Microfinance (in Pakistan) has developed dramatically
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FINANCIER SHAHZAD IQBAL
?Microfinance (in Pakistan) has developed dramatically?
BY ABBAS JAFFER, JUNE 14, 2010
Shahzad Iqbal is Manager of Finance for the Kashf Foundation, a Pakistani organization offering microfinance products to women. Clients have received over $200 million in microloans over the last fourteen years. Kashf has been the recipient of a number of accolades, most recently the Global Leadership Award from Vital Voices. Their work was featured in New York Times bestseller Half the Sky. In this third interview I conducted during the 2010 Skoll World Forum, I spoke to Iqbal about Kashf's history, future, and how gender is an important consideration in his work.
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Could you give us a bit of background on how the Kashf Foundation started?
It was founded by Roshaneh Zafar in 1996. She met with Muhammad Yunus of Grameen Bank, which won the Nobel Peace Prize in 2006, and was inspired by the potential of microfinance. She spent a full two years conducting research in Pakistan on how microfinance could positively impact the lives of poor Pakistani women, who have been given less opportunity in the past to be involved in economic activity. Since our founding, we have worked with over 300,000 female clients.
Pakistan, like other developing countries, suffers from a high degree of financial exclusion which is positively correlated to poverty and gender. An Access to Finance Study conducted by DFID et al. in 2009 shows that 56% of the population in Pakistan is financially excluded. In terms of gendered financial exclusion the study revealed that 68% of women and 42% of men in Pakistan are financially excluded. Kashf Foundation lends money to low-income households through providing credit exclusively to women.
As one of Pakistan?s leading microfinance institutions, we have demonstrated the business case for investing in women. When we began operations in 1996, for every Rupee disbursed in the market as micro-loans only 25% was provided to women. Today, as a result of Kashf Foundation?s success almost 50% of the clientele in Pakistan's microfinance sector is female. Our economic empowerment program has grown from 913 female clients in June 1999 to over 300,000 female clients in March 2010 with an outstanding portfolio of Rs 3.36 billion and cumulative disbursement of Rs 17.3 billion to over one million female clients, making it the third largest institution involved in micro finance in the country.
How did you come to join the team at Kashf? Your involvement as a Pakistani man in this effort?what significance does this hold for you?
I have been working with Kashf for two years since 2008 after having worked in the private sector. I met with Mr. Khalid Kabeer, the ex-CFO of the foundation who was the real source of inspiration for me to join in this organization. After meeting with him, I started enquiring about microfinance. I realized that it is one of the best tools available in our country to alleviate poverty and helping those who are excluded from the main financial sector of the country. First, it's good business. And it was my personal feeling at that time that I should give back to the society which I have gained during my studies and experience with the private and corporate sector. At the time I joined there was high inflation in the economy, which was a big obstacle. Kabeer informed me that a position was opening up, and so I took the opportunity.
It was a challenge for me to fill the position of Mr. Kabeer, who worked here for almost six years and at the time of my hiring. He was assigned a new role to set up a microfinance bank under the brand of Kashf. Today, I can say that his guidance and continuous support helped me in filling his role at Kashf. I strongly feel that we cannot ignore the role of women in the economic development of our country and without their contribution, we cannot be sustainable as a country.
What is the direction of the foundation as it continues its work?
There are three major areas Kashf will be focusing on in the coming years with an extended focus on microfinance plus approach, which essentially means that being a specialized microfinance institute, we shall now work to improve the financial literacy of our community and their immediate families. The three initiatives which the company plans to implement in the coming years are The first is that we would like to expand our programming to engage and empower adolescent girls and try to educate them about the benefits of savings in their lives. The second is to increase our activities to promote financial literacy of our clients in understanding financial transactions, helping them in preparing budgets for their businesses. And the third is a strong focus on microfinance products to meet the business needs of our clients.
Part of our women's programming is a gender incubation lab. We aim to have a labs in all of our 151 branch network of our company, which is spread across two major provinces of Pakistan, out of which the foundation operates. By working on gender issues, we would like to increase the efficiency of how microfinance improves women's lives. We will develop modules for gender mainstreaming. Once we select trainers for the communities we work in, they will help to scale up our efforts.
