PAKISTAN ISLAMIC MICROFINANCECOUNTRY REPORT 2014
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::
Mission
To bring Islamic Microfinance to the forefront of Poverty Eradicationthrough a concerted, transparent and sustainable effort
PAKISTAN ISLAMIC MICROFINANCECOUNTRY REPORT
Board of Directors
Mr. Syed Khurram KhursheedProgram Manager EE&L & Provincial Manager PunjabMuslim Aid Pakistan
Mr. Shahid I MuhammadPresidentNaymet Trust
Mr. Mohammad AdnanDirector Microfinance ProgramIslamic Relief Pakistan
Dr. Muhammad Amjad SaqibExecutive DirectorAkhuwat
CHAIRPERSON
Mr. Yasir TariqC.O.O.Wasil Foundation
Ms. Tabinda JafferyC.E.O.Asasah
PRACTITIONERS
Mr. Ali QamarPartner, Advisory ServicesErnst & Young
Dr. Hafiz Zahid MahmoodAssistant Professor, Departmentof Management SciencesCOMSAT
Mr. Zubair MughalC.E.O.AlHuda CIBE
CONSULTANTS
Editorial Board
Dr. Hafiz Zahid MahmoodAssistant Professor, Department ofManagement Sciences COMSAT
Mr. Mahmood Shah KhanDirector IIB-UMT
Mr. Muhammad Ali KhanSenior ManagerA.F. Ferguson & Co.
Mr. Nausher KhanC.E.O. Islamic Microfinance Network
Ms. Sahar AliResearch Associate, IMFN
IMFN Team
ABBR
EVIA
TION
SAzad Jammu and KashmirBenazir Income Support ProgramCorporate Social Responsibility FundsCalender YearDepartment For International DevelopmentFederally Administered Tribal AreasFinancial Self SufficiencyFiscal YearGilgit BaltistanGross Domestic ProductGross Loan PortfolioGross National IncomeGovernment of PakistanHelping Hands for Relief and DevelopmentIslamabad Capital TerritoryIslamic Microfinance InstitutionIslamic Microfinance NetworkInternational Organisation for StandardizationKnowledge, Attitude and Practices (Of Islamic Banking)Key Performance IndicatorsKhyber PakhtunKhwaLow Cost Private SchoolMicrofinance InstitutionMicrofinance Practitioner/ProviderMicro, Small and Medium EnterpriseNon-Governmental OrganisationNational Rural Development ProgramNational Rural Support ProgrammeOutstanding/Active Loan PortfolioOperational Self SufficiencyPrime Minister Interest Free Loan SchemePartner OrganisationPakistan Poverty Alleviation FundProgress out of Poverty IndexState Bank of PakistanSungi Development FoundationSecurities and Exchange Commission of PakistanSmall and Medium EnterpriseWater, Sanitation and Hygiene PromotionWorld Food ProgrammeWorld Health Organisation
AJKBISPCSR FundsCYDFIDFATAFSSFYGBGDPGLPGNIGOPHHRDICTIMFIIMFNISOKAPKPIKPKLCPSMFIMFPMSMENGONRDPNRSPOLPOSSPMIFLPOPPAFPPISBPSDFSECPSMEWASHWFPWHO
has made trade lawful and madeinterest unlawful...(Ch.2: V.276)
ALLAH
CONTENT
Message From the ChairpersonMessage From the C.E.O.Islamic Microfinance Network, IMFNBackground Microfinance And The Economy Regulatory Environment Public Sector Initiatives ConclusionIslamic and Conventional Microfinance: AnalysisIslamic Microfinance Industry Performance Infrastructure Portfolio Funding Borrowers Urban Vs. Rural Gender & Development Lending Methodology Other Financial Services Sustainability Of The Islamic Microfinance Industry Social Performance IndicatorsGoing Forward – Risks And Potential Product Diversification Synergies Use Of Technology Funding Target Setting For The IndustryTestimonials HHRD Care Starz Asasah Akhuwat
Annexures Annexure I: IMFI’s Profiles Annexure II: IMFN Member Organisations Annexure III: Data Reporting IMFIs Annexure IV: IMFI’s Individual Data Annexure V: Glossary
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It is with great pleasure that we present to you the first ever Islamic Microfinance Country Report for Pakistan. A herculean task that the Islamic Microfinance Network’s team undertook a few months ago and thanks to the co-operation of the industry practitioners and some tireless effort from the network team, we were able to collect, analyse and present this data to be used as a benchmark for times to come. The report serves an integral function of providing all those within the Islamic microfinance sector a platform to voice their successes and contribute to the creation of a vision for the industry. It also serves as a strong reference for the all related sectors to get a peak into the operational modalities, the outreach, the impact and the impediments of Islamic microfinance industry. I am of the strong belief that collectively, we can alter the socio-economic fabric of our society, we can create a change so vast that inequality and disparity no longer would have a place in our communities. The sector has achieved great successes in the preceding years, yet the targets we have set for ourselves for the future are even more ambitious than the milestones we have already achieved. With the collective consensus of the industry, the undying commitment for change displayed by the practitioners, the growing demand for Sharia-compliant financial inclusion and generous philanthropic support, we aim to not only meet but to surpass the aforementioned targets.
The fundamental pillars of hope, empathy, sustainability and equality upon which the industry is developing are values that we hope to further propagate in the coming years and embed deep in the communities within which we work. The strengths and impediments to progress of the industry are presented to you in the following report. Under the development auspices of the Islamic Microfinance Network, we intend on developing the capacities of the individual organisations and of the industry as a whole so that we may see the sector flourish and extend to the far corners of the nation.
It has been a landmark year for the sector and we intend on creating an even larger impact over the course of the coming year. Prime Minister Interest Free loan Scheme (PMIFL) under the auspices of PPAF augurs well. We are also grateful to SBP which is keen to support sharia compliant finance with a special focus on micro finance. This is how we all can nurture financial inclusion. I would like to thank the board members for their active participation in the actualization of this dream and the various organisations that are members of the network for their support. Thank you and God bless.
Message From the Chairperson
Dear All,
Dr. Muhammad Amjad SaqibChairman IMFN
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Message From the C.E.O.
It is an honour to present to you the inaugural report of the Islamic Microfinance Network. A pioneer report documenting the standing of the Islamic Microfinance industry in Pakistan. The sector currently is budding out of the infancy stage and we believe that with the appropriate guidance and support from the practitioner and regulatory community, it can blossom to extend the impact of its operations to all financially excluded individuals in the nation. The report before you is a combined effort of the IMFN team, the network board of directors, the network members & the reporting organisations who have provided their unwavering assistance and co-operation in the realization of this effort.
The sector has made due progress over the last 15 years, with an exponential increase in its outreach being experienced only in the last 5 years. As of July 2014, the total value of loans disbursed stood at PKR 10.28 billion through nearly 327 branches, the total borrowers served were in excess of 618,767 with the industry recovery percentage at 98.3% These figures in and of themselves are a testament to the viability and need of Interest-free microfinance in our poor borrower communities. The sector is generating significant attraction from external parties due its low operational cost, high rate of return based on equitable profit-sharing models and tremendous social impact. The sector personifies the implementation of the double bottom line in its operations. This interest has also gone from the field to echelons of the federal government that has established an interest-free microfinance portfolio of their own being implemented through the auspices of the Pakistan Poverty Alleviation Fund. It is our contention that with adequate advancements in the areas of product and revenue stream diversification, a proliferation and strengthening of industry practitioners is inevitable. These factors can converge to help the sector achieve the 5 year targets without much hindrance.
Being on the pinnacle of the Islamic finance and the microfinance sectors, we require constant introspection, review and adaptation to ensure maximal borrower impact. The sector is progressing towards the direction of self-sustainability, both on an organizational and on an institutional level. It is the distinct pleasure of the Islamic Microfinance Network to facilitate the attainment of this directional objective. Through capacity building, partial standardization of practices, institutional advocacy and the provision of a platform for all industry stakeholders and related sectors to convene upon, we aim to fulfill our mandate of enhancing the scope of sharia-compliant financial inclusion and actualizing the social change which is at the core of our activities.
It is our hope that this inaugural report will serve the utility of a sector yardstick and help propel the industry to unparalleled heights. Once again, I would like to express my gratitude for all those involved in the creation of this report. Thank you and I look forward to the unraveling of the Islamic Microfinance Industry over the coming year.
Respected Readers,
Nausher KhanC.E.O IMFN
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ISLAMIC MICROFINANCE
NETWORK IMFN
SHARIA COMPLIANT FINANCIAL INCLUSION
MSME SECTOR DEVELOPMENT
ISLAMIC FINANCIAL INSTITUTIONAL STRENGTHENING
SOCIAL CHANGE
Islamic microfinance has established itself as a tool for poverty alleviation and this injunction has been embraced by various
Organisations throughout the country. Islamic Microfinance Network, IMFN, a not-for-profit Organisation, was formed in 2009
as a trust under the Trust Act, 1882 by a group of Islamic Microfinance Institutions to unite their efforts for the alleviation of
poverty. Initially, the Network was embedded into the founding entities with no autonomous functions. IMFN was made into an
autonomous body in 2013. Following a phase of initial capacity development, the first Board of Directors of the IMFN was
elected on October 16, 2014.
The Islamic Microfinance Network, IMFN is dedicated to the development and promotion of the Islamic microfinance industry
through innovation, Sharia compliant product development, institutional capacity building, assistance in the development of
donor linkages and up-scaling the Islamic Microfinance Institutions.
IMFN’s four pillars are:
The Network serves as a platform for the dissemination of information, for consultation and for the development of the most
efficient, Sharia compliant practices with a special emphasis on social performance management. It also focuses on raising
public and institutional awareness regarding Islamic Financial Systems. The main outputs of the Organisation include
trainings and workshops for the industry stakeholders, information collection, collation and dissemination, research and
development in different areas of Islamic microfinance and publications on relevant topics.
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IMFN aims on developing linkages with national and international Organisations to catalyze the growth of the industry, on carrying out financial literacy programs to provide
the country with a knowledgeable human capital base and on carrying out social management trainings for maximization of borrower impact, which is the ultimate goal of
the Network. The table above highlights the Network’s operational hierarchy.
Board of Directors
IMFN
Permanent Members
Full ShariaCompliantMixed
Observer Members
ConventionalMicrofinance Practitioners
Other Academics
OUTPUT
SERVICE PROVISION:TRAININGS
&WORKSHOPS
RESEARCH&
DEVELOPMENT
PUBLICATIONS
INFORMATION
PROCESSING
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BACKGROUND
MICROFINANCEAND THEECONOMY
Microfinance in Pakistan is no longer a new phenomenon. It has been in operation since the 70s with the establishment of the Agricultural Development Bank and with the Microfinance Ordinance passed in 2001, has had over 13 years to become a part of the mainstream financial system. Today, it attracts investors from all over the world, based on its impact and attractive returns. However, with an identified target market of around 30 million and only 3 million served, the industry still has a long way to go.
Even though a study by J. Woolley into the resiliency of the microfinance institutions to changes in the economy of a country found that the correlation of performance was not significantly positive, it is true that as these institutions take up more and more of the financial system base of a country, the more influenced they will be by macroeconomic changes.
This is not necessarily bad news for the industry as the Pakistan’s economy has seen a growth of 4.14% in the last fiscal year, the first time since 2008-2009 that it has crossed the 4% mark. This growth comes at the back of a noticeable growth in all major sectors of the economy: agriculture, industry and services, with the industrial sector recording the highest growth rate of 5.84%. Total investments have seen an increase in the growth rate since last year but have decreased as a percentage of GDP as compared to the last fiscal year indicating that investments still need a stronger growth rate to contribute to the economy. The government has also adopted a National Power Policy and has made ground on education and health.
However, the inflationary trend over the period shows that the prices of food have risen. This is bad news for a country where more than 60% of the population lives below the international poverty line. Furthermore, agriculture, which is the main source of livelihood for most of our rural poor, showed a growth of only 2.1% as compared to the 2.9% recorded in previous years. In addition, Pakistan ranked 146 out of a total of 187 countries behind both India and Bangladesh on the human development index. In fact, it has been found that Pakistan has made no headway in this area in the last five years and has also slipped up on the gender inequality index. Pakistan’s latest registered Gini-coefficient indicated a widening gap between economic classes and presents an ever-ready need for further market penetration in microfinance. The majority that constitutes the base of the socio-economic pyramid are going relatively un-served thus further contributing to our poor development indicators. The energy sector of the country also remains an area of concern. Islamic microfi-nance presents a viable opportunity to include the excluded in the loop of financial services and provide them with the means to become self-sufficient.
Nevertheless, it is important to note that the sections of weakness have been recognized and the regulatory bodies and apex institutions have started working on steps to ensure progress. Investors and donor agencies continue to see Pakistan as an attractive market and investments and grants continue to flow into the microfinance sector.
