Investing for public good

Published: July 21, 2012
The writer is founder and managing director of Kashf Foundation and founder of Kashf Microfinance Bank Limited based in Pakistan

The writer is founder and managing director of Kashf Foundation and founder of Kashf Microfinance Bank Limited based in Pakistan

The rapidly increasing world population and the growing numbers living in poverty are, perhaps, the biggest challenges of this century. In modern times, many models have been tested to alleviate deprivation, build an economically equitable system and end poverty. The notion of philanthropy, which predates ancient civilisation, is derived from the myth of Prometheus who endowed humanity with two gifts: the gift of fire as a source of human creativity and potential, and the gift of optimism and hope. Therefore, philanthropy can be seen as a way of harnessing human potential to resolve insurmountable challenges. In other words, charity and altruism are rooted in the basic concern for the welfare of others, while Islam added to it the notion of justice through zakat, which is seen as a way of building a just and equitable society. Today, philanthropy is seen as private giving or voluntary action for public good.

Dr Muhammad Yunus writes in his book Creating a World Without Poverty that “Charity is a form of trickle-down economics; if the trickle stops, so does help for the needy”. In other words, using the metaphor of fire, we need alternative ways of using our financial resources in order to help meet goals for human well-being and at the same time, embed the notions of welfare, altruism and justice within the approach. The concept of impact investing is a hybrid of philanthropy and equity, where measurable social goals are twined with economic returns. In an economic context, businesses that generate returns for private gains will attract sources of capital that are seeking such financial returns. In a social context, where the problems of humanity continue to grow exponentially, the ability of individuals to give or donate will limit the flow of resources to resolve such problems. However, by establishing businesses that have a social purpose, there is a possibility of addressing social and economic problems simultaneously.

Let us simplify this debate and take it to the level of Shaheen, who resides in a low-income community in Bahawalnagar. Shaheen is skilled at making paper flowers and has been working as a piece rate worker for over a decade. The returns she gets for her hard labour is a pittance but it supplements the family income every month. Recently, her husband took a second wife and no longer contributes towards meeting the needs of Shaheen and her four children. Shaheen’s own income cannot address her needs and those of her children anymore. We have two options before us. We can consider her a worthy recipient of charity and provide her a donation to fulfill her needs. We can, perhaps, at best, support her for a few months but what happens when our charity dries up? The second option is to provide Shaheen with a small loan, which she can invest in her flower-making business that will help her generate revenue, which in turn can feed her family and also help pay back the loan. In this case, we have provided her a sustainable choice — a choice to be economically active and rebuild her dignity step by step. Here, microfinance has become the glue that binds the notion of welfare with economics, where both business and social returns reside comfortably. As individuals, we can choose to make Shaheen dependent on our charity or we can contribute towards making her an independent economic agent.

I work in this field because I believe in the unlimited beauty and scale of human potential. It would be wrong for us to limit the notion of  ‘giving’ and welfare to just one financial form. We need to broaden our imagination and look at ways for sustainable giving. In the long run, such a notion will magnify the tools we have in our development handbook and broaden the envelope for us to achieve our mutual human goals.

Khaled Ahmed’s regular column will appear in tomorrow’s issue.

Published in The Express Tribune, July 22nd, 2012.

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Reader Comments (8)

  • observer
    Jul 21, 2012 - 10:15PM

    We can also help future Shaheens by telling them not to have four children to begin with.


  • Parvez
    Jul 21, 2012 - 11:38PM

    There is almost nothing one can disagree with in your article.
    Thinking about this I feel that there has to be a very large amount of simple ‘giving to the poor’ and organised philanthrophy in Pakistan because of which things still function as everyone realises that the government really does not govern but are ‘ in it for themselves ‘.


  • elementary
    Jul 22, 2012 - 3:17AM

    “give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime” so goes the saying.
    In latin america poverty alleviation programmes were very successful as they were not only integral part of a larger macroeconomics improving policies ,they were linked to mandatory child immunization ,school enrolments,vocational training etc.
    In Pakistan however a similar programme BISP(a Rs70 billion/yr project) hands poor the cash without linking it to any such social indices ,which reduces it to a mere vote buying exercise vis-a -vis it’s name.Moreover with inflation staying well into double digits the meagre sum( roughly Rs1000/month ),dished out is worth less and less as the time goes on.


  • x
    Jul 22, 2012 - 3:21AM

    @observer, totally agree. even with a husband’s financial support, having less children is still better in order to give them better lives and futures, and making them into positive contributors to the economy of our country (through education and prospects) rather than being burdens.


  • Falcon
    Jul 22, 2012 - 4:52AM

    Roshaneh – Great article. I think you have captured well the essence of micro-financing. I would love to see your thoughts in subsequent articles on whether this model can also be expanded to truly make such small business participants profitable by facilitating aggregation of similar skill pool, procurement of cheapest raw material, and better access to distribution, because most of the under-previleged people you are trying to target might not have the resource base to build out this light business infrastructure themselves and therefore mere capital financing might not suffice.


  • pmbm
    Jul 22, 2012 - 5:15AM

    Shaheen did not get 4 children by herself. Other party has taken another wife, abandoning his responsibility to his children and their mother.People need to take their responsibility seriously only then they can be helped by society through financial and moral zakat.


  • Annum Saeed
    Jul 22, 2012 - 11:04AM

    “Many small people, in many small places, do many small things, that can alter the face of the world”


  • salman
    Jul 22, 2012 - 12:31PM

    thank you for this article. however, microcredit’s effect in promoting entrepreneurship among the poor is minimal at best so its arguable how much of a measurable impact it is having on the lives of people like Shaheen. there’s also the matter of high interest rates charged by microfinance institutions like Kashf…


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