Now A More Concerted Effort Towards Poverty Alleviation  

The Government of Pakistan has launched an ambitious program to fight poverty directly. It has taken a unique initiative to build up a strong institutional infrastructure, supported by national policies to provide microcredit and related services. These are targeted at the 6.5 million poor households, in a country with a fast growing population of 146 million. While microcredit and savings through community organizations, were an integral component of the National Rural Support Program which was initiated in the 1990s, the new government strategy calls for a more concerted effort by setting up a network of dedicated institutions and poverty eradication programs to reach the bottom poor.

While new institutions have been established for rapid expansion of microcredit, the government has simultaneously started a massive Food Support Program to meet the basic dietary and nutritional needs of the very poor and vulnerable groups. The beneficiaries include widows, orphans, disabled, destitutes and the very needy among the poorest of the poor. Side by side, with an overhaul of the local government, one third of all seats were reserved for election of women into the local councils, to pave the way for the social empowerment of women. For the first time in the nation's history, as many as 40,500 elected women councilors assumed public office at various levels of local government last year.

Institutions Dedicated to the Poor

The national poverty alleviation strategy now has been built on three major institutional components. First, the ongoing National Rural Support Program or NRSP, which had its origins with the Aga Khan Rural Support Program. It provides microcredit through the formation of village based community organizations, supports capacity building through institution building of the poor and also finances community based infrastructure projects like construction of irrigation channels and village roads that help to raise productive capacity of the poor. An analysis of the micro level investment plans shows that while community organizations at grassroots, are interested in carrying out social sector projects such as schools, roads, drinking water, sanitation etc, their members in their individual capacity are more interested in projects that directly enhance their incomes. So far NRSP has disbursed more than Rs.3 billion through 220,000 separate loans; of these 35,000 loans have gone to rural women.

The second component of the new institutional framework is the Pakistan Poverty Alleviation Fund, which is now the national wholesaler of funds for the microfinance institutions at the grassroots, including the KASHF Foundation, a non-government organization that has begun to play a lead role in Pakistan using the Grameen Bank model of microcredit.

PPAF has been sponsored by the Government of Pakistan with an endowment of Rs 500 million, assisted by the World Bank. It is mandated to provide financing to NGOs as well as the government's Rural Support Programs, focusing on microfinance and development of community based infrastructure. PPAF has already disbursed more than one billion Rupees amongst 27 partner organizations. Hopefully, the new wholsale funding institution will answer the crying need for funding microcredit initiatives which have stalled around the region. In addition, the government has also launched the Micro-Finance Sector Development Program (MSDP), with a loan of $150 million from the Asian Development Bank. This fund is earmarked for social capital enhancement and on lending by microfinance institutions.

A third component of the new strategic initiative is the establishment of the Khushhali Bank which has started operating since April, 2000 as the first national level retail bank. It has now 30 branches operating all over the country that provides various types of microfinancial services to the women of the very poor households. It has so far provided 240,000 loans amounting to Rs.3.3 billion and is now ready for rapid expansion. The bank will also function as a wholeseller providing support to formally constituted microfinance institutions which will be set up under new the Microfinance Ordinance promulgated by the government. This will encourage not only the ne

Ghulam Fatima of Mianwali has been a client of Khushhali Bank since 28 December, 2001 and has just completed her second cycle of loans. Khushhali Bank through its group lending methodology, has developed an environment for decision making, collective management, conflict resolution, gender balanced access to microfinance services and participation in development at the grassroots level. Fatima, who is a cornerstone of her family, financed a donkey cart for rentals and livestock for breeding. Now she sends both her children to school and saves regularly. Through higher income, she has even successfully managed to bear additional expenses on account of her incapacitated husband.

w MFIs like the First Microfinance Bank, but even the existing scheduled banks like the Agricultural Development Bank and the Federal Cooperative Bank, to open up new microcredit windows and expand their microfinance operations.

These are significant new initiatives taken by the government in a region where poverty alleviation efforts, inspite of the rapid growth of microcredit programs, have been at best fragmented. Non-government initiatives have not been effective enough for lack of adequate regulatory and policy support by the government. The Pakistani attempt to set up a nation wide institutional infrastructure to extend a broad spectrum of microfinance services aimed at poverty alleviation, would be a major step forward for the region, that has the largest concentration of people entrapped in absolute poverty.

Report by Grameen Trust

Kashf Foundation

Kashf - literally meaning revelation or miracle in Urdu, was established in Lahore, Pakistan, in 1996, as an action research project with a small group of 15 courageous women. Its aim was to lead Pakistani poor women in a process of self-discovery during which they learned to utilize and eventually celebrate their inner capacity and potential, through the help of Grameen-type microcredit. Since then, Kashf has been outstandingly successful in this endeavor, having evolved into a bank and won recognition such as the Grameen Foundation-USA's Pioneer Award for "bringing microcredit to thousands of families in Pakistan and for inspiring other organizations to do the same". Kashf's outreach is now 23,213 borrowers with a total of Rs 210,330,610 as disbursements and Rs 2,974,825 in savings, with a repayment rate of 100%. However, rather than numbers, it is the fact that it is a bank run by women, for women, that empowers women to achieve economic sustainability and social progress in a society that is strictly patriarchal, that speaks louder. Kashf's microfinance service provision through group lending and its capacity development training services, as well as its Dastkaari production program, have been pivotal in providing its members with tools not only for economic, but also social uplift. Kashf's social advocacy agenda is also going a long way towards changing attitudes in the community towards health, gender roles and other social issues. Even in the face of personal danger to its staff due to the lawlessness of its operating area - a staff member was robbed and killed not long ago - Kashf's staff have endeavoured to keep operating standards exceptionally high, and their dedication to their members unflagging.

Kashf is a Grameen Trust partner organization since 1996. E-mail :


 Editor : Muhammad Yunus
Executive Editor : Khalid Shams 
Editorial Assistance :
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Lamiya Morshed 
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