The existing studies on the impact of microfinance in Pakistan have looked at the impact of microcredit on clients and have not studied the broader range of services, such as savings and insurance. The gap in this existing literature was that it was based on quantitative non-experimental methods or quasi-experiments, which have a problem of sample selection bias. This was observed in a brainstorming session jointly organised by the Pakistan Microfinance Network (PMN) and Citi Foundation to discuss the proposed methodology of the first ever comprehensive impact assessment study of the microfinance sector in Pakistan.
The session was attended by Syed Mohsin Ahmed, CEO, PMN, Hashim Bakht, Head of Corporate Banking, Islamabad for Citi, Imran Cheema Area Manager for South and Central Branch Banking for Citi, Ms. Nazrat Bashir, Additional Finance Secretary, Ministry of Finance, Muhammad Ashraf Khan, Executive Director, DFG, State Bank of Pakistan among other experts from the microfinance, social and public sectors.
The impact assessment study initiative is based on a $60,000 grant by the Citi Foundation to the PMN, which will be conducted to assess the various ways in which the microfinance sector has had an impact on different communities across the country at a social level, generate best practices and share lessons learnt. Citi also hosted the brainstorming session to facilitate the discussion on assessment methodologies and the roles of key stakeholders. There are more than two million active borrowers of micro loans in Pakistan with an average loan size of Rs20,270 and the microfinance sector has seen phenomenal growth in the country during the last one decade with more than two dozen active players including banks, NGOs and rural support programmes.
The proposed impact evaluation study by PMN will seek to overcome the limitations of the existing body of knowledge on the impact of microfinance in Pakistan and deliver more sound and robust estimates of benefits accruing to the MF clients, in terms of higher income and lower poverty levels, improved education and health outcomes and greater empowerment of women, etc. In terms of the scope and design of the proposed study, three options were explored, i.e. sector level study of impact of microfinance using quasi-experimental methodology, sector level study of impact of microfinance using randomised control trials methodology, and national level study on the contribution of microfinance to the overall level of poverty reduction and improvement in social outcomes in Pakistan.
The participants of the brainstorming session discussed the three proposed options at length and decided to form a steering committee to provide stewardship and guidance to the conduct of the impact assessment, from the design of the study to the drafting of the final report. The regulator, government, apex donors, practitioners and academia are all represented on the steering committee. Arif Usmani, MD and Citi Country Officer, who has also been a staunch supporter of the growth of the microfinance sector in Pakistan, said, “The Pakistan Microfinance is a long-standing partner for Citi on the microfinance front. This pioneering social impact study with PMN is particularly significant as it reiterates Citi’s commitment to developing intellectual capacity in the microfinance space in Pakistan.” He added, “As we celebrate 50 years in Pakistan this year, we also mark the completion of the 3 year Citi Network Strengthening Programme (CNSP) (2007-2010), in conjunction with SEEP and PMN, based on a $650,000 grant by the Citi Foundation.”
Syed Mohsin Ahmed, CEO expressed the hope that this study will help the industry and other stakeholders interested in the impact of microfinance to understand the level of improvements that financial services bring at the base of the pyramid. It is also expected that over the course of this study more information will reach all of us to understand the role different financial services like credit, deposit, insurance and remittance play in smoothing household consumption, generating incomes, reducing health related expenditures and increasing empowerment of clients, especially women clients.
