredit, Savings and Resource Mobilization, Capacity Building for Enterprise
Development and Microcredit Initiatives for NGOs/CBOs. Currently, microcredit
initiatives for individuals and capacity building on key areas are completely active. The
savings programme is carried out only at a small-scale where clients are convinced to
make savings from their day to day domestic expenses and develop as many tangible and
intangible assets as possible.
SAFWCO articulates its principles and policies for microcredit as:
•
•
•
•
•
Affordable services for low-income groups
Greater outreach to the general public
Minimal risks for new entrepreneurs
Loan pay back systems are nurturing towards small businesses
Increased and easily accessible opportunities for the economically disenfranchised
groups to support them in gaining economic power.
In view of these stated principles, SAFWCO has designed the following mechanisms and
strategies for microcredit. Details on each aspect follow.
3
6.1.4.1 Products and Services Offered
There are five main products offered by SAFWCO. A unique feature of all the products
is, that they are designed according to the contextual and economic realities and needs of
its clients.
•
Handicraft Loan: As indicative from its name, a handicraft loan is offered to
support traditional craftsmanship and the retailing of Sindhi products, such as
embroidery, rilli-making, ajrak dyeing, mirror work, cap making, etc. The amount
offered ranges between Rs. 2-4000. These loans are commonly availed by women
in Mitiari and Hyderabad, and with highest payment rates. These small loans
support them in buying raw material like threads, mirrors, etc.
•
Livestock Loans: With a 60 percent share, this is the most popular product of
SAFWCO especially in the vicinities of Bhit Shah and Shahdadpur since these
areas provide daily dairy supplies all over Hyderabad, Sanghar and Mitiari
districts. The amount of loans range from Rs. 4-10,000. In the subsequent rounds,
the credit amount can be stretched up to Rs 25,000 depending on the performance
of units. Under this product, SAFWCO provides loans for agricultural activities
also.
•
Trade and Retail Loans: This product is more common in urban areas where
small entrepreneurs are supported to expand their existing business and enterprise.
If the application is strong in terms of social collateral, credit is given to start up
new businesses also. The amount of loans range from Rs. 5-30,000; however, a
loan of more than Rs. 10,000 is not processed in the first round.
•
Enterprise Development Fund: This is the latest product of SAFWCO directly
responding to the needs individuals or groups having a long and positive credit
history with the organization. After paying off several rounds of small loans,
many clients felt constrained by the small amounts of loan offered by SAFWCO
which was helpful in running or sustaining the business; however, they could not
plan massive expansion with a maximum of Rs. 25-30,000 only. Launched at a
very small scale, SAFWCO introduced Enterprise Development Fund under
which Rs. 30-100,000 can be borrowed. With this, SAFWCO is also venturing
into institutionalized savings and insurance schemes.
•
Festival Loans: This product also falls under the small loans category with a
maximum range of Rs. 10,000. The loan is offered purely for familial and cultural
festivities like marriages, births, crop cutting, religious festivals, etc. Again, this
product is hugely popular in families barely above the poverty line as it helps
them in meeting their social needs and standing.
4
6.1.5
Lending Methodology and Selection Criteria
SAFWCO provides both group and individual loans. Loans are made to established
groups of both men and women, comprised of three to six individuals, that have been
operating for over a year. For credit and saving activities, villages are identified on the
basis of their socio-economic situation. The CED Programme Officer and Assistant
Programme Officers then hold meetings with the Community Organizations (CO) on
credit and saving policies and form a credit committee to identify the poor for loans and
for monitoring the credit programme. Credit Committees (CC) in rural villages act as
intermediaries between SAFWCO and individuals or group of loaners. Strategically,
SAFWCO ensures that the CC comprises notables and influential people in the village or
lead social activists of the community. CC initially scrutinize the applications and
recommends the applications to the CED for credit disbursement. Members of the credit
committee, guaranteeing proper use and recovery, give the final approval for credit. The
targeting, processing, disbursement, utilization and recovery procedures for credit, are
based on community participation, involving all members of the CO.
For the savings programme, monthly meetings are conducted to collect savings, with a
minimum voluntary contribution of Rs.20. The programme is operated through COs,
which collect deposits, and manage the savings records and passbooks. Communities are
also encouraged to utilise their savings through their village development organisation as
internal lending.
In urban areas, the mechanism is more focused on individual loans and door-to-door
mobilization since the concept of community is very different from that of rural areas.
Another important channel for application generation is the referrals from existing
guarantors and word of mouth. Despite the fact there are other MFIs and Banks operating
in the same districts, SAFWCO is preferred by small and local entrepreneurs mainly due
to its products and service mechanisms.
The socio-economic status, soundness of business proposal and social collateral are the
most important criteria for selecting individuals and groups for loans. Loan delinquencies
of over one month can result in the disqualification of an entire village for further loans.
This ban is lifted only when all arrears are cleared either by the individual or the group of
guarantors. Formation of community organizations and this form of social collateral has
proved effective for SAFWCO. According to the management, the loan recovery rate
averages 95 percent for men and 99 percent for women. An operational reason for
encouraging women clients is also because they not only ensure that instalments are paid
on time, but also take responsibility for appropriate and effective utilization of the credit.
Consequently, SAFWCO has brought flexibility in its lending strategy where credit is
given to female units which can involve other family members in its use. However, care
is taken that too many loans are not given to one family unit.
5
Other filters related to the specific product also apply. For instance, if an application is
made for purchasing raw material for handicrafts, it will fall under the Handicraft loan
which has a maximum ceiling of Rs. 4,000. Similarly, in the first round of application,
the maximum amount given is Rs. 10,000. The selection of applicants for consequent
rounds depends on the credit repayment history of the individual as well as the credibility
of group or credit guarantors for social collateral. Also, those applications are not
considered where units or groups have already taken credit from some other MFIs or
banks. A vigilant and thorough screening process is thus put in place. Annual planning
and organizational directions of SAFWCO also play an important role in deciding the
client numbers and types of loans to be processed. SAFWCO’s management feels that a
ceiling quota for each district should be calculated in relation to overall operations and
programmes for each district. Such targets also help the organization in estimating cost
recovery for branch office operations.
6.1.6
Portfolio Performance and Loan Recovery Ratios
SAFWCO charges an 18 percent service charge on a flat basis, which is its main source
for meeting its operational expenses. Keeping true to its principles, SAFWCO has made
several efforts to facilitate its clients in payment. For instance, the services charges are
reduced up to 4.5 percent if the loan is paid off in 3 months. In addition, a nominal fee of
Rs. 100 is charged for initial documentation. Many a times, this includes facilitation for
computerized NIC formation for almost 80 percent of women clients, especially in rural
areas.
SAFWCO has a PAR>30 days of 3.1 percent and annual write-off ratio of 1.5 percent,
which indicates a need for SAFWCO to address this issue. While the PAR>30 days has
been reduced from 4.33 percent in 2004, it is still critical for SAFWCO to improve its
credit risk profile either through improvement in its loan tracking system or by improving
the appraisal system. According to SAFWCO, it averages 95 percent for men and 99
percent for women, whereas rural area recovery is 100 percent while that for urban areas
ranges between 70-80 percent.
They have recently designed an elaborate MIS which is planned to become functional by
February 2007 and will greatly assist in the tracking and recovery processes. Moreover,
with is five-year strategic planning conducted in December 2006, it is expected that
performance and financial sustainability will be improved while reducing the operational
costs. Although the Yield of Portfolio is fairly strong with 24 percent average, SAFWCO
spends a large amount in its social mobilization strategy in rural areas.
6.1.7
Client Loyalty and Drop Outs
The average retention rate is 60 percent with variations across districts and communities.
It is maintained that clients give preference to SAFWCO’s Credit and Enterprise services
over other MFIs and banks in the area, namely NRSP and Khushhali Bank. Partly, this is
the outcome of the integrated and grass-roots accessibility approach that is promoted by
6
SAFWCO. An equally important factor is the policy and social collateral demands of the
other organizations. Moreover, SAFWCO’s service charges are 2 percent lower than
other institutions.
Of the 40 percent that drop out, SAFWCO’s management reports, that these do not
qualify as drop-outs because they return after a gap of 12-18months. It is felt that the
cultural mindset also drives the clients attitude towards utilization of services. The
majority of people become content with a little improvement in their economic situation
and return only when they feel sustainability or operation of their business is at stake.
The ratio for males and females is roughly 40:60, and the portfolio of clients has changed
significantly over the years. From very desperate and uneducated people, it has become a
mix with people from stable backgrounds also applying. While female clients are
increasing, those women who are from fairly stable economic families, maintain that their
husbands or families are adequately providing for them and hence they do not want to
avail microcredit services.
6.1.8
Institutional Development and Future Expansion
6.1.8.1 Human Resources Profile and Development
As mentioned above, SAFWCO has a team of 63 people looking after the CED
programme with 51 loan officers. The personnel portfolio has significantly increased
from 22 staff for CED with 11 loan officers over the years. The senior and mid-level
managers responsible for overall design, conceptualization and implementation have
qualifications in the social sciences and have extensive experience of working with
communities. While only a few people have specific experience of microcredit
programmes, SAFWCO adopts an apprenticeship model to ensure that they develop indepth understanding of the programmes and processes.
SAFWCO has institutionalized its capacity building and HR development processes
through its Human and Institutional Development Programme. In addition to the external
organizations and development professionals, it carries out regular training and refresher
courses for its staff. It has developed training modules on enterprise development,
business development, analytical tools and software, community mobilization, and other
relevant issues. SAFWCO plans to carry out extensive staff development initiatives on
the basis of HR assessment undertaken as part of its strategic planning.
6.1.8.2 Management Information Systems and Utilization
SAFWCO is steadily moving towards systemic planning and implementation. This is
indicative from the gradual integration of ICT in its work and connectivity of various
branch offices. It has designed a thorough Management Information System through
which data and analysis will be generated on all key financial and operational indicators.
Since the MIS is not completely operationalized, it is difficult to assess the quality of
information generated, or its utilization. However, discussions with SAFWCO
7
management reveal the significance of this instrument in their analysis for planning and
expansion.
The general culture of SAFWCO is to meet with clients to understand their issues and
respond to them by making changes in programme strategies. It has a strong internal
Monitoring and Evaluation team which generates regular reports on programme targets
and efficiency for General Managers and governance; these also form the basis for future
planning. This indicates that there will be a conscious use of analytical reports when the
MIS will be operationalized. Moreover, it is also seen as a tool for strengthening the loan
tracking and screening mechanism.
6.1.8.3 Financial and Operational Sustainability
As indicated above, service charges on credits become the key source for meeting
operational expenses. SAFWCO also receives a line of credit from the Pakistan Poverty
Alleviation Fund (PPAF) worth Rs.13 million under which operation costs and staff
salaries are covered for three years. While it is very likely that PPAF would extend this
contract, however, SAFWCO has developed its endowment fund. There exists a
revolving fund which is in the form of direct contribution from founding members and is
used for new initiatives and asset development.
Despite these initiatives, the indicators for financial and operational sustainability need to
improve tremendously. Although the expense ratio has decreased over the past two years,
it is comparatively high with 32.9 percent when compared with other FSS MFIs 22
percent and for all MFIs in Asia 23.2 percent. Similarly, the operating expense ratio is
also high at SAFWCO – 32.2 percent – as opposed to 15.5 percent of all FSS and all
Asian – 12.6 percent. The current profitability ratios for SAFWCO are low with FSS
standing at 57.9 percent and Operational Self sufficiency is rated as 59.32 percent.
SAFWCO has -16.45 percent Return on Assets and -60.98 percent Return on Equity.
6.1.8.4 Research and Development
SAFWCO follows its legacy of grass roots participation and reflection and thus maintains
research at the core of programme development. It regularly conducts research studies in
the programme areas of the organization or at a wider provincial level as needed.
Research is seen as a better means of learning from past experiences, improving upon
service delivery, planning and allocation of resources, and demonstrating results as a part
of accountability to key stakeholders. While a combination of tools, including
Participatory Rural Appraisal techniques, statistical and quantitative analysis and case
studies are employed, the foci of research are multi-disciplinary and look into poverty
alleviation, socio-economic development and institutional reforms.
Evaluative research also takes an important place in SAFWCO’s overall strategy. It has
identified three levels of evaluation ranging from outcome mapping and assessment to
impact analysis. Research is also featured in the core responsibilities of all programme
employees who are encouraged to keep field journals and accounts to capture their
8
reflections. External evaluations and research studies are also commissioned; however,
the frequency and scope needs to expand significantly.
6.1.8.5 Systemic Planning and Future Directions
SAFWCO has a long range of plans for its operational, institutional and programmatic
expansion. While more specific plans will emanate from the five year strategic planning
that has recently been initiated, broad directions have been shared. With respect to assets
and operational sustainability, SAFWCO has acquired its three branch offices, hence has
reduced the expenses for rents. It has also procured a land parcel of 16 acres for its
DHARTI project i.e. Development of Human Action Research and Training Institute.
The recently established Human and Institutional Development Centre is also procured
from SAFWCO’s own savings of Rs. 3.2 million which is now generating its own
operational costs through consultancies and outsourcing services.
Geographically, SAFWCO has expanded its operation to Achroo Thar district which is a
very marginalized and highly ignored area with extinct facilities or infrastructure.
Similarly, it plans to start its operation in very disadvantaged communities of Jamshoro
and Kohistan areas of Sindh.
6.2
Survey Results
In this section we present the results from our survey for SAFWCO. The results are based
on the data collected on the basis of the questionnaire – see Appendix at the end of the
Report. A select few of the results are presented here in table form, in the main text of
this Chapter, while the substantial majority of tables are presented in the Appendix to the
Chapter. The Appendix to this Chapter contains the largely ‘descriptive’ tables and
results, while the tables which are part of the text in this Chapter, are the more
‘analytical’ tables. In the Appendix to this Chapter, there are far more tables than those
on which we offer comments in the text. Many of these tables are simply informative and
so we do not discuss them in the Chapter. They are being provided for the reader’s own
interest and perusal. Only the more interesting, striking or pertinent results and tables
from the Appendix are discussed in the text.
As we show in Chapter 2, the survey was conducted across four types of populations for
the purposes of the Study. Two of the categories are ‘clients’ or ‘borrowers’, while the
other two are ‘non-clients’. In the borrower/client category, there are two types of clients,
the ‘Active Borrowers’ and the ‘Pipeline Borrowers’. The former category that of ‘Active
Borrower’, is that client who has been in the programme of the MFI for longer than ten
months; s/he may have been a client for some years in their nth loan cycle or may have
even been a client in their first year. ‘Pipeline Borrowers’ are classified as those new
clients who had joined the programme of the MFI a few months – usually between 1-4
months – of the start of our survey. There are also two categories of ‘Non-Borrowers’,
one which are selected from the neighbourhood of the old Active Borrowers, and the
other from the neighbourhood of Pipeline Borrowers. Ideally, and in the best case
possible, the Active Borrower and the Pipeline Borrower (and their neighbours) should
9
have been chosen from ‘old/established’ areas where the MFI has been working for some
years, and ‘new’ areas where they are about to enter and identify and enlist clients.
However, in many cases this was not possible since most MFIs did not have exclusively
‘new’ areas identified, and we were forced to take Active Borrowers and Pipeline
Borrowers, and both sets of their neighbours, from the same locality/area. Nevertheless,
this does not undermine our results which are presented in this Section. In some cases we
present results where we compare the Active Borrower with Pipeline Borrowers, and in
some cases we compare both Active Borrowers and Pipeline Borrowers with the two
combined categories of neighbours, that of Non-Borrowers.
From tables in the Appendix to this Chapter, we find that more than 85 percent of
SAFWCO clients belong to the earlier, their first three, loan cycles which will have a
bearing on our attempt to capture the extent of ‘impact’. Table A.6.2.3 shows, as we
would expect, that there is not too much difference in the educational levels of clients and
non-clients. Table A.6.2.4 has an important finding in it which shows that a large
proportion of Borrowers, whether they are older (Active) Borrowers or new (Pipeline)
Borrowers, have as their professions/business the classification ‘Livestock Management’,
while most Non-Borrowers are ‘Personal Community Service Providers’. This important
finding related to Livestock Management may suggest that in the case of SAFWCO
clients, many want to enter the Livestock business but are resource/credit constrained.
Once they have access to credit, a large proportion of them are likely to opt for Livestock
Management; interestingly, the proportion of those who have a Retail Shop, is fairly
similar across the three categories, suggesting that perhaps this is not a category for
which most would-be borrowers desire credit.
The tables in the Appendix on Housing Characteristics, and Table 6.1 below show us that
there is very little, in fact insignificant, difference in Housing characteristics of SAFWCO
Borrowers and Non-Borrowers, with all living in similar sorts of houses with similar sorts
of services. Table A6.2.8 and Table 6.2 show that while the difference in the Income Per
Capita of Borrowers and New and Non-Borrowers is not very significant, the difference
of Expenditure Per Capita between these two categories, is significant. In most other
categories, the difference between Borrowers and New and Non-Borrowers, is not
significant. However, one of the most important and interesting findings from Table
A.6.2.8, is the substantial number of households who are part of the SAFWCO
microfinance programme, who are below the official poverty line.
Table – 6.1
SAFWCO – Housing
Variables
House owners
Person per room
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
Mean
Standard
Deviation
97.0954
96.9697
4.3941
16.82840
17.17454
2.34141
t-value
Significance
Level
.083
.934
-.544
.587
10
Houses with baked bricks
Houses with RCC Roof
Houses with Cemented Floor
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
4.5091
70.1245
67.8030
3.3195
2.2727
39.0041
37.5000
2.40646
45.86648
46.81189
17.95183
14.93158
48.87744
48.50424
.562
.574
.715
.475
.347
.729
Note: There are 241 and 265 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 6.2
SAFWCO – Economic Status
Variables
Expenditure Per Capita
Per Capita Food Expenditure
Income Per Capita
Household Asset Score
Value of household assets
Category
Mean
Standard
Deviation
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
897.1519
808.2968
422.9781
419.6744
1459.6046
1201.2761
6.41
6.28
673113.7917
549799.9697
462.85240
382.50595
227.56572
227.05425
2200.30022
693.41128
2.579
2.898
984810.32697
727450.14831
t-value
Significance
Level
2.359
.019
.163
.870
1.812
.071
.565
.572
1.608
.108
Note: There are 241 and 265respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
One of the unexpected and surprising results that we have found – Table 6.3 and A.6.2.9
– is that the proportion of School Going Children for Active Borrowers is lower than that
for New and Non-Borrowers and that this difference between the two categories is
significant. From Table 6.2.9, this difference seems to be more marked for Boys than for
Girls, and if this is the case, one possible explanation could be that Boys are now being
used as family labour, particularly in Livestock Management, an activity which is new
for most clients.
Table – 6.3
SAFWCO – Children’s Education
Variables
School Going Children %
Category
Active Borrowers
New and Non-Borrowers
Mean
78.5690
84.1821
Standard
Deviation
t-value
27.12173
24.05542
-2.019
Significance
Level
.044
11
School Going Children - Boys %
School Going Children - Girls %
Children going to Private School %
Monthly Expenditure on Education
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
83.0051
85.3656
55.8051
55.8793
15.7280
13.7733
97.4425
96.1675
29.75190
28.26594
45.01595
44.92048
34.27120
31.43179
238.51888
254.96930
-.688
.492
-.013
.990
.573
.567
.050
.961
Note: There are 241 and 265 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
There is not much substantial difference between our two categories owning Household
Assets, with the only significant difference – Table 6.4 – being that Borrowers own more
Gold (and have Beds with Foam mattresses).
Table – 6.4
SAFWCO – Household Assets Ownership
Variables
Own House
Refrigerator
Colour TV
Motor Cycle
Washing Machine
Sewing Machine
Bed with Foam
Urban Property
Gold
Mobile phone
Category
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Mean
96.2656
97.7273
17.8423
18.1818
48.5477
50.3788
14.1079
13.2576
37.7593
36.3636
54.7718
58.7121
9.9585
4.9242
5.8091
3.0303
49.7925
37.8788
25.3112
20.0758
Standard
Deviation
18.99989
24.55972
38.36654
38.64272
50.08292
52.32111
34.88273
33.97597
48.57940
49.74876
49.87536
52.32111
30.00691
23.36668
25.15512
17.17454
50.10363
50.89362
43.56995
40.13279
t-value
Significance
Level
-.743
.458
-.099
.921
-.401
.689
.277
.782
.318
.750
-.864
.388
2.113
.035
1.460
.145
2.647
.008
1.406
.160
Note: There are 241 and 265 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant at least at 90 percent level of
significant. The negative t indicates that average value of category 2 is greater than the average
value of category 1.
12
One of the most significant findings from our survey for SAFWCO, relates to the
substantial positive difference in different types and categories of Women’s
Empowerment. Table 6.5 shows that in every category, the difference between Borrowers
and the other categories, is significant. None of the other MFIs in our sample had such a
result.
Table – 6.5
SAFWCO – Women Empowerment
Variables
Economic Empowerment
Score out of 14
Income Empowerment
Score out of 5
Assets Empowerment
Score out of 8
Category
Mean
Standard
Deviation
Active Borrowers
New and Non-Borrowers
11.4302
8.5647
2.06107
3.81553
6.120
.000
Active Borrowers
New and Non-Borrowers
4.2093
3.6706
.81336
1.40905
3.066
.003
Active Borrowers
New and Non-Borrowers
3.4186
2.8235
1.25055
1.61228
2.699
.008
7.0814
2.09882
4.485
.000
New and Non-Borrowers
5.5059
2.48147
Active Borrowers
New and Non-Borrowers
5.2907
4.7529
1.33607
1.81204
2.211
.028
Empowerment Related with
Education and Health
Score out of 10
Social Empowerment
Score out of 10
Active Borrowers
t-value
Significance
Level
Note: There are 86 and 85 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
In terms of the perceptions of clients and non-clients, Tables A. 6.2. 24-29, show a
number of features. The longer Borrowers stay with the programme, the larger proportion
feel that they are better-off and that the Quality of their Lives has improved; most say
they eat better and they feel that this improvement in their Quality of Life can be
sustained. Most Non-Borrowers are aware of SAFWCO’s microfinance programme, and
most Non-Borrowers also feel that there is an overall improvement of the Quality of Life
on account of taking the loan – Table 6.2.29. New (Pipeline) Borrowers in particular,
have a very positive perception about the consequences of the programme, and so do
those Non-Borrowers who are located in the same area where the programme functions.
6.3
Regression Analysis
There are weaknesses in using bivariate analysis, as we do above, since it does not allow
us to examine the nature of the impact, and hence, we use multivariate regression
analysis, which allows us to look at impact controlling for other related variables. These
two sets of analysis also explain why we often get contradictory findings.
13
The Difference in Differences (DID) impact model estimated for SAFWCO is
Yij = Xijα + Cijβ + Mijγ + Tijδ +vij
Where Yij is an outcome on which we measure impact for household i in locality j, Xij is
a vector of household characteristics *, Cij is a dummy equal to 1 for active borrowers and
their matched neighbours and 0 otherwise, Mij is a membership dummy variable equal to
1 if household i self-selects into the credit programme, and 0 otherwise; and Tij is a
variable to capture the treatment effects on households that self selected themselves into
the programme and are already accessing loans. T is also a dummy variable equal to 1 for
active borrowers and 0 otherwise. The coefficient δ on Tij is the main parameter of
interest and measures the average impact of the programme. A positive and significant δ
would indicate that microfinance is having a beneficial effect on the borrowers.
SAFWCO has been providing microcredit for sometime and in our sample we have
clients in loan cycles ranging from one to five. Therefore we do two separate sets of
regression on young and old borrowers. In our sample the mean number of loan cycles is
2.1, therefore we define young borrowers as those who have borrowed 2 times or less and
old borrowers who have borrowed more than 2 times.
A Single Difference equation is also estimated to assess impact between active borrowers
and the pipeline clients. This exercise was done for both young and old borrowers. The
form of the equation is as follows and the variables are defined as stated above.
Yij = Xijα + Tijδ +vij
The results from the estimation of δ are given in Table 1. One area where SAFWCO is
having a clear impact is women’s empowerment. Old borrowers perform significantly
better on all indices compared to other respondents. On the overall index old borrowers
score 10 points higher (p=0.018) than other respondents. Old borrowers also perform
better than pipeline clients in the single difference estimates on 3 indices of
empowerment. Furthermore, young borrowers also do significantly better on the income
empowerment index in both single and double difference estimates (DID: 1.5 pts;
p=0.019). In these regressions the member dummy is not significant and therefore we can
say that the higher score on empowerment is due to borrowing from SAFWCO, as the
insignificant member dummy implies that to begin with individuals who self-select into
the borrowing programme are not more empowered. The other result that is positive and
significant is savings for old borrowers compared to pipeline clients. On average, old
borrowers are saving Rs.300 more than pipeline clients (p=0.063).
The only other result that is significant is educational expenditure; however it is negative
implying that old borrowers are spending less than pipeline clients (-138; p=0.008). The
other variables that were generally significant in the regressions were rural and
*
For SAFWCO four household characteristics were included in the regression out of 16 tested through
ANOVA.
14
respondent’s education level. The rural dummy had a negative effect on all outcomes,
while respondent’s education had a positive effect on all variables.
15
Table 1: Regression results
Dependent Variable
Log(Respondent Income)
Log(Household Income)
Log(Per Capita Income)
Log(Total Household Expenditure)
Log(Food Expenditure)
Educational Expenditure
Health Expenditure
Savings
Asset Score
Children Enrolled in School(%)
Boys Enrolled in School(%)
Girls Enrolled in School(%)
2
Women's Empowerment (Overall Index)
Economic Empowerment
Income Empowerment
Asset Empowerment
Empowerment related with Education and
Health
Social Empowerment
Young Borrowers
Old Borrow
Single Difference
Double Difference
Single Difference
Do
1
Coefficient t-value
Coefficient t-value
Coefficient t-value
Co
0.001
0.01
0.15
0.84
-0.27 -1.66
-0.10
-1.04
-0.03 -0.26
0.002
0.02
-0.20
-0.19
0.03
0.21
0.13
1.25
-0.06
-0.95
-0.02 -0.24
-0.03 -0.55
-0.08
-1.15
-0.04 -0.38
-0.02 -0.32
-40.43
-0.65
50.20
0.62
-137.60 -2.66 ***
2.14
0.05
25.10
0.34
-65.50 -1.34
108.20
0.73
63.77
0.34
297.20
1.87 **
-0.29
-0.81
0.48
0.89
0.03
0.08
-5.49
-0.93
1.52
0.17
-9.90 -1.53
-5.60
-0.86
-5.78 -0.60
-7.10 -0.98
-1.55
-0.26
11.76
1.39
-6.30 -1.02
2.09
0.60
6.13
1.43
6.10
1.79 *
0.76
0.58
1.47
0.89
1.95
1.51
0.79
1.71 *
1.50
2.38 **
1.45
3.32 ***
0.12
0.26
0.96
1.66
0.36
0.85
0.61
-0.19
0.73
-0.27
1.69
0.53
1.62
0.62
1.61
0.77
2.00 **
1.07
1 Significant at 10%(*), Significant at 5%(**), Significant at 1% (***)
2 Score based on 47 questions, the other idices listed below are a breakdown of this index. Refer to questionnaire for detail.
Note: Young Borrowers are clients who have taken two loans or less and Old borrowers are those who have taken between 3 to 5 loans.
6.4
Focus Group Discussions
This section discusses the client feedback of microfinance institutions and the various
coping mechanisms at the local level in terms of financial transactions. Information has
been gathered primarily through Focus Group Discussions with beneficiary groups in
randomly selected programme localities. Some additional information has also been
gathered through discussions with the respective programmes’ field and programme staff.
6.4.1 Focus Group Discussions – Bhit Shah Urban
Group Composition:
• Focus group discussions were arranged with SAFWCO’s clients and non-clients from
Bhit Shah Urban.
• A total of 15 people participated in the discussion out of which 9 were women.
Discussions were conducted in small groups separately for men and women to ensure
open and candid responses.
• Interviews with only female non clients could not be arranged.
•
•
Education levels varied significantly – male participants were at least matriculate or
intermediate pass. 5 females were also middle or matric pass while 4 of them were
primary drop-outs.
The group had a mix of clients ranging from those in their fourth or fifth loan cycle
and those who were just one month old clients.
Involvement in Microcredit Programme – reasons and factors
• Income generation or enhancement was identified as the key reason for which all
participants engaged in SAFWCO’s Credit and Enterprise Development Programme
(CED) across urban and rural areas or gender.
• Most female clients took loans for livestock and small loans for embroidery and
handicrafts. Male clients applied for loans to set up their shops or retail business of
milk. Demand for dairy products is higher in that area because of the shrine and
people flock there to pay their homage.
• In case of urban clients, both males and females, another strong reason for applying
for loans is the raising inflation rates which continue to shrink their income and bring
business to a static position.
Loan Repayments and Social Collateral
• Almost all clients mentioned that instalments and their process were very reasonable
and they could easily pay them off. They stated that loans were basically utilized to
purchase more raw material or livestock which gives immediate boost to the income
level. Therefore, they didn’t face any problems at all.
• Female clients elaborated that from the increased income, they not only pay off the
debts but also save considerable amounts. So for the next round of investment, they
add up their saving in the amount received on credit and thus, can take more
ambitious business moves. One participant stated that she was able to buy 3 buffalos
and 5 goats by utilizing the loan and savings strategically. She currently saves up
almost Rs. 120 on selling 5 litres of milk at an average.
• Clients, both men and women, receiving loans for handicraft didn’t seem to be
equally strategic. SAFWCO staff explained that cultural diversity comes into play.
The ethnic groups or castes running the handicrafts business as well as the old
settlers, do not have a business approach. And thus, they feel content with their basic
living needs being met.
Impact on Quality of Life and Social Consciousness
• A direct correlation between taking microcredit and quality of life and enhanced
awareness, cannot be drawn. Partly, the overall community development initiatives,
accessible media and proximity to city centre by SAFWCO and other organizations,
play a role, as does proximity to Hyderabad centre. Also, the clients did not associate
any change in social status, quality of life, or greater consciousness of their rights and
responsibilities towards their family or society at large. Education, health and family
planning were things which they were significantly aware about; however, the
practices were more culturally driven than knowledge based.
17
•
•
Participants were also not very clear about their future plans and aspirations. The
responses could easily be categorized as being very standard, highlighting a stable
economic set up, education and jobs for their children.
In case of women clients, the decision-making and family issues did not change much
with their economic reliance. Key decisions, like arranging for and approving suitable
candidates for children’s marriages, attending family events and tokens to be given,
property, crops, main budgets, were taken by the head of the family. Their
participation level has also not changed. In some cases, husbands always sought their
views, and that continued to happen even after their economic contribution increased.
All clients and non-client were very articulate about their own rights as citizens of
Pakistan and elaborated on how different regime changes have only usurped those
rights.
Non Clients
The only two female non-clients FGD participants maintained that they do not feel
adequate in taking up any risk like accepting loans. While they know their small-scale
business can grow with the microcredit facility, they do not feel courageous enough to
take the plunge. So they use their own savings from their household budget to buy more
raw materials for handicrafts and their embroidery work.
6.4.2 Focus Group Discussions – Shahdadpur Urban and Rural
Group Composition:
• Focus Group Discussions were arranged with SAFWCO’s clients and non-clients
from Shahdadpur Urban and Rural areas.
• A total of 35 people participated in the discussion out of which 19 were women.
Discussions were conducted in small groups separately for men and women to ensure
open and candid responses.
• Representation of non-clients was ensured. Out of 16 men, only 5 were nonborrowers while 6 non-clients were present in the women’s group.
• Education levels varied significantly – male participants were at least matriculate or
intermediate pass. While all female members never pursued education beyond
primary. Only one female member had completed her matriculation and was teaching
in a local school.
• The group had a mix of clients ranging from those in their fourth or fifth loan cycle
and those who were just one month old clients.
Involvement in Microcredit Programme – reasons and factors
• Income generation or enhancement was identified as the key reasons for which all
participants engaged in SAFWCO’s Credit and Enterprise Development Programme
(CED), across urban and rural areas, or gender.
• The immensity of needs, however, varied greatly amongst participants. For instance,
a female client from the urban area stated that she already has a business of candle
making which was supported by her husband and son as well. When she approached
SAFWCO for loans, her husband was taken ill and their productivity was reduced
18
•
•
since she was distributing her time for his care as well. The first loan of Rs. 3,000 was
sought to buy candle-making machines so that she could produce more candles in less
time. The experiment was successful and now in her fifth round of loans, she has 11
machines, and distribution has increased tremendously covering Shahdadpur and
Sanghar both.
Another participant stated that his family was in an extremely desperate condition as
their crops were destroyed during the torrential rains. They were only left with one
buffalo which was the only source of income for the family of 11 people. He found
out about SAFWCO’s programme through the community organization and was
encouraged to apply for a loan. He used it for buying a goat which brought some
stability in the family. Loans were paid off through savings and another application
was filed for buying seeds so they could prepare for the next crop. After a gap of two
years, he applied for a bigger loan to buy another buffalo so the income from selling
milk could be increased further.
In case of urban clients, both males and females, another strong reason for applying
for a loan is the raising inflation rate which continues to shrink their income and bring
business to a static position. Many participants stated that their home budgets keep
increasing because of family needs, health and educational expenses, and they do not
have much left to invest in the business. Therefore, the loan money is directly
invested in business so it could lead to greater profit margins.
Loan Repayments and Social Collateral
• Participants unanimously agreed on the need to make payments on time as their
probability to get bigger loans approved, increases. The strategies used for paying
instalments varied again from individual to individual. Some people did not invest all
amounts together, saving enough to pay off the first three instalments. That freed
them from the worry at least in the initial payments. Once the business picks up,
instalments were seen as utility bills and so were included in budgeting. Others
mentioned that they put aside some money from their daily income so paying Rs.500
or 1000 doesn’t emerge as an issue at the end of the month.
• Many women clients stated that ‘any delays or defaults in loan repayments is
unthinkable’ because they would not want to deceive someone who has done them a
huge favour. They felt that when they were in absolute need of help and support,
SAFWCO took them out of the crises, so it was unethical of them not to repay.
• Clients showed their satisfaction with SAFWCO’s policies for social collateral and
the loan process. Since a group of 3-6 members are needed for each loan application,
there were clients who are part of more than one group. When asked how they would
pay up if the main client defaulted, almost 75 percent of the participants asserted that
such a situation will not arise. The strong belief emanates from the close-knit nature
of business community as well as of rural life. They mentioned that it is basically a
web of trust and interdependence which every member respects. Moreover, there is
the belief that the social and economic gains are much higher if one follows the core
principles rather than violates them.
19
Impact on Quality of Life & Social Consciousness
• Barring a few cases, clients did not associate any change in social status, quality of
life, or greater consciousness of their rights and responsibilities towards their family
or society at large. For instance, the majority were sending their children to school
even when faced with extreme economic pressures. Similarly, cognizance levels of
health care and hygiene were not impacted significantly. Some clients mentioned that
they still opt for self-medication and help from the local dispenser until the ailment
persists for prolonged periods. Changes in lifestyle and preferences were also not
reported or observed - for instance, family planning was not practiced with many
clients having large families of 6-7 children.
• Around 7 participants said that their nutritional intake is far more varied and balanced
now that their business was functional. They mentioned that earlier on they couldn’t
afford to eat mutton or chicken even in 2 months and had staple food only. However,
now twice or three times in a week, they have mutton/meat as their food. The change
was mainly attributed to economic stability.
• Participants were also not very clear about their future plans and aspirations. The
responses could easily be categorized as ‘standard’, highlighting a stable economic
set up, education and jobs for their children.
• In case of women clients, the decision-making and family issues did not change much
with their economic reliance. Only one participant cited concrete examples as to how
her role has changed – she said that she has decided to build a house from her savings
and despite fierce resistance from her in-laws and husband, she continued with the
construction. When asked about her husband’s reaction to her assertiveness, she said
her two sons were supporting her decision who also support her in business dealings,
hence, the husband was quietened in front of his two sons.
• As far as social justice and political rights are concerned, again no decipherable
difference in the status could be seen. For example, the dowry demands and
extravagant expenses of weddings were accepted and articulated as social norms
which they could not question.
• They were very articulate about their own rights as a citizens of Pakistan and
elaborated on how different regime changes have only usurped those rights. A female
client said that she is ready to beat up any nazim or political agent that comes asking
for votes because there is never any service provided to them. And they have given up
hope on any improvement in the political or social scene in Pakistan.
Non-Borrowers’ Perspective
• The reasons for not using the facility of loans and microcredit were also explored by
talking to non-borrowers faced with similar economic and social issues. Out of 11
male and female respondents, 5 did not opt for loans purely because of religious
reasons. They cited various quranic verses and hadith to assert why they will never
engage in any interest and mark up paying activity. Of the remaining, two male
participants said that they have a joint family system so money could be borrowed
from within the family. Two female respondents (urban) stated that their involvement
in economic activities in not supported by their families (both parents and in-laws)
nor are they faced with a desperate situation. While 2 females from the rural areas
20
were still considering the possibility of taking loans, they feared that repayments will
be an issue because they were not very confident about their entrepreneurial
capabilities.
21
Appendix Chapter 6
A.6.1.1 Institutional Snapshot
Indicators
Members outstanding
Active borrowers
Branches
Districts covered
Total disbursements(Rs.)
Average loan disbursed(Rs.)
Account officers (loan officers)
Total employees
Employee turnover (%)
Borrowers per staff
Borrowers per Loan officer
Total income(Rs.)
Total Assets (Rs.)
Average Loan Portfolio
Capital/Asset ratio
Operational self-sufficiency (%)
Financial Self-sufficiency (%)
Return on Assets (%)
Return on Equity (%)
Portfolio yield (%)
Average Loan Balance per
Borrower
Operating expense/Loan Portfolio
Portfolio at risk (>30 days) (%)
Cost per unit of loan disbursed
†
‡
December 2006
27000
12572
22
4
16,113,754
1 1,433,035
51
63
n/a
142
245
9483793 †
63227934
43356900 ‡
24.94%
59.32%
57.99%
-16.45%
-60.98%
24.8% Nominal
20.2% Real
11.68%
45.58%
4.33%
36.6
Data for fiscal year 2003-04
As of December 2005. Source: PMN
22
A.6.1.2 Product Profile
Loan Product
Purpose
Term/Duration
Loan size
Interest rate
Repayment term
Fee
Savings
Insurance
Livestock
Loans
Income
Generation
Crafts Loan
12-18months
Rs.4000 Rs.10,000,
Amount
increases in
Subsequent
rounds
18%
Reduced by
1/4th if loan is
paid back in 4
months
Monthly
Rs. 100 for
documentation
1% of loan
12 months
Rs.2000-4000
12-15months
Up to Rs.25,000
depending on
loan cycles
18%
Reduced by
1/4th if loan is
paid back in 4
months
Monthly
Rs. 100 for
documentation
1% of loan
18%
Reduced by 1/4th
if loan is paid
back in 4 months
Income
Generation
Retail and Trade
Loans
Setting up or
expansion of new
businesses
Monthly
Rs. 100 for
documentation
1% of loan
Enterprise
Development
Business
expansion,
support in
savings
12-24months
Rs. 30,000-Rs.
