Impact of Micro Finance on Poverty and Gender Equity Assignment

Impact of Micro Finance on Poverty and Gender Equity Assignment Words: 9870

The Impact of Micro Finance on Poverty and Gender Equity Approaches and Evidence from Pakistan December 31, 2003 Prepared for the PAKISTAN MICRO FINANCE NETWORK by Maliha Hussein and Shazreh Hussain LIST OF ABBREVIATIONS AKRSP CGAP DFID PMN PPAF PRSP NRSP NGO OCT SEWA Aga Khan Rural Support Programme Consultative Group to Aid the Poorest Department for International Development Pakistan Micro Finance Network Pakistan Poverty Alleviation Fund Punjab Rural Support Programme National Rural Support Programme Non-Governmental Organisation Orangi Charitable Trust Self-Employed Women’s Association I. BACKGROUND Overview 1. There is increasing reliance on micro finance as an instrument of poverty alleviation in Pakistan. The Government of Pakistan’s current Poverty Reduction Strategy emphasises the provision of micro credit as a key aspect of its poverty reduction strategy. The establishment of the Pakistan Poverty Alleviation Fund with World Bank financing and the Khushali Bank with Asian Development Bank financing are based on the underlying expectation that these initiatives will help to reduce poverty in Pakistan.

Micro-finance has been an important aspect of the poverty alleviation strategy of the NGO sector since the 1980s. The Rural Support Programmes have placed a strong emphasis on helping the poor initiate micro-finance programmes as an essential part of their poverty reduction strategy. Women have been a participant in these efforts and, following the example of Grameen Bank, some programmes have focused exclusively on women. Despite this excessive reliance on micro-finance to be the panacea for poverty in Pakistan there has been surprisingly little work undertaken to assess the impact of micro-finance on poverty and gender equity. . This background paper has been written with the primary purpose of assessing the impact of micro finance on poverty and gender equity in Pakistan. The paper has been commissioned by the Pakistan Micro-Finance Network (PMN) for presentation at a seminar being hosted by the Network in December 2003. The main purpose of the seminar is to publicly examine the research and empirical evidence and analytical work available in this regard in the Pakistan context and outline the parameters that are useful to examine in the future to understand the impact of micro-finance on poverty alleviation.

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It is expected that this exercise will help in sharing different approaches and experiences, assist in forming a realistic expectation of the impact of micro-finance and assess the extent to which micro-finance programmes may need to be redesigned to enhance their impact on gender equity and poverty. 3. The paper is not based on any primary research but attempts to assess the different approaches taken to this critical issue by various micro-finance practitioners and the evidence that has been collected in Pakistan in this respect.

The report also scans the approach to impact assessment that has been taken at the regional and international level and the evidence that is available from the region in terms of the impact on poverty and gender equity, particularly in Bangladesh. The main focus of this study was expected to be on micro-finance. However, the major focus of microfinance institutions in Pakistan has been on providing loans and most are exclusively providing credit.

A few NGOs, particularly the Rural Support Programmes have also initiated savings services but this has not been the main focus of MFI services, and most, like the Orangi Charitable Trust (OCT) challenge the rationale of savings given the current economic and financial environment. While a few MFIs have initiated other financial services, such as micro-leasing, insurance, remittance services, etc the volume and scope and outreach of these services is so limited that it does not make much sense to assess their impact, at this stage. Furthermore, informal financial markets have played a major role in providing loans and other services.

However, 3 since these are extended largely by relatives, friends and shop-keepers it was not possible to look at them in the same manner as MFI programmes. Furthermore, the impact assessments that have been undertaken focus on the beneficiaries of NGOs and as such most of the findings refer to credit provision by NGOs. II. APPROACHES USED FOR ASSESSING THE IMPACT OF MICROFINANCE PROGRAMMES A. Approaches Used for Assessing the Impact on Poverty 4. One of the most broadly shared perceptions about micro-finance is that it is beneficial and therefore everyone needs and demands it.

As a result, there has been very little questioning about the benefits of micro-finance and until recently, little interest in trying to measure its precise impacts. The approach generally followed is to expound the benefits of micro-finance without citing any empirical evidence. Following a similar approach, the Pakistan Poverty Reduction Strategy Paper (PRSP) asserted that, “access to credit is the surest way of empowering the poor and improving their income generating opportunities”1 and that “international experience has shown that micro-credit can be an important instrument in improving the income generating capabilities of the poor. 2 Similarly, the Asian Development Bank’s assessment of the micro finance sector in Pakistan was that the “poverty reduction potential of micro-finance is widely recognised at the policy level and among the development community. “3 5. Most international discourse on the subject also perceives micro-finance “as an approach with significant further potential for poverty alleviation and economic empowerment”.

International literature further asserts that “micro-finance began alleviating poverty several decades ago when organizations in Latin America, Bangladesh, and other developing nations began testing the notion of lending small amounts to impoverished people (mostly women). By the 1980s, the success of institutions such as ACCION and Grameen prompted many NGOs and International Organizations to provide micro-finance services. As more micro-finance institutions (MFIs) proved that the poor were reliable borrowers, entrepreneurial, and willing to work hard to escape poverty, the micro-finance industry grew to a remarkable 8,000 MFIs by 1999.

Thus the growth in the MFI sector was sufficient proof that microfinance was a panacea for poverty. 6. The growth in the sector was being used to extol its virtues, partly because the proxy indicators of repayment and disbursements were being used to evaluate microcredit programmes. Both in Pakistan and elsewhere, it was assumed that if loan repayments were being made and disbursements were growing then micro-credit must be yielding benefits. Many programmes in Pakistan followed this approach.

Thus AKRSP, NRSP and PRSP all assumed that since they had repeat borrowers and expanding programmes they were a success. In order to simply reconfirm these 1 2 Pakistan Interim Poverty Reduction Paper. Government of Pakistan. November 2001. p. 38. Pakistan Interim Poverty Reduction Paper. Government of Pakistan. November 2001. p. 38. Report and Recommendation of the President to the Board of Directors on Proposed Loans to the Islamic Republic of Pakistan for the Micro Finance Sector development Programme. Asian Development Bank. November 2000. 3 4 enefits and illustrate this to the donors, most practitioners got in-house staff and interns to document a range of case histories of successful men and women to show how micro-credit was transforming lives. Most of the cases studies were well written and while they did demonstrate the benefits of micro-credit, they were romanticised versions of the power of credit, were generally poorly researched and the financial analysis was undertaken in a fairly superficial and uneven manner. In fact, staff undertaking the analysis was generally not trained to conduct financial or economic analysis.