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REGULATORYENVIRONMENTIslamic microfinance is a relatively new experience in Pakistan which, until recently, has been overlooked by the industry stakeholders. It has been only recently that the role Sharia compliant microfinance can play in eliminating poverty and contributing to the actualisation of the UN Millennium Development Goals has been recognized.
In terms of regulation, Pakistan provides one of the most favorable environments for the Islamic microfinance Industry. On December 23, 1999, Pakistan became the first Muslim country to declare the modern interest charged by the banks as riba and declared it haram by Quran. The implementation of the judgment is on stay but the regulatory framework provides the Islamic microfinance practitioners with the best suited environment for the provision of their services. Similarly, the Punjab Prohibition of Private Money Lending Act was passed in 2007 which described a private money lender as someone who lends money on interest and repealed the Punjab Money Lenders Ordinance passed in 1960. However, these rules and regulations, even though have been enacted, are yet to be implemented and monitored for fulfillment.
Pakistan is one of the very few countries which have both an Islamic Banking Department as part of the Central Bank with all the necessary rules and regulations for carrying out Islamic Banking activities and a separate regulatory framework issued in the Microfinance Ordinance in place since 2001. The country does not have regulations specific to Islamic microfinance as the industry is in its infancy and its impact is still to be considered. However, both the SBP and the SECP continue to take an interest in the Islamic banking and microfinance sector with strategic plans, revisions and new rules coming in during the period of the 2013-2014 fiscal year.
The Islamic Banking Department of SBP has issued a strategic plan for the Islamic Banking Industry for the period 2014-2018. The SBP has also updated its rules for prudential regulations in microfinance banks and has also issued prudential regulations for SME financing. Micro-insurance rules have also been issued during the period. These initiatives might not affect the Islamic microfinance providers directly but it is hoped that they will have a spillover effect and will contribute to the development of best practices in the Islamic microfinance industry and will help set the strategic plan for the sector. The Securities and Exchange Commission of Pakistan has also issued new regulations for micro-insurance in the latter half of the CY 2014. These regulations will hopefully aid in the holistic development of the sector and in the provision of beneficial services to those who require it.
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PUBLIC SECTORINITIATIVES
With the first ever democratic transfer of power from one party to another, Pakistan witnessed a major milestone in its socio-political landscape. Under the country’s new leadership, nation-wide reforms were announced and instituted; among them are two pertinent initiatives to foster microeconomic activity through microfinance in the country.
The first is the youth loan program being conducted by the Government of Pakistan through the National bank of Pakistan and the First Women Bank Ltd. The parameters of this program entail disbursing loans with a maximum individual value of PKR 2 million at a subsidized rate in an effort to generate SME activity throughout the country. The second such initiative is the Prime Minister’s Interest Free Loan Scheme (Qarz-e-Hasan), which is earmarked for the extremely vulnerable and poor segments of Pakistani society. Rs 3.5 billion have been allocated by the GOP to be administered by the Pakistan Poverty Alleviation Fund to the chosen Partner Organisations who directly disburse it to the borrowers. Along with liquidity, PPAF is also providing its POs with capacity building in order to ensure the utmost efficient utilisation of the resources. 22 organisations from all across the country have been shortlisted after a rigorous selection process and are being provided with adequate operational training.
The interest free loan scheme is the first of its kind in the country, the successful completion of which will inevitably lead to the creation of a larger fund, attracting more organisations from across the nation to take up the mantle of poverty alleviation through Sharia-compliant financial services.
Another important step for the Islamic microfinance industry has been the carrying out of a study by the SBP, sponsored by DFID, on Knowledge, Attitude and Practices of Islamic Banking in Pakistan. The study has found that the low income strata and those living in rural areas have little to no access to financial services and the SBP has identified this as a huge opportunity for Islamic microfinance. With the SBP’s support and a genuine demand for the product, the industry will hopefully continue to grow and prosper.
DFID has also earmarked a significant fund housed at the SBP under the auspices of the Financial Inclusion Program. The Financial Innovation Challenge Fund is a component of this Fund and for the CY 2015, it has earmarked its activities for the construction of a Centre for Excellence in Islamic Finance. It is hoped that through this program, the requisite capacity building and knowledge management functions the industry requires will be further strengthened.
A Microfinance Credit Guarantee Facility was launched in 2012 to help boost the microfinance sector in Pakistan. Guidelines on bilateral facilities and redeemable capital have been set to help generate lending from banks to the MFPs and to diversify the funding base for the microfinance practitioners so that they may be able to cater to the market in the years to come.
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The macro-economic situation of Pakistan is improving with all the major sectors of the economy registering favorable growth rates. However, despite an improvement in the economic indicators, the development indicators for the country have continued to maintain their poor ranking. In the meantime, Islamic microfinance has established itself as a credible contender on the road to poverty alleviation and human advancement and has started making significant strides towards the actualisation of the division between economic classes. With the current institutional recognition of the industry’s initiatives and the support lent to it by programs such as the PMIFL & the FICF, the sector has received some much deserved impetus. There has also recently been an increased focus on product diversification to be able to cater to different population strata. The low cost housing sector, the low cost private school sector and the renewable energy sector have provided new avenues of service delivery to the borrowers as a more holistic solution to the uplift of the poor.
It is foreseen that if the current growth rates are maintained, the targets the industry has set for itself in this socio-economic landscape will hopefully not only be met but also be surpassed. In light of a growing regulatory environment, the industry stands to benefit even further and achieve greater landmarks.
CONC
LUSI
ON
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ISLAMIC ANDCONVENTIONAL MICROFINANCE: ANALYSIS
The 1970s saw the creation of the Grameen foundation; BRAC and ASA in Bangladesh rose to prominence and proved the viability of microfinance. In Pakistan, after the formulation of the Agha Khan Rural Support Program, the late 90s saw the establishment of the Kashf Microfinance Program and the government-led Khushhali Microfinance Bank to reign in microfinance as a viable tool in national poverty alleviation efforts. These efforts were institutionalized with the passing of the Microfinance Ordinance of 2001. Herein after, the sector has experienced rapid growth funded by the Pakistan Poverty Alleviation Fund and currently, the myriad of Microfinance Banks, Microfinance Institutions and Rural Support Programs cater to millions in the country.
CONVENTIONAL MICROFINANCEINSTITUTIONALHISTORYWITHINPAKISTAN
INTERESTVS
PROFIT
Islamic microfinance is a relatively new area in the field of microfinance. It brings together microfinance and Islamic banking for the provision of financial services to the most marginalized individuals in the society. Its place in the country’s economy is assured by a Muslim majority population where more than 60.19% of the individuals live below the $2 interna-tional poverty line. However Islamic microfinance efforts globally, particularly in Indonesia, Malaysia and the Middle East have outshone domestic initiatives. The 2000’s saw the estab-lishment of some of the first Islamic microfinance institutions in the country in Akhuwat and Naymet Trust. Embedded within these organisations has been the development of unique public-private joint ventures in the provisioning of Islamic microfinance to the most destitute segments that has thrust the industry into the spotlight of equitable financial inclusion.
Islamic Microfinance aspires to bring the underprivileged and the needy into the realm of financial inclusion who are considered un-bankable. Sharia does not allow the charging of interest because it does not consider capital a factor of production in and of itself. In eliminating all interest rates, Islamic microfinance is able to furnish loans for a vast array of the poor population and provide all with a viable alternative to conventional interest-based financial products.
Islamic microfinance provides multiple models to cater to the distinct needs of the borrowers including trade, equity, rental and debt based models. Sharia does not allow for the increase in reward without any increase in the risk of the party. This means that the return of the lender cannot be fixed except in some instances such as Murabaha which is allowed under certain conditions. Sharia-compliant microfinance products are built on the concept of profit/loss sharing, enabling the risk to be managed by both parties. In this model, the return on investment is directly tied to the success of the borrower.
Contrary to conventional microfinance, Islamic microfinance offers products such as Salam, Murabaha and Ijara etc. This multi-faceted approach involving the exchange of real assets and hard currency results in greater linkages being formed between the supply chain, open market and the financial institution. In this way, this system of providing microfinance services creates a link between the financial and real assets to bring about greater productivity in the economy.
ISLAMIC MICROFINANCE
FINANCIALSTRUCTURE
An important element of the interest based conventional microfinance model is that the structure is purely debt based. This is because the return of the lender or the MFI is fixed and all the risk of the investment is borne by the borrower.
PRODUCTSTRUCTURE
Conventional microfinance providers deal in paper money. Their microcredit is driven by cash based loans and the payback is also in the form of paper money. The interaction between the financial institution and the borrower is restricted to the exchange of hard currency.
Conventional microfinance’s most important distinction from Islamic microfinance is that the industry charges interest rates from the borrowers that can range from nominal to exorbitant. However, a culture of loan sharks in Pakistan has resulted in borrowers having to bear extremely high interest rates. This is due to the fact that microfinance customers are considered risky investments because of the uncertainty of their income and repayment capacity. The conventional/capitalist belief is that money is a factor of production and hence merits some reward in the form of interest.
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Conventional microfinance is adherent to the base financial principles of the open market. This system proves not to be maximally beneficial to the poor borrower as the cost of the loan being incurred hinders the prosperity of the borrower and further entrenches him in a debt-based economic cycle.
FAITH-BASEDIslamic microfinance, although also market based, is devel-oped on the principles adherent to the teachings of the Quran and the Prophet Muhammad (PBUH).The intended consequence of this Islamic Sharia Governance microfinance model is to exponentially increase the net of financial services so as to include the otherwise alienated and equip them with an opportunity to succeed.
The pricing in the Islamic microfinance model is not standardized. Sometimes, products such as Modaraba can be more profitable for the borrower than the IMFIPRICING
The conventional microfinance model entails a standardized pricing methodology. The interest charged on the loans are usually established using a benchmark e.g. the KIBOR
The Islamic microfinance model, under its profit/loss sharing models, develops partnerships with the needy so that in the event of a loss, the IMFI can share it with the borrower and act as a buffer
PARTNERSHIPIn the conventional microfinance model, the concept of partnership is nonexistent. This is a result of the borrower being seen as a risky prospect.
PENALTIESON
DELAYEDPAYMENTS
The Islamic microfinance model does not allow for a penalty in case of nonpayment; most of the transactions are structured to limit the loss of the borrower in case of a crisis
In the case of the conventional microfinance model, if there is a delay in payment by the borrower, he is penalized. This might hinder his future payments, though the delay might have been due to a temporary, non-recurring contingency.
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ISLAMICMICROFINANCEINDUSTRYPERFORMANCE
The following analysis is based on aggregated data collected through an information
collection form and a social indicators questionnaire sent to all participating Organisations.
A total of 14 Organisations have submitted their data for the purpose of this report. Data
prior to June, 2012 was not asked for and thus not incorporated in our analysis.
The last year has seen Islamic microfinance register substantial growth rates on all indicators due to various private and public sector initiatives. The Gross Loan Portfolio for the industry almost doubled to stand at PKR 10.28 billion at June, 2014. The total borrowers for the industry also crossed the 600,000 mark registering a growth of 75% over the previous year. This increase has been possible as a result of an increased provision of microfinance through existing branches and an increase in the number of branches carrying out these services. The total branches for the industry stood at 327 after having seen an increase of 54%. This increased provision of Islamic microfinance did not hit the recovery rate that was recorded at a sound 98.3%.
COMPARATIVE ANNUAL GROWTH RATE FY ’13-‘14VALUEINDICATOR
GLP
Total Borrowers
Active Borrowers
Branches
Recovery Percentage
PKR 10. 28 Billion
618,767
238,326
327
98.3%
86%
75%
37.5%
54%
INDUSTRY HIGHLIGHTS
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INFRASTRUCTURE
0
50
100
150
200
250
300
350
2012 2013 2014
Figure 1.1: No. of Branches
No. of Branches
Even though new entrants have added to the physical infrastructure of the industry, an industry growth rate of 53% as
compared to Akhuwat’s growth rate of 54% suggests that for the other IMFIs, the observed growth rate is low. Indeed, only
50% of the profiled organisations were found to have added to their physical infrastructure, 42% of the Organisations had
maintained their number of branches while one Organisation had cut down on its areas of operation.
The number of branches in the sector saw an
increase of 53% in the year 2013-2014
following an increase of 78% in the previous
year to stand at 327 branches at June, 2014.
This growth has come at the back of a significant
increase in the number of branches of Akhuwat
which saw an increase of 54% in the last year to
stand at 261 branches at June, 2014. HHRD is
the second largest IMFI in terms of the number
of branches with provision of its services
through 25 outlets. The rest of the IMFIs
individually add 10 branches or less to the
cumulative value.