100, 000
18%
Rs. 100 for
documentation
to be introduced
Festival
Loan
Support for
Celebrations,
wedding, crop
cutting
12 months
Up to
Rs.10,000
18%
Reduced by
1/4th if loan is
paid back in 4
months
Monthly
Rs. 100 for
documentation
1% of loan
23
Table - A. 6.2.1
Sample Information
[SAFWCO]
Respondents
Respondent
Category
%
505
100.0
241
47.7
New Borrowers
85
16.8
Non-Borrowers (Same Area)
89
17.6
Non-Borrowers (New Area)
90
17.8
Active Borrowers
Table - A. 6.2.2
Sample Information
[SAFWCO]
Borrowers
Loan
Taken
%
326
100.0
One
133
40.8
Two
89
27.3
Three
60
18.4
Four
35
10.7
Five
9
2.8
Table - A. 6.2.3
Respondent Characteristics - Education
[SAFWCO]
Total
Respondent Category
Active
Borrowers
Respondents
Proportion of Female
Formal Education
NonBorrowers
241
85
179
505
47.7
16.8
35.4
100.0
44.0
27.1
43.0
40.8
No Education
48.1
49.4
50.3
49.1
Primary
19.9
17.6
16.2
18.2
Middle
5.4
9.4
9.5
7.5
Metric
12.9
12.9
8.4
11.3
6.6
7.1
14.0
9.3
Inter
Graduate and above
Technical Training
Pipeline
Borrowers
No Training
Have Training
7.1
3.5
1.7
4.6
100.0
100.0
98.3
99.4
1.7
.6
24
Table - A. 6.2.4
Respondent Characteristics - Nature of Business
[SAFWCO]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
241
85
179
505
47.7
16.8
35.4
100.0
Business (Retail Shops with fixed outlet)
40.7
44.7
39.7
41.0
Personal Community Service Providers
10.4
11.8
30.2
17.6
.4
1.2
2.8
1.4
Technical Service Provider
Transport Service Provider
2.5
8.2
.6
2.8
Agriculture – Crop Production
12.0
3.5
16.2
12.1
Livestock Management
34.0
30.6
10.6
25.1
Table - A. 6.2.5
Household Demography
[SAFWCO]
Total
Respondent Category
Active
Borrowers
Respondents
Family Size
Pipeline
Borrowers
NonBorrowers
241
85
179
505
47.7
16.8
35.4
100.0
1-3 Person
7.9
5.9
6.1
6.9
4-6 Person
32.8
22.4
27.4
29.1
7-9 Person
30.3
41.2
34.1
33.5
More than 9
29.0
30.6
32.4
30.5
Average Family Size
Dependency Ratio
8
8
9
8
116.92
110.11
119.83
116.81
Table - A. 6.2.6
Housing Characteristics - Quality
[SAFWCO]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
241
85
179
505
47.7
16.8
35.4
100.0
House owners
97.1
96.5
97.2
97.0
Person per room
4.39
4.47
4.53
4.45
Houses with baked bricks
70.1
75.3
64.2
68.9
3.4
2.8
49.4
31.8
38.2
Houses with RCC Roof
Houses with Cemented Floor
3.3
39.0
25
Table - A. 6.2.7
Housing Characteristics - Services
[SAFWCO]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
241
85
179
505
47.7
16.8
35.4
100.0
Houses with telephone
8.7
8.2
14.0
10.5
Houses with electricity
95.9
96.5
96.6
96.2
Houses using gas for cooking
40.7
31.8
29.6
35.2
Houses using flush system
53.5
48.2
46.4
50.1
Table - A. 6.2.8
Household Economic Status
[SAFWCO]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
241
NonBorrowers
85
179
505
47.7
16.8
35.4
100.0
1460
1224
1190
1325
Expenditure Per Capita
897
839
794
851
Per Capita Food Expenditure
423
404
427
421
62
68
74
67
Income Per Capita
Poor Households (% below Official
Poverty Line)
Household Asset Score
Value of household assets
6
6
6
6
673114
499518
573677
608521
Average Indebtedness
18348
38333
38357
29425
The Official Poverty Line figure is Rs 1,000 per capita per month – see Montgomery (2006)
Table - A. 6.2.9
Child Education
[SAFWCO]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
School Going Children %
79
80
86
81
School Going Children - Boys %
83
81
88
84
School Going Children - Girls %
56
54
57
56
Children going to Private School %
16
16
13
15
Monthly School Fee per Child
25
16
16
20
Tuition Fee per Child
8
6
2
5
Transport Fee per Child
7
26
6
10
26
Monthly Expenditure on Education
97
162
64
97
Figures are Averages
Table - A. 6.2.10
Child Immunization
[SAFWCO]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Complete Course
82.6
78.3
81.0
81.3
Incomplete Course
12.6
18.8
13.8
14.1
4.8
2.9
5.2
4.6
No Vaccination
Only for household having children less than 5 years
Table - A. 6.2.11
Health Expenditure
[SAFWCO]
Respondent Category
Active
Borrowers
Members reported illness (Last 30 days)
Monthly Expenditure on Health
Pipeline
Borrowers
NonBorrowers
Overall
3
2
3
2
1570
982
1144
1311
Figures are averages
27
Table - A. 6.2.12
Sources of Household Income
[SAFWCO]
Respondent Category
Active
Borrowers
Income Per Capita
(%) Income from Main occupation
Secondary occupation
Other Earners
Pipeline
Borrowers
Overall
NonBorrowers
1460
1224
1190
1325
33
43
35
35
3
3
2
2
27
29
35
30
Pension
0
1
0
0
Inland Remittances
0
0
0
0
Overseas Remittances
0
0
0
0
Rental Income
0
0
0
0
Figures are averages
Table - A. 6.2.13
Household Consumption Pattern
[SAFWCO]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
Overall
NonBorrowers
Expenditure Per Capita
897
839
794
851
Per Capita Food Expenditure
423
404
427
421
(%) Expenditure on FOOD
48
48
54
50
Education
3
4
3
3
Health
6
6
5
6
Electricity
8
8
7
8
Gas
1
1
1
1
Telephone
2
1
2
1
Rent
1
0
1
1
Travelling
4
4
4
4
20
14
0
12
9
8
4
7
4
4
4
4
Repayment of Loan
Saving
Consumption Last 30 days
- Meat (days)
- Fruits (days)
5
4
4
5
- Eggs (days)
10
11
9
10
Figures are averages
28
Table - A. 6.2.14
Household Assets Ownership
[SAFWCO]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
Overall
NonBorrowers
Own House
96.3
94.1
95.5
95.6
Refrigerator
17.8
18.8
17.9
18.0
Colour TV
48.5
51.8
48.0
48.9
Motor Cycle
14.1
10.6
14.5
13.7
Prize Bond
.8
.4
Washing Machine
37.8
42.4
31.3
36.2
Sewing Machine
54.8
64.7
53.1
55.8
Bed with Foam
10.0
5.9
3.4
6.9
Urban Property
5.0
1.2
3.9
4.0
Gold
49.8
32.9
38.5
43.0
Mobile phone
25.3
21.2
19.6
22.6
Figures are average percentage
Table - A. 6.2.15
Business Characteristics
[SAFWCO]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Family Workers (engaged in business)
1
1
1
1
Permanent on Monthly Salary
3
4
2
3
Permanent on Daily Wages/Piece Rate
2
1
2
2
Seasonal/Occasional
1
1
Monthly Sale [Rs.]
26541
18354
24608
24275
Value of Assets - Shop/Workshop
42573
25100
26168
33167
Machinery
8541
10886
5662
7913
Instruments
7164
5192
5505
6174
1
Figures are averages
29
Table - A. 6.2.16
Women’s Empowerment
[SAFWCO]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Number of Respondents
102
22
77
201
Economic Empowerment - Score out of 14
11.4
10.6
8.0
10.0
Income Empowerment - Score out of 5
4.2
3.2
3.8
3.9
Assets Empowerment - Score out of 8
3.4
3.4
2.7
3.1
Empowerment Related with Education and
Health - Score out of 10
7.1
5.8
5.4
6.3
Social Empowerment - Score out of 10
5.3
5.3
4.6
5.0
Figures Average Score except number of respondents
30
Table - A. 6.2.17
Women’s Empowerment - Economic Aspects
[SAFWCO]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
102
22
77
201
Do you take decisions on the aspects of
purchase, modification or repair of house?
29
27
17
24
Do your husband discuss with you when
decision on modification/repair of house is
made
74
55
62
67
Do you take decisions on the purchase or
sale of livestock?
69
55
40
56
Did your husband discuss with you before
sale or purchase of livestock?
75
64
49
64
Do you purchase your dresses for the
family?
79
73
83
80
Do you purchase the utensils for your
family?
77
77
81
79
Do you purchase gold and jewellery for
your family?
58
55
51
55
Do you take decisions on borrowing
money?
77
73
51
67
Do your husband discuss with you on the
issues of borrowing money?
67
59
56
62
Do you spend money you have borrowed?
77
73
52
67
Do you repay the money you have
borrowed?
78
73
52
68
Do you take decisions on transactions
involving household Equipments?
43
41
31
38
Do you have any debt in your name?
83
73
23
59
Do your husband discuss with you when he
has made the debt?
76
68
51
66
Figures are percentages except number of respondents
31
Table - A. 6.2.18
Women’s Empowerment - Income
[SAFWCO]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
102
22
77
201
Do you have your own income?
80
68
79
79
Do you spend it for the family yourselves?
79
68
74
76
Do you need the permission of your husband
to spend your income?
40
23
42
39
Do you get any part of your family income
or husbands income to your hands
regularly?
78
59
71
74
Do your husband discuss with you when he
spends income for the family requirements?
76
45
64
68
Figures are percentages except number of respondents
Table - A. 6.2.19
Women’s Empowerment - Assets
[SAFWCO]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
102
22
77
201
Do you possess any household asset?
36
36
23
31
Do you have cash savings in your own
name?
68
59
40
56
Do you operate Bank account in your
name?
7
4
5
Do you pledge, Sell, or exchange any
of the above said assets yourself?
52
45
32
44
Do your need permission from your
husband to sell, pledge, exchange any
of the assets?
44
55
56
50
Do you have purchased land in your
own name?
2
5
3
2
Is the house you stay registered in
your name?
4
5
4
4
Is the house you stay registered in
your and husband name?
75
77
69
73
Figures are percentages except number of respondents
32
Table - A. 6.2.20
Women’s Empowerment - Health and Education
[SAFWCO]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
102
22
77
201
Do you take decisions on the issues of your
children education?
61
50
55
57
Do your husband consult with you when he
takes decision on the education of children?
74
50
70
70
Do you think you can decide on how many
children you can have?
30
18
16
23
Do you think you can decide on the spacing
between children?
31
14
12
22
Do you think that you can decide on the
treatment of your and your family member
illness?
70
59
43
58
Do you think you can decide on the method
of treatment for your family members?
67
64
42
57
Do you think you can decide on the type of
contraceptive to be used?
32
23
19
26
Do your husband discuss with you on the
issues of health aspects of children?
72
50
64
66
Do you have any choice of food prepared
and served in your home?
80
77
75
78
Are you able to take care of the nutritional
requirements of your self, family and
children?
80
73
77
78
Figures are percentages except number of respondents
33
Table - A. 6.2.21
Women’s Empowerment - SOCIAL Aspects
[SAFWCO]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
102
22
77
201
Are you free to go out and visit your
friends and relatives with out permission?
61
59
42
53
Do you have the choice of the dresses you
wear?
81
73
83
81
Do your husband impose his religious
beliefs on you and make you accept them?
6
9
8
7
Do you have any association with political
parties?
23
36
19
23
Do you participate in voting and other
democratic procedure?
68
82
68
69
1
5
6
3
Do you participate in the meetings of NGO
programs or in other social events?
60
59
32
49
Do your husband prevent you from
participating in such programs?
15
5
18
15
Do you take decisions on the marriage of
your son-daughter?
51
36
43
46
Do your husband discuss with you on the
issues of the marriage of children and
close relatives?
81
73
81
80
Do your husband impose her political
ideas on you and make you accept them?
Figures are percentages except number of respondents
Table - A. 6.2.22
Borrowers - Loan Amount Used by:
[SAFWCO]
Total
Respondent Category
Active
Borrowers
Borrowers
Loan was
used by:
Self
Spouse with your suggestion
Other Members
Pipeline
Borrowers
241
85
326
73.9
26.1
100.0
92.9
97.6
94.2
6.2
2.4
5.2
.8
.6
Figures are column percentages except number of borrowers
34
Table - A. 6.2.23
Borrowers - Loan Amount Used For:
[SAFWCO]
Total
Respondent Category
Active
Borrowers
Borrowers
Loan was
used for:
Business Activity
Consumption
Death/Illness of household members
Pipeline
Borrowers
241
85
326
73.9
26.1
100.0
99.2
98.8
99.1
.4
1.2
.6
.4
.3
Figures are row percentages except number of borrowers
Table - A. 6.2.24
Borrowers’ Perceptions - Getting Loan
[SAFWCO]
Number of Borrowers
241
Loan utilized for same purpose (%)
99
Loan sufficient (%)
100
Time Obtaining Loan (Months)
33
Expenditure incurred (Rs.)
Problems in Obtaining Loan (%)
230
No Problem
Collateral
Delay in Payment
76.8
3.3
17.4
Too many Documentations
2.9
Too many visits
5.4
Group Making
5.0
Figures are averages
35
Table - A. 6.2.25
Borrowers’ Perceptions - Coping Strategy
[SAFWCO]
Loan Taken
One
Number of Borrowers
Two
Three
Overall
Four
Five
48
89
60
35
9
241
Sale of asset/Sale of Animals
60.4
55.1
48.3
45.7
66.7
53.5
Borrow loan from relative/friends
95.8
89.9
85.0
80.0
100.0
88.8
4.2
7.9
3.3
11.1
5.0
10.4
10.1
10.0
2.9
2.1
7.9
3.3
2.9
11.1
5.0
10.4
11.2
13.3
11.4
11.1
11.6
Borrow loan from Microfinance
Borrow loan from Commercial
Banks
Borrow from
Moneylender/Commission agent
Reduce Consumption Expenditure
Search for extra work
8.7
6.3
11.2
13.3
5.7
Extra hours in existing occupation
14.6
12.4
8.3
25.7
11.1
13.7
9.5
Have Enough Saving
12.5
23.6
26.7
31.4
11.1
22.8
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
Table - A. 6.2.26
Borrowers’ Perceptions - Impact
[SAFWCO]
Loan Taken
One
Two
Three
Four
48
89
60
35
9
241
54.2
65.2
75.0
82.9
77.8
68.5
Deteriorated
2.1
4.5
1.7
No Change
43.8
30.3
23.3
17.1
22.2
29.0
As much as wanted (all types)
37.5
52.8
55.0
77.1
66.7
54.4
As much as wanted (not all types)
45.0
22.9
33.3
44.4
Number of Borrowers
Effect on quality of
life
Family eat your fill
Have more to eat now
Improved
2.5
60.4
44.9
2.1
2.2
Have more to eat now
41.7
48.3
2.1
1.1
Equal
56.3
50.6
35.0
28.6
55.6
44.8
Health is better now
22.9
38.2
43.3
60.0
44.4
39.8
2.1
3.4
75.0
58.4
56.7
40.0
55.6
58.5
75.0
83.1
81.7
85.7
100.0
82.2
25.0
16.9
18.3
14.3
Health was better earlier
Equal
Sustainable increase
in income?
Five
Sometimes felt hunger
Have more to eat in earlier times
Family health
Overall
Yes
No
1.2
65.0
65.7
44.4
5.7
53.5
1.7
1.7
17.8
Figures are column percentages except number of respondents
36
Table - A. 6.2.27
Non-Borrowers’ Perceptions - Getting Loan
[SAFWCO]
Respondent Category
NonBorrowers
(Same Area)
Number of Non-Borrowers
Aware about credit facility
Overall
NonBorrowers
(New Area)
89
90
179
100.0
100.0
100.0
Yes
70.8
95.6
83.2
No
27.0
4.4
15.6
Do not need
10.1
8.9
9.5
4.5
18.9
11.7
Interest is high
21.3
16.7
19.0
Regular payment is difficult
30.3
28.9
29.6
Do not know office address
4.5
22.2
13.4
Amount of Instalment is high
Figures are column percentages except number of respondents
Table - A. 6.2.28
Non-Borrowers’ Perceptions - Coping Strategy
[SAFWCO]
Overall
Respondent Category
New
Borrowers
Number of Non-Borrowers
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
85
89
90
264
Sale of asset/Sale of Animals
64.7
29.2
50.0
47.7
Borrow loan from relative/friends
96.5
94.4
93.3
94.7
8.2
10.1
3.3
7.2
4.7
9.0
11.1
8.3
4.7
6.7
3.5
12.4
Borrow loan from Microfinance
Borrow loan from Commercial
Banks
Borrow from
Moneylender/Commission agent
Reduce Consumption Expenditure
Search for extra work
Extra hours in existing occupation
Have Enough Saving
3.8
13.3
9.8
8.2
7.9
4.4
6.8
15.3
10.1
16.7
14.0
2.4
4.5
8.9
5.3
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
37
Table - A. 6.2.29
Non-Borrowers’ Perceptions - Change
[SAFWCO]
Overall
Respondent Category
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
85
89
90
264
65.9
44.9
34.4
48.1
New
Borrowers
Number of Non-Borrowers
Effect on overall quality of
life
Family eat your fill?
Have more to eat r?
Improved
Deteriorated
1.2
6.7
12.2
6.8
No Change
32.9
48.3
53.3
45.1
As much as wanted (all types)
41.2
33.7
32.2
35.6
As much as wanted (not all types)
56.5
58.4
62.2
59.1
Sometimes felt hunger
2.4
7.9
5.6
5.3
Have more to eat now
43.5
39.3
28.9
37.1
Have more to eat in earlier times
Family health ?
1.2
10.1
16.7
9.5
Equal
55.3
50.6
54.4
53.4
Health is better now
44.7
39.3
33.3
39.0
4.7
9.0
14.4
9.5
50.6
51.7
52.2
51.5
Health was better earlier
Equal
Figures are column percentages except number of respondents
38
Chapter Seven:
(NRSP)
National
7.1
Institutional Review
7.1.1
Background and History
Rural
Support
Programme
The National Rural Support Programme (NRSP), is Pakistan’s largest multi-sectoral rural
development programme, established in 1991 by the Government of Pakistan. It is a notfor-profit organization registered under Section 42 of Companies Ordinance 1984.
NRSP is also the largest Rural Support Programme in the country in terms of outreach,
staff and development activities. Its goal is to reach out to 38 million poor people all over
Pakistan through its network and other Rural Support Programmes (RSPs). At present, it
is operational in 35 districts, has 110 field offices and 13 Regional offices that reach out
to 62,330 people directly and many more indirectly. Programme districts are selected
according to district poverty ranking from data available from national level surveys
conducted by government and international organizations, and distributed among other
Rural Support Programmes (RSPs) like the Sarhad and Punjab Rural Support
Programmes (SRSP and PRSP). The poor in the area are targeted according to the local
community assumptions with poor households identified by the communities themselves
in respective localities. NRSP’s main programmes focus on social mobilization,
infrastructure development and microfinance and enterprise development.
Salient features of NRSP are:
•
It is a home grown organization, registered as a Company Limited as Guarantee
under Section 42 of Companies Ordinance (1984);
•
Government of Pakistan provided seed money to establish NRSP in 1992;
•
NRSP’s core operations are managed from the income of an endowment fund as
well as from donor funding;
•
NRSP is an Not for Profit Organization;
•
NRSP is autonomous and independent;
•
NRSP has no preconceived package for delivery of services or supplies;
•
NRSP is a Gender Sensitive Organization;
•
NRSP has no political agenda.
7.1.2
Mission, Vision and Purpose
NRSP's mandate is to alleviate poverty by harnessing people's potential and undertaking
development activities in Pakistan. It has a presence in 35 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. (NRSP website)
NRSP works to release the potential abilities, skills and knowledge of rural men and
women, to enable them to articulate their aspirations and to effectively marshal the
resources they need to meet their identified needs. The purpose is poverty alleviation enabling people to break the cycle of poverty, which begins with lack of opportunity,
extends to the well-known miseries of economic and nutritional poverty and leads new
generations to endure the same conditions. The process is social mobilization - bringing
people together on new terms for a common purpose. The conceptual tools are 'social
guidance' (recruiting local men and women who will take on a leadership role), advocacy,
capacity building and awareness raising. The programmatic tools are training, support to
institutions, microcredit, infrastructure development, natural resource management and
'productive
linkages'.
The organizational purpose is to advocate for the poor and to bring the concerns of
economically marginalized men and women to public consciousness and to affect policy
so that the poor are brought into the mainstream of the economy.
NRSP's vision is manifested in expanded opportunities for income-generation;
community schools which provide quality primary education, community owned and
managed infrastructure schemes, improved agricultural productivity, higher returns for
labour and so on. From the widest perspective the vision is manifested as the first stages
of
a
transformation
of
civil
society.
7.1.3
Objective
The main objective of NRSP is to create a countrywide network of
grassroots level organizations to enable rural communities to plan, implement and
manage developmental activities and programmes for the purpose of ensuring productive
employment, alleviation of poverty and improvement in the quality of life. The
organization is designed in such a way that it specializes as a support organization, which
provide social guidance to the communities. The guiding tenets of NRSP’s philosophy
are to organize rural communities develop their capital base at the local level through
savings and credit schemes, support human development endeavours and link the
communities with the government service delivery departments, donors, NGOs and the
private sector. While interacting with so many stakeholders, NRSP carefully outlines its
role as that of a facilitator. This leads the communities and other partners to maintain
their
relationship
independent
of
NRSP.
The generic principles of NRSP’s philosophy prevent it from following a preconceived
package approach. The whole quest is to identify and support whatever activities
communities intend to do on their own according to their prioritized needs.
7.1.4 Approach
2
To mobilize people's willingness through the provision of social guidance, NRSP takes
the following steps:
Relying on local perceptions, a poverty profile is prepared to assess the intensity of
poverty prevailing in the community that seeks social guidance.
The willing community is introduced to the philosophy of NRSP, based on which the
community organizes itself into a socially viable group called the community
organization (CO). In view of the information provided by the poverty profile, an
attempt is made to encourage the poor to join the CO.
During initial interactions with the community, genuine activists, who have an ambition
to support their communities in their quest to overcome poverty, are identified. The role
of these activists in harnessing the willingness of the communities is of paramount
significance.
Following the identification of an activist, a micro plan for each member is developed
to see what he or she is willing to do on his/her own. Along with catering to the
individual needs, group level and village level needs are also identified. A thorough
analysis of each is conducted in view of available resources and
constraints to assign priorities to the identified needs.
The next step after the cost-benefit analysis is the arrangement of the desired resources
to address the priority needs. These resources are pooled by the community, provided
by the support organization or managed through other stakeholders like private and
public sector service delivery departments, NGOs and donors.
(Source: NRSP Annual Report 2004-05)
7.1.5
Social Mobilization: NRSP’s Vision for Rural Development
NRSP works to release the potential abilities, skills and knowledge of rural men and
women, to enable them to articulate their aspirations and to effectively marshal the
resources they need to meet their identified needs. The purpose is poverty alleviation –
enabling people to break the cycle of poverty, which begins with lack of opportunity,
extends to the well-known miseries of economic and nutritional poverty and leads new
generations to endure the same conditions. The process is social mobilization - bringing
people together on new terms for a common purpose.
The conceptual tools are ‘social guidance’ (recruiting local men and women who will
take on a leadership role), advocacy, capacity building and awareness raising. The
programmatic tools are training, support to institutions, micro-credit, infrastructure
development, natural resource management and ‘productive linkages’.
7.1.5.1 Social Mobilization, the core of NRSP’s philosophy
Social mobilization is based on acknowledging that the community is the centre of all
development activities. It is only informed and engaged community members who can
plan and undertake sustainable grass roots development. NRSP utilizes the following
steps in mobilizing rural men and women:
7.1.5.1.1
Programme introduction: The process of social mobilization in a new
Union Council begins with a series of dialogues with community members, explaining
3
the purpose of the organization and the mutual obligations which CO formation entails.
These dialogues:
• Help to establish rapport and build trust between the NRSP Social Organizers and the
villagers;
• Enable potential CO members to identify the socio-economic and infrastructural
opportunities available in their communities. Every effort is made to include both men's
and women's perspectives as the dialogues proceed.
• Help identify potential areas of effective intervention, as defined by the men and
women of the community. Once identified, the opportunities are grouped into sectorspecific categories.
7.1.5.1.2.
Situation analysis: As part of the entry process, the Social Organizer
completes a 'Situation Analysis', which covers demographic trends, economic data
(household income, agricultural and other earnings), employment data, the institutions
(schools, hospitals etc.) found in the area, the amount and condition of land, health and
education facilities and physical infrastructure and the state of the agricultural economy.
The situation analysis utilizes primary and secondary sources (interviews, Census data,
etc.) and is valuable as a benchmark, as a tool for entry level planning and for eventual
programme expansion.
7.1.5.1.3.
CO Formation: The NRSP staff asks people to form Community
Organizations (COs), which will function as a platform for development. Each CO then
elects a President and a Manager. The NRSP staff and the CO members identify an
Activist from amongst the CO members.
7.1.5.1.4.
Poverty Profile: It is the process in which villagers are identified
according to their own definitions of economic wellbeing. This gives NRSP a good idea
of the scale of poverty in the area and enables NRSP to match its intended interventions
with local needs. The categories are:
Khushal: Well to do Guzara accha ho jata hai: Better off
Guzara bhot mushkil se hota hai: Very poor Guzara mushkil se hota hai: Poor
Dusroon ke sahare zinda rehte hain: Destitute.
7.1.5.1.5. Micro investment plans: Once a CO has been formed, the Social Organizers
help the members to draw up micro-investment plans (MIPs). Established at three levels,
household, group and the village, these help the CO members to identify their economic
needs in concrete terms and to plan ways to improve their economic standing.
7.1.6 Microfinance Enterprise Development Programme
7.1.6.1
NRSP manages one of Pakistan's biggest microcredit portfolios, with 109,614 active
loans as of July 2005. As part of its holistic approach, NRSP provides various financial
services to the members of COs in rural areas to help them implement their Micro
Investment Plans (MIPs). Major programme donors are PPAF, IFAD and a substantive
4
part of the credit programme is also through NRSP endowment fund provided by the
Government
of
Pakistan.
These services include:
Micro Credit - individuals through groups and Village Banking
Micro Insurance - hospitalization and accidental death
Savings - COs keep their savings in commercial banks or they invest these in
Community Physical Infrastructure.
Micro-credit is a major component of NRSP focusing on improving livelihoods. It is
reported to be the largest credit programme in the country after the Agriculture
Development Bank, having so far disbursed Rs. 7 billion in loans since 1995. Loans are
provided to both men and women for entrepreneurial business projects or for other
income generating activities, such as small businesses or investment in livestock.
The credit process begins with an initial instalment of Rs.10,000, followed by further
instalments of Rs. 5,000. The interest rate is 10-11 percent over the 12 months credit
cycle. However, after the inclusion of the processing fees, the rate rises to 21 percent.
The recovery rate is claimed to be almost 100 percent.
7.1.6.2 Savings
Each Community Organization is encouraged to collect some amount from its members
and put these savings in a Bank account. During the year 2004-05, the CO members
saved a total of Rs. 71.91 million. Of this amount, men’s COs saved Rs. 63.81 million
and women’s COs saved Rs. 8.10 million. However, there is no hard and fast rule
regarding the savings mechanism. Some COs keep their savings with the CO leader, who
disburses them according to the need of the group. A few COs also have a ‘committee’
system, whereby, savings are rotated among the members similar to a committee system.
7.1.6.3 Loan Disbursement Methodology
NRSP provides credits to the members of the COs and the credit groups through a
solidarity group approach. Although, NRSP does not have a preconceived package, credit
is given for any income generating purpose. Other than this purpose the credit is not
targeted for any other utilization. According to NRSP, this encourages the COs to utilize
natural resources and human capital.
Unlike many other microcredit programmes, the NRSP credit programme gives loans to
both men and women. The programme feels that the ratio of men and women clients
actually reflects community demands and behaviours. According to the programme
figures for 2004-05, Rs. 1,552,335,800 was disbursed, of which 83 percent was loaned
out to men and 17 percent to women. Furthermore, as the programme purpose is to focus
on improving the household livelihood conditions, the gender of the borrower is not a
major determinant. Most of the loans taken by the women are actually utilized for male
family member’s income generation activities.
5
Group loans are meant specifically for female clients for which followings rules are
applied:
A group should have minimum three members; Mother, daughter and sisters
cannot be members of the same group, however, other female relatives can be
members of the same group if they live in different households; Group members
should be familiar with one another in order to take responsibility for each other;
Group members should be prepared to repay on behalf of a defaulter in the group;
Group members should live within close vicinity of each others’ homes; First time
loan amount will not exceed Rs. 10,000 and will be repaid on monthly
instalments; In addition, group members have the facility to utilize trainings and
skill enhancement through NRSP.
NRSP offers a successive lending product in which the credit amount increases with
successive loans. During the reporting period, the first loan client was Rs. 10,000 while
for a repeating client the maximum ceiling is Rs. 30,000.
The majority of the NRSP loans are used for agriculture and livestock purposes, with 60
percent of the loans for agriculture purposes, 19 percent for livestock and 21 percent for
entrepreneur development. More than 50 percent of the NRSP programme area comprises
arid zones and rain fed areas of the country taking in view the main mandate of the
organization to eradicate poverty.
The Micro-finance and Enterprise Development Programme (MEDP), with a portfolio of
100,276 active loans worth Rs. 1,064, 696, 693 since July 2005, has disbursed a total of
Rs. 6,706,957,499 since NRSP’s inception in 1993. The figures for 2004-05 show an
increase over 2003-04 in loan size and a 3 percent increase in credit disbursement to
women. There was a significant increase in credit disbursement size for enterprise
development and a decrease in disbursement for agriculture loans. The total credit
disbursed in 2004-05 was 79.12 percent for men and 20.88 percent to women.
As the COs are primarily responsible for assessing the character of the intended
borrowers, it is the CO which assesses the credit worthiness of CO members applying for
a loan. The CO submits the loan application to NRSP in the form of a Resolution signed
by at least 75 percent of the CO members. The CO undertakes the responsibility of
verifying the proper utilization of the loan and its repayment. The NRSP Social
Organizers and loan officers also conduct social and technical appraisals before the
approval of the loan.
In order to improve the quality of COs and the loan portfolio, it was decided in 2003 to
make structural changes in the microcredit assessment, delivery and recovery model. A
new social mobilization and credit delivery scheme has been introduced. The principles
of the new model have been derived from the Urban Poverty Alleviation Programme
(UPAP) – see below.
6
7.1.7
Application of the new Model
Currently, the new model is operating in the Hyderabad, Badin, Mardan, Malakand and
Rawalpindi Regions. Present reports show the following outcomes:
•
The entire staff has become more focussed on doing the assigned work in a
planned manner;
•
The credit staff is implementing all credit activities systematically;
•
The social organization process has accelerated;
•
The SOs do not feel overworked despite forming a larger number of COs;
•
Disbursements have increased considerably;
•
Repayments have improved significantly and all new loans are showing 100%
recovery.
It is important to note that the changes are in the management structure only: the
principles and the structure of the credit programme remain the same. For example, the
service charge, repayment schedules and credit ceilings are the same. Credit only goes to
individuals, as is the case in the existing programme. The CO still initiates the request for
credit and its members benefit from it. The concept of social pressure through group
formation still prevails, because the credit is given on the recommendation of the CO,
which also undertakes the responsibility for repayment.
7.1.8
Appraisal Process
The appraisal process focuses on assessing the character and trustworthiness of the
intended clients. Previously, NRSP’s appraisal process focused primarily on the financial
feasibility of the proposed activity plus the COs guarantee. However, the Organization
has learned from experience that the character of the client pays a greater role in his or
her repayment performance than his or her ability to generate a profit from the business
or activity for which the loan is taken. The character assessment or social appraisal
includes whether the client is ‘honest’ and ‘responsible’ as well as confirmation of his or
her whereabouts for which copies of National Identity Cards and client photographs are
obtained and a complete record is maintained at the village and district offices.
Two independent appraisals are conducted. The field Worker collects the CO Resolution
for rural credit in the CO meeting and then carries out an appraisal at the home of the
intended client. This is called the Social Appraisal because it confirms the whereabouts of
the client and on his or her character. While the second appraisal, referred to as a
Technical Appraisal, is done by the Credit Officer confirming the accuracy of all the
information collected by the Field Worker during the Social Appraisal. The Credit
Officer also checks the financial viability of the proposed activity, with assistance from
the Engineer or other specialists such as the enterprise development staff if required. This
double appraisal at the household level helps the NRSP staff to know the borrower and
also involve the family members in the process. The Field Worker is not authorized to
reject a credit application on his/her own. The decision lies with the Senior Credit
7
Officer. If the Field Worker and Credit Officer disagree, the Senior Credit Officer makes
the decision, after hearing both opinions.
Disbursement of amount is done within 7 to 8 days of approval, for which the individual
borrower visits the local Habib Bank Branch for direct collection of cash through a check
issued on her or his name.
Collateral
NRSP extends micro credit to economically marginal men and women who have no
material collateral. The COs, however, exert social pressure in case of loan default.
Because each loan request is signed by at least 75% of the CO members, each member
acts as a guarantor for all other members. To facilitate the COs and their members in the
repayment of their loans in difficult times, NRSP encourages the COs to practice regular
savings before requesting a loan. However, to ensure that this does not discourage the
poorest CO members, the ceilings for mandatory savings are flexible.
Saving and Internal Lending
The habit of saving is a prerequisite for CO membership, as is regular attendance in the
fortnightly meetings. Once the members’ savings (which are deposited in a bank account
in the name of the CO) reach a substantial amount the process of internal lending begins
with the unanimous will of the CO. The CO then forms a credit committee, which
appraises the loan requests. The CO extends credit to its members from its saving pool on
its own terms and conditions. NRSP trains the COs in accounting and financial
management.
Enterprise Development
NRSP facilitates the COs in developing new enterprises and improving existing ones
through its Vocational Training Programme (VTP) and Natural Resource Management
Programme. As part of the VTP, the CO members are trained in business development
and financial management.
7.1.9
Principles of Recovery Monitoring and Dropouts
Recovery monitoring is given a lot of importance in the new system. It requires daily
recovery planning with preparation of daily recovery targets based on the due date of
each instalment. In the new model, the Senior Credit Officer’s primary duty is to develop
daily monitoring reports and to ensure that a client who does not pay his or her
instalments on time is reminded of the obligation to repay. It is the responsibility of the
Senior Credit Officer to focus on finding ways and means of ensuring timely recovery.
According to the NRSP micro-finance programme team, NRSP does not have a very
stringent approach towards recovery and depend more on the social collateral through the
COs and loan groups (3 individuals per group). To-date, the programme has not
encountered any major defaulters.
In addition, the loan officers at the village level have certain district targets which if
achieved are a major source of incentives in form of bonuses added into their salaries.
8
Therefore, staff members try their utmost to meet their loan and recovery targets.
However, this approach does have an affect on NRSP’s mandate of focusing on the
poorer community segments, as many borrowers are not actually the poor in their
respective communities. Some of the team members further added that the poorest strata
were not prepared to take the risk of attaining loans as they did not have the assets to
recoup in case of an emergency or other losses during business. 1
In the recent programme history, there have been very few dropouts in the Credit
Programme process. Except for a few randomly reported cases in the beginning of the
programme, COs members are mostly familiar with each other and do not identify those
borrowers who have probability of leaving in the middle of the loan cycle due to the
social collateral approach. Similar feedback was received during the clients assessment
discussions during this research.
7.1.10 Characteristics of credit staff
The model recognizes the importance of on-the-job training and monitoring to build staff
capacity. The Field Workers are the front line workers responsible for maintaining close
contact with the COs and their members. This requires a large number of honest and
responsible Field Workers who can meet all the COs and their members. The Field
Worker must be a local, trustworthy person. The Credit Officer must guide the Field
Workers. The SCO must be able to train and monitor a large cadre of Field Workers and
Credit Officers. In the new model, once a Social Organizer helps people to form a CO,
and a credit request is initiated, the credit process from that point on is in the hands of the
Credit Officer and the CO and its members. This means that the Social Organizer is free
to concentrate on other activities, including health and education, training and natural
resource management, as the CO requires.
7.1.11 Village Branches (VB)
In order to establish frequent contact with community members, one to two room village
branches have been formed at accessible locations, typically at the centre of one or more
Union Councils. The location and number of Village Branches in a Union Council is
determined by the size and proximity of the potential clientele. The VB is the smallest
administrative unit responsible for coordinating with the COs and their members on a
daily basis. It is also a recovery collection hub. The Field Worker and the Credit Officer
keep the VB open during office hours according to a fixed schedule, posted in the office.
According to the schedule, the Field Worker allocates time for CO meetings, recovery
follow-up, and appraisals and recovery collection. The Credit Officer monitors the
performance of the Field Worker through surprise visits and checking of all the records
etc. The SCO arranges periodic ‘surprise visits’ to ensure proper office procedures and
compliance with the agreed schedule.
1
Study consultant’s Interviews with General Manager Micro-Finance and Entrepreneur Development
Programme and Credit team District Attock
9
The worker’s degree of mobility depends on the type of terrain and the settlement pattern.
In areas with high population density, the FW visits COs and clients on foot, and in areas
where the population is scattered the FW is provided with a motorcycle. Women FWs
work only in areas that have a high population density. For areas with smaller
populations, the Social Organizers will continue providing credit services. Women credit
officers will have vehicles at their disposal to ensure they reach far flung areas, except in
densely populated areas, where they will travel on foot.
7.1.12 Internal Controls
NRSP has a comprehensive MIS with a database for all its programmes. In the new set
up, the credit MIS is not accessible to Credit Officers or Field Workers. The accounting
staff at the district level reports directly to the Regional General Manager and to Finance
and Accounts at the head office. However, in order to ensure the correct postings of data
in the MIS, the Credit Officers are authorized to check the daily postings from the
receipts. In addition, the other principles are:
The CO formation and credit delivery are two distinct processes which must take place
independently of each other:
Only those COs should have access to the rural credit programme, which are
recognized by the Rural Credit Section as viable institutions. For this purpose, the
Rural Credit section will register the COs with NRSP, rather than the person who
formed it;
The credit should always reach the intended client, who must acknowledge the
receipt of the credit from NRSP;
The staff responsible for credit should be able to focus exclusively on credit
operations and should be able to implement a strategy that leads to 100% on time
recovery;
The organizational structure, such as location of offices and staffing patterns,
should make it possible to pursue clients effectively;
The entire process should be transparent;
All credit disbursement and recovery activities should be implemented in a
planned manner;
The system should allow performance evaluation of staff on the basis of
predefined criteria. For example, the Social Organizers will be evaluated on the
quality and performance of the COs they form, and credit staff on the credit
outreach and the quality of the loan portfolio.