What has the impact of receiving the Skoll Award for Social Entrepreneurship in 2007 been for the foundation's work?
Kashf Foundation has a strong history of receiving awards prior to receiving the Skoll Award, which further helped in creating more visibility in the Western world. This is fabulous for us. She and Kashf have achieved so much. As Managing Director and Founder of Kashf Foundation, she has a very clear vision which she successfully transferred to her team as well, and everyone at the organization has buy-in. I can say that this award further recognized her efforts and brought Kashf to higher levels of achievements and standards. In short, The connectivity and networking opportunities this award has given to the foundation has been fantastic.
In Pakistan, we were the first specialized microfinance institute. We were also the first microfinance institution which has successfully closed borrowings from commercial banks of USD 22 million in 2007. Kashf Foundation has a strong footprint throughout the country which also helped the development of the sector as well. Now microfinance in the country has developed dramatically.
In your work, what have been some of the most powerful stories about women's empowerment?
Shams-u-Nisa is a woman who has had to contend with various difficulties and traumas in her life. Her husband was a drug addict and instead of working and providing money for household expenses, he used to forcibly take the little money that she managed to earn by stitching clothes, to buy more drugs for himself. She barely managed to meet the household?s daily food requirements and was unable to provide her four sons and one daughter with proper education and health facilities. Her husband?s drug addiction made him extremely violent and abusive towards his family. She says, ?At times when my husband could find no money in the house to take for his drugs he used to turn violent against me and did not even spare the children. I used to hide the smaller ones under the bed and my two older boys used to run to the neighbors' house for safety.?
Seven years ago, Shams-u-Nisa heard about Kashf Foundation and took a loan of Rs. 6000, from which she purchased cloth and filling materials for making children?s toys. She remembers with joy how her children and her neighbors' children exclaimed with joy on seeing for the first time her colorful cloth dolls, bears, jokers, puppies and ponies. Initially she sold these toys to her neighbors, who in turn sold them to shopkeepers; this enabled her to earn Rs. 5000 ? 6000 monthly. With the second and third loan amounts of Rs. 10,000 and Rs. 12,000 respectively, she further expanded her business by purchasing more material. She is extremely happy with her business, as she now earns Rs. 10,000 ? 12,000 monthly. She has not only been able to provide for the education of her younger children, but has also provided her husband with medical assistance to help him overcome his drug addiction. She says, ?Thanks to Kashf, now I know the community I live in and others know me. My center members along with their husbands will come to my aid anytime, which is why my husband cannot dare lay a hand on us?.
There are other powerful stories as well. There is a woman who's husband was beating her. She started a small fabric art business with a loan from us. In the second year, she employed a few more ladies. Now she has ten employees. And six or seven years back, there was an older woman to used a loan to set up a small grocery shop. After four years, she wanted to buy land for her son, and she was able to with the profits she had made. We are seeing change in the lives of people.
Any final thoughts on the foundation and your involvement?
It is a great honor for me to work with such a team which is lead by an amazing lady, our Managing Director, Ms. Roshaneh Zafar. I would love to continue to work with Kashf and try to reach to as many people as we can. We as a team dream that one day, all women of Pakistan are economically empowered to make their decisions and to work for the betterment of the country?s economy.
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Garment Factories, Changing Women?s Roles in Poor Countries
By VIKAS BAJAJ
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While visiting garment factories in Bangladesh on assignment recently, I met young women who had migrated from villages to the city in search of jobs that they needed to support their families back home. It is a fairly standard story in this part of the world.
What struck me, however, was how their journeys had changed them and their views about life. Take Maasuda Akthar, who moved to Gazipur, a town 30 miles outside Dhaka, when she was 16 with her sister. (I wrote about her in this article about how the Bangladesh garment industry was benefiting from increased labor costs in China.) She married a man whom she met at the factory. As an experienced seamstress, she now makes more money than him. Ms. Akthar, 21, told me that her husband had offered to become the sole breadwinner in the home so that she could stay at home and ?be comfortable,? but she refused because she enjoys working. Not only that, she told me she did not plan to have children for a few years.