76% of the total physical infrastructure of the Islamic microfinance practitioners is present in the province of Punjab
whereas 12% of it is present in KPK and 4% in Sindh. This is surprising as Sindh accounts for less than 1% of the
industry GLP whereas GB which accounts for a higher GLP value, does not have the corresponding higher physical
presence. Over the year, Punjab has seen a growth rate of 42% and KPK has seen a growth rate of 147% from 17
branches to 42 branches at June, 2014. The number of branches in Balochistan has decreased whereas in Sindh and
ICT, the number of branches has doubled: from 7 to 14 and from 1 to 2 respectively.
0
50
100
150
200
250
300
Punjab Sindh Balochistan KPK GB ICT AJK
Total Branches, 2014
Figure 1.2: Total Branches by Province, 2014
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The total staff in the industry saw an increase of 81% between July, 2012 and June, 2013, followed by an increase of 111% in the following year to stand at 2,090 individuals on June, 2014. This substantial increase has been the result of various new IMFIs coming into the sector apart from an increase in the number of staff allocated to existing operations of other IMFIs. As the portfolio of the industry increases, the portfolio per staff increases and it is imperative that the IMFIs add to their staff base accordingly. The IMFIs have recognized this need and this has helped result in the four fold increase in the industry HR within 2 years.
The table above shows the top 5 IMFIs with respect to the number of staff. Akhuwatheads the list with a total staff of 1742, with Asasah at number 5 with 26 individuals dedicated to the provision of its services. One of the risks to the sector is the unavailability of a qualified human resource base. This has resulted in a limited number of qualified staff for the IMFIs which have to bear the added expense of training individuals on premise. An accreditation or standardized training program for the IMFIs in order to ensure a well-trained staff would serve the industry well.
Total Staff, 2014IMFI
Akhuwat
Kashf Foundation
HHRD
Sungi Development Foundation
Asasah
1742
86
52
38
26
TOP 5 IMFIS BY STAFF
0
500
1000
1500
2000
2500
2014 2013 2012
Total Staff
Figure 1.3: Total Staff
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Islamic microfinance has seen exponential growth in Pakistan in recent years and the gross loan portfolio of the industry has been primarily representative of that growth
The gross loan portfolio of the industry saw an increase of 110% between FY ’12-’13 and a further increase of 86% in the following year to stand at PKR 10.28 billion on June 30, 2014. The industry portfolio has almost doubled in both years and there are three main drivers of this increase: a). Akhuwat accounts for the greatest increase in the gross loan portfolio of the industry with its sole product of benevolent loans. b). Recently, PMIFL scheme has been launched through the PPAF and has resulted in many conventional microfinance providers adding an Islamic microfinance portfolio to their operations. Existing IMFIs have further strengthened their portfolio contributing to the expanse in absolute figures for the reported period. c). Some conventional microfinance providers have, in recent years, either partially or entirely converted their product portfolio from that of conventional microfinance to Islamic microfinance. However, since the industry has just passed nascency, the present growth rate is expected to stabilize at a more consistent rate over the coming years.
GLP & OLP
0%
20%
40%
60%
80%
100%
120%
0
2E+09
4E+09
6E+09
8E+09
1E+10
1.2E+10
2012 2013 2014
Gross Loan Portfolio Growth Rate
Figure 2.1: GLP & Growth
Gro
ss L
oan
Portf
olio
G
rowth Rate
PORTFOLIO
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The active loan portfolio for the industry followed the same trend with growth rates of 119% and 61% observed between 2012-2013 and 2013-2014 respectively. Empirical evidence has suggested that extremely high and volatile growth rates are indicative of an unregulated sector. This possibly rings true for Islamic Microfinance in Pakistan and the operations of IMFIs as they are subject to minimal regulatory oversight thus paving the way for unprecedented growth but also unintended consequences such as haphazard client protection practices.
Over 93% of the industry portfolio is driven by benevolent loans whereas 6% of the portfolio is driven by Murabaha. There are several reasons for this skewed portfolio distribution. The Qarz-e-Hasna portfolio is primarily driven by Akhuwat which only provides interest free loans. The PMIFL scheme has also been launched only for the provision of these loans. Moreover, various other organisations are also offering Qarz-e-Hasna as part of their portfolio. Following is Murabaha, the second most popular product which is relatively easier to structure and implement than Musharaka and Modaraba. The latter products carry with them a higher risk profile and require a multi-component structure thus inhibiting organisations from adopting these and other financial products as part of their product portfolio.
0%
20%
40%
60%
80%
100%
120%
140%
0
50000000
1E+09
1.5E+09
2E+09
2.5E+09
3E+09
3.5E+09
2012 2013 2014
Outstanding Loan Portfolio Growth Rate
Figure 2.2: OLP & Growth Rate
0
2E+09
4E+09
6E+09
8E+09
1E+10
1.2E+10
Musharaka Murabaha Qarz-e Hasna Modaraba Sustainable Livelihood
Musawamaha
GLP by Product, 2014
Figure 2.3: GLP by Product, 2014
Out
stan
ding
Loa
n Po
rtfol
io
Grow
th Rate
17 IMFN
The above figure provides the province wise distribution of the gross loan portfolio for the industry. It has been found through the Pakistan Social and Living Standards Measurement Survey, 2012-13 , that Punjab ranks the highest on almost all development indicators whereas Balochistan ranks the lowest. An area of concern to the sector is the lack of presence in the underdeveloped areas of the country. Balochistan being the least developed of the provinces accounts for less than 1% of the overall gross loan portfolio of the Islamic microfinance industry whereas Punjab, being one of the more developed provinces, contributes 90.09% to the industry’s GLP. This concentration of activities might be a concern for the sector in coming years as it enhances the threat of over indebtedness, an increasingly important concern in the microfinance sector. However, Punjab does account for nearly 60% of Pakistan’s population and with only a fraction of the market served, over indebtedness is not a risk of immediate threat. 6.63% of the portfolio is concentrated in KPK with nearly 35% of the profiled organisations conducting their operations in the province. The other provinces collectively constitute nearly 3% of the entire Islamic microfinance portfolio. This vast disparity in service provision is the result of a few factors including:
Due to these primary and other secondary reasons, the industry remains concentrated in Punjab with slight penetration into KPK. Yet the effects of this concentration are personified in an increasing income disparity between the developed provinces and the underdeveloped one. A lack of interest-free financial services is preventing true socio-economic uplift of deprived communities in Balochistan, interior Sindh, GB & FATA.
0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%100.00%
01E+092E+093E+094E+095E+096E+097E+098E+099E+091E+10
Gross Loan Portfolio, 2014
Gros
s Loa
n Po
rtfol
io, 2
014
% age of GLP
%age of GLP
Greater population density in Punjab than the rest of the provinces. Inhibiting security concerns present in Balochistan and interior Sindh preventing organisations from establishing operations in these provinces. Extremely hostile terrain in Gilgit Baltistan exponentially increasing the cost of infrastructure establishment
Figure 2.4: Provincial Distribution of GLP
18 IMFN
The breakdown of the 2014 gross loan portfolio of the industry shows that Akhuwat is the leading provider of Islamic microfinance within Pakistan. Following are HHRD, Islamic Relief, Kashf Foundation and Muslim Aid which are relatively new entrants to the field as well. Akhuwat’s growth is driven by its multiple public-private collaborations with the governments of Punjab and Gilgit Baltistan. Coupled with hefty individual/institutional philanthropic donations, Akhuwat has seen exponential growth in the 14 years of its establishment. Recent government initiatives have seen the same support extended to smaller IMFIs and have resulted in a proliferation of practitioners entering the field but channeled towards benevolent loans only.
0 2E+09 4E+09 6E+09 8E+09 1E+10
Akhuwat
HHRD
Islamic Relief
Kashf Foundation
Muslim Aid
Gross Loan Portfolio, 2014
Figure 2.5: Top 5 Organisations by GLP, 2014
19 IMFN
FUNDING
It was found that of the 14 IMFIs, 8 Organisations carried out their activities based on funding provided by local agencies while only 4 Organisations had international funds at their disposal, 3 of which belonged to Organisations getting funding from their sister concerns. These included Islamic Relief Pakistan, HHRD and Muslim Aid Pakistan. The rest of the Organisations used a mixture of international and local funds.
Furthermore, 29% of the IMFIs depended, to some degree, on individual donors to carry out their operations. Of the IMFIs under consideration, 2 Organisations had received funding from the government through PPAF under the PMIFL scheme which is a recent initiative. An in depth analysis of the sources of funding for the industry reveals that most of the Organisations have had to rely on more than one source of funding and have had to use a blend of the Organisation’s own reserves as well as individual donor support and the help of fellow IMFIs to carry out their operations. A diversified revenue stream was recognized as the optimal method to attain financial sustainability.
Local, 8International, 4
Mixed, 2
Figure 3.1: SOURCES OF FUNDING
20 IMFN
The total borrowers of the industry reached 618,767 in the year 2014, having recorded an increase of 75% over the previous year. This increase came at the back of a 90% increase in the previous year. The total borrowers in the industry stood at just 0.18 million at June, 2012 and are set to reach 1 million borrowers by the end of 2015 if past growth rates are maintained. The growth rate in the number of borrowers for the housing sector has decreased over the year with the greatest increase being seen in the livestock and agriculture sector. The growth rates for the manufacturing / production industry and the services industry remain strong at 76%. The active borrowers in the industry grew by 143% between July, 2012 and June, 2013. However, the growth rate in the following year was considerably lower and the industry stood at 238,326 borrowers at June, 2014 having recorded a 37% increase in 2013-2014. The enormous increase in active borrowers in the previous year was a result of a small initial value but the industry still needs to develop a sustainable growth trajectory in the future. The present growth of the sector is driven by the top few microfinance providers. As the number of Islamic microfinance practitioners increase via PMIFL, diversified funding streams, added exposure to the sector, it is projected that more and more IMFIs will contribute significantly to sectoral growth.
BORR
OW
ERS
0 100000 200000 300000 400000 500000 600000 700000
2012
2013
2014
Total Borrowers, 2014 Active Borrowers, 2014
0
1
2
3
4
5
6
7
Government Fellow IMFIs Individual Donors Orgs. Own Reserves
2 2
4
7
Figure 3.2:Breakdown of Local Funding Sources
Figure 4.1:Total and Active Borrowers
21 IMFN
Akhuwat
HHRD
Kashf Foundation
Sungi Development Foundation
Islamic Relief
IMFI ACTIVE BORROWERS, 2014
219,947
3,793
3,420
2,815
2,501
0
100000
200000
300000
400000
500000
600000
Punjab Sindh Balochistan KPK GB ICT AJK
Total Borrowers, 2014
The table above shows the top five IMFIs by active borrowers in the industry. Naymet Trust and Muslim Aid have a greater
number of total borrowers as compared to Kashf Foundation and Sungi Development Foundation yet have fewer active
borrowers presently. Both Kashf Foundation and Sungi Development Foundation have started their operations very
recently by constituting a separate fund for the provision of Islamic Microfinance using the Organisation’s own resources.
There exists a large disparity between Akhuwat and the other leading microfinance organisations due to reasons
aforementioned.
The province wise distribution of total borrowers shows a similar trend as the gross loan portfolio with Punjab surpassing the other provinces with a 91% share of the total borrowers. KPK and GB rank second and third with
5% and 1% of the industry borrowers respectively.
Figure 4.2:Provincial Distribution of Borrowers
22 IMFN
Urban vs. Rural It has been found that the urban areas constitute 96% of the industry gross loan portfolio whereas the rural areas account for only 4% of the GLP. For a country where over 67% of the population lives in rural areas, the observed figures mean that there is a huge vacuum for Islamic Microfinance services that still needs to be filled. A hindrance to the growth of Islamic Microfinance in rural areas is the lack of the infrastructure required to be able to carry out operations. The increasing urban-rural divide in terms of civil infrastructure needs to be handled so that geographically isolated areas are made accessible for the practitioners. If the divide in terms of infrastructure is bridged, the IMFIs will be able to fill the gap in terms of provision of basic access to interest-free financial services to the rural inhabitants. Although the rural GLP is only 4%, the active loan portfolio of the sector in the rural areas currently stands at 7%. This is indicative of an increased focus on more underdeveloped areas and of a shift towards a more balanced portfolio distribution. As the industry recognizes the demand for agricultural micro-financial products, there is an expected growth in emphasis of relevant Salam, Ijara and other agricultural products over the coming years.