7.2
Urban Poverty Alleviation Project (UPAP)
UPAP began its operations in June 1996 in the urban and peri-urban areas of Rawalpindi
and Islamabad. Since then it has been testing various strategies and adopting the best
ones to cope with the field realities. Having successfully established UPAP as a
microcredit delivery model, NRSP decided to initiate UPAP operations in some of
Pakistan’s major cities. The first expansions were in Faisalabad and Karachi in 2002. The
10
programme has since expanded to Multan and Lahore. It should be mentioned here that
although NRSP through UPAP is running a separate urban credit programme, the NRSP
MEDP continues to operate in certain peri-urban areas in its programme regions.
UPAP establishes low cost settlement offices and disburses credit to women using the
‘solidarity group’ method. Three or more women can form a group. The credit facility
can be used for family enterprises. Men can also use the facility but they must be family
members whose income comes into the hands of the borrowers. This strategy has saved
UPAP from major incidents of fraud or default. Alongside the solidarity group approach,
UPAP also adopted the individual approach on the pattern of the Orangi Charitable Trust,
to cater to the needs of small-scale entrepreneurs and manufacturers who do not live in
areas where there is a UPAP settlement office.
For expansion purposes UPAP has found the solidarity group approach more successful.
The experience of UPAP teams is quite diverse in terms of its borrowers. They learned
that borrowers could be either trustworthy or untrustworthy according to circumstances
and not as a rule. Thus, UPAP believes any credit disbursement strategy is likely to
succeed which ensures effective supervision and pursuance of borrowers. This can be
done through regular monitoring and by developing a relationship of respect with the
community. The recovery rate of UPAP reflects the effectiveness of this approach.
Objectives
•
To improve the quality of life of disadvantaged and low income people;
•
To develop an indigenous model of poverty alleviation in the urban areas of
Pakistan;
•
To provide the urban poor, focusing on women but not excluding men, with
access to credit;
•
To alleviate poverty of low-income households by organizing women,
encouraging them to save;
•
Increasing their access to resources through credit;
•
To create income generating self-employment opportunities for women;
•
To explore the possibility of establishing a specialized bank based on the
experience of the pilot project.
Credit Disbursement Approaches
Solidarity Group:
Three or more like-minded women with comparable social and economic conditions form
a group. Once a group is formed it meets weekly. During the meeting, each group
member saves some amount, through cutting her expenditures equivalent to the weekly
recovery instalment of the credit amount that she intends to borrow. After five weeks, the
weekly saving amount is given to one of the members through a draw. Thereafter this
process continues again. Four weeks after group formation, credit is disbursed to one of
the women. After the group has ensured that this woman has utilized the credit properly
11
credit is disbursed to another woman. Usually, in each weekly meeting the credit is
disbursed to the next member.
Individual:
Any micro level manufacturer living only where UPAP’s settlement office does not exist,
can take credit on the personal guarantee of an honest and competent client of UPAP.
UPAP Programme Monitoring
UPAP has developed an efficient monitoring system. Its MIS developed in Oracle
generates a number of reports revealing both disbursement and recovery positions on a
daily and monthly basis. Monthly staff meetings and daily diaries are a regular feature of
UPAP’s monitoring system. These practices help bring the staff on the same wavelength
regarding programme issues.
7.3
NRSP Survey Results
In this section we present the results from our survey for NRSP. The results are based on
the data collected on the basis of the questionnaire – see Appendix at the end of the
Report. A select few of the results are presented here in table form, in the main text of
this Chapter, while the substantial majority of tables are presented in the Appendix to the
Chapter. The Appendix to this Chapter contains the largely ‘descriptive’ tables and
results, while the tables which are part of the text in this Chapter, are the more
‘analytical’ tables. In the Appendix to this Chapter, there are far more tables than those
on which we offer comments in the text. Many of these tables are simply informative and
so we do not discuss them in the Chapter. They are being provided for the reader’s own
interest and perusal. Only the more interesting, striking or pertinent results and tables
from the Appendix are discussed in the text.
As we show in Chapter 2, the survey was conducted across four types of populations for
the purposes of the Study. Two of the categories are ‘clients’ or ‘borrowers’, while the
other two are ‘non-clients’. In the borrower/client category, there are two types of clients,
the ‘Active Borrowers’ and the ‘Pipeline Borrowers’. The former category that of ‘Active
Borrower’, is that client who has been in the programme of the MFI for longer than ten
months; s/he may have been a client for some years in their nth loan cycle or may have
even been a client in their first year. ‘Pipeline Borrowers’ are classified as those new
clients who had joined the programme of the MFI a few months – usually between 1-4
months – of the start of our survey. There are also two categories of ‘Non-Borrowers’,
one which are selected from the neighbourhood of the old Active Borrowers, and the
other from the neighbourhood of Pipeline Borrowers. Ideally, and in the best case
possible, the Active Borrower and the Pipeline Borrower (and their neighbours) should
have been chosen from ‘old/established’ areas where the MFI has been working for some
years, and ‘new’ areas where they are about to enter and identify and enlist clients.
However, in many cases this was not possible since most MFIs did not have exclusively
‘new’ areas identified, and we were forced to take Active Borrowers and Pipeline
Borrowers, and both sets of their neighbours, from the same locality/area. Nevertheless,
this does not undermine our results which are presented in this Section. In some cases we
12
present results where we compare the Active Borrower with Pipeline Borrowers, and in
some cases we compare both Active Borrowers and Pipeline Borrowers with the two
combined categories of neighbours, that of Non-Borrowers.
The tables in the Appendix of this Chapter describe some of the key findings from our
survey. Unlike all our partner MFIs, NRSP is the only purely rural MFI in our sample,
and hence one needs to keep this factor in mind when evaluating its results. This fact also
makes comparison with the other MFIs in our sample difficult. Moreover, NRSP is a
development organisation involved in poverty alleviation and microcredit is one of its
main activities. Hence, it is also possible that the results from the microfinance
intervention could be affected by other inputs from NRSP, such as the social organisation
skills the organisation relies on. This broad package of development interventions also
makes NRSP unique in our sample, thus making comparisons with specialised MFIs
somewhat problematic.
From our sample, we observe that about one-fifth of NRSP clients are in the fourth and
greater loan cycle. Table A.7.2.3 shows that the educational characteristics of those who
are Active Borrowers as well as those who are not part of the programme, are fairly
similar, an unsurprising result. A large majority of NRSP Active Borrowers are involved
in Agriculture in Crop Production, as well as in Livestock Management. The proportion
of NRSP clients in these two categories seems to be higher than both that of NonBorrowers and new (Pipeline Clients), suggesting perhaps that NRSP loans are used for
agricultural purposes and perhaps non-clients, over time, shift from Business/Retail Shop
type activities to Agriculture and Livestock.
The Housing Quality data seem to be fairly similar across the sample – Table A.7.2.6 –
with perhaps more NRSP Active Borrowers having Cemented Floors than the other three
categories of clients. Table 7.1 in the text below, confirms this observation showing that
the difference are not statistically significant, except in the Cemented Floors category.
What is surprising, however, is that the so few Active Borrowers have Houses with RCC
Roofs compared to the new clients and Non-Borrowers, a difference which is statistically
significant.
Table – 7.1
NRSP – Housing
Variables
House owners
Person per room
Houses with baked bricks
Category
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and Non-
Mean
Standard
Deviation
98.1481
13.50254
97.7528
14.84210
2.7030
1.57825
2.9093
1.51554
69.1358
67.6966
46.26475
46.82936
t-value
Significance
Level
.362
.717
-1.739
.083
.403
.687
13
Houses with RCC Roof
Houses with Cemented Floor
Borrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
5.2469
22.33160
12.3596
32.95827
41.9753
49.42818
30.8989
46.27269
-3.262
.001
3.018
.003
Note: There are 324 and 356 respondents in each category respectively. t-value greater than 1.6
indicates the mean difference between two categories is statistically significant. The negative t
indicates that average value of category 2 is greater than the average value of category 1.
Table A.7.2.8 shows the average Income, Expenditure and Value of Household Assets of
Active Borrowers, Pipeline Borrowers and Non-Borrowers, where Active Borrowers
have higher average Income Per Capita and Expenditure Per Capita than both categories.
Table 7.2 shows that both the Expenditure Per Capita and Income Per Capita for Active
Borrowers is higher than it is for Pipeline and Non-Borrowers and this difference is
statistically significant. Similarly, the Value of Household Assets and the Household
Asset Score are both greater for Active Borrowers and here again, this difference is
statistically significant. Both these sets of data may suggest that NRSP Active Borrowers
are ‘better-off’ than the new clients and non-clients.
Table – 7.2
NRSP – Economic Status
Variables
Expenditure Per Capita
Income Per Capita
Household Asset Score
Value
assets
of
household
Category
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Mean
Standard
Deviation
1051.6925
492.86872
971.8186
405.06757
1632.7789
1358.04301
1303.4008
835.43774
8.46
2.752
7.99
2.868
1189218.7307
1572360.69310
772059.8596
1331138.08740
t-value
Significance
Level
2.317
.021
3.846
.000
2.213
.027
3.742
.000
Note: There are 324 and 356 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
One does not find much difference in the indicators for Children’s Education – Table
A.7.2.9 – although there is a difference in the Monthly Expenditure incurred on
Education, where Active Borrowers spent far more than New and Non-Borrowers –
Table 7.3 – and this difference was statistically significant. In most of our other (urban)
14
MFIs, we did not find a similar result, where there was no such marked difference. In the
urban areas, the Education levels were higher than they are for rural areas, and perhaps
Education in rural areas has a somewhat lower priority than it does in cities and towns.
Hence, it is possible, that only after some years of improved income do rural parents
spend extra on the Education. Perhaps, as Incomes rise in rural areas, the additional
Income allows parents to send more children to school or then send their children to
better schools.
Table – 7.3
NRSP – Children’s Education
Variables
Category
School Going Children %
School Going Children - Boys
%
School Going Children - Girls
%
Children going
School %
Monthly
Education
to
Expenditure
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
Private
New and NonBorrowers
Active Borrowers
on
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Mean
Standard
Deviation
t-value
Significance
Level
91.3612
18.76740
1.089
.277
89.3238
20.63974
90.1341
26.42924
.459
.647
88.8194
26.55939
73.2108
41.67856
.600
.549
70.4734
42.75401
27.2728
41.28501
1.069
.286
23.2768
40.34627
393.9461
868.26460
2.976
.003
207.6695
417.82755
Note: There are 324 and 356 respondents in each category respectively. t-value greater than 1.6
indicates the mean difference between two categories is statistically significant. The negative t
indicates that average value of category 2 is greater than the average value of category 1.
One of our unexpected and surprising results is that there does not seem to be much
difference on Household Asset Ownership amongst the three categories of respondents –
Table A.7.2.14 and Table 7.4. One would have expected Active Borrowers, as their
income rise, to perhaps invest in additional Household Assets.
Table – 7.4
NRSP – Household Assets Ownership
Variables
Category
Mean
Standard
Deviation
t-value
Significance
Level
15
Own House
Refrigerator
Colour TV
Motor Cycle
Prize Bonds
Washing
Machine
Sewing
Machine
Bed with Foam
Urban Property
Gold
Mobile phone
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
98.4568
98.5955
26.5432
30.6180
56.1728
51.1236
21.6049
20.5056
.9259
1.1236
16.62074
15.86011
44.22460
46.15540
50.31339
50.05773
41.21849
40.43109
9.59267
10.55510
43.2099
49.61342
New and Non-Borrowers
Active Borrowers
44.9438
49.81371
68.2099
46.63811
69.1011
17.5926
21.6292
1.5432
1.4045
45.6790
38.7640
38.2716
38.2022
46.27269
38.13461
41.22952
12.34544
11.78418
49.88999
48.78975
48.68017
48.65658
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
-.111
.911
-1.173
.241
1.311
.190
.351
.726
-.255
.799
-.454
.650
-.250
.803
-1.321
.187
.150
.881
1.826
.068
.019
.985
Note: There are 324 and 356 respondents in each category respectively. t-value greater than 1.6
indicates the mean difference between two categories is statistically significant at least at 90
percent level of significant. The negative t indicates that average value of category 2 is greater
than the average value of category 1.
Another unexpected result relates to Women’s Empowerment, where, as in the case of
many MFIs, we find that there is little difference between Active Borrowers and others –
Table A.7.2.17-21 and Table 7. 6. While we found similar results for urban MFIs as well,
we did find that in the case of Economic Empowerment, Active Borrowers were far
‘better-off’ than new clients and Non-Borrowers. In the case of NRSP, we do not get this
result perhaps due to greater rigidity in the social structure in rural Punjab where women
are less physically and socially mobile.
Table – 7.5
NRSP – Women Empowerment
Variables
Economic Empowerment
Score out of 14
Income Empowerment
Score out of 5
Category
Mean
Standard
Deviation
Active Borrowers
New and NonBorrowers
8.8065
2.26765
9.6486
3.29978
2.7419
1.29229
3.2568
1.37553
Active Borrowers
New and NonBorrowers
t-value
Significance
Level
-1.701
.091
-2.234
.027
Assets Empowerment
16
Score out of 8
Empowerment Related with
Education and Health
Score out of 10
Social Empowerment
Score out of 10
Active Borrowers
New and NonBorrowers
1.7581
1.14069
1.9324
1.05117
Active Borrowers
6.0000
1.61955
New and NonBorrowers
6.0541
1.45142
4.4194
1.03303
4.2297
1.19985
Active Borrowers
New and NonBorrowers
-.927
.356
-.205
.838
.977
.330
Note: There are 62 and 74 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
7.4
NRSP Regression Analysis
There are weaknesses in using bivariate analysis, as we do above, since it does not allow
us to examine the nature of the impact, and hence, we use multivariate regression
analysis, which allows us to look at impact controlling for other related variables. These
two sets of analysis also explain why we often get contradictory findings.
The Difference in Differences (DID) impact model estimated for NRSP is
Yij = Xijα + Cijβ + Mijγ + Tijδ +vij
Where Yij is an outcome on which we measure impact for household i in locality j, Xij is
a vector of household characteristics 2, Cij is a dummy equal to 1 for active borrowers and
their matched neighbours and 0 otherwise, Mij is a membership dummy variable equal to
1 if household i self-selects into the credit programme, and 0 otherwise; and Tij is a
variable to capture the treatment effects on households that self selected themselves into
the programme and are already accessing loans. T is also a dummy variable equal to 1 for
active borrowers and 0 otherwise. The coefficient δ on Tij is the main parameter of
interest and measures the average impact of the programme. A positive and significant δ
would indicate that microfinance is having a beneficial effect on the borrowers.
As NRSP has been providing microcredit for a long time we have clients in our sample
who are even in their sixth and seventh loan cycle. Therefore we do two separate sets of
regression on young and old borrowers. In our sample the mean number of loan cycles is
2.25, therefore we define young borrowers as those who have borrowed 2 times or less
and old borrowers who have borrowed more than 2 times.
2
For NRSP six household characteristics were included in the regression out of 15 tested through ANOVA.
17
A Single Difference equation is also estimated to assess impact between active borrowers
and the pipeline clients. This exercise was done for both young and old borrowers. The
form of the equation is as follows and the variables are defined as stated above.
Yij = Xijα + Tijδ +vij
The results from the estimation of δ are given in Table 7.6. From the results we can
conclude that NRSP is having a positive and significant effect on income and total
expenditure. Young borrowers have 26 percent higher income than other respondents
(p=0.094), overall their household income is 32 percent higher (p=0.005) and the per
capita income is 24% higher (p=0.045), however these variables are not significant in the
single difference estimation. On total household expenditure, young borrowers do
significantly better on both single and double difference estimations (7%, p=0.079;
DID:11 percent, p=0.042). Similarly we can see a positive impact on old borrowers on all
measures of income in both single and double difference estimations. In the DID
estimations, active borrowers have 90% higher income (p=0.00), household income is 48
percent higher (p=0.00) and per capita income is 40 percent higher (p=0.00). In
estimations where old active borrowers are compared to pipeline clients (Single
Difference), respondent’s own income is 70 percent higher (p=0.00), household income is
24 percent higher (p=0.02) and per capita income is 22 percent higher (p=0.04).
Other than this impact we find that old borrowers spend Rs.208 more on health
expenditure as compared to all other categories of respondents (p=0.09). Compared to
pipeline clients, old borrowers are saving significantly less (Rs.154; p=0.04) and they
also score lower on the asset empowerment index (1.43; p=0.00).
About 14 percent more girls from young borrowers households are enrolled in school
(p=0.09) compared to all other respondents and they score higher on the asset index when
compared to pipeline clients (0.97; p=0.00). However, on empowerment indices young
borrowers are scoring significantly less than pipeline clients as given in Table 7.6.
A dummy variable was added in the regressions to control for rural and urban differences
between clients. The rural dummy was generally negative and significant for expenditure
and enrolment figures. Respondent’s education was positively related with all variables
and it was significant in about 85 percent of the regressions. The only exception to this
was health expenditure, which was at times negatively related to respondent education,
though it was never significant.
The dummy member was negative and significant for respondent’s own income,
implying that those who self-select themselves for borrowing start with a lower income
compared to other individuals. In some empowerment regressions, member was positive
and significant and the dummy old was negative and significant, but there was no clear
trend.
The results on the income variables do show a positive impact on NRSP clients, however
this impact has not translated into higher spending on education and saving. Higher
18
spending on these latter variables is important to develop human capital and reduce
vulnerability.
19
20
Table 7.6: Regression results
Dependent Variable
Log(Respondent Income)
Log(Household Income)
Log(Per Capita Income)
Log(Total Household Expenditure)
Log(Food Expenditure)
Educational Expenditure
Health Expenditure
Savings
Asset Score
Children Enrolled in School(%)
Boys Enrolled in School(%)
Girls Enrolled in School(%)
2
Women's Empowerment (Overall Index)
Economic Empowerment
Income Empowerment
Asset Empowerment
Empowerment related with Education and
Health
Social Empowerment
Young Borrowers
Single Difference
Double Difference
1
Coefficient t-value
Coefficient t-value
0.05
0.39
0.26
1.68
0.11
1.30
0.32
2.82
0.11
1.31
0.24
2.01
0.07
1.76 *
0.11
2.04
0.02
0.38
0.03
0.48
38.20
0.48
42.00
0.44
-100.00
-0.98
28.80
0.27
-23.19
-0.29
75.00
0.81
0.97
2.97 ***
0.36
0.78
6.81
1.17
9.13
1.16
2.82
0.50
3.27
0.46
2.61
0.43
14.12
1.72
-3.42
-1.93 *
0.82
0.24
-2.10
-2.43 **
-0.79 -0.51
-0.98
-3.05 ***
0.31
0.55
-0.05
-0.91
0.51
1.23
-0.59
0.30
-1.18
0.81
-0.03
0.83
-0.04
1.25
**
***
**
**
*
Old Borrowers
Single Difference
Double Difference
Coefficient t-value
Coefficient t-value
0.70
5.73 ***
0.89 5.63
0.24
2.45 **
0.48 3.83
0.22
2.06 **
0.40 2.94
-0.002 -0.03
0.02 0.29
-0.05 -0.93
-0.06 -0.94
47.40
0.61
23.50 0.25
47.00
0.41
208.00 1.70
-153.00 -2.09 **
-60.50 -0.68
-0.25 -0.72
-0.75 -1.55
8.10
1.32
8.50 1.05
3.64
0.64
3.70 0.51
1.45
0.25
8.86 1.06
0.45
0.07
0.68 0.10
0.06
0.01
-0.04 -0.01
-1.07 -0.95
-0.21 -0.22
-1.43 -1.75 *
-0.84 -1.08
1.78
1.12
1.36
1.24
1 Significant at 10%(*), Significant at 5%(**), Significant at 1% (***)
2 Score based on 47 questions, the other idices listed below are a breakdown of this index. Refer to questionnaire for detail.
Note: Young Borrowers are clients who have taken two loans or less and Old borrowers are those who have taken between 3 to 7 loans.
0.90
0.86
0.55
0.73
***
***
***
*
7.5
UPAP Survey Results
As many as 83 percent of those sampled were in their first three loan cycles, and most of
these had little or no education. The largest share of Active Borrowers, Pipeline
Borrowers and Non-Borrowers, all seem to undertake similar sorts of business activity,
such as having a Retail Shop or then they are Personal Community Service Providers.
Unlike many of the other MFIs studied where we find some sort of shift in business
activity on account of the loan, in the case of UPAP, we get the sense that most
businesses continue after the loan and are consolidated, rather than switched.
There is no significant difference in the Housing characteristics of Active Borrowers or
New and Non-Active Borrowers – Table 7.6 – perhaps suggesting that insufficient capital
has been accumulated in this short span of time to invest in improvements in the house.
Table 7.7, on the other hand, has the rather surprising result that in most cases, the
Expenditure Per Capita and the Per Capita Food Expenditure, are significantly lower for
Active Borrowers than for Pipeline or Non-Borrowers. The percentage of Borrowers
below the Official Poverty Line, in line with most of the other MFIs in the sample, is
only 19 percent. From Table A.7.4.13, it seems that both Active Borrowers and Pipeline
(New) Borrowers are spending a large amount of their income on the repayment of their
loan, and in comparison to those who are Non-Borrowers, are spending less on Food
Expenditure.
Table – 7.7
UPAP – Housing
Variables
House owners
Person per room
Houses with baked bricks
Houses with RCC Roof
Houses
Floor
with
Cemented
Category
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Mean
Standard
Deviation
t-value
Significance
Level
74.2857
43.77542
.934
.351
71.0744
45.40429
3.2650
1.48790
1.968
.049
3.0226
1.68968
92.3810
26.57248
-1.600
.110
95.3168
21.15704
40.6349
49.19327
.329
.743
39.3939
48.92961
75.5556
43.04411
1.391
.165
70.7989
45.53149
Note: There are 315 and 363 respondents in each category respectively. t-value greater than
1.6 indicates the mean difference between two categories is statistically significant. The
negative t indicates that average value of category 2 is greater than the average value of
category 1.
Table – 7.8
UPAP – Economic Status
Variables
Category
Expenditure Per Capita
Per
Capita
Expenditure
Food
Income Per Capita
Household Asset Score
Value
assets
of
household
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Mean
Standard
Deviation
1325.1840
643.54615
1442.4875
703.02808
567.7574
234.59407
664.6475
299.48792
1456.5825
1104.67028
1498.6593
748.03354
7.39
2.649
7.06
2.592
333866.8203
345371.43949
291473.5914
306132.64951
t-value
Significance
Level
-2.253
.025
-4.638
.000
-.587
.557
1.644
.101
1.667
.096
Note: There are 315 and 363 respondents in each category respectively. t-value greater than
1.6 indicates the mean difference between two categories is statistically significant. The
negative t indicates that average value of category 2 is greater than the average value of
category 1.
While there is not much significant difference in the characteristics of Active Borrowers
and the other two categories with regard to Education characteristics, there is one
surprising result in which the proportion of school-going Girls as a proportion, is lower
for Active Borrowers – Table 7.9. Why this is so is difficult to explain; one possible
explanation could be that girls are being asked to work in the family business rather than
go to school, but there could be other reasons as well.
23
Table – 7.9
UPAP – Children’s Education
Variables
School Going Children %
School Going Children - Boys
%
School Going Children - Girls
%
Children going
School %
Monthly
Education
to
Expenditure
Category
Mean
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
Private
New and NonBorrowers
Active Borrowers
on
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Standard
Deviation
tvalue
Significance
Level
90.3040
19.46766
-.758
.449
91.7132
17.43449
82.8616
31.74271
.068
.946
82.6027
34.52412
76.4683
38.97037
-2.027
.043
84.7039
33.07633
43.2434
45.20299
1.249
.212
37.8462
45.66167
506.0400
617.97444
1.442
.150
427.2304
525.06299
Note: There are 315 and 363 respondents in each category respectively. t-value greater than
1.6 indicates the mean difference between two categories is statistically significant. The
negative t indicates that average value of category 2 is greater than the average value of
category 1.
In t case of Household Assets Ownership, we find no significant difference between
Active Borrowers and the other two categories, except that more Active Borrowers have
savings in Gold – Table 7.10. The differences between the two categories in terms of
Business Assets is also not significant, except that we again find the surprising result that
Active Borrowers have lower Business Assets than do New and Non-Borrowers, and that
the value of the Machinery Assets of Active Borrowers are significantly lower – Table
7.11.
24
Table – 7.10
UPAP – Household Assets Ownership
Variables
Own House
Refrigerator
Colour TV
Motor Cycle
Washing
Machine
Sewing
Machine
Bed with Foam
Gold
Mobile phone
Category
Mean
Standard
Deviation
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
78.4127
72.7273
36.8254
44.0771
76.5079
74.3802
12.6984
15.1515
45.61003
46.41870
48.96461
50.26905
46.74632
45.56992
33.34850
36.66583
67.6190
46.86728
New and Non-Borrowers
Active Borrowers
66.9421
49.95318
72.3810
46.86728
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
79.0634
27.3016
21.7631
47.3016
33.3333
42.5397
38.2920
45.84629
45.32987
42.63657
53.09547
51.67543
50.15798
49.24123
tvalue
Significance
Level
1.604
.109
-1.896
.058
.599
.549
-.906
.365
.181
.856
-1.873
.061
1.638
.102
3.466
.001
1.111
.267
Note: There are 315 and 363 respondents in each category respectively. t-value greater than
1.6 indicates the mean difference between two categories is statistically significant at
least at 90 percent level of significant. The negative t indicates that average value of
category 2 is greater than the average value of category 1.
Table – 7.11
UPAP – Business Assets
Variables
Category
Monthly Sale [Rs.]
Value
of
Assets
Shop/Workshop
Machinery
Instruments
Other
-
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Mean
Standard
Deviation
16159.68
18017.626
17661.71
25004.080
11156.19
44093.032
28298.90
171750.279
2132.06
7891.055
4519.28
16168.329
1608.89
6266.196
2366.94
13556.640
4188.89
22578.879
1487.60
7888.063
tvalue
Significance
Level
-.885
.376
-1.723
.085
-2.385
.017
-.911
.362
2.134
.033
25
Note: There are 315 and 363 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
The one category in which UPAP Active Borrowers have significantly better results, is
that of Women’s Empowerment – Table 7.12, Tables A.7.4.16-21. In terms of Economic
Empowerment and Income Empowerment, the difference is significant.
Table – 7.12
UPAP – Women’s Empowerment
Variables
Economic Empowerment
Score out of 14
Income Empowerment
Score out of 5
Assets Empowerment
Score out of 8
Empowerment Related with
Education and Health
Score out of 10
Social Empowerment
Score out of 10
Category
Mean
Standard
Deviation
t-value
Significance
Level
Active Borrowers
New and Non-Borrowers
9.7567
8.4840
2.94614
3.05796
4.958
.000
Active Borrowers
New and Non-Borrowers
3.3333
3.0720
1.55250
1.56865
1.956
.051
Active Borrowers
New and Non-Borrowers
1.4267
1.3280
1.36044
1.30662
.862
.389
Active Borrowers
6.7733
2.11744
.427
.670
New and Non-Borrowers
6.7000
1.86545
Active Borrowers
New and Non-Borrowers
4.4367
4.4920
1.76153
1.69867
-.373
.709
Note: There are 315 and 363 respondents in each category respectively. t-value greater than
1.6 indicates the mean difference between two categories is statistically significant. The
negative t indicates that average value of category 2 is greater than the average value of
category 1.
The perceptions of Active Borrowers on the improvement in their Quality of Life based
on the proportion of Active Borrowers who think their lives have improved on account of
the loans – Tables A.7.4.26 – seem to be lower than for other MFIs. Even from those who
are in their fourth loan cycle or beyond, only about 80 percent feel that their Quality of
Life has improved, while the proportion of those who feel that they are eating
better/more, is also on the lower side.
7.6
UPAP Regression Analysis
There are weaknesses in using bivariate analysis, as we do above, since it does not allow
us to examine the nature of the impact, and hence, we use multivariate regression
analysis, which allows us to look at impact controlling for other related variables. These
two sets of analysis also explain why we often get contradictory findings.
The Difference in Differences (DID) impact model estimated for UPAP is
26
Yij = Xijα + Cijβ + Mijγ + Tijδ +vij
Where Yij is an outcome on which we measure impact for household i in locality j, Xij is
a vector of household characteristics 3, Cij is a dummy equal to 1 for active borrowers and
their matched neighbours and 0 otherwise, Mij is a membership dummy variable equal to
1 if household i self-selects into the credit programme, and 0 otherwise; and Tij is a
variable to capture the treatment effects on households that self selected themselves into
the programme and are already accessing loans. T is also a dummy variable equal to 1 for
active borrowers and 0 otherwise. The coefficient δ on Tij is the main parameter of
interest and measures the average impact of the programme. A positive and significant δ
would indicate that microfinance is having a beneficial effect on the borrowers.
UPAP was established in 1996 and in our sample we find clients who are even in their
sixth loan cycle. Therefore we do two separate sets of regression on young and old
borrowers. In our sample the mean number of loan cycles is 2.25, therefore we define
young borrowers as those who have borrowed 2 times or less and old borrowers who
have borrowed more than 2 times but less than 7.
A Single Difference equation is also estimated to assess impact between active borrowers
and the pipeline clients. This exercise was done for both young and old borrowers. The
form of the equation is as follows and the variables are defined as stated above.
Yij = Xijα + Tijδ +vij
The results from the estimation of δ are given in Table 7.13. Impact results for
empowerment are the most significant. In the DID regressions, UPAP clients perform
significantly better than other respondents. The coefficients for young and old borrowers
are comparable and on the overall index, young borrowers score almost 9 (p=0.00) point
higher than other respondents and old borrowers score 11 (p=0.00) points higher. Old
borrowers also perform better than pipeline clients in single difference estimates for the
overall empowerment index (1.99; p=0.05) and the economic empowerment index (0.83;
p=0.06). The other variable in the regressions was the Member dummy for the overall
empowerment index, economic empowerment and income empowerment. The
significance of the member dummy implies that people who choose to borrow are more
empowered to begin with especially on economic and income empowerment in this case.
Young borrowers have a 15 percent higher per capita income than other respondents
(p=0.057), while old borrowers have a higher educational expenditure and asset score
than pipeline clients. Old borrowers are spending an extra Rs.150 on education (p=0.04)
and also score 0.63 points higher on the asset index (p=0.034). However, old borrowers
are saving less than all other respondents (-212; p=0.099).
3
For UPAP seven household characteristics were included in the regression out of 15 tested through
ANOVA.
27
For young borrowers the number of earners in the household was positive and significant
for income, expenditure and empowerment variables in both single and double difference
estimation. The same was true for old borrowers in both estimations. Surprisingly, in
majority of the regressions, female headed households scored significantly less on
empowerment indices for both young and old borrowers.
In double difference regressions for both young and old borrowers the education of the
respondent had a positive and significant effect on income and expenditure measures.
From out results we can see that UPAP has had some positive impact on educational
expenditure and assets for old borrowers. The results for empowerment are the most
significant in the double difference estimation but as the member dummy is also positive
and significant in some of those regressions we can conclude that both active borrowers
and pipeline clients are more empowered than their neighbours.
28
Table 1: Regression results
Young Borrowers
Old Borrowers
Single Difference
Double Difference
Single Difference
Doubl
1
Dependent Variable
Coefficient t-value
Coefficient t-value
Coefficient t-value
Coeffi
Log(Respondent Income)
-0.04
-0.47
0.13
1.13
-0.10
1.26
Log(Household Income)
0.06
1.49
0.11
1.64
0.01
0.19
Log(Per Capita Income)
0.08
1.62
0.15
1.91 **
-0.05 -1.01
Log(Total Household Expenditure)
0.04
1.12
0.08
1.36
-0.02 -0.51
Log(Food Expenditure)
-0.01
-0.20
0.02
0.33
0.00
0.11
9
Educational Expenditure
40.80
0.76
0.25
0.00
149.50
2.06 **
Health Expenditure
3.70
0.08
59.00
0.93
-28.50 -0.75
2
Savings
102.00
1.00
-32.00
-0.23
-105.00 -1.37
-21
Asset Score
0.31
0.99
-0.18
-0.39
0.63
2.13 **
Children Enrolled in School(%)
0.78
0.15
4.70
0.58
7.23
1.35
Boys Enrolled in School(%)
4.35
0.90
3.50
0.48
2.23
0.49
Girls Enrolled in School(%)
1.40
0.24
3.80
0.45
3.59
0.63
Women's Empowerment (Overall Ind
-0.47
-0.45
2.72
1.44
1.97
2.06 **
Economic Empowerment
-0.21
-0.45
1.14
1.48
0.82
1.93 *
Income Empowerment
-0.03
-0.14
-0.01
-0.02
0.25
1.21
Asset Empowerment
0.13
0.81
0.22
0.77
0.22
1.54
Empowerment related with
Education and Health
0.16
0.51
1.01
1.80 *
0.42
1.46
Social Empowerment
-0.54
-2.07 **
0.36
0.84
0.26
1.12
1 Significant at 10%(*), Significant at 5%(**), Significant at 1% (***)
2 Score based on 47 questions, the other idices listed below are a breakdown of this index. Refer to questionnaire for detail.
Note: Young Borrowers are clients who have taken less than 2 loans and Old borrowers are those who have taken between 3 to 6 loans.
29
7.7
Focus Group Discussions
This section discusses the client feedback of microfinance institutions and the various
coping mechanisms at the local level in terms of financial transactions. Information has
been gathered primarily through focus group discussions with beneficiary groups in
randomly selected programme localities. Some additional information has also been
gathered through discussions with respective programmes’ field and programme staff.
7.7.1 NRSP
Four focus group discussions were held in NRSP programme areas with two male and
two female groups of borrowers. These groups were conducted in Talagung and Attock
districts, which are both part of the Barani area of the Punjab province. In each district,
one male and one female FGD was conducted in two different villages. Groups of rural
clients were selected, as NRSP’s majority borrowers are rural based, with a separate
urban credit programme under the UPAP – see below.
Table 2 gives details of the FGDs localities.
District Attock
Females
Males
District Talagang
Females
Males
Name of Village
Akhori
Boota
Chingee
Bhilomar
Districts Attock and Talagang have more or less similar socio-economic and
geographical characteristics. In the rural areas, the majority of the people have small to
medium sized landholdings along with multiple sources of supplementary incomes, like
small businesses, employment in the service and defence sectors, and out-migration to
other larger urban centres in the country, and internationally. A significant proportion of
males in the area have either gone to the Gulf and European countries for livelihood
purposes and send remittances back home, which account for the relatively better
economic conditions in the area.
Client Profile
Although the main mission of NRSP is poverty alleviation with a focus on the poorer
segments of society, however, the profile of their average rural clients does not reflect
this. The majority of the participants of the focus groups had multiple sources of income
and the average monthly income was approximately Rs. 10-12,000. Some of the
participants reported monthly incomes as high as Rs. 25,000 also.
Most of the borrowers had taken credit through their Community Organizations rather
than through Group Loans, which was still a relatively new concept in the programme
approach. NRSP has a flexible approach towards selection of its borrowers and is willing
30
to consider young unmarried clients as well as older ones who are in good health.
However, most of the borrowers seem to be between the ages of 35 to 55 years, who are
members of Village Community Organizations and familiar with the working of NRSP.
The majority of the participants in all four groups were second or third time borrowers.
According to the group participants, the very poor in their communities were unable to
borrow even under such schemes as NRSP as they could not afford to pay back the loan
instalments and did not possess any assets, which could be used in case of an emergency.
The communities conceded, which was also endorsed by some of the programme staff,
that the poorer households were generally not included as CO members, specifically in
the credit schemes due to the social collateral approach, as other members were not
ready to take the risk in case of a drop-out or defaulter client. Similar feedback was
given in the context of Group Loans for the poor.
NRSP conducts participatory poverty assessments in each community they work in, but
ironically, this inability of actually providing services to the real poor seems to be the
most prominent weakness of the NRSP credit programme.
A rapid comparison of average household incomes of the group participants suggests that
there has been a positive impact of the loan. Borrowers, males or females, usually used
the borrowed amount to strengthen an existing income source. For example, Ghulam
Mohammad was earning Rs. 1,500 to 2,000 per month through his donkey. After he
joined the NRSP CO, the CO president told him to start saving so that he becomes
eligible for a loan through the CO. Once he got the credit of Rs. 10,000, he started a
vegetable cart and now earns Rs. 3,000 to 4,000 per month.
A worthwhile point in case of NRSP clients is that being an integrated rural development
programme, NRSP is not only focused towards credit, but its CO members are also
involved in other community development activities This results in a stronger sense of
cohesiveness and ownership amongst the members, who feel that although the credit
scheme is a major incentive but it is not the only benefit of being a part of NRSP.
Formal financial transactions are quite rare among the rural communities in Pakistan.
NRSP programme areas are no exception. People mostly depended on informal means for
fulfilling their financial requirements and in case of emergencies borrow from relatives
and neighbours.
Female participants were aware of local moneylenders, but had never utilized any such
services. While male groups members were more familiar with the concept, they did not
approve of it and termed it as a highly exploitative means of extracting money from those
in need. According to the men, the money borrowed from a local moneylender could
seldom be repaid due to the high interest rates and for years people kept paying the
interest rates rather than the actual amount borrowed. Therefore, people only went to a
moneylender in case of a very urgent need.
31
Everyone knew about bank loans due to the aggressive marketing of many banks for
agricultural and other credits. But again, the local population especially the women, did
not find the process client-friendly and felt that the process of acquiring a loan was too
tedious. Furthermore, many participants including females said that the bank interest
rates were too high. People also felt intimidated by the general environment in the banks
and were more comfortable with community-based schemes like NRSP. The regular
interaction with the loan officers and programme field workers added to the comfort level
of the communities in addition to accessibility through the NRSP village branches in each
programme union council.
‘The Bank loan’s mark-up is very high. You take a small amount from the bank as a loan
and have to repay almost double. While the process of return is also very lengthy and
tedious.’
(Male FGD participant, Talagang District, Punjab)
The local concept of savings was mostly through the committee system. The women felt
that the only way they could manage any significant savings was by becoming a part of
community committee groups, otherwise people were unable to save anything. Savings, if
possible, were always kept at home as the amount seldom exceeded the level that
required any banking services or safekeeping.
‘The rich do not need to save, while the poor don’t have enough to save. We started to
save only after getting introduced to NRSP.’