Most of these studies documented success stories almost exclusively as they were directed at a fawning audience which did not need more proof about the large scale benefits of micro-finance. The failures were largely forgotten, if not actually intentionally buried in the large plethora of loan applicants. In the early years, this anecdotal evidence sufficed and no further efforts were made to assess the impact of micro-credit. 7. It is only now being recognised that repayment is not an accurate indicator that funds are used to invest in successful productive activities.

Even when a borrower repays a loan on time, the source of income is not necessarily from revenues generated by investing the loan in productive activities. In most peer lending microcredit programs, for instance, borrowers must commence weekly instalments almost immediately after the investment is made. Hence, borrowers are either forced to choose activities that generate almost immediate revenue (and these activities tend to generate the lowest returns), or they have to repay the loan from other sources. In practice, repayment is often derived from general family income rather than the activity for which loan has been provided.

Hence, repayment may be good, due to the economic status of the borrowing household, discipline or peer pressure, regardless of business performance. 4 Some of the micro-credit programmes in Pakistan such as Kashf are designed for immediate repayment from other household sources of income. 8. By the late 1980s, there was a wealth of anecdotal and qualitative case study evidence to support popular perceptions regarding the positive benefits of microfinance, but still no carefully controlled longitudinal or cross-sectional surveys of borrowers and comparable non-borrowers.

Distinguishing between success and failure was still largely a matter of perception, provided that the support funds continued to arrive. Moreover, as long as loan-repayment rates were the primary quantitative indicator of performance, programme staff could manipulate numerous legitimate accounting procedures to ensure that published rates remained high. 5 In the late 1990s, development projects generally, and micro-finance in particular, came under increasing pressure to show that returns on investment were real and sustainable.

In an era characterised by heightened political pressure to defend the role and purpose of foreign aid, it was not enough for programmes to be able to boast high loan repayments rates and cite simple case study evidence of success. The Role of Micro-credit In Poverty Reduction And Promoting Gender Equity – A Discussion Paper. Prepared By: Norman Maclsaac, South Asia Partnership Canada. For Strategic Policy And Planning Division, Asia Branch. CIDA – June 12, 1997 Woolcock J. V. Learning From Failures in Micro-Finance. The American Journal of Economics and Sociology P. 17. January 1999. 4 5 9. In Pakistan there has been a tendency to use anecdotal evidence and claims about the impact of micro-credit are not well documented or supported by verifiable evidence. Some of the evidence is quite weak because of inadequate data or questionable methods used to collect and interpret the data. 6 Some of the micro-credit programmes assert that they cannot afford to undertake impact assessments because they are generally expensive and time-consuming. There are also serious disagreements among experts on the validity of methodologies used in some of the published studies.

In some cases, even the more rigorous studies have produced inconclusive results. The most frequently cited reasons for not undertaking impact are that it is not required, it is too soon for impact to be realised and that no matter what methodology one adopts it will be criticised. 10. A review of the micro-finance sector in Pakistan reveals that the interest in assessing the widespread impact of micro-credit on poverty is a relatively recent phenomenon and that almost all the major studies in this regard were undertaken after 2000.

The only study prior to this year was commissioned by the State Bank of Pakistan and this was undertaken as part of a series of studies by the Applied Economic Research Centre on rural financial markets in Pakistan. To date, this is the largest study on the subject covering more than 6000 households and 24,000 respondents. This is not an impact study but a survey of rural financial markets. However, the impact studies that have been undertaken are not by the major NGOs in the sector where reservations about the usefulness of impact still prevail.

For example, AKRSP, NRSP and PRSP have not undertaken any large scale impact assessments of their micro-finance programmes. A study on NRSP was undertaken recently by Dr Mehmud Hassan Khan which looked at the issue of cost-effectiveness, participation of the poor and impact. Among the main NGO practitioners only Kashf and the Orangi Pilot project have undertaken or commissioned impact studies. The Pakistan Poverty Alleviation Programme has only recently completed a study of some of its partner NGOs and the Khushali Bank is planning to undertake some studies in the future with the assistance of USAID but no current assessment exists.

A few small scale sample surveys were undertaken by PIDE and independent researchers as part of the latest UNDP Human Development Report which has examined the issue of micro-finance in detail. Table 1 summarises the main studies undertaken in Pakistan. Table 1 Overview of Impact Assessments Undertaken on Micro-Credit in Pakistan Organisation Date Sample Size Methodology Used Rural Financial Markets Studies: Rural Credit Study & Role of Women in the Rural Economy and the Credit Market Study AERC, PERI and 6

September 1998 6020 households 24,500 individuals interviewed nearly half were females. Nationwide study. All potential borrowers in each sampled household were simultaneously but separately interviewed. Mahmood Hasan Khan. 2003. 6 PIDE Impact Assessment November as a Management 1999 and Policy Tool: The Social and Economic Outcomes of Kashf’s Microfinance Services Roshaneh Zafar & Sadaffe Abid Social Impacts and Constraints of Micro-Credit in the Alleviation of Poverty.

A qualitative Study of the Micro-credit Programme OPPOrangi Charitable Trust, Karachi Naheed Rehman National Human Development Report Akmal Hussain et al August 2000 Survey of women borrowers from 52 households and two focus groups for rapid appraisal comprising 6 and 5 women Intra-household gender relations, decision-making, self-perception, perception of daughters’ future, obstacles to women’s growth and development 47 respondents 22 women and 25 men. 2003 PIDE survey of seven districts. Before and after

The Impact Assessment Study: Analysis of Kashf’s Micro-finance and Dastkaari Programme on Clients’ Socioeconomic Lives Shazia Ali Khan Kashf The PPAF MicroCredit Financing: Assessment of Outcomes Study Gallup Pakistan PPAF Reaching the Poor through Social Intermediation: Micro-Finance and the Building of December 2001 A. I. Hamid Survey of 277 respondents (40 for each of seven NGOs). 129 respondents Comparison with control group for micro-finance and enterprise workers September 2002 1700 respondents With and withoutBefore and after November 2002

AKRSP: 9 communities (6 women, 3 village orgs) Interviews with staff 10 interviews with Field-based interviews, focus group discussions and participant observation. 7 Social Capital Aga Khan Foundation, Canada members of organizations Interviews with other stakeholders KASHF Focus group discussions 7 rural communities (9 respondents in each) 63 interviews in all with different stakeholders 12 additional with Kashf operational staff 11 with community leaders (7 men, 4 women 10 former clients 7 with non-Kashf members 2003 110 clients 96 men 14 women 69 non-borrowers Borrowers and nonborrowers

Orangi Charitable Trust (OCT) Akbar Zaidi 11. More recently the indicators that are being monitored in Pakistan and the orientation of the research is being fashioned by the concern with financial sustainability. This concern has emerged as a result of international influence regarding the financial sustainability i. e. a programme’s capacity to remain financially viable in the absence of domestic subsidies or foreign support ??? and has become the benchmark against which both the efficiency and effectiveness of micro-finance programmes is being increasingly determined.