An overwhelming amount, 95% and 96%, of both active and total borrowers respectively in the Islamic Microfinance industry are part of the
urban demographic whereas the rural areas account for only 5% and 4% of the active and total borrowers respectively. However, the slight discrepancy between active borrowers and the active portfolio might suggest a higher
average loan size. The difference, nonetheless, is almost negligible
0
2E+09
4E+09
6E+09
8E+09
1E+10
1.2E+10
Urban Rural
GLP, 2014 OLP, 2014
Figure 5.1: Urban & Rural GLP & OLP
0
100000
200000
300000
400000
500000
600000
700000
Urban Rural
Active Borrowers, 2014 Total Borrowers, 2014
Figure 5.2: Active & Total Borrowers
23 IMFN
Gender & Development
Microfinance has always been a gender focused industry with a special emphasis on women empowerment. The same is true for the Islamic microfinance industry in Pakistan. As of June, 2014, PKR 6.1 billion or 60% of the industry’s GLP constitutes of loans extended to the male population whereas women constitute 40% of the industry gross loan portfolio. Of the Organisations analyzed for the purpose of this report, all provided services directed to women whereas 71% of the Organisations provided microfinance to the male population. In this situation, the comparatively higher allocation of GLP to male borrowers can mean one of two things: either the average loan size extended to the male borrowers is higher than that extended to women or it can mean that men constitute a greater percentage in terms of the absolute number of borrowers. An analysis of the total and active borrowers for the two categories for 2014 indicates that the latter observation is true. In terms of the number of borrowers, male borrowers constitute almost 60% of the total borrowers in the industry while they constitute 57% of the active industry borrowers. Female population, although served by more Organisations overall, constitutes a comparatively smaller percentage of the practitioner’s portfolio. The overall distribution is also reflective of the male - female ratio in the country which is 1.06 men for every woman. The age structure profile of Pakistan also indicates that females surpass the number of males in only the 65 years and above age category.
Both Male & Female Female
0 2E+09 4E+09 6E+09 8E+09
Male
Female
OLP, 2014 GLP, 2014
0 50000 100000 150000 200000 250000 300000 350000 400000
Male
Female
Active Borrowers, 2014 Total Borrowers, 2014
Figure 6.1: Organisational Gender Focus
Figure 6.2: Gender-wise Portfolio Distribution
Figure 6.3: Gender-wise Borrower Distribution
24 IMFN
Lend
ing
Met
hodo
logy The lending methodology of most IMFIs consists of lending to individuals rather than to groups. Of the 14
Organisations analyzed, 7 were found to cater solely to individuals, 5 were found to employ group lending as their sole methodology while 2 Organisations: Asasah and Naymet Trust conducted both individual and group lending. There was not found to be a specific lending methodology employed to lend to a specific gender. For instance Care Starz and Sungi Development Foundation both catered to women but Care Starz relied solely on individual loans whereas Sungi Development Foundation employed group lending as their sole methodology. However, overall, 91.1% of the industry portfolio was invested in group loans whereas these loans constituted 91.4% of the active loan portfolio. This huge distinction is a result of the fact that Akhuwat, the largest driver of the industry’s GLP and OLP uses only group lending as its methodology. A group lending methodology also dilutes the risk an organisation faces when disbursing microloans; it is easier to structure and maintain recovery when loans are given to a group as opposed to an individual. This methodology ensures true social progress, accountability and maintains checks and balances required to succeed in such endeavors.
The same trend is observed in terms of the number of borrowers with 93.8% and 94.8% of the active and total borrowers respectively structured as group loans instead of individual loans. The similar percentage in terms of both loan portfolio and the number of borrowers means that although both individual and group loans are being made, the average loan size for both types of loans is the same; group loan size is not greater than the loan size extended to individual borrowers.
01E+092E+093E+094E+095E+096E+097E+098E+099E+091E+10
Individual Group
GLP, 2014 OLP, 2014
Figure 7.1: Individual & Group GLP & OLP
0
100000
200000
300000
400000
500000
600000
700000
Individual Group
Total Borrowers, 2014 Active Borrowers, 2014
Figure 7.2: No. of Borrowers by Lending Methodology
25 IMFN
The top 3 industries supported by the Islamic microfinance sector are trade, services and manufacturing &
production which together account for 79% of the industry loans. The sectors driving the GDP of Pakistan are
trade, services and agriculture. There is an overlap between the sectors supporting the GDP and those
supported by the IMFIs. Agriculture, however, accounts for just 1% of the industry loans and is indicative of a
small presence in rural areas. Over 100,000 loans have fallen under the “Other” category. These loans are
primarily consumption loans which are meant to ease the immediate hardships of the borrowers, a majority of
them are supported by Akhuwat in the form of marriage & liberation loans. The consumption based loans
serve an integral purpose in ameliorating poverty as they provide the borrowers with an opportunity to settle
their interest-based loans from other sources, handle family emergencies or even build upon their existing
houses thus contributing to asset development
0 50000 100000 150000 200000 250000 300000
Other
Agriculture
Livestock/Poultry
Trade
Education
Services
Manufacturing/Production
Housing
Total Borrowers, 2014
Figure 7.3: Industries Supported
26 IMFN
Out of the 14 Organisations who are profiled in this report, 4 were found to be providers of Takaful or Islamic Micro-insur-ance. Naymet Trust and Akhuwat provided micro-takaful on a voluntary basis whereas it was compulsory for the borrowers of both Sungi Development Foundation and Kashf Foundation to apply for insurance so that they could be eligible for a loan. At present, there are around 229,500 hold-ers of micro-takaful in Pakistan.
The Islamic micro-takaful portfolio stands at PKR 2.84 billion and is largely supported by Akhuwat. Kashf Foundation has also been able to reach 4,766 borrowers within the space of a year and is poised for further growth. Naymet Trust and Sungi Development Foundation have added 1,900 and 2,815 number of Islamic Micro-insured individuals respectively to the overall borrowers insured. Sungi Development Foundation has a strong focus on women empowerment and provides its microfinance services only to underprivileged women. Therefore, its entire Islamic micro-insurance portfolio goes into further contributing to the portfo-lio extended to the female population. At present, 58% of the portfolio is constituted by male borrowers and 42% by the female borrowers. These figures are aligned with the previous numbers indicating current male dominance in Islamic microfinance.
Other Financial Services
Islamic Insurance
0
20000000
40000000
60000000
80000000
1E+09
1.2E+09
1.4E+09
1.6E+09
1.8E+09
0
20000
40000
60000
80000
100000
120000
140000
160000
Male Female
# of Policy Holders Islmaic Microinsurance Portfolio, 2014
Figure 8.1: Takaful Portfolio & Policy Holders
Islamic M
icroinsurance Portfolio
# of
Pol
icy
Hold
ers
27 IMFN
98% of the industry micro-insurance portfolio has gone into serving the urban population whereas only 2% of it has been extended to rural borrowers. These figures are in accordance with the industry GLP which also has a 96% stake in the urban areas. The figures are reflective of the industry’s focus on the urban populace. This is also indicative of the risk-averse Takaful companies which at present are not offering agricultural insurance products for the poor rural borrowers.
The province wise distribution of Islamic micro-insurance is shown above. Punjab accounts for 86% of the overall portfolio whereas KPK accounts for 9%. The differing percentages of province wise distribution of GLP and Takaful is reflective of the fact that Kashf Foundation is providing Islamic micro-insurance only in KPK and is one of the 3 Organisations working in that area whereas only 2 Organisations are providing Islamic micro-insurance in Punjab.
0 1E+09 2E+09 3E+09
Punjab
Sindh
Balochistan
KPK
GB
ICT
AJK
Province wise Takaful, 2014
Figure 8.3: Province wise Takaful distribution, 2014
0
50000000
1E+09
1.5E+09
2E+09
2.5E+09
3E+09
0
50000
100000
150000
200000
250000
Urban Rural
# of Policy Holders Islamic Microinsurance Portfolio, 2014
Figure 8.2: Urban vs Rural Takaful Provision
Islamic M
icroinsurance Portfolio
# of
Pol
icy
Hold
ers
28 IMFN
Of the four Organisations offering Islamic micro-insurance, SDF provides health insurance; Naymet Trust provides credit life insurance whereas Kashf Foundation and Akhuwat provide life insurance to its borrowers. Currently, there exists a very limited takaful portfolio being offered by IMFIs to the borrowers. This could be the result of a lack of commercial desire for takaful
companies to offer insurance services via IMFIs or it could be a hesitation on behalf of the IMFI to minimize expenses. Regardless, there is an immense need for the provision of micro-takaful
to the borrowers in order to limit the liability of the practitioner and the borrower as well as create strategic linkages with the booming Takaful sector.
28150000 37000000
2778069994
0
50000
100000
150000
200000
250000
0
50000000
1E+09
1.5E+09
2E+09
2.5E+09
3E+09
Health Credit Life Life
Amount Insured Individuals insured
Figure 8.4: Type of Microinsurance Offered
Amou
nt In
sure
d Individual Insured
29 IMFN
Sustainability of the Islamic Microfinance Industry
The average loan size for the industry stands at PKR 19,182. However, it has been found that the average cost per loan for the industry is PKR 3,331 with the range being PKR 282 – PKR 8021. The presence of outliers as low as PKR 282 and as high as PKR 8021 are reflective of the difference in the efficiency and productivity of different IMFIs. However, what must be kept in mind is that most IMFIs are new entrants into the field of Islamic microfinance and require time to achieve efficiency. The low average loan size for the industry coupled with high cost per loan could prove to be a danger to sustainability in the long run. However, the cost per loan is expected to come down in the future periods for the new practitioners. The average administrative cost per loan for the industry was found to be PKR 1,593 and the average cost per rupee lent for the industry was found to be PKR 0.19 with NRDP’s PKR 0.041 and Muslim Aid’s PKR 0.63 falling at opposite ends of the spectrum. The average operational and financial self-sufficiency for the IMFIs was found to be 91% and 88% respectively.
30 IMFN
AVG Cost perRupee Lent
0.19
FSS 88%
OSS 91%
Admin CostPer Loan
1,593
AVG Loan Size 19,182
These figures were lowered by the new IMFIs which had not reached self-sufficiency with the likes of Kashf Foundation registering an OSS and FSS of 31% and 29.9% respectively. The borrower per staff ratio for
the industry was found to be 149 with Care Starz having a ratio of 40 and HHRD a ratio of 267. The average of 149 needs to be lowered so that the average time spent on a borrower can be increased for
maximum social impact.
It was found that the Portfolio at Risk for the sector was PKR 66 million or 0.64% with an average recovery rate of 98.3%.
The average loan size per GNI per capita for individual IMFIs gives us an idea of the breadth of microfinance borrowers being served. A percentage of less than 20% for 12 of the IMFIs indicates that the focus remains on serving the base
of the socio-economic pyramid whereas a percentage of 37 for Care Starz and 25 for NGO World indicate their focus on more resource intensive enterprise development with average loan sizes of PKR 52,000 and PKR 35,000 respectively.
0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%40.00%
Asas
ahHH
RDIs
lam
ic R
elie
fN
AYM
ETN
RDP
Aas F
ound
ation
Akhu
wat
Care
Sta
rzHa
ral B
unya
dKa
wish
NGO
Wor
ldSu
ngi
Kash
f Fou
ndati
onM
uslim
Aid
Average Loan Size/ Per Capita GNI
Figure 9.1: Average Loan Size/ Per Capita GNI
Average Loan Balance as a percentage of per capita GNI
PAR > 30 DAYS– PORTFOLIO QUALITY
31 IMFN
The Islamic microfinance sector aspires to be a double bottom line industry. Apart from a focus on the financial bottom line which is necessary for the sustainability of any Organisation, it is imperative that an IMFI is able to achieve the social development goals that it has set out to accomplish. For that purpose, measurable indicators need to be identified and tools need to be developed to ensure sustainable progress.
In the Islamic microfinance industry, this focus is intensified as the provision of Sharia compliant finance brings with it the religious concepts of fraternity, compassion and collaboration. The same concepts prevail in the microfinance industry in general, but are heightened in this instance due to their religious driver.
Whether an Organisation is working for women empowerment, providing the youth different opportunities or simply working for poverty alleviation, it is essential that the Organisation embodies its principles both in dealings with its borrowers and in dealing with its employees. A categorization and quantification of such principles is necessary when assessing periodic social impact. These indicators essentially are the driving force behind the revision if any required by an IMFI to change its modalities in order to create maximal lasting change.
The microfinance industry, in general, has always been gender focused. Women constitute the poorest of the poor in Pakistan and many MFIs have taken it upon themselves to bring financial services for the betterment and empowerment of these individuals. An analysis of the women representation on the board of directors for the IMFIs has found that the overall representation remains on the low side. Care Starz has the highest representation of women on its board of directors with a participation of 42% whereas Aas Foundation makes the list at number 5 with a women representation of 28%. There were found to be four Organisations with no women as part of their board structure. An equitably structured board is representative of the priority of their respective organisations and it is an ideal contention to state a perfect balance in board and staff composition.