(Male FGD Participant, Talagang District, Punjab)
The main assets for people in the area were livestock followed by gold jewellery. It was
mentioned that people kept livestock for emergency purposes as it could be easily sold
off in the market with immediate cash returns. For females, jewellery was not only a
personal desire, but also perceived as a financial security, which could be disposed of at
the time of need. Property of course was understood as a major asset, but only the well
off could afford it.
Clients’ Feedback
There was a general sense of satisfaction amongst all the group participants regarding the
credit services of NRSP. People were of the view that this scheme provided them support
to improve their socio-economic conditions in a manageable way. Males and females
alike had a comprehensive understanding of the entire appraisal and loan process and
approved of the social and technical appraisal approach. The pre-group formation or
approval of a loan resolution through the CO authenticated the concept of social
collateral. As a result, borrowers were clear about the repayment procedures and interest
rates prior to applying for a loan.
‘It is very easy to acquire a loan from NRSP and it is equally easy to repay it. There are
small chances that someone will not pay back, because the CO members are community
32
influentials and people understand the implications. Besides a complete record of all
loans is kept by the CO president and the NRSP staff.’
(Male FGD, Attock District, Punjab)
The majority of the participants, including women, did not have any issues with the
NRSP rate of interest or the entire recovery process. Borrowers were aware that the
NRSP mark-up was comparatively much lower than the other credit schemes available to
them, therefore, this was the best available option for them. The recovery process was
termed as quite flexible and borrowers did not feel under pressure to repay on an exact
time and date. The group dynamics permitted some breathing space in case of an inability
to pay on the designated day. However, there were no defaulters reported by the group
participants within their COs or loan groups. People paid on time and in many cases a
few days before the designated day for recoveries. No dropout cases were mentioned in
any of the groups. The NRSP credit staff also endorsed this.
Prior to NRSP, in case of need we would have to borrow from relatives or friends which
becomes cumbersome as one feels a bit under pressure, but now with this facility we deal
with an organization, which does make a difference we deal not with an individual but an
institution.
(Female FGD Participant, Attock District, Punjab)
Usually, we manage to collect our instalments a few days prior to the exact date as we
know that we will have to pay a fine in case of late submission. We manage even if we
need to borrow for the instalment.
(Female FGD Participant, Talagang District, Punjab)
A noticeable number of participants were quite honest in admitting that many times the
loan from NRSP was utilized for some other purpose other than the real reason for the
credit. But it did not make a difference to them as long as they were able to pay back on
time. The Organization also seemed to ignore such issues. There are two probable
reasons for this deviation both on part of the borrower and the programme. Firstly, the
loan amounts are not that large and the borrower can make up through other means;
secondly, most of the borrowers repeat the credit process and can gradually compensate
for the proposed credit activity.
There were several participants who reported taking two to three loans, which had a
positive impact on their household incomes. First time borrowers mentioned little
financial impact because the amount for first time borrowers was usually between Rs.
5,000 to 10,000 only. Most of the loans in the region had been taken for livestock and
agriculture purposes. Women, especially, found livestock loans very effective and were
able to make a profit of Rs. 8,000 to 10,000 per month through a buffalo or a cow.
The group savings in the COs and loan groups was a relatively new concept for the local
communities. Savings are introduced in the initial CO formation process and is
mandatory later according to the financial situation of the individual members, but CO
members mostly continue to put in some savings every month as people take it as an
33
amount put away for emergency purposes. In some of the NRSP COs, members have
formed revolving committee groups, which make savings mandatory for all willing
members.
We have a committee in our CO. It is a real good system as everyone has a substantive
saving amount at the end of the cycle, which can be used for some productive purpose.
(Female FGD Participant, Attock District, Punjab)
The NRSP credit programme provided a sense of security to the CO members who
perceived it as a means to support their income generation and for emergency purposes.
Members generally planned to continue taking repeated loans as per requirement due to
easy accessibility procedures and manageable instalments. The group activities in the CO
also provided the members with an opportunity to sit together and plan collective
community activities, with an added recreational value to the process, especially for the
women, who got a chance to get away from their daily routines and sit with other women
from the neighbourhood.
Although, quite satisfied with the present structure of the NRSP credit programme,
people felt that they would feel even more relief if the interest rate was further reduced
and the loan amount was increased. Both men and women felt that a higher credit amount
would naturally mean more business investment, and thus, greater profitability.
7.7.2 UPAP
UPAP is an offshoot of the NRSP credit programme, which is concentrated in the rural
areas, with little focus on the urban poor. Therefore, UPAP was initiated in 1996
specifically focusing on the urban poor who did not have access to formal financial
institutions. Until 2002, UPAP was only operational in a few selected poor localities of
Islamabad and Rawalpindi. In 2002-03, it also began its operations in Faisalabad and
Karachi. Present UPAP operations are in six major cities. It is small in scale with a total
of 38,923 members and 66,205 credit cases as of July 2005. 4 The loan size begins from
Rs. 8,000 with a ceiling of Rs. 17,000.
As UPAP began its programme from Islamabad/Rawalpindi, this region continues to
have the largest cohort of borrowers (15,829 active cases to-date). Therefore, the locality
selected for the UPAP Focus Group Discussion was a low-income area located in the
heart of Islamabad city. More than 1,000 Christian families inhabit France Colony, with a
significant number employed in the Capital Development Authority (CDA) as sanitary
workers. Many women also work in the nearby houses as domestic workers. This locality
is overseen by the UPAP Bari Imam office, which at present is managing 982 active
borrowers of which 64 are from France Colony. Loans are given in groups of three
members selected by the people themselves. Borrowers are both men and women. The
programme recovery rate is 100 percent.
4
UPAP Disbursement and Recovery Data as of July 2005
34
Client Profile
Most of the women in the area were engaged in some type of income generating activity.
Seven women participated in the discussion. Five were contributing in the family income.
Two were hired as domestic help, one was a home-based seamstress, one had a corner
shop, and one assisted in the family scrap business. Four women were illiterate and three
had attended primary school.
People lived in joint families with multiple incomes, whereby two or more family
members contributed. Household incomes ranged from Rs. 4,000 to 10,000 a month.
All group members had taken successive loans from UPAP at least 4 times. Women in
the group discussion said that their initial loan amount was Rs. 8,000 and then two
successive amounts of Rs. 13,000 each. Now some of them had received Rs. 17,000 in
their fourth cycle. Credit was given only for productive activities and the UPAP team
closely monitored the utilization of the credit amount.
People in the area, especially women, had no dealings with the banks or any other formal
financial institutions/programmes. Financial matters were dealt with directly and through
informal means. Personal loans was the most common method for meeting urgent needs.
In case of emergencies or life cycle events people borrowed from close relatives or
friends. Moneylenders were seldom approached due to their exorbitant interest rates.
Women in the group said that they had never visited a bank and had no idea about how
they worked. But they had heard that bank loans were very difficult to get and their
interest rates were also high. Easy accessibility to UPAP services was a major incentive
for its clients.
Group participants mentioned that in 2006 another microcredit programme had also
approached them, but they did not have any other details regarding it.
There was a common trend of savings even prior to the UPAP interventions. Women kept
small amounts aside safely with them, which according to them, helped them out in times
of need. Committees were another common way of saving and people planned certain
activities around the time of their Committee turn.
Clients’ Feedback
UPAP clients were appreciative of the programme and generally approved of the
programme procedures. People, specifically, women found community based services
much more accessible and said that the only time they had to go outside their localities
was once when they had to cash their checks at the Habib Bank, Murree Road in
Rawalpindi and then for monthly recovery amounts, deposited at the UPAP Bari Imam
office. The monthly instalments were collected by one member and than deposited
together at the designated office. However, the women did not seem to mind these
monthly trips.
35
The clients had no problems in the monthly repayment of the loan, which is also reflected
in the 100 percent recovery rate of UPAP clients. The interest rate was not an issue either,
and none of the women seemed bothered about it.
Similar to NRSP, programme flexibility was again apparent in the case of UPAP, as a
new client, an old woman of around 60 years, openly conceded in front of the loan officer
that she would use part of her loan to repay another debt and use the other part for
investment in her son’s shop. Other women present agreed that one of the main reasons
for their support for the programme was that it provided them with a financial cushion,
while at the same time the amount was not so large and they usually made up through
other means to fulfil the proposed purpose for the loan.
Successive loaning was common among the UPAP borrowers and most clients continued
with new loans to expand on-going productive activities. However, borrowers felt that the
loan amount was too small and the ceiling should be at least Rs. 20,000.
UPAP introduces group savings amongst all their clients in the initial process of group
formation and loan appraisal. Savings are mandatory for all group members in the first
five meetings held every week during the initial group formation period. The total
savings of each member should equal one instalment of the individual loans. The
objective was to introduce the concept of savings and build mutual trust among the group
members. The savings are kept together by one of the members. The group leadership
revolves among the three members as the meetings also rotate to each member’s home
every month.
The savings mechanisms was perceived to be a bit irksome by some of the women as it
became quite difficult to save a specific amount for five consecutive weeks. However, it
was not a major issue and people understood the idea behind the practice. Borrowers
including females seemed quite comfortable with the UPAP staff and loan officers, which
probably is a significant programme strength as it has provided clarity and transparency
between the service providers and the clients.
36
Appendix Chapter 7
Appendix A.7.1
NRSP Institutional Background
Table A.7.1.1: NRSP Micro-Finance and Enterprise Development Programme:
Progress Overview as of November 30th 2006
Total Disbursement (Rs)
Agriculture (Rs)
Livestock (Rs)
Enterprise (Rs)
S.I.I.E (Rs)
No. of Loans
Men
Women
Agriculture
Men
Women
Livestock
Men
Women
Enterprise Development
Men
Women
Small Infrastructure Individual Enterprise
Men
Women
Beneficiary COs
Men
Women
Mixed
No. of Active Loans
Receivable from COs (Rs.)
Recovery Rate
No. of Districts Covered
No. of Districts in which the Credit Programme is
fully Operational
Rawalpindi, ICT, Attock, Jehlum, Khushab,
Bhakkar, Mianwali, Bahawalpur, Lodhran, Vehari,
R.Y. Khan, Rajanpur, Malakand, Charsadda,
Mardan, Swabi, Swat, Badin, Thatta, Hyderabad,
Mir pur Khas, Matiari, Tando Allahyar, Tando
Muhammad Khan, Nawabshah, Muzaffarabad
10,768,161,889
6, 426, 345, 834
2, 138, 519, 500
2, 098, 464, 039
104, 832, 516
833,303
657, 285
176, 018
471, 371
447, 468
23, 903
182, 282
107, 684
74, 598
174, 386
97, 294
77, 092
5, 264
4, 839
425
38, 342
23, 178
13, 786
1, 378
173, 213
1, 769, 800, 139
99%
35
29
Table A.7.1.2: NRSP Credit Disbursement by Loan Type
Type of Credit
Amount (Rs)
Agriculture Inputs
Livestock Development
Enterprise Development
6, 426, 345, 834
2, 138, 519, 500
2, 098, 464, 039
Average
(Rs)
13, 633
11, 732
12, 033
Loan
Size
Cumulative Recovery
Rate %
100%
98%
99%
37
SIIE
Total
104, 832, 516
10, 768, 161, 889
19, 915
12, 922
97%
99%
38
Appendix A.7.2
Results from NRSP Survey
Table - A. 7.2.1
Sample Information
[NRSP]
Respondent
s
Respondent Active Borrowers
Category
New Borrowers
Non-Borrowers
(Same
Area)
Non-Borrowers
(New
Area)
%
680
100.0
324
47.6
108
15.9
118
17.4
130
19.1
Table - A. 7.2.2
Sample Information
[NRSP]
Borrowers
Loan
Taken
One
Two
Three
Four
Five
Six
Seven
432
182
92
69
52
30
6
1
%
100.0
42.1
21.3
16.0
12.0
6.9
1.4
.2
Table - A. 7.2.3
Respondent Characteristics - Education
[NRSP]
Total
Respondent Category
Respondents
Proportion of Female
Formal Education
No Education
Primary
Middle
Metric
Inter
Graduate and above
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
324
47.6
21.3
32.1
19.4
18.2
24.1
4.3
1.9
108
15.9
39.8
39.8
20.4
19.4
16.7
3.7
248
36.5
17.3
31.9
22.6
16.9
19.4
6.9
2.4
680
100.0
22.8
33.2
20.7
17.9
21.2
5.1
1.8
39
Technical Training
No Training
Have Training
100.0
100.0
99.2
.8
99.7
.3
Table - A. 7.2.4
Respondent Characteristics - Nature of Business
[NRSP]
Total
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
324
47.6
19.8
8.6
108
15.9
30.6
14.8
.6
47.8
18.8
4.3
.9
30.6
19.4
3.7
248
36.5
34.7
10.9
.4
1.6
33.5
14.9
4.0
Respondents
Business (Retail Shops with fixed outlet)
Personal Community Service Providers
Technical Service Provider
Transport Service Provider
Agriculture – Crop Production
Livestock Management
Service
680
100.0
26.9
10.4
.1
1.0
39.9
17.5
4.1
Table - A. 7.2.5
Household Demography
[NRSP]
Total
Respondent Category
Respondents
Family Size
1-3 Person
4-6 Person
7-9 Person
More than 9
Average Family Size
Dependency Ratio
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
324
47.6
3.4
43.8
35.8
17.0
7
104.72
108
15.9
3.7
49.1
36.1
11.1
7
97.99
248
36.5
4.8
45.2
32.7
17.3
7
96.83
680
100.0
4.0
45.1
34.7
16.2
7
100.78
40
Table - A. 7.2.6
Housing Characteristics - Quality
[NRSP]
Total
Respondent Category
Respondents
House owners
Person per room
Houses with baked bricks
Houses with RCC Roof
Houses with Cemented Floor
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
324
47.6
98.1
2.70
69.1
5.2
42.0
108
15.9
94.4
2.91
69.4
13.9
31.5
248
36.5
99.2
2.91
66.9
11.7
30.6
680
100.0
97.9
2.81
68.4
9.0
36.2
Table - A. 7.2.7
Housing Characteristics - Services
[NRSP]
Total
Respondent Category
Respondents
Houses with telephone
Houses with electricity
Houses using gas for cooking
Houses using flush system
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
324
47.6
9.9
96.0
25.0
56.8
108
15.9
5.6
88.9
25.0
65.7
248
36.5
11.3
89.5
25.0
59.3
680
100.0
9.7
92.5
25.0
59.1
Table - A. 7.2.8
Household Economic Status
[NRSP]
Total
Respondent Category
Respondents
Income Per Capita
Expenditure Per Capita
Per Capita Food Expenditure
Poor Households (% below
Official Poverty Line)
Household Asset Score
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
324
47.6
1633
1052
500
108
15.9
1268
972
485
248
36.5
1319
972
510
680
100.0
1460
1010
501
41
44
49
44
8
8
8
8
41
Value of household assets
Average Indebtedness
1189219
720841
794365
970502
70258
31000
28516
45430
The Official Poverty Line is Rs 1,000 per capita per month – see Montgomery (2006)
Table - A. 7.2.9
Child Education
[NRSP]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
91
85
91
90
90
85
91
89
73
65
73
72
27
20
25
25
89
27
35
54
27
14
52
28
14
71
27
25
394
241
193
302
School Going Children %
School Going Children - Boys
%
School Going Children - Girls
%
Children going to Private
School %
Monthly School Fee per Child
Tuition Fee per Child
Transport Fee per Child
Monthly
Expenditure
on
Education
Figures are Averages
Table - A. 7.2.10
Child Immunization
[NRSP]
Overall
Respondent Category
Complete Course
Incomplete
Course
No Vaccination
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
68.5
64.4
61.6
65.4
30.1
25.0
35.7
31.4
2.7
3.2
1.4
10.6
Only for household having children less than 5 years
Table - A. 7.2.11
Health Expenditure
[NRSP]
Overall
Respondent Category
Members reported illness (Last 30
days)
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
2
2
2
2
42
Monthly Expenditure on Health
1526
563
1246
1266
Figures are averages
Table - A. 7.2.12
Sources of Household Income
[NRSP]
Respondent Category
Income Per Capita
(%) Income from Main occupation
Secondary occupation
Other Earners
Pension
Inland Remittances
Overseas Remittances
Rental Income
Overall
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
1633
16
1
11
1
0
0
0
1268
24
1
19
0
0
0
0
1319
33
1
16
1
0
0
0
1460
23
1
14
1
0
0
0
Figures are averages
Table - A. 7.2.13
Household Consumption Pattern
[NRSP]
Respondent Category
Expenditure Per Capita
Per Capita Food Expenditure
(%) Expenditure on FOOD
Education
Health
Electricity
Gas
Telephone
Rent
Travelling
Repayment of Loan
Saving
Consumption Last 30 days - Meat (days)
- Fruits (days)
- Eggs (days)
Overall
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
1052
500
48
5
6
6
1
2
0
6
9
2
5
6
10
972
485
51
4
7
5
1
2
1
6
11
2
5
6
10
972
510
54
4
7
6
1
2
0
6
0
2
4
6
10
1010
501
51
5
7
6
1
2
0
6
6
2
4
6
10
Figures are averages
43
Table - A. 7.2.14
Household Assets Ownership
[NRSP]
Respondent Category
Overall
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
97.2
26.5
55.6
21.6
.9
43.2
68.2
17.6
1.5
45.7
38.3
94.4
21.3
46.3
15.7
98.8
34.7
53.2
22.6
1.6
46.8
67.3
23.8
2.0
37.9
35.1
Own House
Refrigerator
Colour TV
Motor Cycle
Prize Bond
Washing Machine
Sewing Machine
Bed with Foam
Urban Property
Gold
Mobile phone
40.7
73.1
16.7
40.7
45.4
97.4
28.7
53.2
21.0
1.0
44.1
68.7
19.7
1.5
42.1
38.2
Figures are average percentage
Table - A. 7.2.15
Business Characteristics
[NRSP]
Overall
Respondent Category
Family Workers (engaged in
business)
Permanent on Monthly Salary
Permanent on Daily Wages/Piece
Rate
Seasonal/Occasional
Monthly Sale [Rs.]
Value of Assets - Shop/Workshop
Machinery
Instruments
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
1
1
1
1
3
1
2
2
1
1
1
1
20968
28828
9016
4188
15170
21040
6098
1698
25154
87291
4591
4233
21863
54885
6394
3748
Figures are averages
44
Table - A. 7.2.16
Women’s Empowerment
[NRSP]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
69
Economic Empowerment - Score out
8.8
of 14
Income Empowerment - Score out of
2.7
5
Assets Empowerment - Score out of 8
1.8
Empowerment Related with Education
6.0
and Health - Score out of 10
Social Empowerment - Score out of
4.4
10
Figures Average Score except number of respondents
Pipeline
Borrowers
NonBorrowers
41
43
153
10.7
8.5
9.3
3.4
3.1
3.0
1.7
2.1
1.9
5.9
6.2
6.0
4.1
4.4
4.3
Table - A. 7.2.17
Women’s Empowerment - Economic Aspects
[NRSP]
Overall
Respondent Category
Number of Respondents
Do you take decisions on the aspects
of purchase, modification or repair of
house?
Do your husband discuss with you
when decision on modification/repair
of house is made
Do you take decisions on the purchase
or sale of livestock?
Did your husband discuss with you
before sale or purchase of livestock?
Do you purchase your dresses for the
family?
Do you purchase the utensils for your
family?
Do you purchase gold and jewellery
for your family?
Do you take decisions on borrowing
money?
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
69
41
43
153
13
44
26
25
67
66
70
67
25
46
23
30
52
44
42
47
49
80
53
59
84
95
79
86
55
80
63
64
57
68
49
58
45
Do your husband discuss with you on
the issues of borrowing money?
Do you spend money you have
borrowed?
Do you repay the money you have
borrowed?
Do you take decisions on transactions
involving household Equipments?
Do you have any debt in your name?
Do your husband discuss with you
when he has made the debt?
71
83
58
71
61
83
37
60
61
78
42
60
42
66
40
48
84
93
42
75
71
90
67
75
Figures are percentages except number of respondents
Table - A. 7.2.18
Women’s Empowerment - Income
[NRSP]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Number of Respondents
69
Do you have your own income?
41
Do you spend it for the family
54
yourselves?
Do you need the permission of your
42
husband to spend your income?
Do you get any part of your family
income or husbands income to your
42
hands regularly?
Do your husband discuss with you
68
when he spends income for the family
requirements?
Figures are percentages except number of respondents
41
59
43
47
153
47
61
53
56
49
44
44
66
40
48
93
65
74
Table - A. 7.2.19
Women’s Empowerment - Assets
[NRSP]
Overall
Respondent Category
Number of Respondents
Do you possess any household
asset?
Do you have cash savings in your
own name?
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
69
41
43
153
6
2
2
4
17
27
42
27
46
Do you operate Bank account in
your name?
Do you pledge, Sell, or exchange
any of the above said assets
yourself?
Do your need permission from
your husband to sell, pledge,
exchange any of the assets?
Do you have purchased land in
your own name?
Is the house you stay registered in
your name?
Is the house you stay registered in
your and husband name?
12
14
7
12
15
2
10
48
32
40
41
3
2
6
2
2
4
67
73
72
70
2
Figures are percentages except number of respondents
Table - A. 7.2.20
Women’s Empowerment - Health and Education
[NRSP]
Overall
Respondent Category
Number of Respondents
Do you take decisions on the issues of
your children education?
Do your husband consult with you
when he takes decision on the education
of children?
Do you think you can decide on how
many children you can have?
Do you think you can decide on the
spacing between children?
Do you think that you can decide on the
treatment of your and your family
member illness?
Do you think you can decide on the
method of treatment for your family
members?
Do you think you can decide on the
type of contraceptive to be used?
Do your husband discuss with you on
the issues of health aspects of children?
Do you have any choice of food
prepared and served in your home?
Are you able to take care of the
nutritional requirements of your self,
family and children?
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
69
41
43
153
41
66
44
48
83
93
81
85
25
5
14
16
30
20
47
32
39
56
16
37
46
49
19
39
42
24
47
39
83
78
79
80
86
95
79
86
65
78
79
73
Figures are percentages except number of respondents
47
Table - A. 7.2.21
Women’s Empowerment - SOCIAL Aspects
[NRSP]
Overall
Respondent Category
Number of Respondents
Are you free to go out and visit your
friends and relatives with out
permission?
Do you have the choice of the dresses
you wear?
Do your husband impose his religious
beliefs on you and make you accept
them?
Do you have any association with
political parties?
Do you participate in voting and other
democratic procedure?
Do your husband impose her political
ideas on you and make you accept
them?
Do you participate in the meetings of
NGO programmes or in other social
events?
Do your husband prevent you from
participating in such programmes?
Do you take decisions on the marriage
of your son-daughter?
Do your husband discuss with you on
the issues of the marriage of children
and close relatives?
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
69
41
43
153
30
29
35
31
81
93
74
82
6
2
2
4
3
10
12
7
51
56
67
57
19
10
2
12
42
29
35
37
25
12
14
18
59
56
47
55
81
88
72
80
Figures are percentages except number of respondents
Table - A. 7.2.22
Borrowers - Loan Amount Used by:
[NRSP]
Respondent Category
Borrower
s
Loan was Self
used by:
Spouse with your suggestion
Total
Active
Borrowers
Pipeline
Borrowers
324
108
432
75.0
25.0
100.0
88.9
81.5
87.0
8.3
13.9
9.7
48
Spouse
without
suggestion
Other Members
your
.6
3.7
1.4
.9
1.9
2.2
Figures are column percentages except number of borrowers
Table - A. 7.2.23
Borrowers - Loan Amount Used For:
[NRSP]
Respondent Category
Borrower
s
Loan was Business Activity
used for:
Repayment
of
debts
Consumption
Total
Active
Borrowers
Pipeline
Borrowers
324
108
432
75.0
25.0
100.0
98.8
98.1
98.6
.6
.6
.5
1.9
.9
Figures are row percentages except number of borrowers
Table - A. 7.2.24
Borrowers’ Perceptions - Getting Loan
[NRSP]
Number of Borrowers
Loan utilized for same purpose (%)
Loan sufficient (%)
Time Obtaining Loan (Months)
Expenditure incurred (Rs.)
Problems in Obtaining Loan No Problem
(%)
Collateral
Delay in Payment
Too many Meetings
Too many Documentations
Too many visits
Group Making
324
99
100
30
169
76.9
.6
15.1
1.2
.9
19.4
.3
Figures are averages
49
Table - A. 7.2.25
Borrowers’ Perceptions - Coping Strategy
[NRSP]
Loan Taken
One
Two Three Four Five
Number of Borrowers
74
92
69
52
Sale of asset/Sale of Animals
39.2 53.3 56.5 82.7
Borrow loan from relative/friends 87.8 79.3 84.1 84.6
Borrow loan from Microfinance
39.2 41.3 30.4 19.2
Borrow loan from Commercial
2.7
3.3
7.2
5.8
Banks
Borrow
from
13.5 12.0 11.6 28.8
Moneylender/Commission agent
Reduce
Consumption
4.1
3.3
1.4
3.8
Expenditure
Search for extra work
4.1
4.3
5.8
Extra
hours
in
existing
4.1
6.5 13.0
5.8
occupation
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
30
76.7
73.3
16.7
Overall
Six
Seven
6
100.0
66.7
16.7
1
100.0
100.0
100.0
324
58.6
82.4
32.4
10.0
16.7
4.9
33.3
15.7
10.0
3.7
3.1
3.3
6.8
Table - A. 7.2.26
Borrowers’ Perceptions - Impact
[NRSP]
Loan Taken
One
Number of Borrowers
Effect on quality of Improved
life
Deteriorated
No Change
Family eat your fill
As much as wanted (all types)
As much as wanted (not all
types)
Sometimes felt hunger
Have more to eat Have more to eat now
now
Have more to eat in earlier
times
Equal
Family health
Health is better now
Health was better earlier
Equal
Sustainable
Yes
increase in income?
Overall
Two Three Four Five
Six
Seven
74
92
69
52
30
6
70.3
77.2
73.9
65.4
66.7
66.7
1.4
1.9
3.3
1.4
1
324
71.6
1.2
28.4
22.8
24.6
32.7
30.0
33.3
100.0
27.2
67.6
60.9
66.7
67.3
70.0
66.7
100.0
65.7
32.4
38.0
31.9
30.8
30.0
33.3
1.1
1.4
1.9
48.6
64.1
56.5
44.2
56.7
1.4
3.3
1.4
1.9
3.3
50.0
25.7
32.6
48.9
40.0
20.0
13.3
66.7
100.0
51.1
53.8
36.5
5.8
57.7
33.3
33.3
74.3
42.0
44.9
7.2
47.8
66.7
100.0
82.4
85.9
79.7
90.4
83.3
100.0
33.3
.9
66.7
54.9
2.2
42.9
37.7
3.7
58.6
84.3
50
No
17.6 14.1
Figures are column percentages except number of respondents
20.3
9.6
16.7
100.0
Table - A.9.2.27
Non-Borrowers’ Perceptions - Getting Loan
[NRSP]
Respondent Category
NonBorrowers
(Same
Area)
Overall
NonBorrowers
(New
Area)
Number of Non-Borrowers
118
130
100.0
100.0
Aware about credit facility Yes
72.9
93.1
No
23.7
5.4
Do not need
11.9
2.3
Amount of Instalment is high
10.2
3.8
Interest is high
28.0
5.4
Regular payment is difficult
20.3
5.4
Do not know office address
4.2
76.9
Figures are column percentages except number of respondents
248
100.0
83.5
14.1
6.9
6.9
16.1
12.5
42.3
Table - A. 7.2.28
Non-Borrowers’ Perceptions - Coping Strategy
[NRSP]
Overall
Respondent Category
New
Borrowers
NonBorrowers
(Same
Area)
NonBorrowers
(New
Area)
108
57.4
91.7
22.2
118
49.2
76.3
16.1
130
61.5
77.7
26.2
356
56.2
81.5
21.6
3.7
1.7
6.2
3.9
13.9
6.8
9.2
9.8
6.5
3.4
8.5
6.2
.9
.8
3.1
1.7
8.3
5.9
10.8
8.4
1.7
Figures are column percentages except number of respondents
.8
.8
Number of Non-Borrowers
Sale of asset/Sale of Animals
Borrow loan from relative/friends
Borrow loan from Microfinance
Borrow loan from Commercial
Banks
Borrow
from
Moneylender/Commission agent
Reduce
Consumption
Expenditure
Search for extra work
Extra
hours
in
existing
occupation
Have Enough Saving
51
15.7
* Multiple Response Questions May Exceed 100%
Table - A. 7.2.29
Non-Borrowers’ Perceptions - Change
[NRSP]
Overall
Respondent Category
New
Borrowers
NonBorrowers
(Same
Area)
NonBorrowers
(New
Area)
108
118
130
356
58.3
44.1
42.3
47.8
2.8
38.9
52.8
4.2
51.7
66.9
7.7
50.0
57.7
5.1
47.2
59.3
46.3
32.2
40.8
39.6
.9
52.8
.8
43.2
1.5
39.2
1.1
44.7
2.8
5.1
10.8
6.5
44.4
29.6
2.8
67.6
51.7
29.7
7.6
62.7
50.0
33.8
9.2
56.9
48.9
31.2
6.7
62.1
Number of Non-Borrowers
Effect on overall quality Improved
of life
Deteriorated
No Change
Family eat your fill?
As much as wanted (all types)
As much as wanted (not all
types)
Sometimes felt hunger
Have more to eat r?
Have more to eat now
Have more to eat in earlier
times
Equal
Family health ?
Health is better now
Health was better earlier
Equal
Figures are column percentages except number of respondents
52
Appendix A.7.3
UPAP Institutional Background
Table A.7.3.1 UPAP Disbursement and Recovery Data as of November 2006
Number of groups
Number of Members
Number of Credit
Cases
Amount Disbursed
(Rs)
Amount Recovered
(Rs)
Principle Recovered
(Rs)
Rawalpindi/Is
lamabad
7,142
27, 456
59, 191
Faisalaba
d
3, 759
12,433
20, 172
Faisalaba
d (1)
3, 748
10,356
17, 897
Karachi
Multan
Lahore
Total
2, 824
9, 500
16, 505
2,136
6, 564
9, 231
322
966
858
19, 331
67, 275
123, 854
662, 995, 569
210,
112,000
175, 868,
320
151,926,9
77
182,
883,000
158, 276,
984
137,012,0
59
179, 040,
000
159, 209,
66
121,463,3
31
107,
290,000
132, 985
11,
822,000
2,085, 261
56,973,75
2
1,688,397
1,354, 142,
569
1,146, 491,
120
1,011,657,5
97
602, 968, 361
542,593,081
Service Charge
Recovered (Rs)
60,288,769
23,937,69
6
21,260,71
6
19,686,68
6
9,158,572
396,864
134,729,303
Excess Recovered
(Rs)
86,511
3,647
4,209
9,192
661
0
104,220
Principle Balance
120,402, 488
58, 185,
023
45, 870,
941
57,576,66
9
50,316,24
8
10, 133,
603
342,484,972
Current Cases
15,116
7,736
6,358
6,956
5,814
856
42,836
12,436
0
100%
11,539
0
100%
9,549
0
100%
3, 417
0
100%
2
0
100%
81, 018
54
100%
100%
100%
100%
100%
100%
100%
Closed Cases
44,075
Expired Cases
54
Cumulative
100%
Recovery Rate
On-time Collection
99.96%
Rate
Source: NRSP Update November 2006
53
Appendix A.7.4 UPAP Survey Results
Table - A.7.4.1
Sample Information
[UPAP]
Respondents
Respondent
Category
%
678
100.0
Active Borrowers
315
46.5
New Borrowers
123
18.1
Non-Borrowers (Same Area)
124
18.3
Non-Borrowers (New Area)
116
17.1
Table - A.7. 4.2
Sample Information
[UPAP]
Borrowers
Loan
Taken
%
438
100.0
One
148
33.8
Two
125
28.5
Three
92
21.0
Four
51
11.6
Five
20
4.6
Six
2
.5
Table - A.7. 4.3
Respondent Characteristics - Education
[UPAP]
Respondent Category
Active
Borrowers
Respondents
Proportion of Female
Formal Education
NonBorrowers
315
123
240
678
46.5
18.1
35.4
100.0
99.0
99.2
63.8
86.6
No Education
62.9
57.7
40.4
54.0
Primary
15.2
16.3
15.8
15.6
Middle
9.8
12.2
16.3
12.5
Metric
8.9
9.8
18.3
12.4
Inter
2.9
3.3
7.5
4.6
.3
.8
1.7
.9
99.4
100.0
100.0
99.7
Graduate and above
Technical Training
Pipeline
Borrowers
Total
No Training
Have Training
.6
.3
54
Table - A.7. 4.4
Respondent Characteristics - Nature of Business
[UPAP]
Total
Respondent Category
Active
Borrowers
Respondents
Business (Retail Shops with fixed outlet)
Business (Vendor without fixed outlet)
Goods Supplier
Pipeline
Borrowers
NonBorrowers
315
123
240
678
46.5
18.1
35.4
100.0
52.1
49.6
56.7
53.2
2.9
3.3
2.1
2.7
1.3
.6
.3
Personal Community Service Providers
24.8
32.5
25.0
26.3
Technical Service Provider
4.1
2.4
5.0
4.1
Cottage Industry
2.5
5.7
4.6
3.8
Transport Service Provider
3.2
2.4
2.9
2.9
Livestock Management
3.8
.8
2.1
2.7
Service
6.3
3.3
.4
3.7
Table - A.7. 4.5
Household Demography
[UPAP]
Total
Respondent Category
Active
Borrowers
Respondents
Family Size
Average Family Size
Dependency Ratio
Pipeline
Borrowers
NonBorrowers
315
123
240
678
46.5
18.1
35.4
100.0
1-3 Person
7.0
8.1
7.5
7.4
4-6 Person
42.5
53.7
54.2
48.7
7-9 Person
40.3
31.7
34.2
36.6
More than 9
10.2
6.5
4.2
7.4
7
6
6
6
115.95
94.24
84.63
100.86
55
Table - A.7. 4.6
Housing Characteristics - Quality
[UPAP]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
315
123
240
678
46.5
18.1
35.4
100.0
House owners
74.3
74.8
69.2
72.6
Person per room
3.26
3.28
2.89
3.14
Houses with baked bricks
92.4
91.9
97.1
94.0
Houses with RCC Roof
40.6
39.8
39.2
40.0
Houses with Cemented Floor
75.6
70.7
70.8
73.0
Table - A.7. 4.7
Housing Characteristics - Services
[UPAP]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
315
123
240
678
46.5
18.1
35.4
100.0
Houses with telephone
7.3
9.8
16.3
10.9
Houses with electricity
95.9
91.9
96.7
95.4
Houses using gas for cooking
88.3
87.8
85.8
87.3
Houses using flush system
93.7
95.9
95.4
94.7
Table - A.7. 4.8
Household Economic Status
[UPAP]
Respondent Category
Active
Borrowers
Respondents
315
Pipeline
Borrowers
123
Total
NonBorrowers
240
678
46.5
18.1
35.4
100.0
Income Per Capita
1457
1459
1519
1479
Expenditure Per Capita
1325
1404
1462
1388
568
596
700
620
25
19
22
23
7
7
7
7
333867
297043
288713
311248
12427
27083
17545
The Official Poverty Line is Rs 1,000 per capita per month – see Montgomery (2006)
17318
Per Capita Food Expenditure
Poor Households (% below Official
Poverty Line)
Household Asset Score
Value of household assets
Average Indebtedness
56
Table - A.7. 4.9
Child Education
[UPAP]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
School Going Children %
90
93
91
91
School Going Children - Boys %
83
79
84
83
School Going Children - Girls %
76
88
83
80
Children going to Private School %
43
38
38
41
118
89
125
116
67
52
65
64
Monthly School Fee per Child
Tuition Fee per Child
Transport Fee per Child
Monthly Expenditure on Education
18
15
16
17
506
372
453
467
Figures are Averages
Table - A.7. 4.10
Child Immunization
[UPAP]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Complete Course
61.8
50.0
62.9
59.9
Incomplete Course
27.2
40.9
33.3
31.4
No Vaccination
11.0
9.1
3.8
8.6
Only for household having children less than 5 years
Table - A.7. 4.11
Health Expenditure
[UPAP]
Overall
Respondent Category
Active
Borrowers
Members reported illness (Last 30 days)
Monthly Expenditure on Health
Pipeline
Borrowers
NonBorrowers
2
2
2
2
1612
1135
911
1278
Figures are averages
57
Table - A.7. 4.12
Sources of Household Income
[UPAP]
Respondent Category
Active
Borrowers
Income Per Capita
(%) Income from Main occupation
Secondary occupation
Pipeline
Borrowers
Overall
NonBorrowers
1457
1459
1519
1479
42
50
57
49
2
2
1
2
54
46
40
48
Pension
1
1
1
1
Inland Remittances
0
0
0
0
Overseas Remittances
0
0
0
0
Rental Income
0
0
0
0
Other Earners
Figures are averages
Table - A.7. 4.13
Household Consumption Pattern
[UPAP]
Overall
Respondent Category
Active
Borrowers
Expenditure Per Capita
Pipeline
Borrowers
NonBorrowers
1325
1404
1462
1388
Per Capita Food Expenditure
568
596
700
620
(%) Expenditure on FOOD
45
44
49
46
Education
5
4
4
5
Health
3
4
4
3
Electricity
4
4
5
4
Gas
3
3
3
3
Telephone
1
1
1
1
Rent
4
5
6
5
Travelling
4
5
5
5
17
18
0
11
3
3
4
4
Repayment of Loan
Saving
Consumption Last 30 days - Meat (days)
6
6
7
7
- Fruits (days)
7
7
7
7
- Eggs (days)
9
10
9
9
Figures are averages
58
Table - A.7. 4.14
Household Assets Ownership
[UPAP]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Own House
74.6
74.0
69.6
72.7
Refrigerator
36.2
33.3
48.8
40.1
Colour TV
73.7
69.1
74.6
73.2
Motor Cycle
12.7
11.4
16.3
13.7
Prize Bond
.6
2.4
2.5
1.6
Washing Machine
67.6
65.0
63.8
65.8
Sewing Machine
70.5
78.9
72.5
72.7
Bed with Foam
26.7
21.1
20.4
23.5
.8
1.3
.6
Gold
44.1
35.8
25.4
36.0
Mobile phone
41.9
35.0
39.2
39.7
Urban Property
Figures are average percentage
Table - A.7. 4.15
Business Characteristics
[UPAP]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Family Workers (engaged in business)
1
1
1
1
Permanent on Monthly Salary
1
1
2
1
Permanent on Daily Wages/Piece Rate
1
1
2
1
Seasonal/Occasional
2
2
Monthly Sale [Rs.]
