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1. Edditor's Note
2. Pakistan Poverty Alleviation Fund
3. The Small Credit Scheme of ABP & AW 
4. Micro Finance and Gender
5. FWBL's Activities                      
6. Letters to Editor 
7. Contact Information    

         1. Edditor's Note

       It gives me great pleasure to be editing the eight issue of Credit News. These days we are operating under the second extension of the preparatory phase and the process of turning the Centre into a registered entity is also underway. An exciting activity at the WCIRC is our current rapport with NGOs/MFIs all across the country. As mentioned in the previous newsletter, the Centre is working on a research study with the objective of providing a basic yet efficient MIS to micro finance practitioners which would help internally strengthen their programmes as well as articulate their efforts in terms of external scrutiny. For this purpose, we had circulated a basic questionnaire to ascertain ground realities, a prerequisite to devising a MIS relevant to the practitioners needs. The feedback obtained in this regards is being collated and analyzed. The next stage is to approach a few highly specialized NGO/MFIs and obtain information about their management systems and supplement it with successful international practices so as to devise a simple MIS that can be replicated and maintained at a larger level. This activity is not being done in isolation, since it will form the basis of conducting an eventual impact assessment study that will be undertaken by the Centre at a later stage.

       Now to come to the current issue of Credit News, it is our pleasure to once again bring you diverse articles concerning micro-finance. We have included an article submitted by the Pakistan Poverty Alleviation Fund to provide information regarding the current status of their programme. Another article is based on information extracted from the recently released 2000 Micro Credit Summit Campaign Report. A comprehensive literature review has been contributed by Karen Moore a visiting research fellow whose article on micro finance and gender was featured in our previous issue. Another contribution is that of the welfare-oriented Small Credit Scheme of the Islamabad/Rawalpindi branch of the Association of Business, Professional and Agricultural Women (ABP & AW). An update of microcredit initiatives of the First Women Bank is also highlighted in the following pages.

       We hope that you enjoy our latest issue and we shall look forward to the usual feedback and comments in this regard.

Thank You
Syed Mohammad Ali

2. Pakistan Poverty Alleviation Fund

This article was submitted by the Media Cell of PPAF

       The Pakistan Poverty Alleviation Fund (PPAF) is formally working for the last two years. Its vision is to make a network of partner organizations that is acknowledged as a global leader in the alleviation of poverty and reduction of gender inequality. PPAF mission is to double the number of partner organizations between the 1st and 3rd year and double it again between the 3rd and 5th year. Furthermore , to double the outreach of partner organizations in reaching the poor, women and under-served districts through direct support and imaginative leveraging of PPAF resources.

       The Pakistan Poverty Alleviation Fund (PPAF) has approved Rs. 551.2 Million for the five partner organizations (POs) of the first batch. Provincial allocation has strictly been considered in the selection of these five POs. The funds allocated for the 1st quarter have been disbursed to the POs. These five partner organizations of the PPAF are Taraqee Trust - Quetta (Balochistan), Aga Khan Rural Support Program (AKRSP) - Gilgit (Northern Areas), National Rural Support Program (NRSP) - Islamabad (Federal Area), Family Planning Association of Pakistan (FPAP) - Lahore (Punjab), and Kashf Foundation - Lahore (Punjab).

       Disbursing Rs. 551.2 Million to the first batch, outreach of the first batch is as; 34 districts are covered, number of impacted individuals is approx. 484,000. Number of individual loans is 30,000 and CPI projects are 340. Schemes of drinking water supply, irrigation / flood protection, link road / bridges, culverts, causeways / sanitation are included in the CPI projects

       Recently, the PPAF approved funding of Rs. 207.194 Million to the second batch of Partner Organizations. With this approval, PPAF's total commitment for funding its partner organizations has reached Rs. 753.83 Million.