By this measure, Grameen Bank was declared less successful than Indonesia’s BRI/BKK programmes, while the favoured approach of the 1960’s and 1970’s i. e government’s heavily subsidizing commercial banks was denounced as an outright failure. Yaron’s subsidy dependency Index (SDI) approach, while not without its own problems, has also been complemented in recent years by significant improvements in the standards and techniques of programme evaluation research. 12. This concern at the international level has also permeated thinking in Pakistan and NGOs have been struggling to find measures to make themselves sustainable.

Thinking in this regard was influenced when practitioners were first exposed to the micro-finance course in Boulder, Colorado where some of these ideas were expounded. Micro finance thinking at AKRSP and NRSP was revolutionised by the ideas emanating from Boulder and fairly key changes were made in these programmes as a result. These ideas had a special appeal in Pakistan where very few microfinance programmes among Pakistani NGOS were initially designed with the sustainability criteria in mind.

Kashf and OCT were an exception. NRSP has been 8 particularly concerned with the issue as it had, at one time, mistakenly calculated that its micro-credit programme could yield enough margins to sustain its entire development programme. Organisations like AKRSP have taken a more radical approach and transformed their micro-credit programme into a formal sector bank in pursuit of sustainability without a careful analysis of what this may mean for its initial objective of poverty alleviation and gender equity.

It is not surprising that the flagship publication of the micro-finance industry; the Performance Indicators Report produced by the PMN almost exclusively focuses on indicators such as financial sustainability, operating efficiency and portfolio quality. The only indicator which could be used to look at the poverty or gender equity aspects is the number of borrowers and the number of savers. Furthermore, the PIR only gives the gender of savers and not of borrowers. 13.

Impact assessment has been viewed largely as an activity that is to be commissioned to an outside agency to ensure credibility and impartiality of the exercise. Thus, while some MFIs like OCT maintain a detailed data base on their clients they do not store variables that would help them determine the benefits of micro-finance for each client. Kashf is also in the process of establishing a Monitoring and Information System that will provide them regular information on clients on a wide range of client characteristics. However, this data set is not designed to provide information on the poverty profile of clients.

None of the RSPs keep a client profile but some have started making a distinction between poor and non-poor clients to be able to better assess the poverty targeting potential of their interventions. 14. At the international level, there have been considerable developments in the field of impact assessment and a vast and diverse academic literature exists on microfinance impact assessment. Currently, microfinance impact assessment is moving away from narrow, donor focused impact assessment events, towards more practitioner-focused processes.

There is recognition of the need to more clearly define the range of objectives to be fulfilled and questions to be answered through impact assessment, and the range of possibilities of approaches and tools available to meet these objectives. It is also proving useful to distinguish between the different approaches to impact assessment. Impact assessment for public policy tends to be associated particularly with “impact proving” using more positivist methods, or quantitative data collection analysed statistically.

Impact assessment for product development or organisational learning, in contrast, tends to be associated with “impact improving” using more participatory methods, or reliance on interpretation of mostly qualitative data. 7 The former is regarded as more expensive but more scientifically rigorous; the latter is cheaper and aims to be credible. There is also a distinction between demand from within MFOs themselves for organisational development, and from donors and regulators for public policy purposes8 as is illustrated in Table 2 below.

While some NGOs have undertaken in-house studies for (Woller, 2002 Impact Assessment Of Microfinance: Towards A New Protocol For Collection And Analysis Of Qualitative Data. James Copestake, Susan Johnson & Katie Wright, Centre For Development Studies, University Of Bath, Uk. June 2002 8 7 9 developing financial products most of the studies undertaken in Pakistan are of the nature of “impact proving. ” Table 2: Contrasting Sources of Demand for Impact Assessment Impact assessment for public Impact assessment for product policy development Who for? Donor Service provider When?

Donor led agenda of promoting Organisation led agenda of seeking to cut costs and improve (Historical increased provision of customer loyalty in order to context) microfinance where supply of survive (strong competition). services is deficient (weak competition). What for? Is public money better used (at What can be learnt from clients in order to improve the prospects for the margin) to subsidise organisational survival? microfinance services or for other purposes? Product differentiation in response Outcomes Green/red light for replication of “best practice” models (e. g. to diverse local demands of different categories of user. illage banking, solidarity groups…. ) without much differentiation of users. 15. Influential institutional players in this field during the last decade include the SEEP/AIMS tools developed by USAID in collaboration with SEEP (a US network of enterprise oriented NGOs). The Consultative Group to Aid the Poorest (CGAP) has invested in promoting an intermediate impact survey tool and a standard tool for assessing the relative poverty of microfinance clients. Micro-Save Africa, with support from DFID and UNDP, is said to be the market leader in establishing and branding ‘industry standards’ for market research using participatory methodologies. Ford Foundation has initiated a three-year action research programme involving twenty-nine microfinance organisations (MFOs) around the world called Imp-Act. 10 The programme’s main aim is to improve the effectiveness of MFIs by strengthening the mechanisms by which they learn about the impact of their services, particularly on poverty. It emphasises that progress in impact assessment is partially determined by techniques and skills of data collection and analysis, but also by the relationships and feedback processes within which IA tools are used.

Imp-Act sets out to move away from donor oriented impact assessment towards practitioner-focused processes of listening and learning. Each participating MFO has developed its own pilot impact assessment plans, to fit specific organisational context, objectives and stakeholder needs. One of the most important issues emerging from the first year of the programme has been the need to develop a simple, cost-effective, replicable and credible method for collection and analysis of qualitative data. All these organisations maintain active websites. A useful single gateway into all of them is the Enterprise Development Website: www. nterweb. org/microcre. htm 10 Imp-Act stands for Impact Assessment of Microfinance: an action research programme. For more information see its web site: www. Imp-Act. org 9 10 B Approaches Used for Assessing the Impact on Gender 16. Although international interest in exploring the impact of micro-finance on gender equity has grown, there are still relatively few studies investigating the impact on gender relations in depth and most studies are limited to the impact of microcredit; there is little research on savings and other services. Independent research has mostly been restricted to programs in India and Bangladesh.