Social Performance Indicators
An analysis of the women staff composition at various levels of employment found that the highest percentage of women was found at the senior level management of these IMFIs. Even then, their representation remained low and was found to be only 15% at the senior management level. The representation was the lowest when it came to branch management and women were found to constitute 13% of the support staff. This can be attributed to prevailing social stigmas and norms that prevent women from excessive exposure in the field, thus limiting their presence to senior management and related consultancy positions.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Senior Management
Middle Management
Branch Management
Loan Officers Others
0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%
Care Starz Sungi Development
Kashf Foundation
NRDP Aas Foundation
Figure A.1: Women Board Representation
Figure A.2: Women Staff Composition
32 IMFN
Over 50% of the organisations were found to have low income clients as their target market, 5 Organisations catered to the poor and only 2 Organisations specifically targeted the very poor. Asasah was the only Organisation that listed having two poverty target markets: the very poor and the low income clients. The presence of a specific target market for each of these Organisations ensures that their Organisation gears its offerings on the basis of their respective targets. The presence of a clearly defined strategy for the carrying out of these IMFIs operations will be of increasing importance in the coming areas as these IMFIs expand their areas of operation. The lack of strategy has already been found to be of escalating concern in the microfinance industry worldwide.
Of the profiled organisations, 8 reported having rural micro-entrepreneurs as one of their target groups. This posed a discrepancy issue as the gross loan portfolio and the total borrowers for the industry have a very small stake in rural areas. However, it was found that out of the 8 Organisations targeting rural entrepreneurs, 7 reported having more than one target group and hence, rural micro-entrepreneurs were not their only priority, 6 organisations identified vulnerable women as their key target market, which was found to be the third most popular target group behind urban micro-entrepreneurs. Most IMFIs do not have the mechanism in place to provide capacity building training to their borrowers before giving out loans and so the targeting of micro-entrepreneurs by these IMFIs is reflective of that weakness.
0 1 2 3 4 5 6 7 8 9
Very Poor
Poor
Low Income Clients
Figure A.3: Target Market
012345678
Figure A.4: Target Group
33 IMFN
9 of the 14 IMFIs provide Qarz-e-Hasan as one of their product offerings. The number of Organisations carrying out Murabaha is also the same. According to CGAP’s Focus Note on Trends in Sharia-Compliant Financial Inclusion, Murabaha is by far the most widely offered Islamic Microfinance product worldwide followed by Qarz-e-Hasan which has a relatively small portfolio. The opposite is true for Pakistan where, although, 9 of the 14 IMFIs offer Murabaha, the portfolio value of this product is relatively low. Furthermore, Akhuwat, the largest IMFI working in Pakistan provides only Qarz-e-Hasan and contributes almost 96% to the industry’s Qarz-e-Hasan portfolio. 2 Organisations carried out Musharaka whereas 1 IMFI offered Modaraba as a product. Product diversification is a subject of supreme importance for the industry at this point and time. A saturation of benevolent loans in the market skews supply and steers the focus away from financially sustainable and integrated products as aforementioned. The sector needs to maintain its social impact while ensuring sustainability of the practitioners and meeting market demand by offering a range of socially conscious interest-free financial products.
It was found that all Organisations had poverty alleviation as one of their development goals. 85% of the IMFIs were found to focus specifically on women enterprise development. However, there needs to be a greater allocation of resources geared towards women enterprise development in order to actualize this goal. Both education-literacy and health -nutrition were found to be the development goals of 9 Organisations whereas only 2 Organisations were geared to providing access to housing to the poor inhabitants. This might be a consequence of the low average loan size for the industry. These goals are also indicative of the underdeveloped areas of social development within the nation
Of the 13 Organisations, 6 were found to use a combination of more than 1 poverty measurement index whereas 7 Organisations used one specific index. The BISP scorecard, which is now the PPAF Poverty Scorecard, was found to be used by 7 Organisations, followed by the Grameen Foundation’s PPI which was in use by 5 IMFIs. Two Organisations: Kawish Welfare Trust and Kashf Foundation had developed their own poverty measurement index whereas Sungi Development Foundation was the only Organisation using a combination of 3 different poverty measurement indices to gauge the poverty status of its borrowers. It is imperative for all organisations to use any such poverty measurement index in order to quantitatively track the progress their borrowers make as a result of the loans extended to them by the organisation. In doing so, these organisations are able to revise their product structure to optimize impact and most efficiently meet market need.
The following data contains information collected from 13Organisations through a social indicators questionnaireKEY FINDINGS
0 1 2 3 4 5 6 7 8 9
Musharaka
Murabaha
Qarz-e-Hasan
Mudaraba
Sustainable Livelihood
Musawama
Islamic Micro-insurance
Figure A.5: Products Offered
02468
101214
Figure A.6: Development Goals
012345678
PPAF Poverty Scorecard
Per Capita Household
Expenditure
Per Capita Household
Income
PPI Participatory Wealth
Ranking
Organisation's own Index
Poverty Measurement IndexFigure A.7: Poverty Measurment Index
34 IMFN
It was found that nearly 40% of the IMFIs used the national poverty line to establish whether a prospective borrower qualified for microfinance services. The Pakistani national poverty line, unlike the international poverty line, is a calorie based measure whereby the expenditure on calorie intake of 2,350 calories per adult along with expenditure on other non-food items is used to construct a poverty line. 4 of the Organisations established the poverty status of their borrowers according to the USD 2 international poverty line. Anyone falling below the USD 2 per day mark qualified for the Organisation’s microfinance offerings. The poverty line was used in conjunction with the poverty scorecard used by the IMFI.
5
4
1
11
Poverty Line Used
National Poverty Line USD 2 International Poverty Line
Nation's 20% Poorest Nation's 60% Poorest
Other
Figure A.8: Poverty Line Used
It was found that 8 of the 13 IMFIs did not conduct any financial literacy trainings for their borrowers whereas only two Organisations: Asasah & Sungi Development Foundation conducted 3 or more trainings for its borrowers per quarter. Financial literacy trainings help build the capacity of the borrowers and without these trainings, such individuals cannot maintain an expedited rate of progress after the loan cycle is over. Furthermore, with 11 of the IMFIs citing women enterprise development as one of their development goals, it is imperative that they start providing basic financial literacy trainings so that the social goals of the IMFIs can be materialized in a sustained manner.
12
2
8
Three or more Two One Zero
Figure A.9: Quarterly Financial LiteracyTrainings for Borrowers
More IMFIs focused on building the capacity of their Organisations as opposed to that of their borrowers. It was found that nearly 40% of the IMFIs conducted one financial literacy training per quarter for their staff whereas Care Starz conducted two trainings per quarter. However, 5 of the IMFIs still did not conduct any financial literacy trainings for their staff. Organisational capacity building for the sustained growth of the industry is imperative for the IMFIs and for that purpose, such trainings need more frequent execution.
2
1
5
5
Three or more Two One Zero
Figure A.10: Quarterly Financial LiteracyTrainings for Staff
35 IMFN
The provision of microfinance services without other supporting
non-financial services in the form of health and education etc. only
uni-dimensionally tackles the poverty endemic and it is imperative for
the IMFIs to provide other reinforcing services. Of the Organisations
analyzed, 9 were found to be providing non-financial services to their
clients. However, the scope of these non-financial services was found
to be limited and needs enhancement to provide a more holistic
solution.
75% of the IMFIs were found to measure the poverty level of their
clients at entry and 9 of these IMFIs went on to track the poverty
status of their borrowers over time. Establishing a borrower’s poverty
level and tracking it over the life of the loan is essential as it gives the
Organisation an idea of whether its services are making a difference
in the quality of the life of its borrowers.
9 of the IMFIs were found to be conducting client exit surveys.
However, only 5 of these reported as having a review process for
these surveys in order to determine any weak links in the
Organisation’s structure and to determine where the Organisation
needed strengthening.
7 of the IMFIs reported as having a basic level of mechanism in place
to determine if the borrower has been over indebted. This is essential
for the safety of both the Organisation and the borrower. As the
industry grows, it is necessary to ensure that measures be instituted
to prevent borrower over-indebtedness. Over-indebtedness has
posed a significant problem in the region over the past, particularly in
the Andhra Pradesh Crisis of 2010. In light of this growing concern,
every organisation needs to act in a fiscally and socially responsible
manner to counter such a vital issue from becoming a prevalent
practice in this region.
9
4
Yes No
Figure A.11: Non FinancialServices Offered
10
3
Yes No
Figure A.12: Is the poverty level ofclients measured at entry?
9
4
Yes No
Figure A.13: Is the poverty level ofBorrowers tracked over time?
9
4
Yes No
Figure A.14: Are client exit surveys conducted by your organisation?
7
6
Yes No
Figure A.15: Is there a mechanism toprevent over indebtedness of clients?
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GOINGFORWARD -RISKSANDPOTENTIAL
GOINGFORWARD -RISKSANDPOTENTIAL
Islamic microfinance, being the confluence of microfinance and Islamic banking, has seen huge demand in recent years especially in the Muslim majority countries with Indonesia, Bangladesh and Sudan being some of the leading providers of Islamic microfinance in the world. It has been estimated that more than 650 million Muslims all over the world live on less than $2 a day and a majority of those are deprived of basic financial services. The demand for these services in Pakistan has also been found to be significant. The KAP study conducted by the SBP has found that the demand for Islamic finance is equally distributed among the rural and urban areas and among individuals of varying income brackets. In fact, one of the factors of the huge growth in the number of Islamic microfinance practitioners has been an increased recognition of the demand for these services. At the back of this demand, the industry has experienced growth rates of 86% and 110% in the last two years respectively. However, what must be kept in mind is the fact that these exponential growth rates are not sustainable in the long run and thus some steps are required to ensure that the industry is able to serve its target markets efficiently and effectively.
The risk of being considered non-Sharia compliant is also a major risk in the Islamic microfinance industry. As the number of IMFIs grows, the risk of losing potential and active clients because of non-Sharia compliance also grows. However, it has been found that the knowledge of the borrowers regarding different Islamic banking models and contracts is low. According to the SBP’s KAP study an average of 96.6% of the non-banked and 87.6% of the banked stated that they do not understand the modalities of Islamic banking models and products. Furthermore, of the three categories analyzed i.e. the banked, the non-banked and the corporate clients, it was found that all three categories lacked any significant knowledge of the different Islamic banking contracts such as Qarz-e-Hasna, Musharaka, Ijara, Modaraba and Murabaha etc. These same contracts form the product structures of different Islamic Microfinance practitioners and a lack of knowledge regarding these facets of Islamic finance is a threat to the industry. Therefore, it is necessary that the borrowers are made aware of these models and product structures through literacy programs so that they may be able to make better judgments regarding the products they need. It is also necessary that the IMFIs take steps to ensure that their Organisations comply with Shariatic principles in the delivery of their products and services. For this purpose, the practitioners need to institute a Sharia compliance framework in their Organisations and have themselves reviewed by an independent Sharia Board.
The industry analysis has shown that the Gross Loan Portfolio of the industry is skewed with an overwhelming percentage invested in urban areas and in the province of Punjab. Even though the industry is in an early development stage, what must be realized is the fact that recently, over indebtedness has emerged as a global concern for microfinance practitioners and recent growth in Islamic microfinance has made it a concern for the Pakistani industry as well. Care must be taken in future years to ensure that the presently neglected sectors of the industry do not stay this way but that the IMFIs start providing their services in rural areas and in expanding their portfolio to other provinces as well. This will ensure that the more under developed areas of Pakistan receive their due share of representation in the Islamic Microfinance industry in Pakistan. In countries like India, the microfinance industry has been able to increase scale and reach all corners of the country through self help groups. Non institutional lending has been employed to fulfill the day to day needs of the borrowers all over the world.
The following areas represent avenues of growth for the industry in the years to come.
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The greatest risk arising from the huge growth in loan portfolios is that the Organisation’s internal capacity will not grow at the same rate as its portfolio. This might mean weak internal controls, unsound decision making practices, weak lending practices and lack of accountability and inclusivity among others. One of the major consequences of this possibility is that the IMFI might not be able to effectively deliver on its goal of financial inclusion and might suffer from increased portfolio risk. Therefore, it is imperative that there is a realization of this concern at all levels of management in an IMFI and that the Organisations spend time and effort in building the capacity of their staff and their overall Organisation. Best lending and decision making practices need to be instituted and sound internal audit practices are necessary to ensure transparency and accountability. There is a need to institute and actively monitor the client protection principles. Impact assessments also need to be carried out by the IMFIs to gauge the success of their endeavors in the alleviation of poverty. For this purpose, employee graduation needs to be tracked and made certain. Furthermore, there is a need to increase the financial acumen of both the Organisational staff and the borrowers for maximum social impact and Organisational risk mitigation. Some IMFIs have already realized the importance of these endeavors and are taking steps in this regard e.g. Kashf Foundation has carried out basic financial literacy trainings for 2,757 of its borrowers in the year ended June, 2014. The industry needs a continuous focus on achieving sustainability of double and triple bottom lines.
Product Diversification ISLAMIC MICRO-INSURANCE
Salam, Musharaka and Modaraba etc..