16160
1
13900
19590
16964
Value of Assets - Shop/Workshop
11156
9951
37702
20334
Machinery
2132
6103
3708
3410
Instruments
1609
432
3359
2015
Figures are averages
59
Table - A.7. 4.16
Women’s Empowerment
[UPAP]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Number of Respondents
311
120
152
583
Economic Empowerment - Score out of 14
9.8
9.6
7.5
9.2
Income Empowerment - Score out of 5
3.3
3.3
2.9
3.2
Assets Empowerment - Score out of 8
1.4
1.3
1.4
1.4
Empowerment Related with Education and
Health - Score out of 10
6.8
6.6
6.8
6.7
Social Empowerment - Score out of 10
4.4
4.7
4.3
4.5
Figures Average Score except number of respondents
60
Table - A.7. 4.17
Women’s Empowerment - Economic Aspects
[UPAP]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
311
120
152
583
Do you take decisions on the aspects of
purchase, modification or repair of house?
60
48
43
53
Do your husband discuss with you when
decision on modification/repair of house is
made
73
68
65
70
Do you take decisions on the purchase or
sale of livestock?
19
14
16
17
Did your husband discuss with you before
sale or purchase of livestock?
23
21
30
25
Do you purchase your dresses for the
family?
86
85
84
85
Do you purchase the utensils for your
family?
87
86
88
87
Do you purchase gold and jewellery for
your family?
62
62
76
66
Do you take decisions on borrowing
money?
76
73
55
70
Do your husband discuss with you on the
issues of borrowing money?
73
73
57
69
Do you spend money you have borrowed?
65
73
23
56
Do you repay the money you have
borrowed?
78
78
23
64
Do you take decisions on transactions
involving household Equipments?
66
63
29
56
Do you have any debt in your name?
94
93
22
75
Do your husband discuss with you when he
has made the debt?
78
79
64
75
Figures are percentages except number of respondents
61
Table - A.7. 4.18
Women’s Empowerment - Income
[UPAP]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
311
120
152
583
Do you have your own income?
55
60
49
54
Do you spend it for the family yourselves?
57
58
46
54
Do you need the permission of your husband
to spend your income?
50
43
24
42
Do you get any part of your family income
or husbands income to your hands
regularly?
83
78
67
78
Do your husband discuss with you when he
spends income for the family requirements?
77
71
75
75
Figures are percentages except number of respondents
Table - A.7. 4.19
Women’s Empowerment - Assets
[UPAP]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
311
120
152
583
8
8
7
7
Do you have cash savings in your own
name?
36
28
41
36
Do you operate Bank account in your
name?
1
2
5
2
Do you pledge, Sell, or exchange any
of the above said assets yourself?
16
12
11
14
Do your need permission from your
husband to sell, pledge, exchange any
of the assets?
20
21
20
20
Do you have purchased land in your
own name?
1
1
1
Is the house you stay registered in
your name?
8
7
2
6
Is the house you stay registered in
your and husband name?
47
43
38
44
Do you possess any household asset?
Figures are percentages except number of respondents
62
Table - A.7. 4.20
Women’s Empowerment - Health and Education
[UPAP]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
311
120
152
583
Do you take decisions on the issues of your
children education?
74
72
72
73
Do your husband consult with you when he
takes decision on the education of children?
81
78
81
80
Do you think you can decide on how many
children you can have?
27
28
16
25
Do you think you can decide on the spacing
between children?
27
26
18
24
Do you think that you can decide on the
treatment of your and your family member
illness?
78
71
72
75
Do you think you can decide on the method
of treatment for your family members?
78
73
71
75
Do you think you can decide on the type of
contraceptive to be used?
29
25
26
27
Do your husband discuss with you on the
issues of health aspects of children?
82
80
78
80
Do you have any choice of food prepared
and served in your home?
91
88
88
89
Are you able to take care of the nutritional
requirements of your self, family and
children?
87
84
87
87
Figures are percentages except number of respondents
63
Table - A.7. 4.21
Women’s Empowerment - SOCIAL Aspects
[UPAP]
Overall
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
311
120
152
583
Are you free to go out and visit your
friends and relatives with out permission?
74
77
63
72
Do you have the choice of the dresses you
wear?
89
92
86
89
Do your husband impose his religious
beliefs on you and make you accept them?
8
6
7
7
Do you have any association with political
parties?
14
28
21
19
Do you participate in voting and other
democratic procedure?
57
60
41
54
Do your husband impose her political
ideas on you and make you accept them?
4
5
3
4
Do you participate in the meetings of NGO
programs or in other social events?
28
32
11
24
Do your husband prevent you from
participating in such programs?
11
10
11
11
Do you take decisions on the marriage of
your son-daughter?
72
69
66
70
Do your husband discuss with you on the
issues of the marriage of children and
close relatives?
70
68
78
72
Figures are percentages except number of respondents
Table - A.7. 4.22
Borrowers - Loan Amount Used by:
[UPAP]
Total
Respondent Category
Active
Borrowers
Borrowers
Loan was Self
used by:
Spouse with your suggestion
Spouse without your suggestion
Other Members
Pipeline
Borrowers
315
123
438
71.9
28.1
100.0
38.7
39.0
38.8
47.3
50.4
48.2
.3
.8
.5
13.7
9.8
12.6
Figures are column percentages except number of borrowers
64
Table - A.7. 4.23
Borrowers - Loan Amount Used For:
[UPAP]
Respondent Category
Active
Borrowers
Borrowers
Loan was Business Activity
used for:
Repayment of debts
Total
Pipeline
Borrowers
315
123
438
71.9
28.1
100.0
84.8
87.0
85.4
1.6
1.1
Consumption
6.7
8.1
7.1
The use of other household members
1.6
2.4
1.8
Death/Illness of household members
.3
Other
5.1
.2
2.4
4.3
Figures are row percentages except number of borrowers
Table - A.7. 4.24
Borrowers’ Perceptions - Getting Loan
[UPAP]
Number of Borrowers
315
Loan utilized for same purpose (%)
100
Loan sufficient (%)
100
Time Obtaining Loan (Months)
32
Expenditure incurred (Rs.)
Problems in Obtaining Loan (%)
237
No Problem
Collateral
81.0
.3
Delay in Payment
5.1
Too many Meetings
1.9
Too many visits
Group Making
19.4
.3
Figures are averages
65
Table - A.7. 4.25
Borrower’s Perceptions - Coping Strategy
[UPAP]
Loan Taken
Number of Borrowers
One
Two
Three
Four
Overall
Five
30
124
88
51
20
Sale of asset/Sale of Animals
16.7
7.3
9.1
21.6
15.0
Borrow loan from relative/friends
96.7
95.2
90.9
86.3
90.0
Borrow loan from Microfinance
26.7
16.9
26.1
37.3
30.0
Borrow loan from Commercial
Banks
Borrow
from
Moneylender/Commission agent
Reduce Consumption Expenditure
Extra hours in existing occupation
2
315
11.4
50.0
92.1
24.4
1.6
.6
.8
1.1
.6
3.3
16.1
19.3
19.6
10.0
10.5
18.2
17.6
3.3
2.4
8.0
3.9
7.3
8.0
3.9
10.0
Pull out children from school
Search for extra work
Six
15.9
50.0
Have Enough Saving
.3
13.0
15.0
5.1
5.7
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
Table - A.7. 4.26
Borrowers’ Perceptions - Impact
[UPAP]
Loan Taken
Number of Borrowers
Effect on quality of Improved
life
Deteriorated
Family eat your fill
One
Two
Three
Four
Five
30
124
88
51
20
2
315
70.0
86.3
85.2
80.4
80.0
100.0
83.2
.8
2.3
2.0
5.0
1.6
15.2
30.0
12.9
12.5
17.6
15.0
As much as wanted (all types)
56.7
46.8
62.5
62.7
80.0
50.0
56.8
As much as wanted (not all types)
43.3
52.4
36.4
37.3
20.0
50.0
42.5
.8
1.1
50.0
69.4
64.8
64.7
6.7
3.2
2.3
2.0
Equal
43.3
27.4
33.0
33.3
35.0
Health is better now
36.7
48.4
44.3
47.1
40.0
Have more to eat now
Have more to eat in earlier times
Family health
Health was better earlier
Equal
Sustainable
in income?
Six
No Change
Sometimes felt hunger
Have more to eat now
Overall
increase Yes
No
.6
65.0
50.0
65.1
2.9
50.0
32.1
45.1
6.7
3.2
3.4
2.0
5.0
56.7
48.4
52.3
51.0
55.0
100.0
51.4
3.5
83.3
83.1
89.8
86.3
75.0
50.0
84.8
16.7
16.9
10.2
13.7
25.0
50.0
15.2
Figures are column percentages except number of respondents
66
Table - A.7. 4.27
Non-Borrower’s Perceptions - Getting Loan
[UPAP]
Respondent Category
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
124
116
240
Number of Non-Borrowers
Aware about credit facility
Overall
100.0
100.0
100.0
Yes
71.0
63.8
67.5
No
29.0
36.2
32.5
33.1
6.0
20.0
Do not need
Amount of Instalment is high
4.0
.9
2.5
Interest is high
5.6
1.7
3.8
8.6
18.3
44.8
21.7
Regular payment is difficult
27.4
Do not know office address
Amount of loan is very low
.8
.4
Figures are column percentages except number of respondents
Table - A.7. 4.28
Non-Borrowers’ Perceptions - Coping Strategy
[UPAP]
Overall
Respondent Category
New
Borrowers
Number of Non-Borrowers
Sale of asset/Sale of Animals
123
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
124
116
363
4.9
4.0
4.3
4.4
Borrow loan from relative/friends
95.9
83.9
92.2
90.6
Borrow loan from Microfinance
26.8
10.5
24.1
20.4
.8
.8
4.3
1.9
Borrow loan from Commercial
Banks
Borrow
from
Moneylender/Commission agent
.8
.3
Reduce Consumption Expenditure
17.9
12.1
4.3
11.6
Search for extra work
13.0
14.5
.9
9.6
Extra hours in existing occupation
3.3
7.3
6.0
5.5
Have Enough Saving
7.3
22.6
12.1
14.0
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
67
Table - A.7. 4.29
Non-Borrowers’ Perceptions - Change
[UPAP]
Overall
Respondent Category
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
123
124
116
363
63.4
65.3
41.4
57.0
New
Borrowers
Number of Non-Borrowers
Effect on overall quality of Improved
life
Deteriorated
Family eat your fill?
Have more to eat r?
3.3
4.8
21.6
9.6
No Change
31.7
29.8
37.1
32.8
As much as wanted (all types)
50.4
68.5
58.6
59.2
As much as wanted (not all types)
47.2
29.0
37.1
37.7
Sometimes felt hunger
.8
2.4
4.3
2.5
Have more to eat now
52.0
46.8
34.5
44.6
4.1
6.5
13.8
8.0
Equal
42.3
46.8
51.7
46.8
Health is better now
39.0
37.1
27.6
34.7
4.9
11.3
18.1
11.3
54.5
51.6
54.3
53.4
Have more to eat in earlier times
Family health ?
Health was better earlier
Equal
Figures are column percentages except number of respondents
68
Chapter Eight: Kashf
8.1
Institutional Review
8.1.1
Background and History
Kashf Foundation, a non-profit microfinance institution started in Lahore in 1996. It was
founded by Roshaneh Zafar after being inspired by the success of the Grameen Bank.
Roshaneh wanted to achieve two things with Kashf; one was to alleviate poverty and the
other was to work towards women’s empowerment. Therefore, Kashf started with the
mission to ‘provide quality and cost effective microfinance services to low income
households especially women in order to enhance their economic role and decision
making capacity’.
At the start, Kashf was registered under the Society’s Registration Act 1860; however, it
is changing the legal status to a non-profit Company by Guarantee under section 42 of the
Companies Ordinance, 1984. The reason for the change is to bring the organization under
stricter regulation and thus improve its image.
In September 2006, Kashf celebrated its 10 year anniversary with accomplishments such
as being one of the first sustainable MFIs in Pakistan, providing loans to over 250,000
poor households with plans to reach 850,000 clients by 2010. Over the years Kashf has
received many awards for its spectacular performance, such as the AGFUND
International award and CGAP financial transparency record.
Kashf started with micro loans for women; however, with the changing needs of the
market it has also started offering larger individual loans for micro entrepreneurs. In the
past year Kashf has rapidly expanded its branch network and from 35 branches at the end
of 2005, it has increased it to 70 branches at the end of 2006, and they are planning to
open 50 more branches in 2007(list in Appendix). With its systems and processes all
streamlined and proven, Kashf is rapidly expanding its outreach.
In 1996, Kashf started as an action research programme with support from the Grameen
Bank. The initial two years were spent in understanding the market and the needs of the
clients in peri-urban and urban settings. At this point there was no entity in Pakistan that
specialized in providing microfinance services to low income communities, and most
programmes were implementing a holistic approach, where microcredit was one
component of their overall development strategy.
Kashf started its microfinance programme in Lahore, however, now it has expanded to
Kasur, Gujranwala, Faislabad, Karachi, Khushab and their surrounding areas. Most of
these branches are for the General Loan category, though six have a specialized section
for the Individual Loan category. By December 2006, Kashf had an outreach of 135,000
clients (Figure 8.1), a staff of 600 and a portfolio of approximately 4 billion rupees, with
PAR under 1 percent
Figure 8.1
160,000
Outreach
135,000
140,000
120,000
100,000
80,000
59,389
60,000
40,000
67,552
75,520
29,655
20,000
0
2002
2003
2004
2005
2006
Year
Kashf started in 1996 as an action research phase with the objective to replicate the
Grameen Bank model. Kashf chose 3 villages, where groups of 5 women were given a
basic productive loan starting at Rs.4,000 with a monthly repayment cycle and a
mandatory savings product. The outcome of this trial lending was that a large number of
loans were stuck; therefore Kashf rethought its lending methodology and organized group
members into larger groups of 25 with a fortnightly repayment process. During the
research phase it was also realized that a consumption loan to meet contingencies was
required so that it did not interfere with the loan repayment process, as a consequence,
the emergency loan was developed.
The action research phase was followed by a more focused approach to expand outreach
and manage growth. The main aspect of this phase from 1999 to 2001 according to the
Kashf Management was applying the experience of McDonald’s to expand operations.
This included standardization of products, systems and policies and simplification of
procedures and reporting requirements. It was realized that the vision and mission had to
be consistently followed to achieve the goals of the organization. Branches were
decentralized and made responsible for their own portfolios and given clear cut targets.
As a result of these measures in 3 years Kashf established 10 branches and reached out to
3600 clients.
However, growth was erratic as funds for on-lending were not readily available. In 2000
CGAP along with UNCDF and Australian Aid provided a grant based on achieving
financial benchmarks. This not only provided the organization with much needed funds
but also spurred it to enhance its sustainability, as in 1999 Kashf’s OSS was at 12 percent
and FSS was at 11 percent Accordingly, Kashf worked on creating better accounting and
reporting procedures and enhancing its efficiency. Consequently by 2001 OSS increased
to 67 percent and FSS to 52 percent.
In the years 2001-03 the main strategy was to enhance outreach and deepen product
offerings through cost effective and sustainable Kashf branches. Credit assessment tools
2
were introduced at several levels and reporting regarding overdue and delinquency was
re-engineered. During this period client attrition increased from 10 to 20 percent,
therefore client satisfaction was focused on and several research initiatives were
undertaken, like customer satisfaction surveys and assessment of exit clients.
During 2001-03, Kashf followed a lateral growth path by entering new markets and
managing dispersed units. Throughout this period sustained improvements in policies,
systems and procedures were undertaken to ensure client satisfaction. Kashf managed
growth by widening outreach and deepening access by offering new products like microinsurance and revamping the existing savings products. A new post of an Area Manager
(AM) was created in an attempt to further decentralize and achieve outreach targets,
enhance financial performance and improve policy compliance. An operational manual
was put together, which benchmarked functions from the LO up to the AM. All these
steps resulted in annual growth increasing to 209 percent and branch level productivity
went up to 2200 clients with each LO managing 563 clients. The OSS increased to about
130 percent though FSS was still below 100 percent At the end of 2003 Kashf had 30
branches with 5 to 6 LOs per branch and almost 60,000 clients. The following Figure 8.2
shows the evolution of operational and financial self sufficiency of Kashf since 2001.
Figure 8.2
Operational and Financial Self Sufficiency
187
Percentage
200
150
100
67
143
129
125
52
57
2001
2002
175
75
50
0
2003
2004
2005
2006
Year
OSS FSS
In 2004 and 2005 Kashf consolidated the growth achieved and planned for the future.
Kashf had experienced a fast rate of growth in the past 3 years so the management had to
ensure that previous growth was maintained and new issues arose that had to be dealt
with. The issues included staff attrition, improving financial management and improving
second tier management at the field level. In 2005 Kashf started to work on automating
all its branches and exploring areas to open new branches. In 2005 a new product, the
Business Sarmaya Loan for micro entrepreneurs was launched and additional research
was undertaken to offer new products such as the home improvement loan. However,
client and staff attrition were major problems during 2004-05. Kashf has also revised the
household income criteria for prospective clients from Rs.3,500 to Rs.6,000, to Rs.4,000
to Rs.10,000 based on poverty analysis as the basic wage went up from Rs.100 to Rs.200
3
per day. During this time period, the number of LOs at a branch were also increased from
6 to 10 so that outreach could be further deepened in the areas of operation.
8.1.2
Organizational Structure
Kashf is run by a highly qualified and diversified voluntary Board of Directors who meet
bi-annually. The structure of the Board is three-tier with executive, non-executive and
specialist Board members. Recently, Dr. Ishrat Hussain (the previous SBP Governor)
joined the Kashf Board as Chairman. The Board meets twice a year and authorizes
budgets, future plans and various other matters.
The organisation is led by the President and Founder, Roshahneh Zafar, who is supported
by the CEO and the CFO. The operations, human resources, MIS and the Advocacy
Department are managed by the CEO, while the Research and the Internal Audit
departments directly report to the President. The operations department is the core arm of
the organization and responsible for all the microfinance activities. (Organization Chart
attached in Appendix A.8.XXX)
Kashf’s branches operate as independent units but they all have an identical setup and
follow the same policies and procedures. The typical setup of a branch consists of 6-10
Loan Officers (LOs), one Branch Manager, one Computer Operator, an Office boy and a
security guard. Each LO is responsible for managing 24-26 centres with 25 members
each, which translates to about 600-650 customers. Moreover, each LO has to conduct 3
centre meetings daily. The branches are decentralized and are responsible for managing
their own portfolios. The branches report to their respective Area Manager (AM) and
each AM is responsible for 4-8 branches and is stationed in one of the centrally located
branches in his/her area.
Due to the expansion, a new post of the Regional Manager is being created who will be
stationed in the regional office. The regional office will be a monitoring arm of the head
office and will be responsible for ensuring expansion, client satisfaction, networking and
managing the staff in his respective region.
4
Box 8.1
Kashf’s Core Values
Service:
Integrity:
Innovation:
Reciprocity:
Responsibility:
Respect:
Commitment:
Productivity:
We delight our customers
We believe in integrity in all that we do
We respond positively to change
All for one and one for all
We believe in excellence in quality
We mutually respect and care for each other
We are part of the solution and not of the problem
We process feedback positively
Kashf has adopted these values so that the staff members know what is the ‘right thing to
do’ when formulating decisions. Kashf believes such values have impact on an
institution’s integrity and ethics, and helps in guiding the organization in achieving its
objectives.
8.1.3 Lending Methodology
8.1.3.1 Group Loans
Kashf’s group lending programme is a Grameen Replication, adopting the classic
Grameen Bank model with some adaptations. Kashf provides one basic loan, called the
General Loan (GL), for 12 months at a flat interest rate of 20 percent per annum. All
members are women and each borrower belongs to a group of five borrowers, and
together five of these groups form one centre. Members repay their loans in bi-weekly
centre meetings attended by Kashf loan officers. There is no collateral, therefore, the
centre takes collective responsibility for loan repayment. Each of the five groups has a
Group Leader, and there is one Centre Manager and one Centre Secretary. Together these
seven women form the credit committee and are responsible for maintaining discipline in
the centre.
Kashf lends to married, divorced or widowed female clients. Divorced and widowed
clients are encouraged in the Group lending approach so that they can earn for themselves
by starting a business or by increasing their current business portfolio. The process of
selecting beneficiaries at the grassroots level is done by the clients who are assisted by
loan officers, after a process of door to door mobilization has been completed. Branch
staff also arrange community meetings and meet influential people in the target area to
find potential clients and inform them about the Kashf programme and products. From
the pool of potential clients, individuals who fall within the Kashf poverty criteria of
household income between Rs.4-10,000, have a low asset base and high dependency
ratio, are encouraged to organize themselves into groups and centres. Once the centres
are formed, application forms for the loan are filled by the LOs and verified by the pair
LO.
5
The documents required for the loan application are copies of the new National Identity
Card (NIC) of the applicant and her husband/son, as well as utility bills to check
ownership status of their current residence. Clients who own their own residence are
preferred to those who live in rented accommodation, because for the latter the owner of
the house has to give a guarantee. The loan officers also carry out credibility checks for
all new applicants by asking their neighbours and nearby shopkeepers to gauge the
applicant’s reputation in the community. Hence, Kashf relies extensively on word of
mouth.
The LO and the pair LO make surprise visits during business hours to the applicant’s
homes to confirm the information in the forms. Once both the LOs have completed their
screening, the Loan applications are passed on to the BM who re-screens all the
applicants. The Screening Pattern followed is given in Table 1.
Table 8.1 Screening Pattern
Type
New Centre
Repeat Centre
Same BM, same LO
Repeat Centre
New BM, same LO
Repeat Centre
Same BM, new LO
Repeat Centre
New BM, new LO
LO
100%
100%
Pair LO
100%
100%
100%
100%
100%
100%
100%
100%
BM
100%
3 clients from each
Group (15 clients)
100%
3 clients from each
Group (15 clients)
100%
Once the BM completes the screening, a centre recognition meeting is held and the loan
disbursed. The cheques are given to the centre manager who gives it to the centre
secretary who passes them on to the group leaders. The group leaders give the cheques to
their respective group members and hence a sense of ownership and responsibility is
developed in the members of the credit committee. After the loan disbursement, meetings
take place fortnightly and the credit committee collects the instalments from all the centre
members and two of the committee members deposit the proceeds at a branch of Muslim
Commercial Bank (MCB) before the centre meeting. The deposit slip is submitted to the
LO at the meeting where the LO gives the deposit slip for the next recovery to the Centre
Manager. The recovery is based on the premise that each member will be responsible for
the other in case of emergency and non-repayment and thus social collateral replaces the
need for physical collateral.
Clients who take the GL also have the option of taking the Emergency Loan (EL) for
contingencies. However, the EL is only disbursed if it is approved by the credit
committee and they are willing to take responsibility. At the centre meetings, loan
officers also discuss various social issues with the clients such as importance of
education, cleanliness and immunization, harmful effect of drugs and so on. The social
6
issues are in the social theme booklet designed by the Gender Empowerment and Social
Advocacy department.
8.1.4
Products
8.1.4.1 General Loan (GL)
The purpose of the General Loan (GL) is to invest in income generating activities and can
be used for an existing business or a new one. The loan size begins with Rs.10,000 and
has a ceiling of Rs.25,000, the loan is repayable over 24 instalments in the course of 1
year at a service charge of 20 percent. Successive loan cycles entitle clients to an
accretion in loan amounts of up to Rs.4,000 depending on their absorptive capacity.
The GL comprises about 87 percent of the product wise share. According to Kashf this
loan is utilized both by women who aspire to establish a small business for themselves or
others who pass it on to their husbands/sons to diversify household income sources.
The total disbursement of the GL stands at 3.9 billion rupees with 322,589 loans given
out. It has grown exponentially over the last year due to the expansion efforts of Kashf as
seen in Figure 8.3. The Average Loan size (ALS) for year 2006 was Rs.12,101 and the
average loan balance per active borrower to per capita income is 25 percent. This attests
to the program’s focus towards catering to the poorer segments of the population who
have limited absorptive capacity.
Millions
Figure 8.3
4500
4000
3500
3000
2500
2000
1500
1000
500
0
GL Disbursement
3903.66
16.98
32.3
189.37
2001
2002
2003
446.33
2004
707.53
2005
2006
Year
8.1.4.2 Emergency Loan (EL)
Emergency Loan (EL) is a service that is available to the existing Kashf clients, who are
already availing a general loan. The idea behind this loan is to provide a buffer/support to
clients to fulfil any unforeseen expenses. The amount of this loan ranges from Rs.2,000
to Rs.4,000 with a 20 percent flat annual interest rate. This loan is repayable in 11 equal
instalments over a period of six months. The amount of loan disbursed under the
emergency loan is approximately Rs 0.6 billion with an average loan size of Rs.2,696. EL
disbursement represents 13 percent of the total product demand at Kashf. In Figure 8.4
7
we can see that the disbursement of EL has grown 10 times in the last year due to Kashf’s
accelerated growth.
Figure 8.4
EL Disbursements
700
596.19
600
Millions
500
400
300
200
100
0
1.72
0.74
18.55
2001
2002
2003
32.82
60.38
2004
2005
2006
Year
The EL has been helpful to clients in relieving periodic financial stresses and enables
them to pay school fees, utility bills, health related expenses or accessories for festivals
such as clothing, etc. The EL equips clients to meet their personal expenses and saves
them from turning to moneylenders and paying exorbitant interest rates to meet such
needs. It has proven to be an asset for the programme since it ensures client loyalty and
motivates the client to remain with the programme to overcome her poverty in a
respectable manner.
8.1.4.3 Business Sarmaya Loan (BSL)
The Business Sarmaya loan is intended for the ‘missing middle’ of the market, i.e., both
men and women with running businesses who demonstrate a financial need for working
capital and/or fixed assets. Small entrepreneurs are provided with access to capital in
addition to advisory support for their respective ongoing businesses that can include
trade, production and services.
The starting loan size is Rs.30-50,000 while in the second loan cycle it can be up to
Rs.100,000 and is payable in monthly instalments. The individual loan product focuses
on clients with higher monetary needs than those engaged in the group lending
programme as well as male micro entrepreneurs. Kashf maintains that the Business
Sarmaya loan acts as an inducement for existing customers involved in group lending to
maintain a suitable credit history and to abide by the procedures of the programme, but it
also targets new clients.
The features of the Business Sarmaya Loan are the result of in-depth research. Since most
respondents who were part of the research did not have access to bank accounts or
significant physical collateral, conditions for access to the individual loan have taken
these factors into account. Consequently eligible entrepreneurs have to possess a fixed
8
business address, attest to experience of at least 3 years of managing a business and
provide their ID cards and signatures of spouse/family.
The BSL is marketed through flyers given out in markets and through the old Kashf
branches. The LOs for BSL require a higher qualification than the regular LOs as the loan
appraisal process is more rigorous and includes detailed financial analysis and projections
of the client’s business. One guarantor is also required who gives an assurance about the
character of the applicant and also pledges to pay the loan in case the client defaults.
The current disbursements of the BSL are 53 million and a total of 1,413 loans have been
given out. The average loan size is Rs.37,711. For individual lending the target for 2007
is to open 8 new branches, with 2 in Karachi and one in Sialkot and give out 15,000 new
loans. Currently, Kashf has 6 branches for Individual loans with 3 in Lahore, 2 in
Faislabad and 1 in Gujranwala, and has given out 2000 loans.
8.1.4.4 Savings
Any customer availing a GL can deposit savings of any amount (in denominations of Rs
10) with the branch manager. This product acts like a savings account. On every bimonthly meeting, the Loan Officer gives an account of the amount of savings each
customer has made to date. Savings is a completely voluntary product. It is a service that
the customers can decide not to avail at all. Despite the fact that it is a voluntary act and
there is no interest paid by Kashf on the amount saved, the amount of savings held by
clients’ amounts to Rs.5.6 million with an average deposit size of Rs.53.
The average deposit size has been falling, even though savings would be expected to
cater for emergencies and investment for lifetime events. Research by Kashf has revealed
that they prefer the RoSCA system for improving their access to sizeable amounts of
money and that rather than depending on savings for unforeseen expenditures they would
rather resort to credit facilities. Small deposits of savings have entailed enhanced
transaction costs; for clients these amounts to costs associated with time management,
‘nuisance’ value of meetings, etc. For the organization the operational cost of mobilizing
small deposits and maintaining them at commercial financial institutions has proved to be
substantial. Consequently, this product is not being promoted or marketed aggressively
at present, but has been preserved as an option for clients.
8.1.4.5 Insurance
It is obligatory upon all Kashf clients to take insurance. Insurance charges are 1.5 percent
of the loan amount (General Loan) and are taken up-front when the loan is disbursed.
This insurance facility applies in case of accidental or natural death of the client. Its
benefit includes the writing-off of the outstanding loan amount and the family receives
Rs.7,500 to cover for funeral expenses.
8.1.4.6 Gender Empowerment and Social Advocacy (GESA)
In accordance with Kashf’s mandate for social empowerment, GESA is a part of the
consolidated approach towards capacity building. The idea behind the social aspect of the
programme is to build social capital among clients through greater awareness of
9
innovative ideas, rights of women and social interaction and networking. In addition to
providing microfinance services to clients, Kashf also organizes borrower trainings, holds
meetings with male members of the client’s families to inform them about the credit
programme, and conducts leadership trainings, reproductive health sessions and gender
training with the clients on a quarterly basis, thus keeping alive the gender and
empowerment vision of the programme. Recent activities of GESA for the quarter July to
September 2006 are attached in the Appendix.
8.1.5
Operations
8.1.5.1 Human resources
Kashf has well-qualified and professional staff at all levels. The field staff plays the most
important role in shaping the overall portfolio quality of a microcredit organization. In
this regard loan officers (LOs) are the most critical employees because they are the key
point of interaction between Kashf and its clients. Recognizing the importance of the LOs
role, Kashf has placed a minimum requirement of an Intermediate degree for an LO. The
induction process of LOs at Kashf is around one month during which a fresh recruit is
sensitized on the activities of the organization. A fresh recruit is given a combination of
classroom and field training. Previously, the training time of fresh recruits was three
months but this was brought down as it was realized that such a long period was not
needed and it was quite costly as well.
Other than this initial training, LOs also attend training sessions which develop their
personal and technical skills. Not only do new recruits receive training but older staff
members also regularly attend international and national workshops. According to Kashf,
these trainings assist staff to innovate and see things in their work environment from a
new angle and thus provide the organization with a qualified and skilful staff pool that
sustains the organization’s growth rate.
LOs are evaluated on an annual basis and their performance is measured with the targets
set for them and they are given an increment accordingly. The top management and the
AMs are evaluated on a six monthly basis. A whole set of benefits is given to staff
members such as health and life insurance, provident and pension fund and travel
benefits. About 70 percent of the positions are filled by internal promotion in each tier.
Internal promotions are given to keep motivation high. Fringe benefits are also revised
regularly. Kashf aims to provide a safe, secure and friendly environment for its staff so
that they are motivated and perform to the best of their abilities.
Kashf regularly undertakes staff satisfaction surveys and recently it undertook an
extensive exercise of salary mapping of staff and upgraded compensation. Over the years
Kashf has actively tried to maintain a gender balance, however, with the rapid expansion
this has been compromised, and one of the goals for 2007 is to improve this.
8.1.5.2 Strategic Initiatives
Kashf recently set up a learning centre for its staff where they can train 50 people on a
daily basis. Kashf is rapidly expanding and the need for trained staff is high, therefore,
10
the learning centre has been set up. At the centre not only are new recruits trained, but
previous staff are also given trainings on various issues. Due to the high client attrition
rate of 2005, customer care has become a serious issue and specific training on this is
held. Furthermore, Kashf undertakes regular customer satisfaction surveys and focus
groups so that it is aware of the changing preferences of clients.
In 2006, Kashf completed the automation of all its branches which was a major goal for
the year. However, integration of finance and HR with the operations side is still to be
completed. Kashf reports that the efficiency gains from the automation have been
significant, consequently the caseload for LOs have been increased to 650, which is very
high according to the industry standards.
Kashf transfers centres among LOs on an annual basis. Generally the centre is passed on
to the pair LO; however, problematic centres might be passed on to a new LO. This is
done to prevent fraud or collusion of any form. The organization tries to relocate branch
staff to counter this risk.
Recently, the organizational structure was strengthened and two new positions of Chief
Executive Officer and Chief Financial Officer were introduced. This was done in an
attempt to strengthen and develop leadership within Kashf. Kashf also has comprehensive
documentation of all its operations and processes. There are manuals for financial risk
management, credit risk management, human resource policy manual, a treasury manual
and an operations manual.
8.1.5.3 New Products
To keep up with the changing needs of its clients, Kashf is developing new products. The
latest product in the pilot stage is the Home Improvement Loan. Research for its design
was completed in the summer of 2005 and focused on the demand for a housing product.
The aspects evaluated were the target market’s capacity to carry additional debt, and any
risks posed by a lack of property rights and mobility. The results indicated that housing
was a priority for many of Kashf’s clients and 84 percent of the surveyed, demanded a
home improvement loan. The research also indicated that housing was the leading use for
which households dedicated their savings. The loan size ranges from Rs.50-70,000 and
has a 4 year term with 15 percent rate of interest. The accompanying documents required
include photocopies of titles of the residence, and the loan is given to a group of 3-5
women. The loan cannot be used for new construction; it is only for renovation or adding
a new room/bathroom. The pilot phase of the Home Improvement Loan (HIL) is running
in two of Kashf’s branches: Ravi Rayon and Jorah Pull. The response to this new product
is very encouraging and the pilot phase is being monitored to streamline all operational
and policy features
Two more products are in the research/planning phase. One is a loan to treat Hepatitis C
and its feasibility is currently under study. In Lahore the infection rates are alarming with
at least 13 to 16 percent of the city’s population infected with the virus. The motivation
behind this loan is that the majority of the cases in Pakistan can be cured with
11
conventional therapy, if diagnosed and treated early. The Yaki Gate branch has been
earmarked as the pilot branch due to the incidence of the disease in the area.
The other product is Health Insurance, which shall provide medical services to the people
of low income households at very nominal rates. Kashf asserts that health care facilities
are inadequate and have limited outreach and women are denied access to care in the face
of limited mobility and lack of money. Therefore, Kashf in collaboration with a Health
Insurance Company has mapped out the design, market and service of the health
insurance product and is planning to pilot it in the coming year.
8.1.5.4 Geographical Coverage:
Kashf has opened around 40 branches in 2006 and entered 10 new districts. The total
number of branches stands at 70. They plan to open 50 more branches in the urban and
semi-urban areas of Punjab and Karachi in 2007. Kashf has a graduated plan to expand
all over Punjab, in the past Lahore was treated as a hub and new branches were set up
close to the city. However, now Kashf is also operational in Karachi and Rawalpindi and
ready to start operations in Multan and, therefore, each of these cities will work as a
regional hub.
New areas for operations are selected after in-depth research in the respective area. A
research team consisting of a minimum of 4 people visits the union/district council of the
area and collects information on demography, competitors, household size, education and
income level of the area. New branches are approved by the President, Roshaneh, if
approximately 100 centres can be set up and there are 2-3,000 potential clients. The area
chosen should not be notorious for any reason and public transport and a commercial
bank should be in the vicinity.
Out of the eligible areas Kashf chooses the one with the larger market. In larger centres
operations can be easily scaled up and it is easier to find entrepreneurial spirited people
and qualified staff.
8.1.5.5 Competition and Expansion Strategy
The competition in the operational area of Kashf has been gradually building up,
however, the majority of the market is still untapped. Only 7 percent of the market has
been penetrated; therefore, Kashf Management is not threatened. In Lahore, which is a
hotbed of competition 75 percent of the market is also untapped. Therefore, competition
is not a serious issue for Kashf.
However, Roshaneh Zafar states that there is a problem with unfair competition such as
Khushali Bank which has been given a huge subsidy and provides credit at an
unsustainable interest rate. Such measures by the government spoil the market as
Khushali Bank’s effective interest comes to only 24 percent while that of Kashf is at 34
percent.
The increased competition has led Kashf to renew its commitment towards providing
quality services to the poor. They have taken new initiates in the area of product
12
development and undertaken market surveys to gauge the needs of the potential market
and the future for expansion. They are also keeping a tab on what the competitors are
doing in their areas of operation.
Kashf’s future plans are to reach 850,000 women by 2010. The plan for 2006 was to
reach 125,000 clients, which Kashf surpassed by 10,000. The plan for the next year 2007,
is to reach 325,000 and for 2008 it is 400,000. Kashf has already secured funding for
2007, however, it is still trying to procure the money for the expansion plans of 2008.
Kashf also plans to move into rural finance sometime in the future.
Another initiative Kashf is planning to take is to start a Bank to which the BSL portfolio
will be shifted. The costs associated with turning Kashf into a Bank are huge and not part
of Kashf’s plan as just undertaking a feasibility study, altering the organizational
structure and setting up the relevant channels would cost Rs.112 million. Furthermore as
an NGO MFI, Kashf does not pay profit tax of 34 percent, which would have to be paid if
it were a Bank and this further reduces the feasibility. The Bank that will be setup would
offer deposits and will take over the higher end of Kashf’s portfolio which is the BSL
portfolio. It is a relatively small portfolio with only 8 branches and thus the transfer
would be easy. However, the feasibility and the demand and supply analysis still has to
be carried out.
8.1.5.6 Policy Environment
Kashf is not regulated as a microfinance institution as it is registered as a society.
However, it follows all the standards set in the microfinance ordinance such as 30 percent
of the assets are liquid. The issues that Kashf has with the regulatory environment are that
it cannot take deposits from its clients, therefore, it has to mobilize funds from other
sources which are much more expensive. Kashf would like to get a provisional license
like those offered in Bangladesh and Bolivia to be able to offer savings to its clients;
however, it is not on the agenda of the government. The interim license would bring them
within the tenors of financial regulation but they will still not be a microfinance bank.
They will offer savings through the affiliated Bank they plan to set up and those savings
would be channelled to Kashf to lend on.
8.1.5.7 Dropouts
Kashf has had a very high drop out rate of 26 percent in 2004 as compared to other MFIs
in Pakistan and the region. According to a client exit survey conducted by Kashf it was
found that the majority of client exits comprised of voluntary exits which included
households who no longer needed the loan or had migrated to another area. The
remaining were cancelled by Kashf for not meeting all the policies and conditions.
Furthermore, the branches in Sheikhupura were closed due to low demand and credit
unworthy behaviour of clients as more than 70 percent of the loans were overdue. This
exacerbated the client attrition rate.
13
Figure 8.5
Client Attrition Rate
30%
26%
Percentage
25%
21%
20%
15%
10%
9%
9%
5%
0%
2003
2004
2005
2006
Kashf has brought down its drop out rate considerably. For 2006 it is around 9 percent
(Figure 8.5) and Kashf has put in a lot of effort to reduce it. A ‘Win-Back’ initiative was
launched and a new value ‘Delight the Customer’ was added to Kashf’s core values. A
review of services and products was undertaken to assess the changing needs of the
clients. Other efforts made included remarketing the products, flexibility in policies for
good clients, focus on customer care and dealing with clients with optimism.