There is little focus on gender equity and even a recent initiative by the Ford Foundation on impact assessment in collaboration with 29 MFIs has little focus on gender. 17. There is no standard definition of gender equity or women’s empowerment in the literature, as a result impact assessments are motivated by different definitions. These definitions of women’s empowerment vary, depending on the paradigm of development. For example, the financial sustainability paradigm focuses on economic empowerment, expansion of individual choice and capacities for selfreliance.

The poverty-alleviation approach focuses on increased wellbeing, community development and self-sufficiency and the feminist empowerment paradigm on transformation of power relations throughout society. 11 18. Schuler and Hashemi outline six elements of women’s empowerment in Bangladesh which includes a sense of self and vision of a future, mobility and visibility, economic security, status and decision-making power within the household, ability to interact effectively in the public sphere and participation in non-family groups.

A review of the literature undertaken by Mayoux suggests that the following are generally considered indicators of women’s empowerment by donors advocating financial sustainability models: significant increase in incomes from women’s own activities; enable women to control (have a choice over use of) income from loans and activities generated by loans; enable women to negotiate improvements in their wellbeing within the household; give women access to support networks which enable them to protect their individual and ollective interests at the local and macro-levels. Mayoux defines empowerment as ‘a multidimensional and interlinked process of change in power relations’ (see Box 1). . BOX 1: FRAMEWORK FOR EMPOWERMENT ??? ??? ??? ??? ower within: enabling women to articulate their own aspirations and strategies for change; power to: enabling women to develop the necessary skills and access the necessary resources to achieve their aspirations; power with: enabling women to examine and articulate their collective interests, to organise to achieve them and to link with other women’s and men’s organisations for change; power over: changing the underlying inequalities in power and resources which constrain women’s aspirations and their ability to achieve them.

These power relations operate in different spheres of life (eg economic, social, political) and at different levels (eg individual, household, community, market, institutional). Whose empowerment? a predominant concern with equity and empowerment of those currently most disadvantaged in the different spheres and at different levels. 11 MacIsaac, 1997. 11 Who should decide? Empowerment is of necessity a process of negotiation where the subjects of the empowerment process (i. e. here women members of micro-finance programmes) define the main priorities and strategies.

This process of negotiation however requires an appropriate forum and information to enable women to fully consider the possible options and potential consequences of choices. It is also likely to require explicit promotion of women’s interests at the macro-level to widen the scope of choice. Mayoux G&C 19. Indicators of women’s empowerment will depend on how empowerment has been defined and the context they are being defined in. In a study of urban SEWA members, Schuler and Hashemi (1996) concluded that, in the Indian urban context, mobility and visibility were much less significant indicators than others.

In stark contrast to their rural counterparts in BRAC and Grameen Bank, SEWA urban selfemployed women had always been more visible, mobile and independent. So indicators for empowerment have to be selected keeping in view the specific manifestations of women’s position in a given society. 20. In Pakistan, interest in exploring the impact of micro-finance on gender equity has been minimal. Not surprisingly, a review of impact studies shows great variation in the extent to which gender equity issues have been addressed. In some studies, the issue has been overlooked completely and in others it is marginalized.

In some, data is not disaggregated by gender, in others, gender-disaggregated data is available but the gender dimension has not been highlighted in the analysis. In very few cases, has gender equity been examined in some depth. There is insufficient recognition of the need for gender-disaggregated intra-household analysis and the household continues to be the preferred unit of analysis. Table 3 Overview of Gender Aspects of Impact Assessments Undertaken on MicroCredit in Pakistan Organisation Date Sample Size Gender Aspects Reviewed Gender disaggregated data on reasons for not borrowing and borrowers of large loans

Rural Financial Markets Studies: Rural Credit Study & Role of Women in the Rural Economy and the Credit Market Study AERC, PERI and PIDE September 1998 24,500 respondents Half the respondents were women. 12 Impact Assessment as a Management and Policy Tool: The Social and Economic Outcomes of Kashf’s Microfinance Services Roshaneh Zafar & Sadaffe Abid November 1999 Survey of women borrowers from 52 households and two focus groups for rapid appraisal comprising 6 and 5 women Intra-household gender relations, decisionmaking, self-perception, perception of daughters’ future, obstacles to women’s growth and development None 7 respondents August Social Impacts and Constraints of Micro- 2000 Credit in the Alleviation of Poverty. A qualitative Study of the Micro-credit Programme OPPOrangi Charitable Trust, Karachi Naheed Rehman Micro-credit for Development. The Impact of the OPPOrangi Charitable Trust Micro credit Programme on Urban Livelihoods. S. Akbar Zaidi National Human Development Report Akmal Hussain et al 2001 PIDE survey of seven districts. 2003 22 women and 25 men. 110 clients 96 men 14 women 69 non-borrowers 63 men 6 women Gender disaggregated data on increase in standard of living

None The Impact Assessment Study: Analysis of Kashf’s Micro-finance and Dastkaari Programme on Clients’ Socioeconomic Lives Shazia Ali Khan The PPAF MicroCredit Financing: Assessment of Outcomes Study Gallup Pakistan Reaching the Poor December 2001 A. I. Hamid Survey of 277 respondents (40 for each of seven NGOs). Social capital generated 129 women through women’s respondents participation in Kashf’s micro-finance program September 2002 November 1700 respondents Ratio of men to women in sample same as ratio of men to women borrowers per district AKRSP:

Gender disaggregated data on control over resources, decision making, social st Empowerment: social 13 2002 through Social Intermediation: MicroFinance and the Building of Social Capital Aga Khan Foundation, Canada 9 communities (6 women, 3 village orgs) KASHF 7 rural communities (9 respondents in each) 63 interviews in all with different stakeholders 12 additional with Kashf operational staff 11 with community leaders (7 men, 4 women 10 former clients 7 with non-Kashf members 110 clients 96 men 14 women 69 non-borrowers 63 men 6 women apital, financial benefits, identity, information and skills, leadership and conflict, practical and strategic needs, intrahousehold gender relations Micro-credit for Development. The Impact of the OPPOrangi Charitable Trust Micro credit Programme on Urban Livelihoods. S. Akbar Zaidi National Human Development Report Akmal Hussain et al 2003 Gender disaggregated data on increase in standard of living 2003 PIDE survey of seven districts. A. I. Hamid Survey of 277 respondents (40 for each of seven NGOs). None 1. There is also a tendency for qualitative studies to show a much greater impact than can be corroborated through quantitative studies, with the exception of impact on women’s self-esteem. The most popular methodology used by MFIs to show a positive impact on gender equity has been the case study method. Virtually every MFI has a stack of case studies which focus on success stories. Most show how women’s lives have been transformed with the provision of a loan they have invested in their own businesses.

