‘New Microfinance Strategic Framework to promote sustainable growth’

Policy’s effectiveness hinges on dynamism coming from the operators.


Express December 02, 2011

KARACHI: State Bank of Pakistan (SBP) Governor Yaseen Anwar said the central bank has laid down a detailed strategy to promote sustainable growth of the microfinance sector in its new Microfinance Strategic Framework 2011-15, which will foster a pro-poor and sustainable development in the country.

He said this while speaking at the inaugural ceremony of the 5th Pakistan Microfinance Country Forum here on Friday. He said the strategy’s effectiveness and success hinges on growth dynamism fundamentally coming from microfinance operators themselves.

“SBP will issue regulatory guidelines to microfinance banks (MFBs) for up-scaling of loans and develop a reporting structure to assess the geographic distribution of microfinance growth,” he added. The evolution or trajectory of microfinance has so far remained positive despite many challenges, he added.

Anwar said that though early successes in microfinance industry are laudable, they have yet to create a major dent in the widespread financial exclusion.

“Currently, microcredit is reaching only two million borrowers whereas the size of the target market is estimated to be 25 to 30 million,” he said and added that Pakistan has one of the lowest financial penetration levels in the world with 56% of the adult population totally excluded, and another 32% informally served.

Speaking on the downward slide of the rupee, he said, “The rupee is stable and the downward slide against dollar was simply because Pakistan has made oil payments of $700 million that increased pressure on the currency.”

Speaking on the importance of entrepreneurship, Mohammad Ali Jinnah University Dean Dr Abdul Wahab said that research has shown that many people give undue weight to money before starting businesses. “What is more important for an entrepreneur is to ponder on the idea of the business first and not finances,” said Wahab.

“The biggest challenge before us is to change our mindsets that poverty is predetermined, because it is not.” he said. Citing the example of American food chain KFC, he said like KFC, there are hundreds of successful companies in Pakistan like Tapal, Student Biryani, Haleeb Foods and Karachi Haleem that started their businesses from small pushcarts.

“Not everything is bad in Pakistan.” Wahab said, “Despite present gloomy economic conditions, the profit margins of national and multinational companies in Pakistan range from 100 to 400%.”

Published in The Express Tribune, December 3rd, 2011. 

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