Furthermore, disbursement time was brought down from 15 days to 3 days for repeat
centres and 7 days for new centres.
Better monitoring polices and weekly tracking of pending centres has also reduced client
delinquency and dropout rates to a considerable extent. The recovery rate has been
maintained at 100 percent, while PAR has also fallen. Moreover, many old clients came
back to Kashf after being dissatisfied by the competition.
8.1.5.8 Operational Systems
The MIS system for the branches has full connectivity with the head office. Kashf calls
the MIS software, Miracle Worker, and it allows efficient processing of the loan
application, tracks clients’ loan cycles and generates effective reports for efficient
decision making and management. The system has modules for Loan and Saving
Management, General Ledger and Security. It is an Oracle based software and
information is sent to the head office daily, where back-ups are maintained on tape drives
and disks. At the branch, the loan officers give in their recovery and savings sheets to the
Computer Operator daily who enters them into the Miracle Worker. Kashf estimates that
due to the Miracle Worker, LOs save 40 percent of their time which they previously spent
on paperwork. Consequently LOs now use that time to build better relations with clients
and their caseload has been increased to 650 clients from 600.
Kashf completed the automation of all of its branches in mid 2006 and now real time data
is available at the Head Office from which data is consolidated and reports by city,
district and the overall region are available for analysis. As yet the financial and HR
14
information has not been integrated but will be done so over the year. Currently at the
head office finance and operations are manually integrated. Recently the finance
department has revised the General Ledger software, used for accounting purposes; it
now has multi-user accessibility and has all the database of Kashf’s branches.
8.1.5.9 Audit Systems and Financial Planning
The internal audit department audits all the branches every six months though the plan is
to bring it down to once a year. However, for the high risk branches, the audit will be
more frequent. There are five teams from the department which go out to audit the
branches, compile reports and share findings with the CEO and the board. There are
manuals for the audit department on the procedures and compliance regulations. The
focus of the internal audit is regularly changed based on the issues that are emerging from
the branches. An external auditor also audits the accounts of the organization on an
annual basis. The auditor is changed every three years by the Board and is educated on
CGAP standards so that Kashf is audited according to international norms.
On the operations side, the AM spends one day a week in each branch and screens a
sample of clients while also monitoring the accounts and operations. Due to the
expansion, Kashf is planning to set up regional offices headed by a Regional Manager
(RM), who will spend 15 days out in the field to monitor the branches. He will select the
areas randomly each month to audit and would monitor all operations, finances and also a
small sample of centres. Teams from the Quality Assurance section of the Operations
department at the head office also regularly go out to monitor branches and this will
continue even when the regional offices have been set up, however, it will be on a smaller
scale.
Centres have to submit full payments and partial payments are not accepted by Kashf. If
delinquency is detected, the credit committee is closely involved to ensure recovery, as
well as all the branch staff, so that the problem can be quickly resolved. A special LO is
sometimes assigned to manage the delinquent centres so that the problem does not get out
of hand.
A new loan can only be issued to a client after full payment of all dues. In case a client
causes minor problems in paying the dues, her case is reviewed by the AM and
documented before a loan is reissued. However, if a client has made late payments
consistently and displayed unreliable behaviour, her membership may be cancelled.
Kashf also has a very strict policy towards fraud and negligence. Clear cut branch cash
management systems are given. Each branch has a standardized budget given by the
finance department and also overseen by them. If the budget is exceeded by a branch, the
manager is called in and the matter is investigated.
8.1.5.10
Portfolio Performance
Kashf has very good portfolio quality. Its repayment rate is 100 percent and it has almost
always been so. The PAR at one day late was 0.8 percent at the end of 2006 and its trend
over the years is given in Figure 8.6. At the end of the year, Kashf writes off loans that
15
are more than 90 days old in the overall accounts, however, they are not written off from
the individual branch’s records and they are supposed to recover them.
Figure 8.6
Portfolio at Risk
6%
Percentage
5%
5%
4%
3%
2%
1%
1%
1%
0.15%
0.61%
0.32%
0.08%
2005
2006
0%
2000
2001
2002
2003
2004
Kashf generated an income of Rs.87 million from its portfolio during the period July to
September 2006. In terms of diversification, Kashf’s portfolio is reasonably diversified in
lending for different kinds of activities and with time the geographical diversification of
the loan portfolio is also increasing as Kashf is expanding and moving its operations to
other urban centres around the country.
8.1.6
Financial Management
8.1.6.1 Mobilisation of funds
Kashf is working on its long term financing strategy as it plans to provide microfinance
to 850,000 people by 2010. The objective of the strategy is to secure adequate funds to
fuel the projected growth. The intended steps and sources include commercial sources
(financial and money market), privately and publicly placed bonds, funds from
international agencies and subsidized funds. Kashf has already secured funding for its
growth plans for 2007 and is now working on funds for 2008. The main funding comes
from PPAF and DFID, but due to the extensive growth plans Kashf is also in negotiation
with commercial banks. It is in the process of finalizing its agreement with two local
banks and one international bank. The funds from these sources will be available at
KIBOR plus 2.5 percent.
Currently, Kashf’s operations are funded from four sources, Pakistan Poverty Alleviation
Programme, Grameen Trust, MCB and Acumen Fund. The interest paid and the
outstanding balances are given in Table 8.2.
16
Table 8. 2 Financing Sources: September 2006
Source
Limit
Interest
rate
PPAF
1.350M 6-8%
MCB
300M
10%
Grameen 21.19M 2%
Acumen 8.9 M
6%
Total
Loan
proceeds
279.66M
RF
NIL
NIL
Outstanding as on Sep
30,2006- Rupees in millions
536.83
9.3
21.19
8.9
576.22
8.1.6.2 Asset, liability and equity composition
Kashf has deployed 62 percent of its assets in loans, and the other major category is cash
in hand and in the bank which is about 21 percent. Investments consist of 12 percent of
assets and the remaining 5 percent is in various other categories. The loan portfolio
increased by 62 percent over the year, while total assets increased by 50 percent.
About 91 percent of the liabilities constitute borrowings, which are either under a mark
up arrangement for short term running expenses or long term loans for on-lending. The
capital structure breakdown of Kashf is given in Figure 8.7.
Figure 8.7
Capital Structure
Other
Commercial
Liabilities
Debt
2%
17%
Subsidized
Debt
19%
Donor Equity
40%
Retained
Earnings
22%
8.1.6.3 Profitability and Sustainability
Kashf Foundation became operationally self-sufficient in FY2003 and financially selfsufficient in FY2004. For the year 2005, OSS of the organisation was 180.2 percent while
FSS was 117.21 percent. These figures give clear indication of Kashf’s superior
performance in the region when compared to the OSS and FSS averages of 127 percent
and 115 percent for the rest of the region and 89% and 79% respectively for other MFIs
in Pakistan (Kashf Foundation, 2005).
The profitability indicators for Kashf show a commanding lead when compared to other
MFIs in the region. The return on assets is 6.86 percent as compared to a dismal -7
17
percent for the MF Industry in Pakistan. The return on equity (adjusted) fares quite well
at 13.31 percent as compared to Kashf’s peer group in Pakistan at -497 percent. Yield on
Portfolio is around 38 percent as compared to 14 percent for the industry in Pakistan.
The key to Kashf’s success lies in the fact that it is a dynamic and growing organization.
At Kashf active research and innovation is encouraged at all levels. It is highly
decentralized, which has put loan officers and the field staff at the fore front of all
operations and thus enabled Kashf to expand efficiently. However, the organization needs
to concentrate on maintaining portfolio quality and offer a wider range of products and
services to cater to the needs of its clientele.
8.2
Survey Results
In this section we present the results from our survey for Kashf. The results are based on
the data collected on the basis of the questionnaire – see the Appendix of the Report. A
select few of the results are presented here in table form, in the main text of this Chapter,
while the substantial majority of tables are presented in the Appendix of the Chapter. The
Appendix to this Chapter contains the largely ‘descriptive’ tables and results, while the
tables which are part of the text in this Chapter, are the more ‘analytical’ tables. In the
Appendix to this Chapter, there are far more tables than those on which we offer
comments in the text. Many of these tables are simply informative and so we do not
discuss them in the Chapter. They are being provided for the reader’s own interest and
perusal. Only the more interesting, striking or pertinent results and tables from the
Appendix are discussed in the text.
As we show in Chapter 2, the survey was conducted across four types of populations for
the purposes of the Study. Two of the categories are ‘clients’ or ‘borrowers’, while the
other two are ‘non-clients’. In the borrower/client category, there are two types of clients,
the ‘Active Borrowers’ and the ‘Pipeline Borrowers’. The former category that of ‘Active
Borrower’, is that client who has been in the programme of the MFI for longer than ten
months; s/he may have been a client for some years in their nth loan cycle or may have
even been a client in their first year. ‘Pipeline Borrowers’ are classified as those new
clients who had joined the programme of the MFI a few months – usually between 1-4
months – of the start of our survey. There are also two categories of ‘Non-Borrowers’,
one which are selected from the neighbourhood of the old Active Borrowers, and the
other from the neighbourhood of Pipeline Borrowers. Ideally, and in the best case
possible, the Active Borrower and the Pipeline Borrower (and their neighbours) should
have been chosen from ‘old/established’ areas where the MFI has been working for some
years, and ‘new’ areas where they are about to enter an identify and enlist clients.
However, in many cases this was not possible since most MFIs did not have exclusively
‘new’ areas identified, and we were forced to take Active Borrowers and Pipeline
Borrowers, and both sets of their neighbours, from the same locality/area. Nevertheless,
this does not undermine our results which are presented in this Section. In some cases we
present results where we compare the Active Borrower with Pipeline Borrowers, and in
some cases we compare both Active Borrowers and Pipeline Borrowers with the two
combined categories of neighbours, that of Non-Borrowers.
18
We first discuss results based on tables presented in the Appendix to this Chapter.
Since Kashf is one of the oldest MFIs in Pakistan, it is one of those which has clients in
its third cycle and beyond. In fact, as Table A.8.2.2 shows, about a third of Kashf’s
sample is in its fourth (or longer) loan cycle, which makes Kashf one of the best MFIs to
undertake an impact assessment analysis. As in the case of some other MFIs which work
with women, we see that in the case of Kashf as well, most women are in the Business of
operating shops – Table A.8.2.4; also, unlike Active or Pipeline Borrowers, most women
in the Non-Borrowers category are involved in Cottage Industries.
The Housing Characteristics of Active Borrowers, on average, seem to be slightly better
than those of the other categories – Tables A.8.2.6 and A.8.2.7. The average Income Per
Capita and the Expenditure Per Capita for Active Borrowers is much higher for Active
Borrowers than for all other borrowers. The value of Household Assets of Active
Borrowers are also much higher than all others. However, as in the case of the targeting
of the ‘Official Poor’, i.e., those below the Official Poverty Line, very few of Kashf’s
clients fall below that Line – Table A.8.2.8. The difference in the Household Assets
Ownership position – Table A.8.2.14 – does not seem to be large amongst the three
groups.
Table A.8.2.26 which shows the perceptions of Borrowers on the impact the programme
is having on them, reveals, as it does in most other MFI cases, that as the number of loan
cycles increase, in general, so does the positive perception about impact. This is not a
surprising result, as one would expect that someone will stay on with a programme only
if their real or perceived quality of life has improved. If they felt that their lives were not
improving, they should have left the programme. Also, as in the cases of most other
MFIs, new (Pipeline) Borrowers have a far better perception about the change in the
quality of life, than do Non-Borrowers – Table A.8.2.29.
Unlike most of our other partner MFIs, data from Kashf allows us to see whether there
was much impact on account of the microfinance intervention, mainly because Kashf has
been in the sector for more than a decade and there are numerous clients who are in their
fourth and beyond loan cycle. Table 8.3 shows, for example, that the differences that
relate to better living Housing conditions for Kashf’s Active Borrowers are significantly
better than the other three categories.
Most important, however, is the hugely significant improvement in Per Capita Income,
Per Capita Expenditure, Value of Household Assets, etc, which accrues to Kashf clients
compared to those who are new to the programme or do not belong to it – Table 8.4
brings out this difference very sharply. In the case of Children’s Education – Table 8.5 –
not surprisingly, we do not find much significant difference between those who are
Active Borrowers and the other categories. This is probably because, as we speculate and
as our tables in the Appendix show, most women send their children to school anyway
and one does not necessarily expect much difference on account of the microfinance
intervention. A curious result from Table 8.5, which is also found in other MFIs, is the
statistically significant difference between children who attend private schools of Active
19
Borrowers and the others. It is surprising that fewer children of Active Borrowers attend
private schools than do those of Non-Borrowers and Pipeline Borrowers.
Table – 8.3
KASHF – Housing
Variables
Category
House owners
Person per room
Houses with baked bricks
Houses with RCC Roof
Houses with Cemented Floor
Mean
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Standard
Deviation
93.7238
24.30425
85.6089
35.16493
3.0621
1.26558
3.2895
1.77538
99.5816
6.46846
88.1919
32.33013
32.6360
46.98647
30.6273
46.17974
48.9540
50.09397
37.2694
48.44162
t-value
Significance
Level
2.992
.003
-1.645
.100
5.352
.000
.486
.627
2.675
.008
Note: There are 239 and 271 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 8.4
KASHF – Economic Status
Variables
Category
Expenditure Per Capita
Per
Capita
Expenditure
Food
Income Per Capita
Household Asset Score
Value of household assets
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Mean
Standard
Deviation
1719.1644
731.22097
1382.1862
588.18874
858.0294
322.48533
830.9796
306.96651
1843.7834
825.03292
1550.0408
749.29919
7.04
1.729
6.31
2.094
408644.0380
323086.48155
299592.0976
318946.72808
t-value
Significance
Level
5.762
.000
.970
.333
4.213
.000
4.248
.000
3.212
.001
20
Note: There are 239 and 271 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 8.5
KASHF – Children Education
Variables
Category
School Going Children %
School Going Children - Boys
%
School Going Children - Girls
%
Children going
School %
Monthly
Education
to
Expenditure
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
Private
New and NonBorrowers
Active Borrowers
on
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Mean
Standard
Deviation
t-value
Significance
Level
87.2143
23.26893
1.482
.140
81.8200
25.30298
90.0585
27.97030
1.845
.067
80.0000
35.61127
75.1389
39.28180
1.185
.238
67.1405
42.72509
38.8528
47.51905
-3.226
.001
59.8700
45.11408
409.0000
435.23233
1.518
.131
326.1560
355.05028
Note: There are 239 and 271 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
The differences on Household Ownership Assets – Table 8.6 – between Active
Borrowers and others are also large and significant, implying that Active Borrowers own
more/better Household Assets. Table 8.7 also shows the significant difference between
the value of sales of Active Borrowers compared to the other categories.
Perhaps the most surprising and unexpected results on impact, which relate to not Kashf
alone but to almost all MFIs, relates to the decrease in women’s empowerment in most
cases. Although, there is a significant (positive) difference at the Women’s Economic
Empowerment level between Active Borrowers and the other three categories, in the case
of other types of Empowerment, such as Income, Assets, Health and Education, we find
that those women who have not joined the programme are ‘better-off’. What this suggests
that while women begin to take decisions related to Economic issues far more
independently, perhaps they compromise the additional income earned by allowing their
spouses/sons to control this income
21
Table – 8.6
KASHF – Household Assets Ownership
Variables
Own House
Refrigerator
Colour TV
Motor Cycle
Washing
Machine
Sewing
Machine
Bed with Foam
Gold
Mobile phone
Category
Mean
Standard
Deviation
t-value
Significance
Level
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
93.3054
86.7159
33.8912
21.7712
87.8661
75.6458
6.2762
7.0111
25.04523
34.00311
47.43333
41.34542
32.72060
43.00138
24.30425
26.98964
2.464
.014
3.083
.002
3.574
.000
-.321
.748
74.0586
43.92331
4.645
.000
New and Non-Borrowers
Active Borrowers
54.6125
49.87890
89.1213
31.20248
-1.871
.062
93.7269
40.5858
28.4133
18.4100
16.2362
39.7490
31.7343
24.29264
49.20878
45.18348
38.83794
36.94645
49.04058
46.63034
2.912
.004
.647
.518
1.891
.059
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Active Borrowers
New and Non-Borrowers
Note: There are 239 and 271 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant at least at 90 percent level of
significant. The negative t indicates that average value of category 2 is greater than the average
value of category 1.
22
Table – 8.7
KASHF – Business Characteristics
Variables
Category
Monthly Sale [Rs.]
Value
of
Assets
Shop/Workshop
Machinery
Instruments
Other
-
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Mean
Standard
Deviation
t-value
Significance
Level
18368.62
12139.060
6.820
.000
11940.96
9075.918
6093.30
35215.210
-.734
.463
8612.55
41453.424
6057.32
22503.791
2.656
.008
2156.83
8299.247
970.71
3495.841
1.033
.302
694.83
2504.775
4456.07
19849.699
.436
.663
3773.80
15451.121
Note: There are 239 and 271 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
Table – 8.8
KASHF – Women’s Empowerment
Variables
Economic Empowerment
Score out of 14
Income Empowerment
Score out of 5
Assets Empowerment
Score out of 8
Empowerment Related with
Education and Health
Score out of 10
Category
Mean
Standard
Deviation
Active Borrowers
New and NonBorrowers
7.7238
3.20174
6.0369
2.65806
2.0962
1.34849
2.8044
1.38060
1.1757
.80602
1.6605
1.38346
4.9582
2.59248
5.8487
2.30362
Active Borrowers
New and NonBorrowers
Active Borrowers
New and NonBorrowers
Active Borrowers
New and Non-
t-value
Significance
Level
6.499
.000
-5.844
.000
-4.752
.000
-4.108
.000
23
Borrowers
Social Empowerment
Score out of 10
Active Borrowers
New and NonBorrowers
4.1381
1.58836
4.2214
1.39406
-.631
.528
Note: There are 239 and 271 respondents in each category respectively. t-value greater than 1.6 indicates
the mean difference between two categories is statistically significant. The negative t indicates that
average value of category 2 is greater than the average value of category 1.
8.3
Regression Analysis
There are weaknesses in using bivariate analysis, as we do above, since it does not allow
us to examine the nature of the impact, and hence, we use multivariate regression
analysis, which allows us to look at impact controlling for other related variables. These
two sets of analysis also explain why we often get contradictory findings.
The Difference in Differences (DID) impact model estimated for Kashf is
Yij = Xijα + Cijβ + Mijγ + Tijδ +vij
Where Yij is an outcome on which we measure impact for household i in locality j, Xij is
a vector of household characteristics 1, Cij is a dummy equal to 1 for active borrowers and
their matched neighbours and 0 otherwise, Mij is a membership dummy variable equal to
1 if household i self-selects into the credit programme, and 0 otherwise; and Tij is a
variable to capture the treatment effects on households that self selected themselves into
the programme and are already accessing loans. T is also a dummy variable equal to 1 for
active borrowers and 0 otherwise. The coefficient δ on Tij is the main parameter of
interest and measures the average impact of the programme. A positive and significant δ
would indicate that microfinance is having a beneficial effect on the borrowers.
As Kashf has been around for 10 years, the clients we interviewed were anywhere
between 1 to 7 loan cycles. Therefore to see the impact of continued borrowing we
divided the clients into groups, one was the group of young borrowers (borrowed 3 times
or less) and the other was of old borrowers (borrowed 4 times or more). On each of these
groups we estimated impact separately.
A Single Difference equation is also estimated for to assess impact between active
borrowers and the pipeline clients. This exercise was done for both young and old
borrowers. The form of the equation is as follows and the variables are defined as stated
above.
Yij = Xijα + Tijδ +vij
1
For Kashf nine household characteristics were included in the regression out of 15 tested through
ANOVA.
24
The results from the estimation of δ are given in Table 8.9. Generally the results of Kashf
show positive impact for both young and old borrowers except for empowerment. We
find that young borrowers have 10 percent higher per capita income (p=0.10) and
household expenditure (p=0.076) compared to pipeline clients, while old Borrowers are
doing even better with approximately 20 percent higher per capita income (p=0.001) and
household expenditure (p=0.00) (Single Difference estimation). Similarly, old borrowers
perform better on household and respondent income in both estimations and the same
goes for young borrowers except for the DID estimation of household income. The only
anomaly in the results is the significant negative impact on food expenditure for young
borrowers in both single difference (10%; p=0.01) and DID (14%; p=0.04).
On asset score Kashf borrowers do well regardless of which estimation we look at. Old
borrowers score 1.05 to 1.50 points higher than other respondents on asset score while
young borrowers score 0.66 to 1.14 points higher as compared to others. All these results
are significant.
Old Kashf borrowers are also spending significantly more on health than pipeline clients.
A higher percentage of children of old borrowers are enrolled in school as compared to
pipeline clients (11.8%; p=0.046). This higher percentage predominantly pertains to girls
as we see in our results that almost 13 percent more girls from households of old
borrowers are enrolled in school (p=0.014). We find a similar result for young borrowers
when they are compared to pipeline clients (p=0.036).
In sharp contrast to these great impact results we have the empowerment indices where
Kashf borrowers are scoring significantly less as compared to other respondents. A
deeper investigation of these results indicates that the coefficient on the member dummy,
the people who self-select themselves into the borrowing programme, is significant and
positive. In fact in the majority of the double difference regressions for both young and
old borrowers the value of this dummy is twice as high as that of δ. What we can
conclude from these results is that individuals who self-select themselves into the
programme are more empowered than non-borrowers. However the pipeline clients
score better on these indices than active borrowers and the difference is significant even
though it is less than one point as shown in Table 8.9 under Single Difference estimators.
All these results indicate is that newer clients of Kashf are more empowered.
In the regressions the member dummy was positive and significant for household and per
capita income implying that self-selected individuals are richer compared to nonborrowers. However, the member dummy was significant and negative for expenditure
on health. This was true for both young and old borrowers.
Another interesting finding in our results was that for young borrowers the effect of a
female head of the household was negative and generally significant on most outcomes
except for the empowerment indices. This was validated by both single difference and
DID estimation. However, for older borrowers this was not true, and the effect of a
female head of the household was usually positive and at times even significant. Here
again both estimation methods generated the same result.
25
The variable respondent’s education had a positive and significant effect for young
borrowers on income and expenditure outcomes. However, for old borrowers this did not
hold. The number of earners in the household was generally positively related with
household income and expenditure outcomes for all borrowers in both kinds of
estimations.
These regression results show that Kashf borrowers, both young and old are doing well
with regards to income and expenditure as compared to other respondents and this has
also had a positive impact on assets and schooling of girls. On the other hand Kashf
borrowers do not score well on the empowerment indices, but in general all individuals
who self-select themselves into borrowing have high score on the indices.
Table 8.9 Regression results
Dependent Variable
Log(Respondent Income)
Log(Household Income)
Log(Per Capita Income)
Log(Total Household Expenditure)
Log(Food Expenditure)
Educational Expenditure
Health Expenditure
Savings
Asset Score
Children Enrolled in School(%)
Boys Enrolled in School(%)
Girls Enrolled in School(%)
2
Women's Empowerment (Overall Index)
Economic Empowerment
Income Empowerment
Asset Empowerment
Empowerment related with Education and
Health
Social Empowerment
Young Borrowers
Single Difference
Double Difference
1
Coefficient t-value
Coefficient t-value
0.14
2.14 **
0.16
1.72
0.01
0.14 **
-0.02 -0.31
0.09
1.65 *
0.01
0.14
0.09
1.78 *
0.04
0.51
-0.10
-2.62 ***
-0.14 -2.12
-19.00
-0.31
-20.00 -0.27
21.50
1.54
5.59
0.24
-11.60
-0.23
-79.00 -1.17
1.14
5.23 ***
0.66
1.69
6.65
1.29
7.50
0.89
-1.80
-0.30
-0.25 -0.03
9.16
2.10 **
8.90
1.11
-3.86
-4.22 ***
-4.01 -3.47
-0.35
-0.96 ***
-0.97 -2.01
-0.79
-4.02 ***
-0.89 -3.56
-0.89
-5.17 ***
-0.67 -3.08
-0.81
-1.02
-2.39 **
-5.11 ***
-0.77
-0.76
*
**
*
***
**
***
***
Old Borrow
Single Difference
Do
Coefficient t-value
Co
0.23
3.29 ***
0.13
3.29 ***
0.21
3.23 ***
0.19
3.66 ***
-0.03 -0.76
59.00
0.78
57.00
2.26 **
10.30
0.17
1.52
6.58 ***
11.80
2.00 **
1.40
0.20
13.60
2.48 ***
-2.58 -3.13 ***
-0.16 -0.45
-0.75 -3.66 ***
-0.69 -3.89 ***
-1.65 *
-2.73 ***
-0.44
-0.55
-1.33
-2.70 ***
1 Significant at 10%(*), Significant at 5%(**), Significant at 1% (***)
2 Score based on 47 questions, the other idices listed below are a breakdown of this index. Refer to questionnaire for detail.
Note: Young Borrowers are clients who have taken between 1 to 3 loans and Old borrowers are those who have taken between 4 to 7 loans.
8.4
Focus Group Discussions
This section discusses the client feedback of microfinance institutions and the various
coping mechanisms at the local level in terms of financial transactions. Information has
been gathered primarily through Focus Group Discussions with beneficiary groups in
randomly selected programme localities. Some additional information has also been
gathered through discussions with respective programmes’ field and programme staff.
26
A total of three focus group discussions were conducted in two Kashf programme
localities in Lahore. These discussions were organized according to the client categories,
according to which one FGD was conducted with the second loan cycle category in Kot
Lakpat Branch, while two were held with fourth and sixth cycle categories of clients in
Chungee Branch area. Two groups had 7 to 9 participants, while the third had more than
10 participants.
Both the localities were highly populated with the majority belonging to the low to lower
middle incomes groups. According to the groups’ participants, people in these areas
indulged mostly in small enterprise development, while many were also employed in the
industrial and service sectors as labourers and support staff.
Client Profile
Kashf gives loans for household entrepreneurship, but only through female clients. If 25
women from the same locality are able to form a group and are prepared to act as
guarantors for one another, they are eligible to become Kashf clients. Most of the women
in the three groups were between the age brackets of 30 to 45 years, with low education
levels, and monthly average incomes ranging from Rs. 4,000-35,000.
Similar to other microcredit clients of other programmes, women in Kashf areas were not
very aware of formal financial institutions or such services. Although, every participant
in both localities mentioned banks as a major source of credit, but none reported having
any interaction with any bank either as an independent account holder or a borrower.
Women felt that bank processes were too tedious for them to handle and family male
members did not have that much time to spare due to their busy work schedules.
‘We are mostly illiterate women and cannot handle all the complications that are
involved with banks. Besides, I just don’t know how to go about accessing a loan from a
bank. how to get there, who to talk to and then whether I am taking the right decision in
availing a bank loan; these are a few of the questions which make me nervous’.
(FGD Participant, Kot Lakpat, Lahore)
Life cycle events were mostly managed through personal loans from neighbours and
family, which were gradually paid off. In addition, all women said that they had a habit
of saving whatever was possible, even prior to Kashf interventions, which always helped
in times of immediate need. However, the Kashf savings mechanism has definitely
institutionalized the savings concept as now it is mandatory for them to contribute some
amount in the group savings, which is another additional source of finances for them.
Savings were also utilized for paying utility bills and other outstanding dues.
The committee system was not very common among the participants as most could not
afford to spare yet another amount from within their household budgets. Before Kashf
interventions, some women use to participate in the committee system, but don’t have the
need to do so.
27
‘Before Kashf, I use to put in money in a committee. But now I prefer Kashf as the
payment in this system is up-front and you get your amount immediately, while in a
committee one has to wait for the turn.’
(FGD Participant, Kot Lakh Pat, Lahore)
A few women had actually taken the loans for their personal business development;
otherwise, in most cases, loans were used for family business development managed by
the husband or the son. A significant number of borrowers reported noticeable
improvement in their socio-economic conditions after the Kashf credit. However, this
change was more reflective amongst the old time borrowers (three or more credit cycles).
Clients’ Feedback
Kashf has stringent programme procedures and clients have to adhere to strict
institutional policies and recovery orders. Borrowers have to stick to certain rules like
complete quorum of 25 members and strict recovery procedures. Therefore, it was
understandable that the 2nd cycle category group participants were finding difficulties in
adjusting to the hard and fast organizational rules as compared to the other two categories
who were quite comfortable with the workings of the credit cycle.
Women in the early cycle group felt that it was quite inconvenient for them to have a
complete quorum of all the members, as sometimes because of one member’s absence
they had to wait for hours, which wasted a lot of time.
In addition, the recovery procedure was also very strict no matter what one had to pay on
the designated day. The women felt that there was no need for this kind of a rule because
the borrowers were very conscious of the fact that they had to pay their instalments, so if
someone was unable to pay back on the said day there must have been a genuine reason
for this. Many group members also mentioned that twice a month recoveries were also
burdensome and monthly instalments were more feasible for them.
‘Once we had to wait for almost the whole day because one of the members had to attend
a funeral and could not come to the meeting. We kept telling the credit officer that she
might not be able to come but it was useless. We were let off after that woman returned in
the evening.’
(FGD Participant, Kot Lakh Pat, Lahore)
Comparatively, the more mature borrowers (4 or more loan cycles) gave a more positive
feedback of the MFI interventions. There was a sense of ownership amongst the group’s
members, who said that now they all felt like an extended family because of the frequent
interaction. The group meetings provided them with an opportunity to socialize and share
each other’s problems. One of the FGD localities in Chungee is a pilot test area, where
Kashf has initiated a once a month group meeting of the members, although, the recovery
is still twice a month. The women in the group said that they preferred twice a month
meetings and missed the get-togethers.
28
The positive impact of the credit was also apparent as many women said that not only had
the business prospects improved through the credit, but also their families ate better food,
and had better education and health facilities. Most women started their credit
programme with Kashf on Rs. 6,000 and now had gone up to Rs. 30,000. At this point,
many borrowers felt that the loan amount should be increased to Rs. 50,000 or more, as
they required more to expand the business further and were also in a better financial
situation to repay it. At least a 50 percent increase was reported in the family income
after the Kashf loan by the mature borrowers.
Eight years back, Perveen’s husband divorced her leaving behind two young children.
She had no family of her own and no other source of livelihood either. All she knew was
how to sew and stitch, so she started making small earnings through stitching
neighbourhood women’s clothes. Six years ago, Kashf came into the area. Her first loan
was Rs. 6,000 from which she bought cloth from Peshawar and sold it on profit in her
area. Gradually Perveen started buying more and more cloth and sold it in the Lahore
market on a profit margin. She has been a Kashf client for the last 6 years and has taken
a loan again this time of Rs. 20,000. Her monthly income is almost Rs. 10,000 a month,
which according to her, she could not have accomplished without Kashf.
Dropout cases were reported, but were few. According to one of the group participants,
that in their four years of being together as a group only two women had been dropped
out of the group by the members, as they did not pay on time and the other group
members had to pay on their behalf.
These women were quite comfortable with the various mechanisms of the Kashf
programme and organized their savings and personal loans provisions according to their
needs.
‘We also do personal savings other then Kashf savings. I use the personal savings for
everyday needs, like if a guest comes over and a special dinner has to be organized I
don’t need to go to the neighbour’s house to borrow some amount; the Kashf savings I
leave aside for emergencies like an illness, etc. The Kashf personal loan I use for home
repairs or other personal needs at that time.’
(FGD Participant, Chungee)
Only when probed or told about a more flexible recovery mechanisms, did women state
that they wanted lower interest rates; however, there was no unprompted mention of
higher interest rates. Clients felt that as they were paying twice a month, the burden of the
interest rate did not bother them as much.
The mature clients also had a higher awareness level regarding the reasons for certain
Kashf rules and procedures. Some of the women explained that they understood why the
organization wanted 25 members and not less.
Having 25 members reduces the operational cost of the programme. If there were fewer
women, we would have to pay higher interest rates.
29
(FGD Participant, Chungee, Lahore)
In the Chungee area, other microcredit programmes like Asasah and Akhuwat are also
functioning. The women reported that one of these programmes was giving credit without
any interest, but they would continue working with Kashf as they were happy with their
services and found them to be much more accessible.
Accessibility was a major incentive for most women in terms of easy availability of
services at the local level and access to the local Kashf office in their area, whereby they
could walk the short distance whenever there was an issue or a meeting. The majority of
the women, including the second time borrowers, said that they wanted to continue their
relationship with Kashf and would borrow from the same source again due to
convenience and transparency of the system.
30
Appendix Chapter 8
A.8.1.1
Institutional Snapshot
Indicators
Age
Members outstanding
Active borrowers
Branches
Districts covered
Total disbursements (Rs)
Average loan disbursed (Rs)
Account officers (loan officers)
Total employees
Employee turnover (%)
Borrowers per account officer
Total income(Rs)
Operational self-sufficiency (%)
Financial Self-sufficiency (%)
Adjusted Return on assets (%)
Portfolio yield (%)
Cost of borrowings(%)
Operational Efficiency(%)
Portfolio at risk (>30 days) (%)
2006
10
135,000
117,000
70
10
4.6 billion
12,101
530
600
5
650
79 million
164
114
3.2
35
6.25
25
0.8
A.8.1.2 Products Profile
Loan Product
Purpose
Term/Duration
Loan size
Interest rate
Repayment term
Processing Fee
Savings
Insurance
General
Loan
Income
Generation
Emergency
Loan
Consumption
Needs
12 months
6 months
Rs.10,000 - Rs.4,000
Rs.25,000
Rs.10,000
20%
20%
Fortnightly
Fortnightly
Voluntary
1.5% of loan
-
Business
Sarmaya Loan
Small Business
Development
6-18 months
- Rs.30,000
Rs.100,000
20%
Monthly
1.5% of loan
Housing
Loan
Construction
3-4 years
- Rs.50,000 –
Rs.70,000
15%
Monthly
1.5% of loan
31
A.8.1.3List of Kashf Branches
Area -1
26
Pattoki
R
1
Bedian
SU
27
Chunian
R
2
Chungi
U
28
Ellah Abad
R
3
Kahna
SU
29
Okara-1
U
4
Kot Lakhpat
U
30
Okara-2
SU
5
Kainchi
U
Area- 6
6
Green Town
U
31
Farid Town
SU
7
Walton
U
32
Rahwali
U
33
Ladeywala
SU
Area-2
8
Jorah Pull
U
34
Kamoke
SU
9
Siraj Pura
U
35
Wazirabad
U
10
Baghban Pura
U
36
City Br.
U
11
Dharam Pura
U
Area- 7
12
Yakki Gate
U
37
GM abad
U
13
Ichra
U
38
Razaabad
U
39
Jang Rd
U
Area-3
14
Bund Road
U
40
Saman abad
U
15
Karim Park
U
42
Samundri
SU
16
U
Area- 8
43
People Col.
U
44
Nishat Abad
U
18
Shadarah
Moore
Shadarah
Town
Ravi Rayon
SU
45
Hajvery Town
U
19
Ali Park
U
46
Mansorabad
U
20
Rehmat
Colony
U
47
Jaranwala
SU
48
Chak Jhumra
SU
21
22
23
Kasur - 01
Kasur - 02
Khudian
SU
U
R
49
Millat Abad
U
50
Old Civil lines
U
24
Mustafa Abad
R
51
Khushab
SU
25
Raiwind
SU
52
Bhalwal
SU
53
Sillawali
SU
17
U
Area - 4
Area- 5
Area- 9
32
54
Jawarian
R
55
Behra
R
56
Sahiwal
SU
57
Saddar
U
58
Jail Road
U
59
Chechawatni
SU
60
Korangi-1
U
61
Korangi-2
U
62
Landhi-1
U
63
Malir-1
U
64
Dharam Pura
U
65
66
Ferozpur Road
Yakki Gate
U
U
67
Multan Road
U
68
69
Razaabad-Fsd
Gujranwala
City
U
U
Area- 10
Karachi
IL
33
A.8.1.4:
Organizational Structure
President
Internal Audit
Finance Department
Research Development Unit
CEO
Operations
Information
Gender, Social
Human
Operational Structure
Manager
Operations
Data Analyst
Poverty Lending Programme
Business Sarmaya
Programme
Assistant Manager
Associate
Associate
Area
Associate
Growth
Delinquency
Management Team
Management Team
Associate
Branch
Manager
M
Branch Manager
34
A.8.1.5: GESA Activities
Initiatives
Out comes
Gender Client
Council
The Gender Client Council is envisioned as a council comprising of Kashf clients and
non-clients with regular meetings to debate issues related to gender, environment, and
community development. The idea is for the council to act as a catalyst for
communities to analyse their problems, come up with solutions and to initiate relevant
actions. The role of Kashf is to facilitate this process.
These GCC conduct monthly meetings and its methodology is as under:
¾
initial field visit
¾
orientation council meeting
¾
explain concept
¾
talk about main problems
¾
prioritize problems
¾
main problem to work on
¾
work-plan
¾
assign responsibilities
During this quarter, monthly meetings were conducted for two old client councils,
furthermore, process initiated for the establishment of 2 new councils in Baghbanpura
and Qainchi branch. After the establishment, the councils in Qainchi raised issue of
health and it is in the resolution process in collaboration with NGOs focusing on health
provision. A new water and sanitation project has been initiated in Baghbanpura with
the connivance of Interactive Resource Centre.
Kashf’s
orientation for
Councillors
Media/
Networking
Theatre
Councillors at the Union Council level are one of the important stakeholders in terms
of Kashf’s operations. This initiative aims to ensure that: councillors are aware of
Kashf’s mission and operations; that they have some knowledge of microfinance
within its larger context; and are aware of the different ways in which they could
facilitate Kashf’s operations and staff security
The core objective of this program is to build Kashf’s image as a socially responsible
MFI and develop linkages with other stakeholders. This includes dispensing
information about the organization within the media and interfacing with different
channels about Kashf’s role in the past, present and future. Furthermore, rapport and
public relationing is also undertaken by this cell.
A strong awareness-raising medium and is the most promising and dynamic initiative
undertaken by GESA. The content of the performances is carefully planned and
monitored by GESA. 3-4 themes have been developed and are being performed in
communities. We focus on clients’ perspectives while developing these themes.
During this Quarter, 25 performances have been conducted in area 1, 2 & 3 and
awareness generated on Hadood Ordinance, Gender Discrimination and Harassment
amongst 4000 clients. Impact assessment study is going on gauge the impact of the
program, 6 focus groups were conducted in area 1 and 6 to fulfil the purpose.
Our overall strategy is to establish area based theatre groups to conduct area-based
performances on societal issues to raise awareness amongst Kashf’s clients.
35
Leadership
Training
This training is targeted at Kashf’s Centre Managers. The module has been designed to
enhance their leadership qualities and based on questions such as:
what are CM leadership needs
what leadership skills can be developed in one session
how to design follow-up sessions
Social themes
The Social theme package consists of 24 themes. It is a much more interactive package
than the previous booklet. Monitoring is on going part of regular operations. Only spot
monitoring is conducted by GESA. In addition to training LOs, there will also be an
attempt to develop strong incentives for LOs to maintain a high standard of quality
when delivering social themes.