However, the dramatic impact on increase in income and well-being has not been corroborated by the quantitative surveys that have been conducted. In some cases, qualitative studies have been conducted with a sample size that is either not statistically significant or gender-biased. 22. A spot survey conducted for the Human Development Report12 focuses on the impact of micro-credit on nutrition, health and sustainable income increases on households. The sample comprised a representative sample (277) of clients of 7 12 A. I. Hamid. 2003. 14 NGOs.

Two of the organizations chosen, Kwendo Kor and Kashf work only with women so it can be inferred that the sample contained a minimum of 80 women. The report suggests that ‘most participatory bodies include working with women to a greater rather than a lesser degree although the range of opportunities provided to women is still not equal to that provided to men’. Beyond this statement, gender equity issues are not discussed. 23. The two studies conducted on OPP-OCT’s micro-finance program do not address impact on gender equity in any significant manner.

Akbar Zaidi’s study contains gender disaggregated data on increase in standard of living. However, very few women were included in the sample (63 men and 6 women non-borrowers, 69 men and 14 women clients) so even the findings on this one indicator can only be considered indicative and not conclusive. In Naheed. Rehman’s study on Social Impacts and Constraints of Micro-Credit in the Alleviation of Poverty, nearly half the respondents were women, however gender-specific impacts were not explored.

The rationale for not doing so was stated to be as follows; “Among the issues not discussed in this essay are gender-specific impacts of micro-credit in Orangi. This is largely because this research did not highlight such impacts as salient nor suggest that women and men viewed credit participation in distinctly different ways. As noted earlier, the OCT unlike Grameen Bank, is not a female-centred lending institution nor does it place women’s empowerment above broader goals to facilitate business expansion among the working poor”. 24.

The PPAF Micro-Credit Financing: Assessment of Outcomes Study by Gallup Pakistan (2002) focuses on gauging the socio-economic outcomes of micro-credit programs. Gender-disaggregated data has been provided only for the following three hypotheses out of the seventeen that were studied: increase in personal income; increase in household income and improvement in social status within or outside household by assessing participation in local politics and control over key resources. In addition, gender-disaggregated data has been provided on return on investment.

Yet despite some significant findings, gender issues receive no mention in the executive summary. Even where there are very significant differences between findings for men and women, these are not focussed on even in the conclusions drawn for each hypothesis in the body of the report. For example, 54 per cent of women borrowers reported a positive change in their incomes as opposed to 34 per cent of men borrowers but in the conclusion the finding that is highlighted is the difference in the change in income reported between borrowers (41 per cent) and non-borrowers (32 per cent).

This marginalisation of gender issues even when data is available reflects the minimal concern with gender equity which characterizes the microfinance sector in Pakistan. 25. The Kashf study on the Impact Assessment as a Management and Policy Tool: The Social and Economic Outcomes of Kashf’s Microfinance Services (1999) reflects a concern with several dimensions of empowerment such as self-confidence, decisionmaking, intra-household relations, women’s vulnerabilities. It uses a sample of fiftytwo households for the survey.

Only women and no men were interviewed. The two focus groups used for the rapid appraisal comprised 5 and 6 women respectively. There were no focus groups with men. The second survey undertaken by Kashf, the Impact Assessment Study: Analysis of Kashf’s Micro-finance and Dastkaari Programme on Clients’ Socio-economic Lives (2001) investigates human, physical 15 and social capital generated. The household is the unit of investigation for economic, physical and human capital.

The impact on women has been looked at separately only for social capital which includes indicators such as effect of group formation on women’s social lives, social issues awareness, self-confidence and attitudes and mindset towards responsibility for child rearing, earning a living, girls working outside the home, age of marriage and consent for girls. That issues which were explored in the earlier study such as intra-household gender relations, women’s vulnerabilities, patterns of decision-making are not explored in this study may indicate a dilution of the focus on gender equity and empowerment issues within the organization. 6. The Rural Credit Study commissioned by the State Bank of Pakistan and carried out by the Applied Economics Research Centre (1998) systematically and comprehensively addresses gender equity issues. The terms of reference included collecting information on both men and women’s credit and savings needs and data was collected at the household and the intra-household level. Data was collected on the borrowing and saving patterns of each male and female member of the household as well as on related aspects of women’s lives such as mobility, education, employment and ownership of assets.

Gender disaggregated data was also collected on the purpose of borrowing, collateral used, interest rates, transaction costs, reasons for not using institutional sources of credit. A nation-wide sample of 6,020 household was selected from which 24,000 individuals were interviewed and out of these 47 per cent were women. Separate questionnaires were prepared for men and for women and in both questionnaires, where relevant, questions were asked from each member of the household.

The Study on Role of Women in the Rural Economy and the Credit Market Study (1998) however presented preliminary data on a few variables as the rest of the data was not available at that stage. Unfortunately the rest of the data has not been presented in any report. 27. The Aga Khan Foundation- Canada conducted a regional study on ‘Reaching the Poor through Social Intermediation: Micro-Finance and the Building of Social Capital. ‘ This included research on two Pakistani MFIs, AKRSP and KASHF.

This study used a comprehensive definition of women’s empowerment which includes social capital, financial benefits, identity, information and skills, leadership and conflict, practical and strategic needs and intra-household gender relations. Fieldbased interviews were conducted with a variety of stakeholders, focus group discussions and participant observation. The sample size in these studies is however very small: 9 to 10 client interviews per community selected with additional interviews with staff, community leaders, non-clients and ex-clients.

As these are not samples that can yield statistically significant results, the findings can be considered indicative rather than conclusive. 28. Overall, the studies that have been conducted in Pakistan have been short-term whereas international literature13 contends that impacts on social and gender relations are complex and seldom is short-term quantitative data sufficient to demonstrate impact. Assessment of poverty and inequity require more than relative changes in income levels – and assessing results in terms of empowerment require more creative approaches to quantitative information, as well as qualitative data.

