Microfinance witnesses robust growth in Pakistan

Contrary to the other parts of the world, microcredit sector has witnessed a robust growth in Pakistan, which has been ranked by the Economic Intelligent Unit among the top countries for offering conducive environment for microfinance sector growth.
According the latest report of Microcredit Summit Campaign, just about 13 million world’s poorest families received access to microcredit and other financial services in 2011.
The report titled “Vulnerability: The State of the Microcredit Summit Campaign Report 2011” however observes that microcredit sector has registered a considerable progress in Pakistan.
As a sector developer, Pakistan Poverty Alleviation Fund (PPAF) is in the driving seat to control the trajectory and disbursed over Rs 14 billion during the year under review resulting in an increase of Rs 2,545 million in the outstanding loan portfolio and contributing almost 76 percent of the total increase witnessed by the microfinance sector in Pakistan.
PPAF is the strategic and exclusive partner of Microcredit Summit Campaign for reporting and in terms of realising its aims and objectives. Since its inception, PPAF has disbursed more than $850 million through 5.2 million microcredit loans.
Currently, almost half of Pakistan’s microfinance market share is financed by PPAF through over 50 microfinance banks, microfinance institutions and other civil society organisations in 92 districts across the country.
It is for the first time since 1998, when the Microcredit Summit Campaign began tracking this data, the total number of clients and number of the poorest families reached has declined.
The total number of clients was reported to have fallen from 205 million to 195 million and the sub-set of families living in extreme poverty, defined as less than $1.25 a day, from 137 million to 124 million. According to the report, most other parts of the world saw moderate or slowed growth, with the exception of 1.4 million new clients in Sub-Saharan Africa.
Despite this reverse in 2011, microfinance institutions still provided microloans to more than 124 million households living in extreme poverty.
Assuming an average of five persons per family, this means that more than 621 million people were affected; this is twice the entire population of the United States. The report argues that getting the industry back on track will require a new understanding of clients’ needs, preferences and aspirations as well as designing new tools for delivering products and services at lower costs.