Gender
and
Development
workshops
The empowerment vision of Kashf and GESA’s mandate both make it imperative that
high-quality gender sensitization training be carried out for all Kashf staff. During this
quarter, 2 gender sensitization workshops were conducted for the new loan officers.
In order to keep up with staff expansion, GESA will also invest resources in building a
cadre of in-house, high quality trainers
36
Table - A.8.2.1
Sample Information
[KASHF]
Respondents
Respondent
Category
%
510
100.0
239
46.9
New Borrowers
91
17.8
Non-Borrowers (Same Area)
90
17.6
Non-Borrowers (New Area)
90
17.6
Active Borrowers
Table - A. 8.2.2
Sample Information
[KASHF]
Borrowers
Loan
Taken
%
330
100.0
One
139
42.1
Two
38
11.5
Three
46
13.9
Four
57
17.3
Five
30
9.1
Six
16
4.8
4
1.2
Seven
Table - A. 8.2.3
Respondent Characteristics - Education
[KASHF]
Total
Respondent Category
Active
Borrowers
Respondents
239
91
180
510
17.8
35.3
100.0
100.0
100.0
100.0
100.0
84.9
78.0
76.1
80.6
Primary
7.9
8.8
10.6
9.0
Middle
3.8
8.8
5.0
5.1
Metric
2.9
3.3
6.1
4.1
1.7
.6
No Education
Inter
Graduate and above
Technical Training
NonBorrowers
46.9
Proportion of Female
Formal Education
Pipeline
Borrowers
No Training
.4
1.1
.6
.6
100.0
100.0
100.0
100.0
37
Table - A. 8.2.4
Respondent Characteristics - Nature of Business
[KASHF]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
239
91
180
510
46.9
17.8
35.3
100.0
Business (Retail Shops with fixed outlet)
36.0
26.4
15.0
26.9
Business (Vendor without fixed outlet)
16.3
12.1
12.8
14.3
1.3
3.3
2.8
2.2
10.5
23.1
14.4
14.1
5.4
3.3
1.1
3.5
23.8
22.0
51.7
33.3
6.7
9.9
1.1
5.3
Agriculture – Crop Production
.6
.2
Service
.6
.2
Goods Supplier
Personal Community Service Providers
Technical Service Provider
Cottage Industry
Transport Service Provider
Table - A. 8.2.5
Household Demography
[KASHF]
Total
Respondent Category
Active
Borrowers
Respondents
Family Size
Average Family Size
Dependency Ratio
Pipeline
Borrowers
NonBorrowers
239
91
180
510
46.9
17.8
35.3
100.0
1-3 Person
16.7
20.9
16.7
17.5
4-6 Person
53.1
38.5
43.9
47.3
7-9 Person
27.6
38.5
34.4
32.0
More than 9
2.5
2.2
5.0
3.3
6
6
6
6
68.42
82.09
98.43
81.50
38
Table - A. 8.2.6
Housing Characteristics - Quality
[KASHF]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
239
91
180
510
46.9
17.8
35.3
100.0
House owners
93.7
84.6
86.1
89.4
Person per room
3.06
3.27
3.30
3.18
Houses with baked bricks
99.6
97.8
83.3
93.5
Houses with RCC Roof
32.6
28.6
31.7
31.6
Houses with Cemented Floor
49.0
28.6
41.7
42.7
Table - A. 8.2.7
Housing Characteristics - Services
[KASHF]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
239
91
180
510
46.9
17.8
35.3
100.0
Houses with telephone
2.1
2.2
3.9
2.7
Houses with electricity
100.0
98.9
97.2
98.8
Houses using gas for cooking
60.7
64.8
63.9
62.5
Houses using flush system
99.6
87.9
89.4
93.9
Table - A. 8.2.8
Household Economic Status
[KASHF]
Total
Respondent Category
Active
Borrowers
Respondents
Pipeline
Borrowers
NonBorrowers
239
91
180
510
46.9
17.8
35.3
100.0
Income Per Capita
1844
1735
1457
1688
Expenditure Per Capita
1719
1559
1293
1540
858
917
788
844
5
18
22
14
7
6
7
7
408644
282272
309585
347058
10000
10000
The Official Poverty Line is Rs 1,000 per capita per month – see Montgomery (2006)
10000
Per Capita Food Expenditure
Poor Households (% below the Official
Poverty Line)
Household Asset Score
Value of household assets
Average Indebtedness
39
Table - A. 8.2.9
Child Education
[KASHF]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
Overall
NonBorrowers
School Going Children %
87
64
86
84
School Going Children - Boys %
90
85
78
84
School Going Children - Girls %
75
35
77
70
Children going to Private School %
39
64
59
52
Monthly School Fee per Child
83
105
88
88
Tuition Fee per Child
93
68
64
75
3
4
0
2
409
247
346
355
Transport Fee per Child
Monthly Expenditure on Education
Figures are Averages
Table - A. 8.2.10
Child Immunization
[KASHF]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Complete Course
81.0
70.3
73.6
75.7
Incomplete Course
17.7
29.7
22.6
22.1
3.8
2.3
No Vaccination
1.3
Only for household having children less than 5 years
Table - A. 8.2.11
Health Expenditure
[KASHF]
Respondent Category
Active
Borrowers
Members reported illness (Last 30 days)
Monthly Expenditure on Health
Pipeline
Borrowers
NonBorrowers
Overall
2
2
2
2
342
103
146
225
Figures are averages
40
Table - A. 8.2.12
Sources of Household Income
[KASHF]
Overall
Respondent Category
Active
Borrowers
Income Per Capita
(%) Income from Main occupation
Secondary occupation
Pipeline
Borrowers
NonBorrowers
1844
1735
1457
1688
76
66
63
70
1
0
0
0
23
34
37
30
Pension
0
0
0
0
Inland Remittances
0
0
0
0
Overseas Remittances
0
0
0
0
Rental Income
0
0
0
0
Other Earners
Figures are averages
Table - A. 8.2.13
Household Consumption Pattern
[KASHF]
Overall
Respondent Category
Active
Borrowers
Expenditure Per Capita
Pipeline
Borrowers
NonBorrowers
1719
1559
1293
1540
Per Capita Food Expenditure
858
917
788
844
(%) Expenditure on FOOD
54
74
62
60
Education
2
3
3
3
Health
2
2
2
2
Electricity
7
8
7
7
Gas
3
3
3
3
Telephone
1
0
1
1
Rent
1
1
2
2
Traveling
2
3
3
3
24
18
0
14
1
1
1
1
Repayment of Loan
Saving
Consumption Last 30 days
- Meat (days)
3
3
4
4
- Fruits (days)
2
4
3
3
- Eggs (days)
4
6
5
5
Figures are averages
41
Table - A. 8.2.14
Household Assets Ownership
[KASHF]
Overall
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Own House
93.3
89.0
85.6
89.8
Refrigerator
33.9
12.1
26.7
27.5
Colour TV
87.9
78.0
74.4
81.4
6.3
3.3
7.8
6.3
Washing Machine
74.1
37.4
63.3
63.7
Sewing Machine
89.1
94.5
93.3
91.6
Bed with Foam
40.6
18.7
33.3
34.1
Gold
18.4
2.2
23.3
17.3
Mobile phone
39.7
28.6
33.3
35.5
Motor Cycle
Prize Bond
Urban Property
Figures are average percentage
Table - A. 8.2.15
Business Characteristics
[KASHF]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Family Workers (engaged in business)
1
Permanent on Monthly Salary
1
Permanent on Daily Wages/Piece Rate
3
Seasonal/Occasional
1
2
18369
14437
10679
14953
6093
1538
12189
7432
Machinery
6057
2087
2192
3985
Instruments
971
940
571
824
Monthly Sale [Rs.]
Value of Assets - Shop/Workshop
2
1
1
2
1
3
2
Figures are averages
42
Table - A. 8.2.16
Women’s Empowerment
[KASHF]
Respondent Category
Active
Borrowers
Pipeline
Borrowers
NonBorrowers
Overall
Number of Respondents
239
91
180
510
Economic Empowerment - Score out of 14
7.7
8.3
4.9
6.8
Income Empowerment - Score out of 5
2.1
3.0
2.7
2.5
Assets Empowerment - Score out of 8
1.2
2.1
1.5
1.4
Empowerment Related with Education and
Health - Score out of 10
5.0
6.1
5.7
5.4
Social Empowerment - Score out of 10
4.1
5.0
3.8
4.2
Figures Average Score except number of respondents
43
Table - A. 8.2.17
Women’s Empowerment - Economic Aspects
[KASHF]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
239
91
180
510
Do you take decisions on the aspects of
purchase, modification or repair of house?
25
30
24
25
Do your husband discuss with you when
decision on modification/repair of house is
made
70
74
63
68
Do you take decisions on the purchase or
sale of livestock?
2
2
1
2
Did your husband discuss with you before
sale or purchase of livestock?
25
40
24
27
Do you purchase your dresses for the
family?
70
90
63
71
Do you purchase the utensils for your
family?
78
95
77
80
Do you purchase gold and jewellery for
your family?
28
12
24
24
Do you take decisions on borrowing
money?
59
66
29
50
Do your husband discuss with you on the
issues of borrowing money?
77
91
61
74
Do you spend money you have borrowed?
41
49
2
29
Do you repay the money you have
borrowed?
61
71
6
43
Do you take decisions on transactions
involving household Equipments?
49
46
36
44
Do you have any debt in your name?
95
95
9
65
Do your husband discuss with you when he
has made the debt?
92
70
69
80
Figures are percentages except number of respondents
44
Table - A. 8.2.18
Women’s Empowerment - Income
[KASHF]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
239
91
180
510
Do you have your own income?
27
54
54
41
Do you spend it for the family yourselves?
28
51
57
42
Do you need the permission of your husband
to spend your income?
24
51
31
31
Do you get any part of your family income
or husbands income to your hands
regularly?
41
66
42
46
Do your husband discuss with you when he
spends income for the family requirements?
90
81
86
87
Figures are percentages except number of respondents
45
Table - A. 8.2.19
Women’s Empowerment - Assets
[KASHF]
Respondent Category
Active
Borrowers
Number of Respondents
Do you possess any household asset?
Do you have cash savings in your own
name?
Pipeline
Borrowers
NonBorrowers
Overall
239
91
180
510
4
33
20
15
18
52
32
29
1
0
Do you operate Bank account in your
name?
Do you pledge, Sell, or exchange any
of the above said assets yourself?
4
29
8
10
Do your need permission from your
husband to sell, pledge, exchange any
of the assets?
8
22
18
14
Is the house you stay registered in
your name?
5
32
20
15
Is the house you stay registered in
your and husband name?
79
40
47
61
Do you have purchased land in your
own name?
Figures are percentages except number of respondents
46
Table - A. 8.2.20
Women’s Empowerment - Health and Education
[KASHF]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
239
91
180
510
Do you take decisions on the issues of your
children education?
22
33
43
31
Do your husband consult with you when he
takes decision on the education of children?
68
68
84
74
Do you think you can decide on how many
children you can have?
26
42
37
33
Do you think you can decide on the spacing
between children?
44
54
57
50
Do you think that you can decide on the
treatment of your and your family member
illness?
27
45
37
34
Do you think you can decide on the method
of treatment for your family members?
50
69
60
57
Do you think you can decide on the type of
contraceptive to be used?
18
24
25
22
Do your husband discuss with you on the
issues of health aspects of children?
69
86
76
74
Do you have any choice of food prepared
and served in your home?
84
87
70
79
Are you able to take care of the nutritional
requirements of your self, family and
children?
88
98
86
89
Figures are percentages except number of respondents
47
Table - A. 8.2.21
Women’s Empowerment - SOCIAL Aspects
[KASHF]
Respondent Category
Active
Borrowers
Number of Respondents
Pipeline
Borrowers
NonBorrowers
Overall
239
91
180
510
Are you free to go out and visit your
friends and relatives with out permission?
83
89
91
87
Do you have the choice of the dresses you
wear?
85
98
93
90
Do your husband impose his religious
beliefs on you and make you accept them?
4
10
3
5
4
1
58
61
Do you have any association with political
parties?
Do you participate in voting and other
democratic procedure?
55
Do your husband impose her political
ideas on you and make you accept them?
2
Do you participate in the meetings of NGO
programs or in other social events?
71
88
9
52
Do your husband prevent you from
participating in such programs?
6
13
4
6
Do you take decisions on the marriage of
your son-daughter?
32
48
38
37
Do your husband discuss with you on the
issues of the marriage of children and
close relatives?
76
71
83
78
84
1
Figures are percentages except number of respondents
48
Table - A. 8.2.22
Borrowers - Loan Amount Used by:
[KASHF]
Respondent Category
Active
Borrowers
Borrowers
Loan was Self
used by:
Spouse with your suggestion
Other Members
Total
Pipeline
Borrowers
239
91
330
72.4
27.6
100.0
28.0
12.1
23.6
65.7
76.9
68.8
6.3
11.0
7.6
Figures are column percentages except number of borrowers
Table - A. 8.2.23
Borrowers - Loan Amount Used For:
[KASHF]
Respondent Category
Active
Borrowers
Borrowers
Loan was Business Activity
used for:
Repayment of debts
Consumption
Total
Pipeline
Borrowers
239
91
330
72.4
27.6
100.0
97.5
98.9
97.9
.8
1.7
.6
1.1
1.5
Figures are row percentages except number of borrowers
Table - A. 8.2.24
Borrowers’ Perceptions - Getting Loan
[KASHF]
Number of Borrowers
239
Loan utilized for same purpose (%)
100
Loan sufficient (%)
100
Time Obtaining Loan (Months)
31
Expenditure incurred (Rs.)
Problems in Obtaining Loan (%)
313
No Problem
100.0
Figures are averages
49
Table - A. 8.2.25
Borrowers’ Perceptions - Coping Strategy
[KASHF]
Loan Taken
Overall
One
Two
Three
Four
Five
Number of Borrowers
50
37
45
57
30
Sale of asset/Sale of Animals
4.0
Six
Seven
16
4
239
.8
Borrow loan from relative/friends
80.0
86.5
75.6
68.4
66.7
81.3
75.0
75.7
Borrow loan from Microfinance
32.0
35.1
35.6
45.6
56.7
31.3
75.0
40.2
Reduce Consumption Expenditure
2.2
Search for extra work
2.0
Extra hours in existing occupation
6.0
6.3
.8
2.2
10.8
2.2
.8
7.0
23.3
25.0
8.4
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
Table - A. 8.2.26
Borrowers’ Perceptions - Impact
[KASHF]
Loan Taken
One
Number of Borrowers
Effect on quality of Improved
life
No Change
Family eat your fill
Two
Three
50
37
45
57
30
16
4
239
100.0
94.6
97.8
100.0
100.0
100.0
100.0
98.7
5.4
2.2
Seven
1.3
48.0
59.5
55.6
61.4
70.0
50.0
75.0
57.7
52.0
40.5
44.4
36.8
30.0
50.0
25.0
41.8
92.0
86.5
91.1
91.2
100.0
87.5
100.0
91.6
1.8
6.3
1.3
8.0
10.8
8.9
7.0
6.3
7.1
82.0
67.6
68.9
78.9
70.0
4.0
5.4
2.2
3.5
6.7
14.0
27.0
28.9
17.5
23.3
43.8
75.0
23.8
100.0
94.6
95.6
98.2
100.0
87.5
100.0
97.1
5.4
4.4
1.8
Have more to eat now
Equal
Health is better now
Health was better earlier
Equal
Sustainable
in income?
Six
As much as wanted (not all types)
1.8
Have more to eat in earlier times
Family health
Five
As much as wanted (all types)
Sometimes felt hunger
Have more to eat now
Four
Overall
increase Yes
No
2.7
.4
56.3
25.0
72.4
3.8
12.5
2.9
Figures are column percentages except number of respondents
50
Table - A. 8.2.27
Non-Borrowers’ Perceptions - Getting Loan
[KASHF]
Overall
Respondent Category
NonBorrowers
(Same Area)
Number of Non-Borrowers
NonBorrowers
(New Area)
90
90
180
100.0
100.0
100.0
Yes
61.1
56.7
58.9
No
38.9
43.3
41.1
Do not need
8.9
20.0
14.4
Amount of Instalment is high
6.7
12.2
9.4
Aware about credit facility
Interest is high
20.0
7.8
13.9
Regular payment is difficult
25.6
13.3
19.4
Do not know office address
2.2
13.3
7.8
Figures are column percentages except number of respondents
Table - A. 8.2.28
Non-Borrowers’ Perceptions - Coping Strategy
[KASHF]
Respondent Category
New
Borrowers
Number of Non-Borrowers
91
Sale of asset/Sale of Animals
4.4
NonBorrowers
(Same Area)
90
NonBorrowers
(New Area)
Overall
90
271
2.2
2.2
Borrow loan from relative/friends
64.8
84.4
83.3
77.5
Borrow loan from Microfinance
38.5
8.9
11.1
19.6
3.3
Reduce Consumption Expenditure
6.7
11.1
7.0
Extra hours in existing occupation
3.3
2.2
1.8
Have Enough Saving
1.1
.4
Figures are column percentages except number of respondents
* Multiple Response Questions May Exceed 100%
51
Table - A. 8.2.29
Non-Borrowers’ Perceptions - Change
[KASHF]
Overall
Respondent Category
NonBorrowers
(Same Area)
NonBorrowers
(New Area)
91
90
90
271
87.9
51.1
36.7
58.7
New
Borrowers
Number of Non-Borrowers
Effect on overall quality of Improved
life
Deteriorated
Family eat your fill?
Have more to eat r?
1.1
18.9
15.6
11.8
No Change
11.0
30.0
47.8
29.5
As much as wanted (all types)
56.0
30.0
32.2
39.5
As much as wanted (not all types)
33.0
58.9
52.2
48.0
Sometimes felt hunger
11.0
11.1
15.6
12.5
Have more to eat now
73.6
50.0
32.2
52.0
1.1
16.7
15.6
11.1
Equal
25.3
33.3
52.2
36.9
Health is better now
59.3
45.6
36.7
47.2
Have more to eat in earlier times
Family health ?
Health was better earlier
Equal
1.1
7.8
4.4
4.4
39.6
46.7
58.9
48.3
Figures are column percentages except number of respondents
52
Chapter Nine: Conclusions
For anyone who has read any of the Chapters 3-8, in which we present the analysis and
results of the social and economic impact of microfinance interventions on clients, the
first thing that will probably strike them, is the observation that the results are ‘mixed’,
are contradictory, and probably in many cases, surprising and unexpected. Before we
discuss the general results from the last six Chapters, it is important to reemphasise a
number of points that have been made in the previous Chapters, so that we can
understand our results better.
We have looked at six microfinance institutions which are fairly (and in some cases,
radically) different from each other. We have MFIs which cater to women, and some
which do not differentiate on the basis of gender, with the result that only a very small
handful of its clients are women; we have group lending and individual clients, with
some group lenders increasingly moving towards individual lending programmes; we
have development organisations for whom microfinance is one intervention, while there
are others which specialise only on microfinance – microcredit, more correctly – and do
not claim to do anything else; we have purely rural MFIs, MFIs which work in both rural
and urban areas, and purely urban MFIs in our sample. The management styles of the
MFIs are very different, with some tightly structured and hierarchical and top-heavy,
while others are thinner in the way they are structured and less tightly managed. Many of
our MFIs are highly dependent and accountable to donors, with others being less
dependent and less accountable to such interests, claiming to have a great deal of
autonomy and freedom in how they work and in their style of work. Even a cursory
reading of Chapters 3-8 shows that we have a very diverse group of MFIs in our sample,
and hence the repeated warning about the need to examine each MFI separately based on
what it does, rather than to compare the results and make statements that such-and-such
MFI has the greatest impact on its clients. As the Chapters show, each microfinance
institution has some sort of impact which others may not have.
Along with the repeated caution about comparison, there is greater concern about
observing, leave alone measuring, impact. All previous studies which have examined
‘impact’ of poverty alleviation interventions – microfinance being one such important
intervention – warn about problems with data and methodology. This is why there have
been so few impact assessments of microfinance interventions, and the ones that have
been conducted, have all been criticised for some short-coming or the other. Perhaps the
main reason why impact assessment studies have been difficult, is that it takes many
years before impact can be observed and quantified, if at all, convincingly. Moreover, the
desire to show that microfinance interventions have an impact on softer indicators, such
as ‘empowerment’ and ‘gender equalisation’, makes matters worse, as such indicators are
not just difficult to measure, in more traditional settings such impacts may take much
longer to emerge than say, impact on income. Clearly, on all counts, one has to be fairly
cautious about reading impact assessment studies, whether they show a positive effect, a
negative effect, or no effect, despite many years’ of intervention. It may still have to take
some years when the methodology improves to be able to actually capture impact.
After these general comments above, we turn to some of the more important general
findings which emerge from this Study of these six microfinance institutions working in
Pakistan. Specific findings related to each MFI are discussed in their specific Chapters
and are not repeated here, and in this last Chapter, we state some generic, general, results
and observations.
Although in some areas and sectors and with regard to some microfinance institutions,
one finds signs of positive ‘impact’, the single most important finding from this Study is
that the social and economic impact on the lives of those who take credit, for the most
part, is limited. The differences observed in the economic and social aspects of the lives
of those who take credit and those who do not, are, for the most part, statistically
insignificant. While this result may be disappointing for those who think that
microfinance is the answer to all the problems of the poor, it is not a very unexpected
result given the characteristics of microfinance institutions and of the microfinance
sector, as a whole. Given the nature and structure of the microfinance sector – mainly that
it is very young – our results are in line with the findings of many other studies conducted
elsewhere and need not be cause for concern. However, the results, even if they are
interpreted to be ‘negative’ (which they are not) – or not positive enough – are important
for they help temper the enthusiasm of those who believe that microfinance is the Magic
Bullet for all ills, and allows one to take a more realistic picture of development-related
interventions. We do not say that the impact of microfinance interventions is negative;
what we do say is that the impact from microfinance is ‘not positive enough’, and that we
are not in a position to state categorically, that microfinance has a positive impact. We do
find improvement in the lives of many borrowers, but this improvement is not significant
enough. Moreover, this result may also mean that, perhaps, we need some additional
interventions, along with microfinance, to make a significant impact on poverty. Some of
the other important findings that emerge from this Study, follow.
The first observation to be made is, that most of the MFIs in our sample, are recent
practitioners of microfinance and are young and fairly new MFIs. Of the 2,185 Borrowers
surveyed, only 15 percent were in their fourth (or greater) loan cycle. Hence, 85 percent
had not as yet completed their third loan cycle. Clearly, impact, so early on in the process
of intervention, will be difficult to observe or to measure. Most of our results in the last
six Chapters also show that impact has been limited (or unobserved and un-measurable)
in most cases, probably on account of most clients being new to microfinance
interventions. On account of this factor, the greatest impact that we do find in most
indicators, is that amongst microfinance institutions which have been providing credit for
many years. This result, while perhaps not unexpected, leads to questions about
differences in management style and structure being significant factors in suggesting
impact, rather than just the extended time spent with clients.
Other factors that could also be responsible, relate to the idea of microfinance not being
sufficient on its own as a poverty alleviation tool and requiring additional social capital
and physical infrastructure support. Nevertheless, despite the fact that many factors could
contribute to why the two MFIs with the oldest clients seem to have greater impact, we
can say with a great deal of assurance, that a minimum number of years of microcredit
2
are necessary for impact to take place. It is difficult to say what those minimum ‘numbers
of years’ are, but repeat clients in their fifth and sixth loan cycles seem to show greater
impact, and the fact that they voluntarily keep coming back to the MFI, suggests that the
clients themselves, perceive significant (or at least some worthwhile) impact.
If the number of years for impact is important, partly on account of better entrepreneurial
ability, better use of the credit market, experience, the relationship with the MFI, and a
host of other reasons which accrue over time, the second observation from our survey
relates to the greater impact observed on account of loan size. Apart from this cocktail of
reasons – experience, relationship – each loan cycle is (usually) greater than the previous
amount. Hence, our results, linked to the number of years argument presented above,
relate to the fact that larger loan sizes – or at least a loan size above a minimum – has a
greater impact than does a small loan amount. Table 9.1 displays the loan cycle amounts
of all the MFIs which were part of this Study, and a reading of any Chapter will shed
some light about observable impact. Our results suggest that a longer relationship with
microfinance and/or higher amounts of credit, will have a greater impact, clearly not a
very surprising or unintuitive result.
The question worth asking is whether a higher loan amount would have the same impact,
or whether it is a combination of a longer relationship with greater amounts? It is difficult
to answer this question conclusively, although in the case of one MFI, our results suggest
that a longer-term relationship on its own is not enough and that there has to be a’
substantial’ – however defined – loan amount to make microcredit work. It is also
possible that a higher amount on its own, from the first loan, without that special, longerterm relationship, could also show a greater impact. Hence, new entrants in the
microfinance provision sector, might be able to show greater impact by starting at higher
credit levels. Whether any new MFI would take such risks with new, unknown and
untested clients, is a questionable point. Another fact that may be related to loan-size,
deals with the difference in Group Lending and Individual Lending. Most of our MFIs
follow the Group Lending method. This means that the group may limit the upward
amount of a loan and weigh it down. In the case of Individual Lending, MFIs are free to
lend as much as they want and can select clients individually and more carefully, after
which they can offer them higher loans. With many MFIs in Pakistan moving from
Group Lending to Individual Loans, we might see the average loan size of these MFIs
increasing.
3
Table – 9.1
Average Amount of Loan
Microfinance Institution
Loans Taken
One
Two
Three
Four
Five
Six
Seven
OCT
10000
15000
15000
25000
30000
40000
SAFWCO
7500
10000
15000
18000
20000
Akhuwat
10000
12000
13500
15000
Asasah
12000
18000
20000
20000
Kashf
10000
14000
18000
24000
25000
27500
28000
NRSP
10000
15000
20000
25000
30000
30000
35000
UPAP
10000
10000
13000
13000
13000
14000
Thirdly, with the exception of only one MFI, all the MFIs state that they are in the
business of poverty alleviation. In their Mission and Vision statements, they all state that
their microfinance (and in the case of one MFI, its development-related interventions) are
all for the poor and that their clientele is also from the ‘poor’. The problem then, is
around the definition of the notion of ‘the poor’. As we found in our Institutional
Reviews of each MFI, all MFIs carry out some sort of in-house ‘poverty assessment test’,
where they identify localities and people whom they consider to be ‘poor’. By this
criteria they may actually be targeting those whom they call the ‘poor’. However, if an
objective criterion for poverty is used, such as the Government of Pakistan Official
Poverty Line – Rs 1,000 per capita – then, very few clients can officially be called ‘poor’.
Our results show that only 23 percent of urban Borrowers – 65 percent of our sample –
are below the Official Poverty Line (OPL). On the other hand, 50 percent of the NonAgricultural Rural Borrowers and 61 percent of the Agricultural Borrowers, are below
the Official Poverty Line. Clearly, by the criterion of the Official Poverty Line, the
clients selected by urban-based MFIs suggests, belong to the ‘non-poor’. However, one
needs to make a few important points regarding poverty-line criteria.
The OPL figure of Rs 1,000 per capita is a controversial statistics and many economists
feel that the amount is too low, and a poverty line ought be drawn at a somewhat higher
level. If this is the case, then the proportion below the poverty line for all MFIs would
rise, depending on what alternative minimum level was chosen. If one used the poverty
line of the US one Dollar-a-Day criterion, the proportion below the poverty line targeted
by the MFIs can rise considerably. Secondly, MFIs are not meant to carry out household
poverty studies and do not know what the OPL is, and nor how one measures it.
Moreover, one questions why any MFI ought to stick to the OPL criterion, when they are
carrying out the provision of microfinance based on their own criteria of who the ‘poor’
are. Thirdly, most studies on microfinance interventions across the world have shown,
that the poor are often by-passed, ignored or over-looked, and the clients of many wellknown MFIs, are above the poverty line. The reasons for this are understandable and it
seems that most MFIs in Pakistan follow their own criteria. It is unlikely that one will see
much change in this pattern. Moreover, perhaps it is also inadvisable to suggest that all
MFIs follow the strict OPL criterion.
4
Another finding from the survey suggests that there is not a huge deal of difference in the
profile of Borrowers and Non-Borrowers living in similar localities. This is not a
surprising result on account of which we get a lot of similar sets of characteristics – in
terms of Household Assets, Education, etc – amongst old, new and Non-Borrowers. Also,
not surprising, is the huge awareness about MFIs across our entire sample, particularly,
but not solely, in urban areas. Urban non-clients are all familiar with microfinance
programmes, while many MFI clients have been previous clients of other MFIs as well.
Moreover, our Focus Group Discussions also tell us that many of the clients of any
particular MFI, are also familiar with clients (and practices) of other, competing, MFIs in
the region. They state that they choose to stay with their particular MFI because they
think it is better.
While impact has been difficult to quantify in many cases for reasons discussed above
and in Chapter 2, the perceptions of a very large majority of old Borrowers towards the
programmes, are very positive. More interesting is the finding that new Borrowers, who
have been with a programme for only a few months, think that there has been a
considerable improvement in their Quality of Life.
The one overall surprising result from the survey has been the finding that the
microfinance interventions do not seem to have a significant positive impact on the
different aspects of Women’s Empowerment. The results for almost all MFIs in the
Economic Empowerment category for Women are positive and significant showing that
most women do tend to be more ‘empowered’ on account of economic activities, but in
most other categories where we have tried to measure and quantify Empowerment, this is
not the case. We had expected far more positive results in this regard, but with very few
exceptions, the results show that not only has there been little improvement, in some
noticeable cases, Women’s Empowerment has deteriorated after joining a programme.
While we realise that it is very difficult to capture and quantify indicators like
‘Empowerment’, this result, no matter how tentative, is cause for concern and needs to be
addressed by MFIs. Changes in Empowerment take much time and social conditions
inhibit improvement more so than in the case of income enhancement, but still, one needs
to examine this area for each MFI, more carefully.
Recommendations
Based on our individual and collective findings, a few general recommendations can be
made.
Firstly, given that this is still a young sector, a social and economic impact assessment
exercise ought be conducted of a large number of microfinance institutions once they
have been in the credit business for at least seven or eight years. Anything prior to this, as
we found out, will show varied and mixed degrees of impact. Since it takes some time for
impact to come through, it is better to wait for the MFIs to mature rather than to prove
impact when little is evident.
5
Secondly, if staying power matters as the longer the microfinance institution stays with
its clients and the greater the likelihood of impact being observed and measured, an
institution should stay the course with its clients and develop their clientele over a longer
period of time.
Thirdly, linked with the time factor, is that of loan size. Perhaps MFIs should raise the
loan size for their clients sooner and more substantially so that the loan amount makes a
difference. Each MFI will have to work out the optimum ranges of loan size offered with
regard to particular and specific needs and requirements.
Since all MFIs state that they are intervening in the market to ‘alleviate poverty’, they
need to clearly state what those poverty criteria are. Whether they are following the
Official Poverty Line criteria, or whether they are developing their own criteria.
Whatever they do, they should state where their poor lie in terms of the poverty line, who
they are, and what determines the definition of the ‘poor’ for them. They need to assess
their own performance with these sets of criteria.
Many MFIs stated said that the inability to use the client deposits for further lending was
a problem. These MFIs do not actively promote savings as it is very expensive for
them, but there is a need to encourage them to promote savings, which, in turn, could
enhance impact, as savings were seen to be very important for sustainability and coping
with vulnerability. While it was not the Brief of this Study to look at microfinance policy,
given the importance of savings, one can suggest that regulations ought to be
reconsidered or amended, and licenses to on-lend savings be given, based on an MFI’s
performance and sustainability.
We did not find much impact on education or health, even though there is some impact
on income for older MFIs. This probably suggests that specific measures for these social
services need to be taken. The simple view that microfinance will sort out everything is
too simplistic; if these services are not available or of decent enough quality,
microfinance will not help very much. Maybe the MFI's could link-up with government
or other NGO programmes on these social issues and improve these services in their own
areas and for their clients.
Similarly, since on the Empowerment factor most results have been unimpressive, there
is a need for each MFI which claims that it also has Empowerment as an objective, to
evaluate its methodology of intervening on this count. Does microfinance automatically
translate to Empowerment? Does it require special, separate, intervention? How should
MFIs evaluate indicators of Empowerment?
A Final Word
Impressionistically and anecdotally, we all know that microfinance ‘works’ and that it
makes a huge difference in the lives of borrowers; otherwise they would not continue to
come back for more loans. The fact that this does not show through in our results does
not mean that there is little impact. Given methodological issues, and the nature and form
6
of the microfinance sector in Pakistan, one needs more time and perseverance to capture
quantifiable results. One hopes that another (more sophisticated) study five years from
now, when the sector has matured, will capture that impact better and we will find greater
proof that, in fact, the social and economic impact of microfinance programmes in
Pakistan, is considerable.
7
Appendix 1: Questionnaire for the Survey
Questionnaire
[Including Data Files Structure, Variable Names and Codes]
SOCIAL IMPACT ASSESSMENT
OF MICROFINANCE
Section 1 – IDENTIFICATION
File: ‘Key Variables’
Respondent’s Identification
[HID]
Institution:
________________________
[INSTITUT]**
District
________________________
[DISTRICT]**
City
_________________________
[CITY]**
Tehsil
_________________________
[TEHSIL]**
Locality/Village
_________________________
[LOCALITY]**
Branch
_________________________
[BRANCH]**
Institutional Reference
____________________
Respondent’s Category:
1)
2)
3)
4)
[REFERENC]
[B_CAT]
Borrowers
Borrowers-to-be
Matched Sample – Neighbor (Same Area)
Matched Sample – Neighbor (New Area)
Respondent’s Area Status:
[R_CAT]
1) Urban
2) Rural
21) Rural - Agriculture
_________________________________________________
Variable names are given in square brackets. Codes of variables with ** are provided in the appendix.
[Note: Respondent of Non-Borrowers Category should be head of household or main earner, has not
obtained any microfinance loan and preferably is self-employed]
Questionnaire – Social Impact Assessment of Microfinance
2
Section 2 – All Respondents
File: ‘RESPONDENT’
1.
Respondent’s Characteristics
1.1
Name
________________________________
1.2
Home Address
________________________________
1.3
Sex
1.4
Age (Years)
1.5
Relationship with Head
[1] Head
[RELATION]
[2] Spouse
[3] Father/Mother
[4] Mother, Father In-Laws
[5] Brother/Sister
[6] Son/Daughter
[7] Other _______________
1.6
Marital Status
[1]
[2]
[3]
[4]
1.7
Formal Education
[1]
[2]
Male
Female
[SEX]
[AGE]
Married
Unmarried
Widowed
Divorced
Number of Years
[M_STATUS]
[EDUC_R]
[Put ‘0’ if no education, 21 if religious
education (madarsa)]
1.8
Technical/Vocational Training
Major Field
1
[TRAIN1]**
Type
[Codes]
[TR1]
2
[TRAIN2]**
[TR2]
3
[TRAIN3]**
[TR3]
Type Code:
1.
2.
3.
4.
5.
Questionnaire – Social Impact Assessment of Microfinance
On the Job Training/Apprenticeship
Diploma
Certificate/Short Courses
Degree
Other
3
1.9
Occupation – Primary
_____________
[OCCUP_M]
1.10
Occupation – Secondary
_____________
[OCCUP_S]
2.
Demography
Total
Male
2.1
Total Family Member
[FS]
[FSM]
2.2
Number of Family Members – Upto 5
[CHILD5]
[CHILD5M]
6 – 15 Years
[A615]
[A615M]
16 – 30 Years
[A1630]
[A1630M]
31 – 65 Years
[A3165]
[A3165M]
Above 65
[A65]
[A65M]
2.3
Number of Earners
(Excluding the respondent and unpaid family workers)
3.
Technical Education
Type of Education
Numbers
Male
Female
[EARNERS]
Monthly
Expenditure
Rs.
Technical/Vocational [TECH1_M] [TECH1_F] [TECH1_E]
Apprenticeship
[TECH2_M] [TECH2_F]
Questionnaire – Social Impact Assessment of Microfinance
4
Section 3 – All Respondents
File: ‘CHILD ENROLLMENT’
Education (Formal/Informal Education)
Name/Number
SEX
1 = Boy
2 = Girl
[NUMBER]
[SEX]
TYPE
Monthly
School
Fees
Monthly
Tuition
Fees
Monthly
Transport
1 = Government
2 = Private
3 = Madarsa
[Rs.]
[Rs.]
[Rs.]
[TYPE]
[FEES]
[TUITION]
[TRANS]
CLASS
[CLASS]
Questionnaire – Social Impact Assessment of Microfinance
5
Section 4a – All Respondents
File: ‘HOUSING’
4.
Housing Characteristics and Services
4.1
House Status
[OWNH]
[1]
[2]
[3]
4.2
Type of House [Observe]
[HTYPE]
[1]
[2]
[3]
[4]
[5]
4.3
Type of major material of the outer wall
[Observe]
Type of major material of the roof
[Observe]
Brick (Baked)
Concrete Blocks
Unbaked Brick, Adobe
Wood
Tin, Zinc Shelling
Mud
Bamboo, Canvas
Other ___________
[ROOF]
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
Questionnaire – Social Impact Assessment of Microfinance
Independent
Flat
Part of Large Unit
Part of Compound
Other ___________
[WALL]
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
4.4
Own
Rented
Other
Asbestos sheet
Concrete
Metal Sheet
Unbaked Bricks
Wood
Thatch
Canvas, Felt
Other __________
6
4.5
Type of Floor Construction
[FLOOR]
[1]
[2]
[3]
[4]
[5]
Katcha
Bricks
Cemented
Tile
Other __________
4.6
Number of Rooms
[Excluding bathroom, kitchen]
[ROOMS]
4.7
Sources of Water
[WATER]
[1]
[2]
4.8
4.9
4.10
4.11
Telephone Connection
[PTCL]
[1]
[2]
Yes
No
[1]
[2]
Yes
No
[1]
[2]
[3]
[4]
[GAS]
Cooking Gas
Wood
Kerosene Oil
Other ________
Electricity
[ELECTRIC]
Type of Cooking Fuel
Type of Latrine
[LATRINE]
[1]
[2]
[3]
[4]
4.12
Inside
Outside
Flush
Pore
Pitt
No Latrine
Major Repairing/Improvement/Construction/Expenditure on Utility Connections
[During Last Five Years, how much expenditure you made on house repair,
improvement, construction or obtaining connections of utilities]
Total Rupees ___________________________________
Questionnaire – Social Impact Assessment of Microfinance
[REPAIR]
7
Section 4b – All Respondents
File: ‘HOUSE REPAIR’
Please provide following detail.