It is imperative that the IMFIs broaden their product base to be able to provide a more holistic solution to poverty. The dominant product in the market is Qarz-e-Hasna but other products such as Murabaha and Musharaka need to be instituted at a larger scale to help in the sustainability of the sector. The following areas of improvement/advancement have been identified for the industry to continue on its growth trajectory and to serve its social goals.
It has been found that most of the IMFIs in Pakistan do not provide micro-insurance to their clients. Of the ones that do, many of the important types of insurance products relatively go uncovered. The poor and the destitute generally do not have access to healthy food and are therefore most prone to suffer from health issues. They usually have jobs that are more taxing on the body as well and are more prone to accidents and injuries at work. Therefore, this segment of the society is most in need of different types of insurance services but are also the most deprived as they are considered more risky. Of the IMFIs analyzed, it has been found that health insurance, credit life insurance and life
insurance are the three types of insurance products provided by the practitioners. However, the overall industry portfolio is low and needs to be strengthened in future years.
One of the main drivers of the Pakistani economy is agriculture and it forms the basis of livelihood of most of the rural inhabitants representing one of the lower income stratas of the country. However, agriculture insurance does not form a part of the Islamic micro-insurance portfolio analyzed here. Similarly, the portfolio invested in health insurance is low and needs to be broadened through provision by more IMFIs. To increase the depth of Islamic microfinance, it is imperative that more IMFIs enter this field. It is also important that the borrowers’ families are also brought into the fold of Islamic micro-insurance such that they are also taken care of in case of any crisis.
In this instance, NRSP’s insurance against child labor could serve as an example. The insurance scheme covered members of the borrowers’ household in case of a threat of collapse of the support network of the borrower’s household and had been found to reduce child labor and to increase high school attendance. Innovative insurance regimes to curb the vast array of problems being faced by the poor in our country need to be put into place if the IMFIs are to serve their common goal of poverty alleviation. More importantly, it willfully covers the organisation’s liability in case of unprecedented loan.
The delivery of the ideal product for the borrowers is a matter of strategic importance to any Organisation. Different target areas and groups require a varying product structure. As the market broadens its focus to include rural areas, the emphasis needs to shift to a product suitable to the bucolic regions. With a vast agricultural set up, Salam is an appropriate product for future expansion. It can help the small land owners with limited resources to get access to cash for investing in their land. The harvest is then sold to the IMFI at an agreed upon price. The IMFI can in turn, sell the product on the market or can run a parallel Salam. Of the Organisations analyzed here, none offer this product.
Similarly, Musharaka is another product which has gone relatively neglected by the industry practitioners. A recent initiative is the provision of the product in Swat by Asasah. Aas Foundation is another Organisation providing this service. Musharaka is considered risky as it involves the sharing of both profits and losses and requires certain risk management practices as well as complete transparency and reporting to be carried out. Modaraba is another product that involves sharing of profits whereas the losses are borne by the Rub-ul-Mal while the Modarib loses his time and effort. Modaraba is also being carried out at a very small scale by HHRD. However, these products can set the stage for the long run growth and sustainability of the Organisations, a goal which the provision of Qarz-e-Hasna cannot serve. Also, both these products involve elements of risk sharing and can ease the burden on the borrower which should be the prime responsibility of the IMFIs. If the Organisations build their own and their borrowers’ capacity, they will be able to provide such services and pave the way for the sustainability of both the IMFI and the borrower. These financially integrated products serve the ultimate purpose and are more equipped to meet the varied market demand.
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Product Innovation
The State Bank of Pakistan has issued guidelines highlighting the essential elements of different Islamic modes of finance. These have been specifically laid out to ensure that there is room for improvement and innovation. The industry needs to develop product structures being mindful of the needs of the borrowers. Serving these needs in an effective manner would require customization of the basic product structures to the borrower’s requirements. The IMFIs also need to come up with ways to produce hybrids of the basic elements of different products to serve the masses. Wasil Foundation, an Islamic microfinance practitioner working in Pakistan has recently developed a new product by the name “Master Salam” which combines aspects of both Salam and Ijarah to cater to the target market. In fact, the Organisation won the CGAP Islamic Microfinance Challenge for the product and was awarded a grant of $100,000. Such innovations need to be carried out at a broader scale to find the optimal solutions to serving the poor.
The importance of the provision of non-financial services is recognized by the IMFIs and it is hoped that the breadth and depth of their provision will increase in the future.
The low cost housing sector for the poor and the needy has largely gone un-served by the practitioners. Of the total loans made by the industry, only 0.2% have gone into serving the housing needs of the borrowers. There is significant housing demand among the middle and lower income households in Pakistan with the housing backlog estimated at 7.57 million in 2009. This backlog has since increased and some of the major factors for this increase are population growth, depletion of housing units, non-availability of finance to meet the housing needs of the sector and growing rural to urban migration. The increased instances of slums and informal dwellings among different regions of the country are a reflection of the need for housing finance.
Diminishing Musharaka is one of the tools that can be used to fill this demand-supply gap. This implies a Musharaka between the borrower and the IMFI where the share of the IMFI’s capital decreases over time, reducing to zero by the end of the engagement when the title shifts to the borrower. This would require minimal initial outlay by the borrower with relatively easy installments over the life of the engagement. The IMFIs, in this instance, can be used as the carrier to provide funding to low income households through funding by the HBFC in targeted areas.
SYNE
RGIE
S
Low Cost Housing
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Pakistan has seen an exponential growth in low cost private schools in recent years. This growth has come at the back of a supply gap in the public schools in Pakistan. Today the LCPS sector serves 30% of the students enrolled in primary schools. It serves around 10.5 million students out of a total enrollment of 35.2 million. The LCPS have become an important part of the education system in Pakistan due to their
competitive edge that comes from an emphasis on parent’s preferences, delivery of customized solutions and integration in the communities that they serve. These low cost private schools have in the past been run using the owner’s personal resources and a reliance on informal borrowings. However, this sector
requires formal borrowings to be able to improve quality and for the purpose of expansion. The IMFIs can step in to provide this financing and help the LCPS in the provision of their services. The IMFIs need to
devise product structures and implementation procedures that can see the development and expansion of LCPS, aid in the capacity building of teachers and institute progressive reforms in curricula. For this purpose, it is imperative that the IMFIs build their capacity so that they may be able to tap in to this
burgeoning industry.
The rate of electrification in Pakistan is
extremely low with South Punjab, KPK, FATA,
Interior Sindh and Balochistan being the
hardest hit areas. There are approximately
30,000 villages in Pakistan and a population
of 30 million people that is deprived of
access to electricity. In the rural areas that
are connected to the electricity grid, the
black outs last from16-18 hours which
hamper productivity of the constituent
households forcing them deeper into
poverty. These households then turn to
kerosene to fulfill their requirements and
face health issues from its usage.
Furthermore, they also have to bear the
rising cost of kerosene and need a cheaper
source to be able to carry out their day to
day activities.
Solar home systems, among other renewable energy products, can serve to
overcome the difficulties that these households continue to face. Instead of a huge initial outlay, these rural households
can obtain their products from the IMFIs on the basis of Murabaha or Qarz-e-Hasna and
can pay the price of the system in small installments over the life of the engagement. For this purpose, the IMFIs need to develop
linkages with solar solutions providers. These IMFIs would also need to develop
technical capabilities of their employees to be able to carry out this new line of
operation.
Low Cost Private Schools
Renewable Energy
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The Islamic microfinance sector needs to leverage technology to be able to stay competitive in an ever changing environment. This means employing latest information systems to add to the capacity of the Organisation and the use of branchless banking to reach out to the underserved areas in the country.
Management Information Systems designed specifically to cater to the Islamic microfinance practitioners have been developed in Sri Lanka and need to be brought to Pakistan to be deployed in the sector. These systems will help ensure that the IMFIs are run effectively and efficiently and will bring about ease of provision of the Organisations’ respective services. These systems will also ensure savings in time and in cost and will contribute to the sustainability of the sector. These will ensure transparency and accountability via making sure that all relevant data is present and by having controls set up to ensure that the responsible parties are identified and made answerable.
Branchless banking is another area which can be utilized by the IMFIs to bring down their costs, reduce their portfolio risk and to be able to provide their services at a broader level. Typically, loan officers and the beneficiaries of the IMFIs’ loan offerings have had to travel long distances for the purpose of payments and collection of the loan amounts. This has stacked up the cost of transaction of various IMFIs. This has also limited outreach as some potential borrowers are unable to afford these services because the cost of travel to make these loan payments is too high. With the advent of branchless banking, however, these difficulties can be eliminated. Pakistan is one of the leading countries in the provision of branchless banking services with more than 400,000 transactions taking place per day through Easypaisa, the leading provider of branchless banking in Pakistan. Many Islamic and conventional microfinance institutions are now beginning to turn towards over the counter transactions or m-wallets to be able to efficiently carry out their operations. NRDP is just such an IMFI who has linked with Easypaisa to carry out its operations. However, at present, only repayments and not disbursements are being made through these services. The IMFIs need to make optimal use of this tool to increase their scale and bring down their costs. They also need to find the optimal level of operations where the benefits of branchless banking are maximized and the costs minimized.
At present, the Islamic microfinance industry is dependent on external funding sources to be able to carry out its operations. However, their avenues of funding are limited due to the unavailability of a Sharia compliant source of funding at the national level and due to underdeveloped linkages with the Islamic banks and Islamic financial companies. Access tosubsidized financing via organisations such as PPAF is essential in this infant stage of the industry, over time though the reliance on subsidized funds needs to be weaned off and deeper links need to be established with capital markets. As the industry develops, commercial credit can be accessed at a broader level to ensure sustainability apart from having product structures that support this cause. In the Member Country Partnership Strategy for Pakistan for 2012-2015, the areas of socio-economic development identified by the IDB included supporting Islamic Finance. The strategy identified two specific areas of development including the Takaful sector and strengthening the Islamic microfinance sector and indicated a financing facility of $2.5-$3 billion. Collaboration with IDB in the coming years could serve as one of the commercial sources of funding for the sector. Partnerships with commercial banks will also be a huge step in this regard. Infact, Wasil Foundation has already partnered with Meezan Bank to provide microfinance services to the agricultural sector. Furthermore, the IMFIs also need to come up with innovative solutions to the finance crunch by making use of new tools such as crowd funding. Seed Out, a platform for the provision of benevolent loans has already made use of crowd funding to reach the poor and the needy. Similarly, these Organisations need to tap into the CSR funds for various corporations and need to look into angel financing to be able to deliver their services.
Use of Technology
Funding
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With a majority of the country’s population living in abject poverty, it is vital that the IMFIs not only continue to provide
their Organisational services but rather track their progress over time to ensure that they are on the right path on the
road to maximal financial inclusion. It is fortunate that the IMFIs have taken it upon themselves to set up targets for
various indicators that they plan on accomplishing in the coming years. The following table highlights the figures that the
industry hopes to achieve in the 5 year period ending in December, 2019.
As of June, 2014, the number of total borrowers served by the IMFIs is 618,767. With a target market estimated at 27
million, the outreach of Islamic Microfinance stands at 2.3%. The industry plans on having achieved an outreach of 9%
by December, 2019 with 2.5 million borrowers served. The industry also plans on adding 499 branches to the existing
infrastructure to register an increase of 152% in the number of branches for the sector.
Target Setting for the Industry
Branches
Borrowers
Districts
826 branches all over Pakistan
2.5 million borrowers in all regions of the country
A growth of 64% in the number of districts served
INDICATOR TARGET FOR DECEMBER, 2019
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TESTIMONIALS
Abdul Haq had just completed his intermediate degree when it became necessary for him to leave college to support his family. He started by helping his father in his electronics shop in the Sheikoteq village of Chitral. Abdul Haq’s house happened to be located near a village stream. In the monsoon season of 2011, there was heavy rainfall all over the country and the rain caused flooding in small streams. Abdul Haq’s village was no different and the houses near the stream were affected the worst. Resultantly, Abdul Haq’s house was partially destroyed. His farm animals and his family’s crop had also been lost in the flood. Overall, the rains had caused him a loss of more than PKR 100,000/-. Fortunately, however, his shop had survived the floods and was now helping him in recovering some of the losses. Although, his shop was running well, it was now the only source of income for his family. On top of that, the profit that he was making was making was low and was going towards recouping some of his losses. He started the work of repair on his house and purchased cattle but at the expense of buying material for his shop. As a result, his profits decreased even further.
Worried about the condition of his business, he wanted to take a loan for his shop. No one in the locality, however, was in a condition to extend him a loan. One day, he heard from the bank manager that an Organisation was providing financial assistance. The manager provided him with the address of the Organisation and told him to visit the premises. Abdul Haq went to the given address and saw the offices of Helping Hands. He was nervous and excited at the same time, wondering if his prayers will be answered or not. He met with one of the representatives of HHRD and was
asked to provide the requisite documentation. Within a few days, the case of Abdul Haq was approved and he was given material worth PKR 30,000 for his shop. The material was given under the Murabaha facility of HHRD’s Esaar Microfinance. Just a few days after acquiring the material, Abdul Haq’s sales increased and his business turnover also saw a boost.