Monitoring over 13 Norman MacIsaac (1997) 16 the long term is required, given the dynamic and complex processes involved in social change. Some14 have attempted to provide qualitative and quantitative data: indicators of women’s empowerment in Bangladesh and outline certain elements in defining empowerment. Some key aspects with respect to assessment of gender aspects are given in box 2. Box 2 ??? Both quantitative and qualitative monitoring and evaluation over the long term are required to produce reliable data. Change in gender equity and economic status takes place over the long term, and is seldom a linear process. Snap-shots” may be misleading. When considering impact on gender equity, income is only a part of the equation. First of all, women’s aim is seldom limited to increasing income. In addition, other changes, such as enhancing women’s visibility and enabling them to voice their concerns may be a key means to achieve long-term impact in raising women’s status and improving gender equity. While women are occupying non-traditional roles and occupations, for example, they are challenging accepted norms and breaking the path for future generations. The impact of micro-credit alone on women’s status and gender equity is limited.

Most women borrowers have only partial control over loans, or have relinquished all control to male members of the family. This has serious implications for the impact of gender equity. However, this is not to say benefits are non-existent. As part of a broader effort to raise awareness and mobilize women, credit could play an important role as an “entry point” to strengthen women’s networks and mobility, increase their knowledge and self-confidence, and increase their status in the family. Participatory appraisal may have an important contribution to make to improved monitoring of the impact of micro-credit on women’s empowerment.

Compared to credit, there has been much less reflection on the impact and importance of savings for the poor and poor women in particular. More research is required into the relationship between savings and gender equity. For example, do women have firmer control over savings than loans and income? Would more open access to savings raise new issues of control? How do women’s and men’s savings habits and withdrawals differ? ??? ??? ??? ??? DO THE POOR REALLY NEED CREDIT ? 29. There is widespread belief that there is a large unmet demand for credit, especially among the poor.

Estimates of credit demand internationally and nationally present a wide gap in the demand and supply of micro-finance services in general and credit in particular. It is generally asserted that roughly 80 percent of the world’s population is without access to credit and savings facilities beyond that provided by family members, friends or money lenders, while in developing countries this number is estimated to be around 90 percent. 15 As a result, there is aggressive marketing of micro-credit services. Empirical evidence on the actual demand for credit and the methodology used to estimate it is generally not presented.

The 1997 Micro-credit 14 15 Schuler and Hashemi (1996) Woolcock J. V. Learning From Failures in Micro-Finance. The American Journal of Economics and Sociology P. 17. January 1999. 17 Summit launched a campaign to provide micro-finance services to 100 million of the world’s poorest families by 2005. On the other side of the spectrum, the critics of micro credit challenge the very idea of putting the poor in debt, and doing it with limited donor funds which could be directed to more urgent concerns, like immunization, food, shelter and childcare.

However, prior to mediating the two points of view let us examine whether there is in fact as widespread a demand for credit as the suppliers would have us believe. 30. In assessing credit demand in Pakistan, the Asian Development Bank’s MicroFinance Sector Development Review 16 asserted that there were 6. 3 million poor households in Pakistan and all of them were potential clients for financial services and that government considered half the adult poor population (nearly 10 million) as potential micro-finance clients.

The average size of loan taken by poor households from NGOs was about Pak. Rs 16,540 at an interest rate of 18-20 percent per annum. Considering these, the estimated potential demand for micro-credit was assessed to be about US$ 2 billion based on the number of poor households or about $ 3 billion based on half the adult poor population. However, when these figures are juxtaposed with estimates of credit demand based on survey data, the situation that emerges is quite different. The largest survey in this regard was conducted in 1998 by the Applied Economic Research Centre and this found hat 76% of the households did not apply for a loan as they did not see any reason to borrow (59%) and did not like asking for a loan (17%). There was not much variation in the response by landowning pattern, tenancy pattern, occupational group or by gender. The National Human Development Report on Poverty, Growth and Governance17 found that “70 percent of the rural households never applied for any loan. From among these, 33 percent replied that they did not need a loan and 43% did not want to pay interest for religious reasons. 18 These results are quite contrary to the general contention of a widespread demand for credit.

Table 4: Most Obvious Reason Shown Against Not Borrowing Large Loans (Rs 1000 or above) Other No Do Not Complicated On Category No and Lengthy religious Collateral Reason Reason like Grounds Available Asking procedure to Borrow for Loan All 59% 17% 8% 2% 10% 4% Pakistan Occupation Non55 Agriculture Livestock 55 Farm 61 16 18 17 9 9 8 2 2 2 15 11 8 4 6 4 16 Report and Recommendation of the President to the Board of Directors on the proposed Loan to the Islamic republic of Pakistan for the Micro Finance Sector Development Programme. November 2000. 7 Poverty, Growth and Governance: The National Human development report, Pakistan, January 2003. 18 Annexure III (i): Poverty, Growth and Governance: The National Human Development Report, Pakistan, January 2003. 18 Gender Males Females 63 57 13 20 13 4 3 1 7 12 3 5 Rural Financial Markets Study: AERC. 1998. 31. The other important aspect is that not all the people borrow concurrently at the same time. In a given year, only a certain proportion will borrow but over a longer period of time the proportion of households which borrow goes up significantly.

The Rural Financial Markets study found that 61% of the households obtained at least one loan during a five year period. Micro-Finance experts19 maintain that while most people have not applied for a loan from formal sources it does not mean that the poor do not need some emergency consumption loans during the lean season or access to money at the beginning of the year for school fees, or money to go see a doctor or a wedding or a funeral. A “one size fits all” credit product may not be ideal for many of the poor who need different types of financial services as much as any body else.

It appears that while there maybe a large unmet demand for financial-services and a demand for micro-credit which is significantly larger than the current capacity of the MFIs to deliver, yet the large claims of an un-met demand for credit alone maybe somewhat exaggerated. ESTIMATING THE OUTREACH OF THE MICRO-FINANCE SECTOR 32. The two key services that are currently being provided by the micro-finance sector in Pakistan are loans and savings. In this section, the paper examines the outreach of these two services.

The current supply of micro-finance is from both NGOs, commercial banks and Development Finance Institutes. There has been rapid growth in the micro finance sector in Pakistan in the last few years with the PMN members alone covering about 141,874 borrowers and Khushali Bank claiming to have a current annual coverage of 100,000. An earlier study of the sector estimated that the main NGOs in the micro-finance sector had disbursed Rs 8. 9 billion by the end of June 2002 to over 700,000 clients. 20 However, the basis of these figures was not clear.

For this paper the outreach of the credit services provided by the MFIs was estimated using the annual number of borrowers that currently receive loans from the main MFIs. Among the financial institutions, 6 commercial banks and 2 DFIs have a limited micro-finance portfolio. However, the exact number of borrowers of commercial banks and DFIs who provide micro-credit was taken from the estimates prepared by the Asian Development Bank as latest figures for these institutions were not readily available. Table 5 below gives an estimate of the existing outreach of MFIs based on these calculations.