Major Repairs/
Improvement/Construction
[CODES]
[YEAR]
1
Roof
2
Outer Wall
3
Floor
4
Additional Rooms
5
Kitchen
6
Bathroom
7
White-Wash, Paints
8
Water Connection – Fittings and Other
Expenditure
Electricity Connection – Fittings and Other
Expenditure
Cooking Gas – Fittings and Other
Expenditure
Telephone Connection – Fittings and Other
Expenditure
Other ______________________
9
10
11
12
[Call Out each Item]
Approximate
Year
Cash
Expenditure
Questionnaire – Social Impact Assessment of Microfinance
[AMOUNT]
8
Section 5a – All Respondents
File: ‘HEALTH COMPLAINTS’
What health complaints did your family has in the last 30 days?
[Multiple Answers Possible]
What health complaints
did your family has in
the last 30 days?
[HCODE]
Number of
Family
Members
Reported
[NUMBER]
How many
times did your
family
member visit
a health care
facility?
What kind of
health care
facility or health
care provider did
your family
member visit?
How much
did your
family spend
on health
care facility?
[FREQ]
[SOURCE]
[EXPEND]
1
Stomach disorder
2
Cough
3
Cold
4
Back pin
5
Asthma
6
Stomach ache
7
Headaches
8
Toothaches
9
Ear pain
10 Diarrhea
11 Skin problem
12 Fever
13 Accidents
14 Malaria
15 Joint/muscle pain
16
17 Others
Source Codes:
1. Public Hospital
2. Public Health Clinic
3. Basic Health Unit
4. Rural Health Centre
5. Private Hospital
6. Private Clinic
7. Medical Store
8. Private Doctor
9. Hakim / Homeopathic Doctor
10. Lady Health Visitor
11. Other __________________
Questionnaire – Social Impact Assessment of Microfinance
9
Section 5b – All Respondents
File: ‘IMMUNIZATION’
Have your children been immunized?
[All Children Below Five years]
Name/Number
Fully
Immunized
Partly
Immunized
Not
Immunized
[ISTATUS]
[Child]
CODES
1
Questionnaire – Social Impact Assessment of Microfinance
2
3
10
Section 6 – All Respondents
File: ‘EXPENDITURE’
6.1
Household Expenditure on: [Call Out each Item]
6.1
Monthly Expenditure (Rupees)
6.2
1)
Total Monthly Expenditure
[TEXP]
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
Food
Education (fee, stationary etc.)
Health (Doctor/Medicine)
Electricity Bill
Cooking Gas Bill
Telephone – PTCL/Mobile
House Rent
Soap/ Soda / Laundry
Toothpaste/Cosmetics
Toys/Game/Recreation
Kerosene
Charcoal, Firewood, Dung Cakes
Traveling
Match box, Candle
Monthly Installment Repayment of Loan
Monthly Saving (Bank, BISI etc.)
[FOOD]
[EDUC]
[HEALTH]
[EXP_EL]
[EXP_GAS]
[TELEPH]
[HRENT]
[SOAP]
[TPASTE]
[TOYS]
[KOIL]
[COAL]
[TRAVEL]
[MATCH]
[REPAY]
[SAVING]
Food Consumption
During last month, how many days did you and your family eat?
Meat (Chicken, beef, mutton, fish)
Fruits
Eggs
[MEAT]
[FRUIT]
[EGGS]
[Note: Make sure that there were neither special occasion in the household during last month nor
guests visited unusually]
Questionnaire – Social Impact Assessment of Microfinance
11
Section 7 – Only for Non-Agriculture Households
File: ‘INCOME’
7.
Household Income
7.1
Respondent’s Income
Respondent/
Borrower
Income
Frequency
If Frequency is daily
[Rs.]
[Codes]
From Primary Occupation
[INC1]
[FREQ1]
How many days you
have worked during
last month
[DAYS1]
From Secondary Occupation
[INC2
[FREQ2
[DAYS2]
Frequency Codes:
1 = Daily, 2 = Monthly, 3 = Bi-Annually, 4 = Annually, 5 = Occasionally
7.2
During last month, what was the average monthly income of other earners?
Other Earners
Total Income
Age
Sex
1
Earner – 2
[AINC2]
[AINC2_A]
[AINC2_S]
2
Earner – 3
[AINC3]
[AINC3_A]
[AINC3_S]
3
Earner – 4
[AINC4]
[AINC4_A]
[AINC4_S]
7.3
Other Household Regular Monthly Receipts [Call Out each Item]
1
Pension/EOBI
[OINC1]
2
Domestic Remittance
[OINC2]
3
Foreign Remittance
[OINC3]
4
Rent
[OINC4]
Questionnaire – Social Impact Assessment of Microfinance
12
Section 8a – Only for Borrowers (Category 1 and 2)
File: ‘CURRENT MF LOAN’
8.
Microfinance Loans (from Institution recorded on front page)
8.1
Current Microfinance Loan
1) When Received
Month [L_MONTH] Year [L_YEAR]
2) Amount Received (Rs.)
[AMOUNT]
3) Total Repayment Period – Months
[R_MONTH]
4) Repayment Frequency
[P_CODE]
1)
2)
3)
4)
5)
Monthly
Bi-Monthly
Fortnightly
On Harvesting
Other ________
5) Amount of Installment
[INSTAL]
6) Loan amount was used by: (Multiple Codes Possible)
[USE]
1)
2)
3)
4)
7) Loan amount was used for
[Multiple Codes Possible]
Self
Spouse with your suggestion
Spouse without your suggestion
Other Members
[PURPOSE]
1) Business/Agriculture Activity
2) Repayment of debts
3) Consumption
4) Marriage of Daughter/Son
5) The use of other household members
6) Death/Illness of household members
7) Other ____________________
Questionnaire – Social Impact Assessment of Microfinance
13
8) Do you regularly pay the loan installment?
[REGULRAR]
1) Yes
2) No
9) (If No in 8) What problems do you face?
[PROBLEM]
1) Cash Turnover
2) Slack Season
3) Business Problem
8.2) How many loans you have taken before
from this institution? (Excluding the current loan)
[LNUMBER]
8.3) Has the institution a Microfinance Saving Program?
[SAV_MFI]
1)
2)
Yes
No
8.4) (If Yes in 8.3) How much you have deposited
during last 12 months?
8.5) (If No in 8.3) Do you want to have a saving program
in this institution?
1) Yes
2) No
Questionnaire – Social Impact Assessment of Microfinance
[S_AMOUNT]
[S_PROG]
14
Section 8b – Only for Borrowers (Category 1)
File: ‘PREVIOUS MF LOANS’
History of Microfinance Loans
(From Institution recorded on front page, excluding the current loan)
Loan
Number
[LCODE]
Total Amount
Received
[L_AMOUNT]
When
Received
Purpose
[Year]
[Codes]
[YEAR]
[PURPOSE]
Total
Amount
Paid
[REPAID]
Number of
Months to
Repay
[Months]
Sources of
Repayment
[R_MONTH]
[R_SOURCE]
[Codes]
1st
2nd
3rd
4th
5th
6th
7th
Codes for Purpose of Loan
1)
Retail Shop
2)
Vendor
3)
Suppliers of Goods
4)
Workshops/Garage
5)
Small Scale (Cottage) Industry
6)
Tailoring
7)
Beauty parlor
8)
Taxi/Rickshaw
9)
Education Institution
10)
Training (skill) Institution
11)
Livestock
12)
Agriculture Inputs
13)
14)
Codes for Repayment Sources:
[Multiple Codes Possible]
1) From loan related activity
2) From own income
(other than loan related activity)
3) Loan from relatives/friends
4) Loan from Bank/other MF institution
5) Sale of Assets / Animals
6) Others _____________
Consumption
Other _______
Questionnaire – Social Impact Assessment of Microfinance
15
Section 9 – All Respondents
File: ‘LOAN HISTORY’
Household Loan History (Last Five Years)
[Other than Institution recorded on front page]
Sources of
Loan
Loan Amount
When
Received
Amount
Paid
Sources of
Repayment
[Codes]
[Rupees]
[Year]
[Rupees]
[Codes]
[SOURCE]
[AMOUNT]
[YEAR]
[REPAID]
R_SOURCE]
Any Balance
Due
Recipient’s
Status
[Codes]
[BALANCE
[L_WHO]
1
2
3
4
5
6
Codes for Sources:
Codes for Repayment Sources
Codes for Recipient’s Status
Questionnaire – Social Impact Assessment of Microfinance
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
Family Relatives/Friends
Local Money Lender
Shopkeeper (Other than supplier’s credit)
Commission Agent
Microfinance Institution ______________
Microfinance Institution ______________
Microfinance Institution ______________
Commercial Banks
HBFC
First Women Bank
Landlord
Other _____________________
1) From loan related activity
2) From own income (other than loan related)
3) Loan from relatives/friends
4) Loan from Bank/other Microfinance institution
5) Sale of Assets / Animals
6) Others ___________________
1) Recipient/Respondent
2) Other Family Member
16
Section 10 – All Respondents
File: ‘NGO MEMBERSHIP’
Membership in NGO Programs
10.1
Have you been a member of any NGO/Microfinance program and has left the
group or program?
Which NGOs you have left?
NGOs
Left
When
Dropped
Out
[Codes]
[Year]
Reasons for dropped out
[Multiple Codes possible]
[Codes]
[LEFT]
[LYEAR]
Codes for NGOs:
1.
Kashf
2.
NRSP
3.
SRSP
4.
OPP-OCT
5.
Asasah
6.
Akhuwat
1
2
3
5
[REASON1]
[REASON2]
[REASON3]
[REASON4]
7. FMFB
8. DAMEN
9. SAFWCO
10. SUNGI
11. Taraqee
12. TRDP
13.
14.
15.
16.
17.
18.
PRSP
Bank of Khyber
ORIX
Rozgar
Community Support Concern
Other ______________
Codes for Reasons [1-4]:
1.
Did not ready credit in time
2.
Had problems with other group members
3.
Did not pay required weekly saving
4.
No time for lengthy meetings
5.
Do not need credit anymore
6.
Do not need any other service anymore
7.
Head of household ask me to leave the NGO group
8.
Wanted to join other NGO. Name _________________
9.
Had problem with NGO agent/worker
10.
Other reasons
__________________
Questionnaire – Social Impact Assessment of Microfinance
17
10.2
Had you wanted to join a program, and applied for membership, but application
was rejected?
NGOs
When
Applied
[Codes]
[Year]
Reasons for Rejection
[Multiple Codes possible]
[Codes]
[REJECT]
[RYEAR]
Codes for NGOs:
1.
Kashf
2.
NRSP
3.
SRSP
4.
OPP-OCT
5.
Asasah
6.
Akhuwat
5
6
7
8
[REASON5]
[REASON6]
[REASON7]
[REASON8]
7. FMFB
8. DAMEN
9. SAFWCO
10. SUNGI
11. Taraqee
12. TRDP
13.
14.
15.
16.
17.
18.
PRSP
Bank of Khyber
ORIX
Rozgar
Community Support Concern
Other ______________
Codes for Reasons [5-8]:
1.
Being too rich (rejected by NGO agent/worker)
11.
12.
Other group members did not accept me Because:
2.
I am too poor
3.
I am too rich
4.
of my sex
5.
of my religion
6.
I do not live close to other members
7.
of my marital status
8.
of my age
9.
of my main occupation
10.
of my creditworthiness and indebtedness
I don’t know why I was rejected
Other reasons
__________________
Questionnaire – Social Impact Assessment of Microfinance
18
Section 11,12 – Only for Non-Agriculture Households
File: ‘BUSINESS’
11.
Characteristics of Business
[For which Microfinance loan was obtained or applied for]
11.1
Type of business
11.2
Do you fully own this business?
11.3
[If Not], What is your share (%)?
[BPERCENT]
11.4
When Started this business (Year)
[BYEAR]
11.5
Workers/ Employees/Family Members in business activity
[BTYPE]**
[1]
[2]
Numbers
Employees/Workers
[If Borrower]
When Obtained
First Loan
Now
Family Members
Permanent – Monthly Salary
Permanent - Daily Wages
Seasonal/Occasional
11.6
[If Non-Borrower]
One Year Before
[PE1]
[PE2]
[PE3]
[PE4]
[CE1]
[CE2]
[CE3]
[CE4]
Yes
No
[BOWN]
Average Wage
Per Worker
[If Borrower]
Now
When Obtained
First Loan
[If Non-Borrower]
One Year Before
[CW2]
[CW3]
[CW4]
[PW2]
[PW3]
[PW4]
Approximate Return from business
Now
Monthly Sales (Rupeess)
[CSALE]
Questionnaire – Social Impact Assessment of Microfinance
[If Borrower]
When Obtained First Loan
[If Non-Borrower]
One Year Before
[PSALE]
19
11.7
Business Assets
[If Borrower]
When Obtained First Loan
Current
Value
[If Non-Borrower]
One Year Before
Business Assets (Rupees)
[Call Out each Item]
Shop/Workshop (If Separate from House)
Machinery
Livestock
Other_______________
11.8
[PA1]
[PA2]
[PA3]
[PA4]
Working Capital
Value (Rs.)
Amount Required to
run the operation of
the business
Working Capital
[If Borrower]
When Obtained First Loan
Current
Value
Per Day
11.9
[CA1]
[CA2]
[CA3]
[CA4]
[CDWC]
Per
Month
[CMWC]
[If Non-Borrower]
One Year Before
Per Day
Per
Month
[PDWC]
[PMWC]
Business Liabilities
Current
Value (Rs.)
[If Borrower]
When Obtained First Loan
[If Non-Borrower]
One Year Before
Business Liabilities:
[Call Out each Item]
Banks/Microfinance Institution
Personal (Friends/Relative)
Market (Traders)
Others
Questionnaire – Social Impact Assessment of Microfinance
[CL1]
[CL2]
[CL3]
[CL4]
[PL1]
[PL2]
[PL3]
[PL4]
20
Section 13 – All Respondents
File: ‘HOUSEHOLD SAVING’
Household Saving
13.1
Do you maintain and operate any bank account?
[1]
Yes
[2]
No
[ACCOUNT]
13.2
[If Yes in 13.1]
[SAMOUNT]
How much have you deposited in this account since last 12 month?
13.3
[If Yes in 13.1]
[WAMOUNT]
How much have you withdrawn from this account since last 12 month?
13.4
Since last 12 months, how much did you put into the committee (BISI)?
Total
[BC]
Monthly Installment
[BCINST]
13.5
Since last 12 months, how much did you put into the
postal saving account?
13.6
Since last 12 months, did your household purchase?
[Rupees}
Prize Bonds
Defense Saving Certificate
Khas Deposit Certificate
Questionnaire – Social Impact Assessment of Microfinance
[PS]
[PB]
[DSC]
[KDC]
21
Section 14 – All Respondents
File: ‘HOUSEHOLD ASSETS’
Household Assets [Call Out each Item]
Items
Owned
Current
Market
Value
Yes = 1
No = 0
[Rupees]
[OWNED] [CVALUE]
[ACODE]
1
House
2
3
Other Buildings
[Shed/Kitchen/Shop]
Agriculture Land _______ Acres
4
Refrigerator
5
Colored TV
6
Black and White TV
7
Radio/Tape Recorder/DVD/VCD
8
Motor-cycle
9
Cycle
10
Prize Bond
11
Washing Machine
12
Sewing Machine
13
Bed with Foam
14
Bed without Foam
15
Furniture
16
Property – Urban
17
Property – Rural
18
Livestock
19
Hand-pump (for home)
20
Electric Motor (water)
21
Jewelry
22
Cell-Phone
23
Other
When Last
Purchased/
Obtained?
[Year]
[PYEAR]
____________
Note: Put ‘999’ in value column, if respondent has an asset and refuses to tell current value. Similarly, put
‘999’ in year column, if the asset has not purchased by respondent or he/she do not know the year of
purchase.
Questionnaire – Social Impact Assessment of Microfinance
22
Section 15 – All Respondent
File: ‘SALE OF ASSETS’
Did your household sale any asset during last 12 months?
Type of
Asset
Owner of
Asset
What was the
price?
When did
household
sell?
Why did you
sell asset?
[Codes]
[Codes]
[Rupees]
[Month]
[Codes]
[ACODE1]
[OWNER]
[SVALUE]
[SMONTH]
[REASON]
1
2
3
Codes for Type
1
House
2
Other Buildings
3
Agriculture Land
4
Refrigerator
5
Colored TV
6
Black and White TV
7
Radio/Tape Recorder
8
Motor-cycle
9
Cycle
10
Prize Bond
11
Washing Machine
12
Sewing Machine
13
Bed
14
Table
15
Chairs
16
Other Furniture
17
Property – Urban
18
Property – Rural
19
Livestock
20
Hand-pump (for home)
21
Electric Motor (water)
22
Jewelry
23
Hand Saw
24
Husking Mill
25
Husking Machine
26
Husking (traditional)
27
Axe
28
Pushcart
29
Power Tiller
30
Other __________
Questionnaire – Social Impact Assessment of Microfinance
Codes for Owner of Assets
1
2
3
Joint Household Property
Recipient/Respondent
Other Family Member
Codes for ‘why sold’
1
Food
2
Health (Doctor/Medicine)
3
Positive Social event (marriage etc.)
4
Education
5
Agriculture Equipment
6
Agriculture Inputs
7
Livestock
8
Poultry
9
Cycle/Bike
10 Purchase/Rent-in Land
11 Hiring Tubewell
12 Hiring Tractor
13 Input for other business activity
14 Dowry to be given
15 For house repair
16 Purchase of house
17 Radio/TV/Crockery
18 Household Electrical Equipment
19 Clothes
20 House Furniture
21 Negative Social Event (Death etc.)
22 Repayment of other debts
23 Other __________________
23
Section 16,17,18 – All Respondents
File: ‘PERCEPTIONS’
Loan Utilization and Perception of Loan Impact
(Q.16.1 to Q.16.11 for Borrowers, Category 1)
16.1
16.2
Percentage of the amount of loan which
is utilized for same purpose for which it was
obtained? (%)
Is the amount of loan sufficient for your
current Business?
[Q161]
[1]
[2]
Yes
No
[Q162]
16.3
How much time does it take from loan
application to obtaining the current loan
(Days)?
[Q163]
16.4
How much expenditure occurred for getting
the current loan? [Transport, food etc.]
[Q164]
16.5
What significant problems did you face in obtaining current loan?
[Q1651]**
[Q1652]**
[Q1653]**
16.6
In case of urgent financial needs/ financial emergency,
[Q1661]
what steps you will now adopt?
[Q1662]
(Multiple Codes Possible)
[Q1663]
[1] Sale of asset/Sale of Animals
[2] Borrow loan from relative/friends
[3] Borrow loan from Microfinance
[4] Borrow loan from Commercial Banks
[5] Borrow from Moneylender/Commission agent
[6] Reduce Consumption Expenditure
[7] Pull out children from school
[8] Search for extra work
[9] Extra hours in existing occupation
[10] Have Enough Saving
[11] Any other _____________________
Questionnaire – Social Impact Assessment of Microfinance
24
16.7
Is there any effect on your overall quality of life
after getting the loans?
[1] Improved
[2] Deteriorated
[3] No Change
[Q167]
16.8
Did you and your family eat your fill?
[Q168]
[1] Consumed as much as wanted (all types)
[2] Consumed as much as wanted (not all types)
[3] Sometimes felt hunger
[4] Often felt hunger
16.9
Do you have more to eat now or before taking loan?
[Q169]
[1] Have more to eat now
[2] Have more to eat in earlier times
[3] Equal
16.10 Is your family’s health better now or before taking loan?
[Q1610]
[1] Health is better after taking loan
[2] Health was better earlier
[3] No difference
16.11 Did the loan result in sustainable increase in income?
[Q1611]
[1] Yes
[2] No
[3] No difference
(Q.17.1 to Q.17.2 for Non-Borrowers)
17.1
Do you know there is facility in your area to obtain credit?
[Q1711]
[1] Yes
[2] No
Questionnaire – Social Impact Assessment of Microfinance
25
17.2
[If Yes in 17.1], Why you did not take the loan?
[Q172]
[1] Do not need
[2] Amount of Installment is high
[3] Interest is high
[4] Regular payment is difficult
[5] Do not know Office Address
[6] Do not like to borrow
[7] Do not know procedure
[8] Amount of loan is very low
[9] Applied for
[10] Application Rejected
[11] Religious Reason
(Q.18.1 to Q.18.5 for New and Non-Borrowers)
18.1
In case of urgent financial needs/ financial emergency,
what steps you will now adopt?
[Multiple Codes Possible]
[Q1811]
[Q1812]
[Q1813]
[1] Sale of asset/Sale of Animals
[2] Borrow loan from relative/friends
[3] Borrow loan from Microfinance
[4] Borrow loan from Commercial Banks
[5] Borrow from Moneylender/Commission agent
[6] Reduce Consumption Expenditure
[7] Pull out children from school
[8] Search for extra work
[9] Extra hours in existing occupation
[10] Have Enough Saving
[11] Any other _____________________
18.2
Is there any effect on your overall quality of life
compared with last year ?
[1] Improved
[2] Deteriorated
[3] No Change
[Q182]
18.3
Did you and your family eat your fill?
[Q183]
[1] Consumed as much as wanted (all types)
[2] Consumed as much as wanted (not all types)
[3] Sometimes felt hunger
[4] Often felt hunger
Questionnaire – Social Impact Assessment of Microfinance
26
18.4
Do you have more to eat now or one year before?
[Q184]
[1] Have more to eat now
[2] Have more to eat in earlier times
[3] Equal
18.5
Is your family’s health better now or one year before?
[Q185]
[1] Health is better now
[2] Health was better earlier
[3] Equal
Questionnaire – Social Impact Assessment of Microfinance
27
Section 19 – Only for Female Respondent
File: ‘WOMEN EMPOWERMENT’
IF RESPONDENT IS A SPOUSE OF HOUSEHOLD {19.1 to 19.5)
19.1
ECONOMIC ASPECTS
[Score: Yes =1, No =0]
Indicators:
Do you take decisions on the aspects of purchase, modification or repair of house?
Do your husband discuss with you when decision on modification/repair of house is made
Do you take decisions on the purchase or sale of livestock?
Did your husband discuss with you before sale or purchase of livestock?
Do you purchase your dresses for the family?
Do you purchase the utensils for your family?
Do you purchase gold and jewellery for your family?
Do you take decisions on borrowing money?
Do your husband discuss with you on the issues of borrowing money?
Do you spend money you have borrowed?
Do you repay the money you have borrowed?
Do you take decisions on transactions involving household Equipments?
Do you have any debt in your name?
Do your husband discuss with you when he has made the debt?
19.2
Score
[E1]
[E1]
[E1]
[E1]
[E1]
[E1]
[E1]
[E1]
[E1]
[E10]
[E10]
[E12]
[E13]
[E14]
INCOME
[Score: Yes =1, No =0]
Indicators:
Do you have your own income?
Do you spend it for the family yourselves?
Do you need the permission of your husband to spend your income?
Do you get any part of your family income or husband’s income to your hands regularly?
Do your husband discuss with you when he spends income for the family requirements?
19.3
Score
[INC1]
[INC2]
[INC3]
[INC4]
[INC5]
ASSETS
[Score: Yes =1, No =0]
Indicators:
Do you possess any household asset? [Record all assets owned by spouse]
Do you have cash savings in your own name?
Do you operate Bank account in your name?
Do you pledge, Sell, or exchange any of the above said assets yourself?
Do your need permission from your husband to sell, pledge, exchange any of the assets?
Do you have purchased land in your own name?
Is the house you stay registered in your name?
Is the house you stay registered in your and husband’s name?
Questionnaire – Social Impact Assessment of Microfinance
Score
[A1]
[A2]
[A3]
[A4]
[A5]
[A6]
[A7]
[A8]
28
19.4
EDUCATION & HEALTH
[Score: Yes =1, No =0]
Indicators:
Do you take decisions on the issues of your children’s education?
Do your husband consult with you when he takes decision on the education of children?
Do you think you can decide on how many children you can have?
Do you think you can decide on the spacing between children?
Do you think that you can decide on the treatment of your and your family member illness?
Do you think you can decide on the method of treatment for your family members?
Do you think you can decide on the type of contraceptive to be used?
Do your husband discuss with you on the issues of health aspects of children?
Do you have any choice of food prepared and served in your home?
Are you able to take care of the nutritional requirements of your self, family and children?
19.5
Score
[EH1]
[EH2]
[EH3]
[EH4]
[EH5]
[EH6]
[EH7]
[EH8]
[EH9]
[EH10]
SOCIAL ASPECTS
[Score: Yes =1, No =0]
Indicators:
Are you free to go out and visit your friends and relatives with out permission?
Do you have the choice of the dresses you wear?
Do your husband impose his religious beliefs on you and make you accept them?
Do you have any association with political parties?
Do you participate in voting and other democratic procedure?
Do your husband impose her political ideas on you and make you accept them?
Do you participate in the meetings of NGO’s programs or in other social events?
Do your husband prevent you from participating in such programs?
Do you take decisions on the marriage of your son/daughter?
Do your husband discuss with you on the issues of the marriage of children and close relatives?
IF RESPONDENT IS NOT A SPOUSE OF HOUSEHOLD
19.6
Who in your household decides about children’s education?
[Q196]
[1]
Head/Father decides alone
[2]
Head/Father in consultation with his/her spouse
[3]
Head/Father in consultation with the woman concerned
[5]
Head and spouse in consultation with the woman concerned
[6]
Head/Father and other male members decide
[7]
Other_____________________
19.7 Who in your household decides whether you can seek or
[Q197]
remain in paid employment?
[1]
Head/Father decides alone
[2]
Head/Father in consultation with his/her spouse
[3]
Head/Father in consultation with the woman concerned
[5]
Head and spouse in consultation with the woman concerned
[6]
Head/Father and other male members decide
[7]
Other _______________
Questionnaire – Social Impact Assessment of Microfinance
29
Score
[S1]
[S2]
[S3]
[S4]
[S5]
[S6]
[S7]
[S8]
[S9]
[S10]
19.8
Who in your household decides where and when you
[Q198]
should be married?
[1]
Head/Father decides alone
[2]
Head/Father in consultation with his/her spouse
[3]
Head/Father in consultation with the woman concerned
[5]
Head and spouse in consultation with the woman concerned
[6]
Head/Father and other male members decide
[7]
Other _____________________
Ask if she is currently married
19.9
Who in your family decides whether you can use
birth control methods?
[1]
Husband alone
[2]
Woman herself
[3]
Husband & woman jointly
[4]
Mother of woman or husband
[5]
Nobody
[6]
Other ____________________
[Q199]
19.10 Who in your family decides whether you
should have more children?
[1]
Husband alone
[2]
Woman herself
[3]
Husband & woman jointly
[4]
Mother of woman or husband
[5]
Nobody
[6]
It is in the hands of God
[7]
Other _________________
[Q1910]
19.11 Who in your household usually makes decisions about purchase of following
consumption items?
Food, Clothing and Footwear
Medical Treatment
Recreation
Traveling
Codes
[Q19111]
[Q19112]
[Q19113]
[Q19114]
Codes:
1.
2.
3.
4.
5.
6.
Head/Father decides alone
Head/Father in consultation with his/her spouse
Head/Father in consultation with the woman concerned
Head and spouse in consultation with the woman concerned
Head/Father and other male members decide
Other _________________
Questionnaire – Social Impact Assessment of Microfinance
30
SCHEDULE – 2
For
AGRICULTURAL HOUSEHOLDS
Questionnaire – Social Impact Assessment of Microfinance
31
Section 20a – Only for Agricultural Households
File: ‘NON CROP INCOME ’
20.1
Respondent’s Occupation Category
[OCCUP_AP]
[OCCUP_AS]
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
20.2
20.3
20.4
Landowner
Owner operator
Sharecropper
Daily wages labor
Land leaseholder
Livestock
Service (Government/Private)
Supplier of Goods
Business (specify)
Other ______________
[If Sharecropper]
Share in agriculture produce (%)
[Code 1, 2 and 3]
How many family members actively engaged
in household farm activity?
20.7
[MILK]
[BUTTER]
[GHEE]
[YOGURT]
[CHEES]
Household’s Monthly Income from poultry products.
Chicken
Eggs
20.6
[MEMBER]
Household’s Monthly Income from Dairy products.
Milk
Butter
Ghee
Yogurt
Cheese
20.5
[SHARE]
Household’s Annual Income from Livestock
products [Kids, hair, wool, skin]
Household’s Monthly Non-farm Income
[Salaries, Wages, Profit, Business etc.]
[Also include income of other members of household]
Questionnaire – Social Impact Assessment of Microfinance
[P_CHICKS]
[P_EGGS]
[L_SALE]
[NONFARM]
32
20.8
Agricultural land rental Expense (Leased In)
[RENT_EXP]
20.9
Other Household Regular Annual Receipts [Call Out each Item]
1
Pension/EOBI
[PENSION]
2
Domestic Remittance
[REMIT1]
3
Foreign Remittance
[REMIT2]
4
Rent – Agriculture (leased land)
[RENT_A]
5.
Rent – Non-Agriculture
[RENT]
20.10 Livestock Ownership:
How many head of the following animals does your household own?
Cows
[COW]
Buffaloes
[BUFFAL]
Oxen
[BULLOCK]
Sheep
[SHEEP]
Goats
[GOATS]
Donkeys
[DUNKEY]
Camels
[CAMEL]
Chicken
[CHICKEN]
20.11 Monthly Expenditure on Livestock
[Out-of-pocket cash expenditure, (if in-kind) write estimated cash value. Do
not include own fodder and labor]
Commercial feed
[LIVE_EXP]
Veterinary services/medicine
[VET_EXP]
20.12 Farm Machinery and Other Assets
[Business Assets [Call Out each Item]
Land
Livestock
Non-agriculture Machinery
Hand Saw
Husking Mill
Husking Machine
Axe
Pushcart
Other Agriculture Machinery
Questionnaire – Social Impact Assessment of Microfinance
Current Value
[LAND]
[LIVESTK]
[MACHINE]
[SAW]
[HMILL]
[HMACHINE]
[AXE]
[CART]
[OTHER1]
33
Section 20b – Only for Agricultural Households
File: ‘RABI CROP’
Household Receipts and Sale from RABI (2006)
Table Columns:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Column – 1
Column – 2
Crop Codes (1-20)
Crops’ Name
Wheat
Barley
Pulses
Sunflower
Other Oil Seeds
Onion
Other Vegetables
Spices
Barseen / Lucern
Sugarcane
Other _______
Other ________
Other ________
[CROP1]
Column – 3
Column – 4
Column – 5
Column – 6
Column – 7
Column – 8
Column – 9
Column – 10
Column – 11
Column – 12
Column – 13
Column – 14
Column – 15
Cultivated Area (Acres)
Per Acre Cost of Seed (Rupees)
Per Acre Cost of Fertilizer (Rupees)
Per Acre Cost of Pesticide (Rupees)
Total Harvest (Quantity - Maund)
Paid in-kind to labor as wages (Maund )
Paid as rent (Quantity - Maund)
Received as Rent from other land (Maund)
Received in-kind as wages from other land
Consumed by Household (Maund)
Crop Sale (Quantity - Maund)
Price /per Maund (Rupees)
Total Amount Received (Rupees)
[ACRE]
[SEED]
[FERT]
[PEST]
[OUTPUT]
[KIND1]
[KIND2]
[KIND3]
[KIND4]
[HOME]
[SALE]
[RATE]
[AMOUNT]
Questionnaire – Social Impact Assessment of Microfinance
34
Section 20c – Only for Agricultural Households
File: ‘KHARIF CROP’
Household Receipts and Sale from last KHARIF (2005)
Table Columns:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Column – 1
Column – 2
Crop Codes (21-40)
Crops’ Name
Basmati Rice
Other Rice
Maize
Jawar
Bajra
Cotton
Mung
Other Pulses
Fodders
Tomato
Other Vegetables
Sugarcane
Other _____________
Other _____________
[CROP2]
Column – 3
Column – 4
Column – 5
Column – 6
Column – 7
Column – 8
Column – 9
Column – 10
Column – 11
Column – 12
Column – 13
Column – 14
Column – 15
Cultivated Area (Acres)
Per Acre Cost of Seed (Rupees)
Per Acre Cost of Fertilizer (Rupees)
Per Acre Cost of Pesticide (Rupees)
Total Harvest (Quantity - Maund)
Paid in-kind to labor as wages (Maund )
Paid as rent (Quantity - Maund)
Received as Rent from other land (Maund)
Received in-kind as wages from other land
Consumed by Household (Maund)
Crop Sale (Quantity - Maund)
Price /per Maund (Rupees)
Total Amount Received (Rupees)
[ACRE]
[SEED]
[FERT]
[PEST]
[OUTPUT]
[KIND1]
[KIND2]
[KIND3]
[KIND4]
[HOME]
[SALE]
[RATE]
[AMOUNT]
Questionnaire – Social Impact Assessment of Microfinance
35
Page is left intentionally blank
Questionnaire – Social Impact Assessment of Microfinance
36
Enumerator’s Observations /Remarks
Name of Enumerator
____________________________________
Signature of Enumerator _____________________________________
Date of Interview
_______________
Time of Interview
From _____________
First Contact on [Date]
______________
Second Contact on [Date]
______________
Name and Signature of Supervisor
Questionnaire – Social Impact Assessment of Microfinance
To
____________
_______________________
37
Appendix: Additional Codes
___________________________________
Institution: [INSTITUT]
OPP
1
SAFWCO
2
AKHUWAT
3
ASSASA
4
KASHF
5
NRSP
6
UPAP
7
____________________________________
District: [DISTRICT]
KARACHI
SANGHAR
MATIARI
LAHORE
CHAKWAL
GUJER KHAN
BAHAWALPUR
RAHIMYAR KHAN
RAWALPINDI
ISLAMABAD
KASUR
GUJRANWALA
1
2
3
4
5
6
7
8
9
10
11
12
___________________________________
Questionnaire – Social Impact Assessment of Microfinance
38
__________________________________________________
City: [CITY]
Karachi
Shahdah pur (urban)
Bhit shah
Lahore
Chakwal
Bahawalpur (hasilpur)
Rahimyar khan (bhundi)
Rawalpindi (dhok ratta)
Islamabad (muslim colony)
Gujer khan (doultala)
Gujranwala
Raiwind
Kot radha kishan
Kasur
Kamoky
Shahdadpur rural (1) = lundo
Shahdadpur rural (2) = maqsood rind
Shahdadpur rural (3) = sarhari
Bhit shah rural (uderolal)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
21
22
23
31
__________________________________________________
Tehsil: [TEHSIL]
Karachi
1
Lahore
4
Kamoky
10
Kasur
11
Gujranwala
12
Shahdadpur
51
Hala
52
Rahimyar Khan
54
Sadiqabad
55
Matiari
56
Hasilpur
57
Chakwal
58
Talaganj
59
Kallan Kahar
60
Rawalpindi
81
Gujer Khan
82
Islamabad
83
____________________________________
Questionnaire – Social Impact Assessment of Microfinance
39
_________________________________________________________
Area: [LOCALITY]
MFI
Branch
Area
Township
Township
Kot Lakhpat
Data Nagar
Tezab Ahata
Karim Park
AKHUWAT
Badami Bagh
Data Darbar
Khokhar Road
Kasoor Pura
Bilal Ganj
Malipura
Yadgar
Yadgar
Kamonky
Kamonky
ASSASA
Gujranwala
Gujranwala
Kot Radha Kishan Kot Radha Kishan
Raiwind
Raiwind
Karim Park
Karim Park
KASHF
Kahana
Kahana
Kasoor
Kasoor
Noorani Basti
Noorani Basti
Bazarta Line
Bazarta Line
UPAP
Rawalpindi
Dhok Ratta
Islamabad
Muslim Colony
Urban UC – 4
Rural UC Lundo
Shahdadpur
SAFWCO
Rural UC Sarhari
UC Bhit Shah
Matiari
UC Uderilal
Chakwal
Chakwal Rural
NRSP
Gujar Khan
Doltala
Rahim Yar Khan
Bhundi
Bahawalpur
Hasilpur
Orangi
Orangi
OPP
Baldia Town
Baldia Town
Questionnaire – Social Impact Assessment of Microfinance
Codes
1
2
1
2
3
4
5
6
7
8
1
2
3
4
5
1
2
3
1
2
12
13
1
2
3
4
5
1
2
3
4
1
2
40
____________________________________________________
Branch: [BRANCH]
AKHUWAT – Township
11
AKHUWAT – Data Darbar
12
ASASAH – Yadgar
13
ASASAH – Kamonky
14
ASASAH – Gujranwala
15
ASASAH – Kot Radha Kishan
16
ASASAH – Raiwind
17
KASHF – Karim Park
18
KASHF –Kahana
19
KASHF –Kasoor
20
UPAP – Noorani Basti
21
UPAP – Bazarta Line
22
OPP – Orangi
23
SAFWCO – Shahdadpur Urban
51
SAFWCO – Shahdahpur Rural
52
SAFWCO – Bhit Shah
53
UPAP Dhok Ratta
54
UPAP MuslimColony
55
NRSP Chakwal Rural
56
NRSP Daultala
57
NRSP Bhundi
58
NRSP Hasilpur
59
____________________________________________________
Questionnaire – Social Impact Assessment of Microfinance
41
______________________________________________
Q – 1.8 : [TRAIN1, TRAIN2 TRAIN3]
Lathe machine
Watch repair
Embroidery
Auto Workshop
Thread Dying
Welding
Electrician
Tailor
Computer Repairing
Electric Plating
Drafting
Garments Manufacturing
Driving
Embroidery
Auto Parts
Cobblers
Hakim
Computer Hardwear
Refrigeration
Nickel Polish
OT Technician
Photography
Textile Designing
Auto Electrician
Wood Trading
Loom
Medical shop
Motor Winding
Computer Basics
Mechanical Training
Typing
Engineering
Show Making
Pipe Fitting
Mobile Phone Repairing
Nursing
Handy Crafts
Cycle Repair
Questionnaire – Social Impact Assessment of Microfinance
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
42
______________________________________________
Q – 16.5 : [Q1651, Q1652, Q1653]
No Problem
Collateral
Pictures Requirement
Delay in Payment
Requirement of Utility Bill
Complicated procedure
Staff Bad behavior
Too many meetings
Too many documentation
Too many visits
Group Making
0
1
2
3
4
5
6
7
8
9
10
____________________________________________________
Q- 1.9, Q-1.10, Q-11 [OCCUP_M, OCCUP_S, BTYPE]
Business (Retail Shops with fixed outlet)
701
Business (Vendor with no fixed outlet)
702
Goods Supplier (No fixed or moving objects)
703
Personal Community Service providers
(Barber, beauty parlor, photographer, tailoring, education etc.)
704
Technical Service Provider
(Mechanics, plumber, electrician, TV repair, welding shops etc.)
705
Cottage Industry (shoe making, pot making, roti making etc.)
706
Transport services (rickshaw, donkey cart, Suzuki van, tanga etc.)
707
Agriculture – Crop Production
708
Livestock Management
709
Service
710
_______________________________________________________
Questionnaire – Social Impact Assessment of Microfinance
43
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