“I was very concerned about my business and it was going down day by day after the flood. I tried to get a loan but to an avail. Esaar Microfinance proved to bea blessing. Providing material to me proved to be very effective. My profits have now doubled. I was earning a monthly profit of only PKR 2,000 and now I am earning more than PKR 4,000 a month. My quality of life has also improved and I’m also saving PKR 2,500 per month out of my income. All this has been possible only with the help of Esaar Microfinance”.
HHRD
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“I cannot believe that I have been nominated as a successful Woman Entrepreneur. I was in this business for 10 years but never earned handsome profit as I was lacking the knowledge to run an enterprise but thanks to Care Starz, today I am being hailed as a successful woman,” Amina.
Amina Bibi was a resident of Mughalpura in Lahore. She was 50 and a mother of 5 children. Amina Bibi had been engaged in the microfinance sector for the last 10 years but had been unable to set up a sustainable business. She had to suffer significant business losses, threatening to entrench her deeper into poverty, due to lack of business management skills and proper guidance to run a micro-enterprise. Despite significant losses, however, she continued to put faith in her enterprise due to unavailability of alternative options. Her husband was a daily wage earner who was sometimes unable to find work and in these circumstances, the little profit from her business was the only thing putting food on the plate.
By 2013, however, she had had enough and decided to give the “Muaash” program of Care Starz a try. The Muaash program had been set up by Care Starz in Lahore with a comprehensive supply chain management mechanism. The program included an asset based financial facility, a demand oriented stock facility, free pre- and post- capacity building programs, effective monitoring & supervision system, no processing fee, a weekly inventory refilling system, repayment based on good sale and financing up to PKR 60,000/-. Amina enrolled in the program in September, 2013 and went through a business training exercise following which she
set up a micro shop at her home. In the past, she had kept only one product at her shop but later came to realize that she would require more than one product to be able to be able to become solvent. She collected information through formal and informal methods and analyzed which products would be best suited for her shop. Following this exercise, she selected clothing, electrical equipment, kitchen items and crockery for her micro shop. Her eldest daughter did stitching and Amina Bibi announced a discount of 50% on stitching if the customer purchased the cloth from Amina’s shop. This idea proved successful and enhanced her profits to PKR 80,000. Due to these tremendous earnings she earned the award of best entrepreneur of the quarter ending June 2014.
CARE STARZ
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Like any mother, Amna Baji had very high aspirations for her son. Unfortunately, the years had not been kind to her. She was having problems on the home front and the matters escalated to such a degree that she was forced by her family to take a divorce from her husband. However, she decided not to put added burden on her family of having to take care of her as they were not very well off.
Amna Baji finally decided that she wanted to live separately with her son and earn a living. The only place she could afford was a rented house in Ghaziabad, Lahore which was very small and consisted of just one room.
However, she still had to figure out a way to earn a living and she wanted to improve on her living conditions to be able to give her son the best of everything. She knew how to stitch clothes but did not have a sewing machine or its accessories. Most of what she had went into paying the rent of the residence and in taking care of day to day expenditures; she did not have the money to buy a sewing machine. However, she had heard of Asasah which provided different Islamic microfinance products including Qarz-e-Hasna.
Asasah’s selection procedure was based on careful consideration which gave preference to women who were skilled and wanted to work for economic empowerment. They also gave preference to widows or divorcees who wanted to earn a livelihood for their children. Therefore, Amna Baji was the ideal candidate for a loan. She provided them with the relevant documents and a loan to her was approved by the Organisation. Using the loaned amount, she bought a sewing machine and other required materials. Using that machine she started providing stitching services to various clients and her business began to grow and flourish. Within a short time, she became self-sustainable and is now working hard to support herself and her son. She plans on giving her son high quality education.
ASASAH
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Born a stone’s throw away from Faisalabad in a small village to a service oriented house-hold, Muhammad Waseem’s dreams were just those: unattainable realities lying outside the perimeter of reality. The youngest in a family of 7 children, forced to drop out of school at the tender of 15 to be put to work in order to contribute to the household income, he worked for one night at a ‘Total’ petrol pump in Lahore but due to the severity of the weather that night, vowed not to return. The following day, he contacted an electronics store that required salesman and began working there at RS 2500/month. For 7 years he toiled at that store, raising his wage up to 6000/ month but by this time he had a lot more responsibility and additional expenses to bear. The salary he earned was not enough to sustain his household. Having to take care of a wife, 2 children, his parents and the upkeep of the house where his entire family still resided, Waseem was limited in his options, not being able to leave his job as it was the only source for income for him, nor did they furnish his request to raise his wage thus leaving him incapable of in financially providing for his family. Living in the grips of poverty, with no water or electricity, in a house occupied by 22 people, he saw his options becoming more limited with each passing day. This continued, until he consulted a distant family member through him was made aware of Akhuwat’s service of providing interest free loans. The same relative also gave him the idea of starting a motorcycle spare parts business with his cousin. Acquiring a 10,000 rupee loan for Akhuwat and using his life savings of 20,000, he pooled the total in order to buy a few spare parts, and leaving his cousin in charge of the business, continued his day job at the electronics store. In a matter of a couple of months he came to realize that the cousin had squandered the money away through mismanagement of finances. This new adversity would have been a pivotal point for anyone in Waseem’s situation:
most people under these circumstances would either have meekly accepted their fate and continued in the same condition, having lost all hope to better their lifestyle. Or have demanded retribution, which in most cases would have proved futile.Yet this proved to be the very situation required for Waseem to take that leap of faith. After paying off his initial debt, he left his job, acquired another loan to the amount of Rs. 25,000 from Akhuwat and established a business focusing not just on the sale of spare parts button motorcycle repair as well. Waseem still lives in the same home with the same people, but now he has been able to do right by them, the way he had always hoped to. He has installed a water meter and an electricity line, and is able to comfortably house, feed and educate his daughters and meet all expenses over and above their basal expenditure.. His recent good fortune allows him now to save an average of 15,000 rupees per month after meeting his regular expenditure. He uses this money to reinvest in his business, having hired two people to work in the shop and managing his finances in order to expand to automobile repair and parts replacement. In its truest form, Muhammad Waseem Attari has embraced the message of Akhuwat, having facilitated the loan acquisition of 5 more borrowers and contributed significantly in his own right to the membership donor program, he stands as a testament to hard work, perseverance and brotherhood.
“Akhuwat has made me a donor from a borrower and for that my gratitude knows no bounds”.
AKHUWAT
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ANNEXURES
Aas Foundation
Aas Foundation in an NGO registered under the Societies Act, 1860. It envisions “A socially, economically and politically sustainable and peaceful society, where all its citizens avail their potential and opportunities on an equal basis”. The Organisation works towards achieving its objective through community mobilization by creating awareness, through the provision of Islamic microfinance services and related trainings, through the provision of better livelihood enhancement opportunities, through carrying out capacity initiatives for the poor, through the formation of collaborations with like-minded Organisations to contribute in the development of social and physical infrastructure and through the empowerment of women via different initiatives.Aas Foundation carries out Islamic microfinance as the core business of the Organisation and has been catering to the market for the last 5 years. It has a total of 7 offices, three of which carry out Islamic micro-finance operations. All of the Organisation’s Islamic microfinance operations are concentrated in Punjab. Under its Islamic microfinance product portfolio, the Organisation provides the following products:
The Organisation provides services to the extremely poor women in the rural areas and focuses on rural entrepreneurship. For more information, please visit their website at: http://www.aasfoundationpk.org/
Akhuwat is an Islamic microfinance provider that started its operations in 2001, disseminating interest free loans based on the principles of Qarz-e-Hasna. It visualizes a society free of poverty and based on the postulates of empathy and fair play. Its mission is to empower the marginalized and to bring out their entrepreneurial capabilities. It operates through religious places and embodies the concepts of brotherhood and volunteerism. It provides the destitute with guidance and builds their capacity to become sustainable.The last decade has seen Akhuwat become a formidable force in the industry. The loan offerings of Akhuwat include:
MusharakaModaraba
Family Enterprise Loan for the establishment of a new business or the expansion of an existing oneLiberation Loan to rid the borrower of loans taken at unfair interest ratesEducation Loan to help finance the borrower’s educational financial needsHealth Loan to aid the essential healthcare cost of the borrowerEmergency Loan as a cushion against loss in an emergency or crisisHousing Loan for the requisite repair and construction of living premisesMarriage Loan for the cost associated with wedding ceremonies and dowries
Akhuwat
Annexure I - IMFI Profiles
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The Organisation also provides Islamic micro-insurance or Takaful as a voluntary product. Apart from the provision of Islamic microfinance, the Organisation also focuses on building the business ideas of the borrowers along with providing educational and health services. A unique effort by the Organisation has been a focus on the rehabilitation and integration of the Khawajasira community. For more information, please visit their website at http://www.akhuwat.org.pk/.
Asasah is a non-profit public company, limited by guarantee which started its operations in 2003. It has the honor of being the first Organisation to start its operations with 100% commercial funding for the purpose of carrying out conventional micro-finance. It was instituted to replicate the model of Grameen Foundation to increase the productivity of households in the rural areas. It has since transformed into an Islamic micro-finance provider and expanded its operations to urban centers. Asasah believes that the provision of financial assistance on its own is not sufficient to make the poor of this country sustain themselves. Therefore it makes use of the three pronged approach whereby, along with financial assistance, it imparts knowledge to the borrower so that he can make optimal use of the loan being provided and also helps develop market linkages so that the borrower can get a good price for whatever produce he has come up with. After ten years of conducting conventional micro-finance operations, Asasah announced the complete transformation of the Organisation from a conventional to an Islamic micro-finance provider in 2013. Under the new portfolio, Asasah offers the following products: For more information please visit http://www.asasah.org/
Care Starz conducts Islamic micro-finance as its core business in the province of Punjab. It is an independent, non-profit NGO that strives to mitigate poverty and hunger and envisions a prosperous and healthy society. It aspires to achieve its vision through the supply of quality food and through the provision of enterprise development and capacity building trainings along with providing educational expertise. Like other Organisations in its field, its operations are structured on the premise that the provision of financial assistance alone is not enough to rid the borrower of poverty and that a complete support system including financial literacy trainings and the development of the borrower’s business idea is needed to help him become self-sufficient. Care Starz adopts a three tiered strategy in which it helps its clients increase their savings through the following means:
Currently the Islamic micro-finance products being offered by Care Starz are Murabaha, Musawamaha and Salam. Through these products, the Organisation helps its borrowers, all women, set up micro shops that help them become solvent and capable of helping themselves and eventually, others.For more information, please visit http://carestarz.org/.
Asasah
Care Starz
MusharakahMurabahaQarz-e-HasnaInterest Free Loan for Food Security
It provides its clients with food at subsidized prices or in some cases, free of costThe comparatively nutritious food provided by the Organisation helps the family maintain good healthIt conducts sessions on how to increase daily savings to make the client self sufficient
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Haral Bunyad is an initiative of Borjan, a recognizable fashion brand in Pakistan as part of their corporate social responsibility scheme. It has been registered under the Society’s Registration Act, XXI of 1860. It endeavors to socially and economically uplift the deprived and destitute of Pakistan. Haral Bunyad’s regions of focus for development and growth are the rural areas and the urban slums of the country which are inhabited by the poorest of the poor. It envisions a just society where equal opportunity is offered to all individuals. To that end it strives to increase the standard of living of these individuals and communities through the deployment of financial and non-financial support.
Haral Bunyad started its operations as an Islamic Micro-finance Provider in 2009. It has since disbursed millions of rupees to the poor and the needy through its sole Islamic Micro-finance product: Qarz-e-Hasna. It disburses loans ranging from an amount of PKR 15,000 to PKR 25,000. Its loans carry no mark-up and are repaid over a period to become a part of permanent fund used for future lending. An applicant fills a form and provides other relevant data after which his place of residence and work are visited and the loan is approved at the monthly committee meeting.
Apart from this, the society also provides non-financial support which includes skills development and technical training of the individuals so that they can become independent. For more information, please visit http://www.borjan.com.pk/about_us.php.
HHRD is a “…global humanitarian relief and development Organisation…” founded in 2005 which provides emergency services and support to disaster stricken areas all over the world. In addition, the Organisation also carries out long-term relief and development initiatives. It visualizes the empowerment of the most marginalized individuals of the society and aspires to provide them with equal opportunities and to strengthen the bond between the members of a community. Its donors include DFID, WFP, and WHO etc.
