Unfortunately, corruption and defaulting has somehow become a part of our national heritage. People feel that if they have been provided with a loan from a bank, it is part of their personal obligation to not pay it back. What they do not realise is that the money that is lent out to them is public money. It is money that can be spent to enhance the cottage industry, to create more job opportunities, to provide a source of employment to the unemployed. In order for any country to prosper there is a need for it to have a strong lower and middle class. Pakistan is perhaps one of those few countries where the middle class is fast diminishing.
Most of us comprehend the value of education both to our businesses and jobs. It is a common known fact that a skilled workforce is vital to the success of a business. However, the skills a person acquires are not merely learnt in the classroom but also entail experiential learning. Therefore, if we look at education it is multi-faceted something an individual is constantly acquiring through the course of his life. As I said earlier, strengthening the middle and lower class can serve as a backbone to the economy. Unfortunately it is the same class, that is wary of going to banks for loans for they feel that the terms would be too stringent and there is lack of communication between the two. The SME bank, unlike most other banks in Pakistan, has over the years tried bridge this gap and has approached small businesses and entrepreneurs giving them advice on opening up businesses and how to utilise the finances available to them.
SME in itself stands for Small Medium Enterprises and it is by providing these small entrepreneurs with microcredit can the country truly help various social classes improve their economic condition. If Dr Younas can create a model in Bangladesh for the availability of microfinancing to the poor rural classes in Bangladesh, why can the same not be done in a country like Pakistan where 45 per cent of the work force is employed in agriculture and a great proportion of our population is living below the poverty line. As discussed earlier, education is multi faceted and requires not only theoretical understanding but practical experience of concepts and situations. There have been many examples of successful entrepreneurs in history who did not receive formal education as such but were successful in running their businesses.
Interestingly, the initiative taken by Dr Yunas against the advice of banks and the government was a glaring success in Bangladesh and to date, has more than 2000 branches serving 8.29 million borrowers in approximately 80,000 villages. Grameen bank with a recovery rate of 97 per cent is higher than any other banking system in the world. This is mainly due to the fact that while the influential people and large corporations feel that they would be able to get away with defaulting on loans the same is not the case with small entrepreneurs who know that they inevitably have to pay back their loans to the bank.
The success of Grameen bank is not very hard to replicate in Pakistan. It simply requires dedication and strong will to complete the task. A great chunk of money available to banks in Pakistan is in most cases gobbled up by corrupt individuals and corporations. The fact that they are able to do so, further goes on to show that the legal framework of Pakistan needs to be strengthened to ensure that such defaulters do not get away. If there is greater accountability, individuals and corporations would think twice before defaulting on public money.
The writer is Chief Manager, SME Bank