       As in the case of the first batch of organizations that were funded, PPAF has been mindful and sensitive to provincial and gender parity. The new partners of the PPAF are 1)Thardeep Rural Development Programme (TRDP) - Mithi (Sindh), 2)Sarhad Rural Support Corporation (SRSC) - Peshawar (NWFP), 3)Basic Urban Sercvices for Katchi Abadies (BUSTI) - Karachi (Sindh), 4)Development Action for Mobilization & Emancipation (DAMEN) - Lahore (Punjab), 5)Kurram Rural Support Organization (KRSO) - Parachanar (Kurram Agency), and 6)Sindh Agricultural & Forestry Workers Coordinating Organization (SAFWCO) - Shahdadpur (Sindh).

       The forecast coverage and outreach of the second batch is as; districts covered will be 40, number of impacted individuals will be around 630,000 and individual loans will be 40,000. In the second batch operations, 450 CPI projects will be undertaken with the similar types as in the coverage of the first batch.

       These will be assisted by Micro Credit loans and income-generating Community Physical Infrastructure grants. Both of these interventions will be supported with capacity building grant funding so that the partners can improve the administrative and operational skills of their own organizations as that of the communities.

       With a view to ensuring results, the PPAF will be closely monitoring the activities of the partner organizations with regular visits by teams of the PPAF Monitoring Units. Similarly the PPAF will carry on regular audits to ensure that funds have been utilized as per the agreed implementation plan, and in accordance with the terms of contract. To assist in the activity of monitoring the partner organizations will be sending in regular monthly and quarterly reports. By following this procedure, PPAF believes that it can control the major risk of misuse of the funds. For this, 1st quarter amount is released to the POs and after balancing the released amount with a quarterly report comprising detailed utilization of these funds, how and to which communities / projects, amount for the second quarter is released. This is pertinent to mention here that 100% payment has been received from 1st batch of POs. The PPAF hopes to extend this outreach further by November 2000 when it funds its next batch of partner organizations.

       The ultimate goal of the Pakistan Poverty Alleviation Fund is to become an "internationally recognized social fund" with all the qualities of a progressive, pro-active and efficiently functioning international organization using Best Practices and working successfully for poverty alleviation.

3. The Small Credit Scheme of the Association of Business, Professional and Agricultural Women (Islamabad/Rawalpindi Branch)

Capacity Building

      The scheme was initiated to provide financial assistance and counseling to the lower income group of women who wanted to start micro-enterprises but were not familiar with formalities of banks and other credit agencies. The scheme procedures were streamlined to disburse payment speedily and with a minimum of formalities. The scheme envisaged disbursals of Rs. 5,000 each against the personal surety of one person with repayments in 12 easy monthly installments at a 9% markup rate only. Counseling and guidance at every stage was an integral part of the plan. After a detailed scrutiny the IR Committee finalized their plans for disbursement of these six loans in September, 1992.

       After having given out 100 loans in a period of over 4 years 26-9-1992 to 1-9-1996, the following observations were made:

• Women have behaved very responsibly towards the return of the loan which has lead to a positive attitude towards increasing their knowledge and a marked enhancement in their self-confidence.

• There is a visible feeling of togetherness and the willingness to cooperate with each other. There is a definite improvement in the way they conduct themselves while outside, and in the company of our members, the bank or at other functions.

• There is a marked improvement in their household lifestyles - in terms of dress, what they wear and how much money they have to spend.

       A definite feeling of "economic empowerment" and a display of confidence were evident due to this credit scheme. The initial amount had no doubt formed the base of a rotating fund, but it was felt that some fund raising was required to increase outreach. It was thus decided to raise money through private donations. Due to the confidence, trust and credibility of our team we succeeded in doing so. Until now the Islamabad/Rawalpindi branch of ABP & AW has disbursed 300 loans and the prevailing recovery rate is 92%. Repayments come in regularly and are almost always on time. We have a few defaulters but with quick and immediate action, we are able to either cancel the loans or recover the entire amount lump sum. Almost four loans are now disbursed every month and private donations continue to come in. Donations have now exceeded Rs. 1,70,000/- (One lac seventy thousand) and we are determined to utilize these funds to further assist women who want to start micro-enterprises to increase their family incomes.

