Webinar discusses financial inclusion

A yardstick that comments on core objectives of MFPs termed beneficial for industry

The Pakistan Credit Rating Agency (PACRA) hosted a webinar in collaboration with the SECP (the Securities Exchange Commission of Pakistan). The key focus of the webinar was financial inclusion as a necessity for the development of Pakistan and the betterment of its citizens.

There have been concerted efforts on the part of both SBP and SECP in this regard. Amongst financial industry players, Microfinance Providers are the torchbearers in these efforts. They have a valuable contribution in enhancing access to finance, particularly for underprivileged segments of society. This has positive bearings on poverty reduction.

Most Microfinance Providers (MFPs) have dual goals: (a) a social objective, by serving the strata of the population that are excluded from the traditional financial system, and (b) a financial objective, to enable it to perform its mission on a sustainable basis, that is to remain commercially viable. These objectives are critical for all stakeholders of MFPs, though their respective importance may vary according to the purpose and intention of each stakeholder. However, information as to a specific MFP’s behavior against each of these objectives is usually not available. In cases where it is available, it is difficult to compare the behavior of different MFPs against each other.

PACRA believes that the availability of a yardstick that comments on both core objectives of MFPs would be beneficial for the industry.

This belief has led to the development of Social Impact and Performance (SIP) Rating. SIP Rating is a unified opinion on the performance of an entity in achieving its desired social impact and becoming commercially sustainable.

Published in The Express Tribune, March 7^th, 2022.