The total number of current borrowers reached by the MFIs is estimated to be 381,874. 33. It is estimated that there are 6. 3 million poor households in Pakistan. We have seen that not all of them need a loan and that roughly one-third need a loan at a given time. Thus, if the current outreach is used as the numerator on the assumption that each borrower belongs to a different household than the current outreach of the microcredit sector in Pakistan can be estimated to be around 12%, if half the poor households are assumed to demand credit at any given time.

However, if we assume that only one-third of the poor households will demand credit at any given time than 19 20 S Hashemi. World Bank. SDC assessment of the micro-finance sector. 19 the outreach of the sector would increase to around 18% of the households. The Rural Financial Markets study found that even in the event that a particular household managed to borrow a loan it does not necessarily mean that the credit needs of all its members were met. Thus, it is useful to estimate the demand on a household basis as well. When outreach is estimated n the basis of the number of poor people rather than households than the same coverage figures indicate that only 4% of the poor people will have been reached if half the poor people demand credit at any given time and 6% if only one-third of the poor demand credit. 21 34. The UNDP report22 claims that when all sources of micro-finance, both formal and informal are included, then NGO intervention in the area of micro-credit appears relatively insignificant. The report claims that of the total number of loans received by all income classes, from all the sources, the NGOs have provided only 1 percent of the loans in the urban areas and 0. percent of the loans in the rural areas. 23 Even if our generous assumptions about household coverage are a little off the mark and several of the borrowers are from the same household, the UNDP figure seem parsimonious. The only caveat in the scenario outlined here is that we do not know if the loans that are being given are indeed all going to poor households or poor people. We will see if we can refine our calculations in the sections below with the use of existing information. Table No 5 Total Number of Borrowers of Selected MFIs Annual Borrowers Cumulative Borrowers

Organisation Commercial Banks and 140,000 DFIs Khushali Bank 100,000 NGOs 141,874 PRSP 42,928 Kashf 36,103 NRSP 28,768 AKRSP 12,232 Damen 5,365 TRDP 4,728 Taraqee 3,846 BOK 2,166 SAFWCO 1,876 SRSP 1,804 OCT 1,617 Sungi 441 TOTAL 381,874 125,000 176,982 53,797 308,270 617,712 7,507 35. As far as savings is concerned it is essentially the RSPs or NGOs which are following the RSP organisational methodology which offer savings services to their 21 22 Based on an estimate of the adult poor population of 20 million people.

UNDP. Human Development Report. January 2003. 23 Akmal Hussain et al. 20 clients. The Orangi Pilot Project does not offer a savings product to its clients because of its reasoning that encouraging small entrepreneurs to hold savings in banks at declining rates of interest rather than investing in their own businesses with inflation-adjusted rates of return of over 30% typically makes no sense. However, when the RSPs first launched their savings programmes, the financial environment was such that savings did make sense.

Many other NGOs do not offer savings services to their clients because NGOs are not allowed to accept deposits under existing regulation and hence the savings which are accrued have to be deposited with commercial banks or DFIs. Some of the savings services offered by the NGOs are designed in a manner that some of the essential attributes of a good savings model are lost. Some NGOs insist that a certain minimum amount of savings be undertaken by members as a pre-requisite to qualify for some other components and part of the savings is held as collateral to cover the risk of NGOs offering credit services.

Thus not all of the saving can be withdrawn when required. In fact, some of AKRSP savers lost their savings when some of the borrowing members from the same VO defaulted on loan repayments. These undesirable attributes of the savings programmes would somewhat colour the demand and outreach of the micro-savings programme managed by NGOs. 36. Despite the constraints in the savings services offered by NGOs, the number of active savers of NGOs exceeds the borrowers by at least six times with a combined total of almost a billion rupees. The number of women savers at 313,109 is also significantly higher than the number of female borrowers.

The difference in the number and amount of savings between men and women is much narrower than the difference in the credit programme indicating the much greater interest and access to women of this service despite its constraints. On the assumption, that these savings programme are largely of interest to all the poor households, one can assert that the micro-savings services of NGOs have reached 4. 5% of the adult poor population. Table No 6 Outreach of Savings services Offered by PMN NGOs As a proportion of men As a proportion of the total 66% 34% Total Savings

No of active savers (male) 602,181 NA No of active savers (female) 313,109 52% Cumulative 697,973 amount saved by men Pak Rs. (000) Cumulative 263,590 amount saved 38% by women Pak Rs (000) Performance Indicators Report; 2002 73% 27% 21 DOES MICRO-CREDIT REACH THE POOREST ? 37. There is significant divergence regarding estimates about the extent to which micro-finance actually reaches the poor. The Micro-Credit Summit asserted that by the end of 1999, micro-credit was already reaching 23. 5 million people of which 13. 8 million or 58 percent represented the poorest. Others assert that most MFIs do not reach large numbers of very poor people.

Some studies show that there are limits to the use of credit as an instrument for poverty eradication, including difficulties in identifying the poor and targeting credit to reach the poorest of the poor. Added to this is the fact that many people, especially the poorest of the poor, are usually not in a position to undertake an economic activity, partly because they lack business skills and even the motivation for business. Conventional microfinance acts through deliberate and unintentional mechanisms to exclude the poorest and market forces operate to serve the less-poor first.

Often the very poor people are excluded through self-exclusion, deliberate or unintentional MFI policy, exclusion by other clients, or by leaving the programme. 24 Others feel that it is not the poverty level of potential clients that determines access and impact, but the design of the services provided. 38. An alternate approach to assessing whether the loans are reaching the poor or non-poor adopted by some is to examine the loan size and assert that if the loan size is below a certain percentage of the GDP per capita than it is likely that the loans are reaching the poor. For example, some programmes like the Khushali Bank nd the PPAF have fixed a ceiling of Rs 10,000 on the understanding that this loan size is more likely to reach the poor as a loan size of this amount forms only 36% of the per capita GDP. However, using loan size as a proxy indicator for assessing the poverty targeting potential of credit is not a good approach in Pakistan because the lending mechanisms are not vigilant enough to safeguard against one person being restricted to getting his quota in a group which would mean that the actual loan received is much larger as it goes to fewer borrowers than intended and because the non-poor are also interested in loans regardless of the loan size. 9. The record of MFIs in reaching the poor in Pakistan is mixed. Very few NGOs actually keep a profile of their borrowers and most follow a non-targeted approach. In the last few years, some of the RSPs have adopted a poverty ranking approach to track the economic status of their beneficiaries. However, this approach is not adopted rigorously and the RSPs are unable to give the profile of all their beneficiaries based on this ranking. Others feel that this approach may tend to overstate the number of poor households as the participating households generally self-select themselves as poor in this approach.