4. Micro Finance and Gender

Karen Moore has two degrees in development studies BA (Toronto, Canada) and MSC (Bath, UK), and experience with several micro finance institutions, including BRAC (Bangladesh) and the Small Enterprise Foundation (South Africa). Her current research interests include gender, childhood and development, micro-finance, and economic psychology, socialization and anthropology, primarily within the South Asian context. Karen is presently in Pakistan as a Visiting Research Fellow with the Aga Khan Foundation

       On the surface, the rationale behind the growing Micro Finance Institution (MFI) focus on women is obvious. While women are often identified as among the poorest and most vulnerable people within low-income communities, with households often depending on their income generating and expenditure saving activities, throughout the world women are disproportionately denied access to formal financial services. While the poor are often excluded from the formal financial sector, socio-legal customs and attitudes can act to limit further women's access to financial services in several ways. On the supply side, limits on women's de jure and de facto ownership of the land and property required as collateral, requirements of a male co-signatory, and beliefs about the appropriate role of women, all can act as exclusionary forces. On the demand side, the allocation of the majority of household and childcare responsibilities to women, and other constraints on women's time and mobility, mean that formal banking transaction costs are often too costly for women.

       Thus, targeting women has been explained by some MFIs as an endeavor to reach those entrepreneurs who are most in need of financial services and at the same time most excluded from them. It is surmised that providing women access to affordable credit can empower them economically in the same manner as men; through enhancing their ability to invest in productive human and physical capital as well as risky technologies, to avoid emergency sales of assets and usurious rates of interest, and to smooth consumption (Zeller et al., 1997:25-8). Further, it is important to note that fostering women's role as the `brokers' of the health, nutritional, and educational status of her family, in particular that of her children, is also an important goal (Goetz and Gupta, 1996:46). Thus, women's participation in micro finance programmes has been considered instrumental, not only in terms of her own socio-economic well-being, but also that of her family.

       It is also often suggested that membership in a micro finance institution and access to credit can foster the social, political and psychological empowerment of women as well as their economic empowerment - their strategic as well as their practical needs in the Moser (1989) framework. For a woman who has seldom if ever come into contact with a significant amount of money, an MFI loan can result in greater feelings of self-confidence and self-worth. In addition, MFI membership can provide access to a congregation of community women - the credit group - and health services. Thus, a women's access to credit can allow for her broader participation in community social networks and social programmes, in turn enhancing wider opportunities and self-esteem (Bennett et al., 1996:285; Hulme and Mosley, 19961:125-8).

       However, the impacts of participation in a micro finance programme are neither certain nor straightforward. Hulme and Mosley (19961:125) list the assumptions behind the belief that loans for women will lead to their socio-economic empowerment: (1) that women will use loans for their own enterprises, (2) which will be successful, (3) the profits of which women will control, and (4) that greater involvement in economic activity will strengthen the socio-political position of women. Two studies in particular (Ackerley, 1995; Goetz and Gupta, 1996) challenge the first and third of these assumptions. According to these studies, women loanees in Bangladesh manifest a range of levels of control over loan-funded enterprises, returns from those enterprises, and responsibility for loan repayment - a significant proportion of women have limited or no control over loan-funded business and returns yet shoulder the burden of repayment. In this case, "the developmental objectives of targeting credit to women can be eroded if a direct relation between personal loan use and repayment responsibility is ruptured" (Goetz and Gupta, 1996:54).

       Why then are women continuing to be targeted, despite this realization? Analysts increasingly note another reason behind the targeting of women with financial services: as Rogaly (1996:106) succinctly puts it, it is not `access for women'; rather `women are accessible'. Women have been found to be much better credit risks than their male relatives. In many countries women are relatively easy to locate, as they work in the home compound. Further, they are perceived as more susceptible to repayment pressure, both in terms of the social network and training opportunities they stand to lose, as well as the social norms in which they operate that make them easier to intimidated.