My conversations with Ms. Akthar and the other woman appeared to confirm what economists, policy makers and businessmen had told me By giving women an independent source of livelihood, Bangladesh?s garment industry has changed this conservative Muslim country?s society in immeasurable ways. (More than 80 percent of the three million people who work in the industry are women.)
I later spoke to Ahmed Mushfiq Mobarak, an economist at the Yale School of Management, whose research with Rachel Heath, a graduate student, applies academic rigor to those assertions.
Mr. Mobarak, a Bangladeshi who has advised his country?s government, found that the presence of apparel jobs appears to bolster school enrollments of girls, especially for young girls.
?A doubling of garment jobs causes a 6.71 percent increase in the probability that a 5-year-old girl is in school,? Mr. Mobarak writes in a summary of his findings.
The effect is more muted for girls 16 to 19 in age, who are more likely to drop out earlier to start working in the factories. And there is no significant effect on boys, which might be the result of the relatively low employment of men at lower levels of the industry. (Not surprisingly, men still manage and own most Bangladeshi garment factories. But in politics, Bangladesh?s two main parties are led by women ? Sheikh Hasina, the current prime minister, and Khaleda Zia, a former prime minister.)
Mr. Mobarak also found that girls who live in villages with garment factories tend to marry later and have children later than the girls who grow up in villages without factories. In other countries, this has typically happened as women get more educated, but Mr. Mobarak?s survey of 1,500 families suggests that it is happening slightly differently in Bangladesh, which has a literacy rate of just 55 percent.
?Girls do seem to take advantage of these jobs at 17 to 19 years old, and that allows them to delay marriage and child bearing,? Mr. Mobarak told me in a telephone interview. ?Even if it?s not happening through education, it is happening through work.?
Mr. Mobarak?s research is not yet complete, so it is hard to draw firm conclusions about what might be driving these changes. It could be that women and their families realize that they can make more money with more education. Or perhaps garment factory jobs are giving families more financial breathing room, allowing some children to stay in school while others take jobs and support the family.
His research echoes the findings of another recent paper that looked at school enrollment, this one in Indian towns and cities before and after the arrival of call centers. That research, by Emily Oster and M. Bryce Millett, shows that the introduction of one information-technology enabled services center increases school enrollment by 5.7 percent. The researchers found that English-language schools are responsible for all of the increase.
For India, Bangladesh and other developing countries, these findings provide a reason for optimism. Governments in these places are struggling to improve the quality of infrastructure ? hard (highways, ports, electricity) and soft (schools, courts, basic governance) ? but private forces unleashed by nascent economic reforms and globalization are not standing idly by. They are already changing societies and economies.
Wages in Bangladesh?s garment industry are among the lowest in the world. The minimum wage, which the government is expected to increase soon, is just 1,662 taka (about $23) a month. Labor groups are demanding a sharp increase and their protests and clashes with the police have periodically shut down factories in recent weeks.
Still hundreds of thousands of women flock to Dhaka and other garment hubs in Bangladesh every year because factories pay more than the women could earn in villages.
M.T. Shika, a worker I met in Dhaka, is single and lives with three other girls in a two-bedroom apartment. She sends home up to 3,000 taka (about $43) every couple of months to help support her parents. (Her three sisters are already married.)
Ms. Shika, 20, told me that she wants to wait for two or three years before she gets married and has children because she wants to save up some money first. ?I want to send them to school,? she said about her future children.
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This is good news, thx 4 sharing )
The way i see it, the hardworking women who were oppressed in the past & present are bound to be the ones occupying the higher positions in the future. Along with the (not so few, i hope?) good men of course.
These young factory ladies, do they get chance of some kind of organized education at work?
Btw, i checked there's currently no wikipedia entries on this Kashf foundation and its founder Roshaneh Zafar. Maybe you can start it?
and, um.. for those interested
http//www.youtube.com/watch?v=0fzWoI_27J8
http//www.youtube.com/watch?v=_UaLMyf6gUc
http//www.youtube.com/watch?v=w3y3KoWA52I