HHRD is registered as a trust under the Trust Act, 1882 and is carrying out its activities in all provinces of Pakistan. Its core areas of business include health, emergency response, physical rehabilitation, skills development, orphan support, water, infrastructure development, education, disabled children, In-kind donations and Esaar Microfinance.
HHRD has been carrying out Islamic micro-finance under the banner of Esaar Microfinance since 2009. Esaar Microfinance focuses on the development of micro enterprises and the provision of livelihood opportunities for poverty alleviation. To achieve this objective, it relies on the concepts of brotherhood and solidarity. It has three products as part of its portfolio:
Like other Islamic micro-finance providers, it focuses on building the capacity of its clients through various non-financial services and puts emphasis on social mobilization. HHRD’s website can be visited at http://www.hhrd.org/.
Haral Bunyad:
Esaar Microfinance-Helping Hands for Relief and Development:
Qarz-e-HasnaModarabaMurabaha
51 IMFN
Islamic Relief is an international relief and development Organisation founded in UK in 1984 as an NGO. It is carrying out its activities in 30 countries. The Organisation started working in Pakistan in 1992 and is registered as a Company Limited by Guarantee. In its vision, the Organisation is inspired by faith and envisions a caring world where the individuals are empowered and fulfill their social and moral obligation to unite in the hour of need.
To achieve its vision, the Organisation mobilizes resources, establishes partnerships and builds the capacity of the needy. The Organisation’s programs include the following:
Islamic Relief Pakistan has been running its microfinance program since 2001. Its products include: Qarz-e-Hasna & Murabaha. To make the masses independent and sustainable, it provides interest free financing for small businesses, enterprise development trainings, business start-up grants and tool kits, develops market linkages and helps strengthen community governance. Its activities have benefitted thousands of individuals in their target market throughout the years. The Organisation’s website can be visited at http://www.islamic-relief.org.pk/.
Kashf was initially started as a research program in 1996 but the later years saw it evolve into a microfinance provider and the Foundation is now considered the premier wealth management company for low income households. It envisions a society free of poverty and gender discrimination as a result of financial services tailored to its borrower’s life cycle and business needs. It empowers women to become agents of economic and social change by promoting linkages, building alliances and making them get in touch with their entrepreneurial spirit. The foundation provides the following services:
The Foundation started carrying out its Islamic microfinance services in late 2013 and has since benefitted over 3,500 borrowers. Its Islamic microfinance product is Murabaha and the Foundation provides this product through 8 branches operating within KPK. The Organisation has, since the inception of these services, provided financial literacy trainings to over 2,700 clients and is poised for the growth and development of the sector in years to come. For more information, please visit http://kashf.org/.
Child Welfare ProgramMicrofinanceHumanitarianWater and SanitationHealth & NutritionEducation and TrainingEmergency AppealSeasonal Initiatives
Islamic Relief Pakistan
Kashf Foundation
Access to business loans to promote entrepreneurshipFinancial education trainings to help the borrowers improve their financial management skillsProvision of micro-insurance services to reduce family level contingencies
52 IMFN
Kawish Welfare Trust has been practicing Islamic micro-finance since 2008. It visualizes a literate, healthy and dignified society that is ready to take on anything that comes its way through collaboration and association. Kawish Welfare Trust’s building blocks to achieve its objective are the provision of primary and middle level education, supply of the fundamental health facilities, microfinance services, the development of skills and crisis management. For this purpose, the Organisation is carrying out varied projects, including:
Under the umbrella of Al Basit Microfinance Project, Kawish Welfare Trust has partnered with Akhuwat and has been providing interest-free Islamic microfinance products since June, 2008. The project aims at alleviating poverty in rural areas and making the deserving and needy in those areas, self sustainable. Their main area of operation for this project is Bahawalnagar. They have provided motorcycles, sewing machines and have also recently invested in livestock to make the local population independent. For more information, please visit http://www.kawish-welfare-trust.org/.
Muslim Aid is a UK based nonprofit Organisation that started its operations in 1985 for the famine affectees in Africa. Its main goal, initially, was to serve humanity by reaching the effected people in an emergency situation. With the passage of time, the Organisation started providing services in other areas of social development namely:
Muslim Aid established its field offices in Pakistan following the earthquake in 2005. Since then, it has been serving the marginalized people in the country in all areas of operation. Internally displaced people, especially, have benefitted a lot from the efforts of the Organisation. The vision of Muslim Aid is “A world of peace, compassion and justice where all people achieve fulfillment”. It aims to achieve its vision through the development of innovative and sustainable solutions that help individuals live independently and with dignity. The Organisation carries out its microfinance activities under the head of economic empowerment. These activities are focused in the areas of Rawalpindi and Chakwal where the individuals at the bottom of the economic pyramid are identified and given financial support without pledging any collateral for the service.The Organisation provides these services through the Islamic mode of Murabaha. Since inception, the Organisation has served 32,000 families with a disbursement of over PKR 38 million. For more information, please visit http://muslimaid.org.pk/.
Al-Aleem Education ProjectVocational Training InstituteAl-Nafay Library ProjectHealth ProjectAl Basit Microfinance ProjectDisaster ManagementCommunity DevelopmentHaleeb Village Milk Collection CentersRural Tele Medicine
Kawish Welfare Trust
Muslim Aid Pakistan
EducationHealthWASHEconomic Empowerment
53 IMFN
National Rural Development Program is registered as a society under the Societies Act, 1860. It carries out its development and humanitarian activities in the province of Punjab and Sindh along with the capital city of Islamabad. The Organisation has been operating since 1992 when it started with an office in Narowal. It envisions a just and vibrant society where wealth is equitably distributed and the people live in a poverty free community. It aims to achieve its vision through various strategic measures including:
The Organisation has been carrying out its Islamic micro-finance operations for 3 years. Under this program, the Organisation provides two products:
Under its Murabaha product, the Organisation provides livestock and agricultural development services which serve the rural community. The Organisation can be reached through http://nrdp.org.pk/.
NRDP provides services in the following areas: social mobilization, microcredit enterprise development, education, health, disaster management, water and sanitation, food security, women rights and empowerment, good governance and democratic development & human and institutional development.
Naziran Yousaf Memorial Trust is a not-for-profit, non-governmental and non-political Organisation that was established in 2004 and registered in 2005 through a group of volunteers. Its target market is the most marginalized individuals in the urban and semi-urban areas in Pakistan. The Organisation strives for the social and economic uplift of these individuals and helps them become sustainable.
The Organisation’s vision of “Micro-actions, Macro-effects” is achieved through the deployment of sustainable social and economic solutions. Its areas of operations include Punjab, Sindh and Gilgit Baltistan. NAYMET Trust is running the following programs:
The Organisation has been providing Islamic micro-finance services for the last 5 years. Its products under the program include: Qarz-e-Hasna and Murabaha. In addition, the Organisation also provides activities supportive of the ventures undertaken by the borrowers to bring them out of poverty. These include the development of the requisite skill set so that the borrower might be able to support himself/herself. The Organisation also provides Takaful or Islamic micro-insurance services. For more information, please visit http://naymet.org/.
Community EngagementDeveloping Strategic PartnershipsInnovationsInstitutional StrengtheningQuality Assurance
Qarz-e-HasnaMurabaha
National Rural Development Program
Naymet Trust
NAYMET Food SchemeHealth CentersIslamic Micro-finance and Enterprise DevelopmentRehabilitation ProgramSeasonal InitiativesSkill Development CentersWater Resource Management
54 IMFN
Sungi Development Foundation was established in 1989 by Omar Asghar Khan as a non-profit Organisation, working for the interests of the public. Its vision is a harmonious and prosperous society built on the foundation of equality, fair play and justice. It is working to materialize its vision through the mobilization of the marginalized sectors of the society by bringing about institutional and policy modifications. Through the years, the foundation has evolved into one of the leading humanitarian Organisations in Pakistan working for equal rights. The Foundation carries out its activities in Punjab, KPK, Balochistan and AJK. The following points highlight the core areas of the Organisation’s operations.
NGO World started out as a platform for the leaders in the NGO sector to interact with other industry stakeholders including researchers and scholars etc. to improve visibility which was to help in the growth of the development sector in Pakistan. It was later also registered under the Societies Act, 1860 as “The NGO World Foundation”. The foundation has since been carrying out relief and development work in various underdeveloped areas of Pakistan. It prides itself on being a non-profit, non-discriminatory Organisation helping the marginalized and vulnerable inhabitants of Pakistan without discrimination on the basis of caste, creed or religion.
The Organisation’s projects encompass all areas requiring progress including health, education, youth development, disaster response and poverty alleviation through the provision of Islamic microfinance etc. The Organisation made its ISO 9001:2008 certification announcement on quality management in early 2013.
The Organisation started its Islamic Microfinance activities in 2013. Under its activities related to Islamic microfinance, the Organisation is working to enhance the livelihood of individuals in the district of Khanewal in Punjab and has since disbursed over PKR 7 million in a short period of time. It is targeting the low income clients and bringing out the entrepreneurial spirit of the rural inhabitants. For more information, please visit http://www.thengoworld.org/.
The Foundation started carrying out its Islamic Microfinance operations in 2013 in Azad Jammu and Kashmir and KPK. In the field of Islamic microfinance the Organisation is providing the following products:
The Organisation uses its own revolving fund to carry out its Islamic microfinance operations. Its target market is rural micro-entrepreneurs and the target group is women which are both reflective of the overall activities of the Organisation. The Organisation also provides mandatory health insurance to its borrowers. For more information, please visit http://www.sungi.org/.
The NGO World Foundation
Sungi Development Foundation
The Foundation prides itself on being one of the leading right-based Organisations in Pakistan working for the rights of the marginalized communities including widows, minorities and children etc.The Foundation firmly believes that the role of the government should not be impinged upon. However, the Organisation works on improving governance structures by collaborating with the government to improve policy, structures and systems.The Organisation pilots projects and focuses on women’s economic empowerment.The Organisation works for the provision of food security and the sustainability of agriculture.The foundation also focuses on environmental issues and collaborates with the disaster prone areas of Pakistan for risk management strategiesThe foundation works with individuals displaced as a result of construction of dams
MurabahaQarz-e-Hasna
55 IMFN
IMFIs
ANNEXURE IIIMFN MEMBER ORGANISATIONS
Aas Foundation
Akhuwat Islamic Relief Pakistan
Kashf Foundation
Muslim Aid Pakistan
Naymet Trust
NRDP
Wasil Foundation
Al KhidmatFoundation Pakistan
HHRDEsaar Microfinance
Al Huda CIBE
Asasah
Care Starz
Haral Bunyad
56 IMFN
ANNEXURE III - DATA REPORTING IMFIS
Aas Foundation
Akhuwat
Asasah
Care Starz
Haral Bunyad
HHRD – Esaar Microfinance
Islamic Relief Pakistan
Kashf Foundation
Kawish Welfare Trust
Muslim Aid Pakistan
Naymet Trust
NGO World Foundation
NRDP
Sungi Development Foundation
57 IMFN
ANNEXURE IVIMFIS’ INDIVIDUAL DATA
IMFI GLP(PKR) Branches Employees Disbursements2013-2014 (PKR)
TotalBorrowers
AasFoundation
Akhuwat
Asasah
Care Starz
Haral Bunyad
IslamicRelief Pakistan
KashfFoundation
Kawish WelfareTrust
Muslim Aid Pakistan
Naymet Trust
NGO WorldFoundation
NRDP
HHRD Esaar Microfinance
SungiDevelopmentFoundation
8,814,150
9,227,251,842
38,419,110
6,276,980
24,162,174
386,523,140
287,500,000
88,344,000
8,250,000
87,484,195
75,000,000
7,000,000
8,500,000
28,150,000
515
567,525
1,334
205
1,740
13,893
11,500
3,567
1,650
5,472
7,500
200
850
2,815
3
261
8
2
1
25
3
8
2
2
6
1
1
4
73
1,742
26
7
4
52
18
86
7
11
17
6
3
38
6,750,000
4,351,452,100
38,419,110
3,084,230
2,499,174
121,291,366
54,544,801
88,344,000
1,460,000
24,075,000
25,000,000
3,500,000
6,160,000
28,150,000
58 IMFN
ANNEXURE V - GLOSSARY
Administrative Cost Per Loan
Administrative Efficiency
Borrowers Per Staff
Cost Per Loan
Cost Per Rupee Lent
Financial Self Sufficiency
Operational Self Sufficiency
Administrative ExpensesTotal No. of Loans Disbursed
Administrative ExpensesTotal Amount of Loans Disbursed
Total No. of BorrowersTotal Staff
Total ExpensesTotal Number of Loans Disbursed
Total ExpensesTotal Value of Loans Disbursed
Adjusted Operating Revenue (Financial Expense+ Loan loss Provision Expense +Operating Expense + Expense Adjustments)
Operating Revenue/(Financial Expenses + Loan loss Provision Expense+Operating Expenses)
59 IMFN
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