Still many others do not specifically target the poorest but target either small entrepreneurs or the working poor like OCT, or have a criterion like the Khushali Bank that focuses on obtaining group guarantees for repayment and a close scrutiny of monthly cash flows to determine the repayment capacity of potential clients. Some of these factors can potentially exclude the poor. 40. Some assert that the non-targeted approach which may have been relevant at the time of the inception of some of the Rural Support Programmes, such as AKRSP in the Northern Areas, as most of the people in the Northern Areas and Chitral were 24

The importance of microfinance in poverty eradication: October 2002:Anton Simanowitz. 22 poor and were following similar livelihood strategies, at the time. However, it is inadequate in the face of changing socio-economic differentiation which today exists across the programme area. The table below shows that those who are associated with AKRSP today are largely non-poor e. g. 67% in 2001 compared to 47% percent in 1994. It shows that the target for the AKRSP has been closely representative of the poor /non poor distribution in the Programme Area as a whole rather than particularly focused upon the poorer category.

This would indicate that AKRSP was not specifically targeting the poor. Had that been the case, the percentage of poor households in the AKRSP’s membership would have been higher than that of the Programme Area. 25 Table 7: AKRSP’s Target Households 1994 54% 53% 63% 1997 45% 40% 71% 2001 34% 33% 73% Poverty in Programme Area Poverty in member households AKRSP covered households in the Sample Geoff Wood. HTS. 2002. 41. PRSP also maintains data on the poverty profile of its micro-credit clients. This data is reproduced in table 8 below.

It shows that 16% of PRSP clients belong tot the better off category and while 58% can be classified as poor, 26% are very poor and less than 1% are destitute. NRSP also attempted to keep a poverty profile of its clients but was able to identify the complete poverty profile of its borrowers in only one of its field units. An analysis of the data for this field unit shows that 46% of its clients are poor and 54% are very poor and that only client is in the better off-category and 5 belong to the destitute category.

It seems that the data which the NGOs themselves maintain on the poverty profile of their clients reports a higher percentage of poor in the RSP clientele compared with the results of survey data. Table 8: PRSP’s Targeting of Poor Households Men Total No. Loanees well to do better off are poor very poor are destitute 118,832 4,401 16,240 69,013 28,837 341 33,670 16,436 54 Women 58,150 1,414 6,576 Total 176,982 5815. 00 22816. 00 102683. 00 45273. 00 395. 00 Percentage of the Poor 0. 03 0. 13 0. 58 0. 26 0. 00 42.

An examination of the Lachi Poverty Reduction Project, which is one of the few programmes which keep track of poverty figures, shows that overall, 81% of the loans and 77% of the loan amount has been given to members who belong to the poor 25 Geoff Wood. 23 and very poor category of households. 26 However, this is a result of a very targeted programme and self-selection of poor households in which there maybe a tendency to exaggerate the poverty status knowing that the programme would prefer to work with this category of households.

In order to ensure accessibility of credit to the poorest members of the COs, formation of smaller sub-groups has been undertaken to facilitate the group approval of individual credit requests. This has proved extremely helpful to members who were unable to secure a group guarantee for their credit application from the larger group. In addition, new loan products were introduced which were specifically targeted to poor women, e. g the micro-leasing of sewing machines which has made credit more accessible to poor women. 43.

Sometimes there are differing interpretations of the results reported on the targeting capacity of some large NGOs like NRSP. The NHDR/A. I. Survey data asserts that neither NRSP’s loan sizes nor its selection of borrowers in the area surveyed target the poor. The survey asserted that if ownership of canal irrigated land was an indicator of rural wealth than NRSP had the wealthiest clients as 60 percent of its sample beneficiaries owned irrigated land and, 33 percent of the households owned more than 10 irrigated acres.

Furthermore, the survey reviewed the income level of the beneficiaries of seven NGOS and found that 50 percent of the respondents had monthly household incomes of above Rs. 5000. Another in-house farm level survey of 100 farmers was carried out in December 1998 to assess the impact of NRSP’s credit programme in Vehari. Over 50% of NRSP’s clients were either landless or had marginal land holdings i. e. less than six acres. This study asserts that the NRSP credit is meeting the needs of the lower groups in the land owner spectrum.

The results also showed that with access to the capital at reasonable terms, poor farmers and the landless were able to lease land, thereby increasing their incomes. 27 Another study on NRSP28 attempted to assess the extent to which the rural poor were involved in the programme and assessed that 40 percent of the households can be regarded as poor. 29 Thus while the results from these different surveys are consistent the authors come to different conclusions. 44. According to a survey30 undertaken as part of the Human Development Report31 in Pakistan, it was assessed that only 35. percent of the households surveyed had access to loans and that the proportion did not vary substantially across the categories of extremely poor and poor households. However, the proportion was significantly lower in the urban areas, where only 16 percent of the households received loans. For the rural areas, the proportion of households receiving loans was lowest in the case of the extremely poor i. e. 37. 3 percent compared to 44. 7 percent and 47. 7 per cent for the poor and the non-poor households respectively.

While the rural areas have received more loans that does not mean that they have received more 26 27 Lachi Poverty Reduction Project. Micro-Finance Section. March 2002. Credit and Enterprise Report: Sixth Annual Repot: NRSP. 1998-1999. 28 Mahmood Hassan Khan. The Rural Support Programmes in Pakistan: Methods for Assessment of Cost and Impact. 2003. 29 Monthly income per person is not above Rs 650. 30 NHDR/PIDE Poor Communities Survey of Pakistan 2001. A sample survey of seven districts in Pakistan. 31 The National Human Development Report, Pakistan.

January 2003. United Nations Development Programme. 24 institutional credit. As much as 80. 3 percent of the total loans are obtained either from the shop keepers or from friends and relatives. The institutional credit tends to flow to relatively richer sections of society. Thus the non-poor who are less than 20 percent of the population have received 36. 4 percent of the ADBP loans whereas the extremely poor who constitute 40 percent of the total rural households have received only 13 percent and the poor have received the remaining 50 percent. 2 Table No 9 Percentage of Households Who Received Loans During Last 12 Months Extremely Poor 32. 1 17. 6 37. 3 Poor 35. 4 14. 5 44. 7 Non-Poor 41. 9 18. 4 47. 7 Total 35.

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