       This alternative rationale suggests that simply targeting women with micro finance does not necessarily imply that gender issues and gender relations have been adequately addressed (Johnson, 1999:2). In this view, woman-targeted micro finance programmes harness gender norms such that women assume the costly job of ensuring repayment of male/household credit, increasing, women's dependence on male decision-making and their vulnerability to male violence and economic shocks. As Hulme and Mosley (1996:129) comment, "a simple emphasis on disbursement to women is likely to encourage tokenism and reinforcement of established gender roles".

       Mayoux (1995:4-5;1998:14-25) thus distinguishes between three main paradigms of women-targeted micro finance provision. The financial sustainability paradigms is based on an instrumentalist, market approach which focuses attention on women's high repayment rates as a means to achieve the wider goal of assisting individual entrepreneurs to increase their incomes. The poverty alleviation paradigm targets women as among the poorest, and as more likely than men to spend increased income on their families. The feminist empowerment paradigm aims through group activities to enhance the bargaining power as well as the incomes of poor women, and sees gender equity itself as an inseparable part of any wider development goal. In this framework, without parallel interventions fostering women's access to markets, technology, decision-making structures, legal rights and social capital, the positive discrimination inherent in targeted credit ends.

       Household power structures, however, can be affected by a targeted infusion of credit in several different ways, such that the line between strategic-empowerment-feminist and practical-instrumentalist-market becomes blurred. Credit can become a bargaining chip for many women, in terms of both improving their fall-back position, and allowing them to 'negotiate transfers' with those who hold some form of social control. In the Bangladeshi context, women's economic contributions to the household are traditionally in labour and kind, and as such are often 'invisible'. Access to an institutional loan in cash "may induce a revaluing of women's contribution to household survival: such that women's status within the household, her access to resources for herself and her children, and familial stability may all rise (Goetz and Gupta, 1996:53-4). This revaluation can be based on both an actual increased contribution to the household that a woman is able to make, as well as on perceptions that contributions of credit are of greater value than household labour or contributions of credit are of greater value than household labour or contributions in kind (Agrawal, 1997:11). Similarly, widows with access to credit have been noted by Todd (1996:84) to have a stronger claim of support on their sons. As Hashemi et al. (1996:643) suggest, "All women who receive a loan gain access to additional resources even if their husband appropriates the money".

       Based on an analysis of the opposing perspectives on gender and micro finance in Bangladesh, as well as field data on a Bangladeshi MFI targeted to a relatively better off group of women and men, Kabeer (1998) constructs a much more nuanced argument. Her analysis not only reminds us of the importance of defining 'empowerment' in women's own terms, but also highlights the importance of the characters of individual women and men, as well as the circumstances of their poverty and how a financial service is delivered, in determining the impact of credit upon investment choices, asset accumulation and household decision-making structures. While many Bangladeshi women certainly suffer a strategic disadvantage within households, one must also recognize that in many cases the household is conceived as a 'joint venture' in which women and men have different rights and responsibilities in terms of asset control and decision-making. The idea of separate control over separate earnings may not be very useful in this context (Todd:1996:80). In other households, women may be located benefits in terms of securing their own well-being and that of their children in the negotiated transfer of loan funds and enterprise control (Goetz and Gupta, 1996:53). It is important to recognize that women's ability to use financial services in the way they wish can be both constrained and facilitated by the gendered socio-economic relations that operate at the household level as well as in business and the local and national communities. "There is an extremely fine line between recognizing constraints on women's freedom of maneuver and reinforcing the terms of those constraints by taking them as givens" (Ibid.,59).

List of References:

Ackerley, B. (195). Testing the Tools of Development: Credit Programmes, Loan Involvement, and Women's Empowerment. IDS Bulletin, 26 (3), 56-67.

Agarwal, B. (1997). "Bargaining" and Gender Relations: within and beyond the Household. Feminist Economics, 3 (1), 1-51.

Bennett, L.; Goldberg, M.; and Hunte, P. (1996). Ownership and Sustainability: Lessons on Group-Based Financial Services from South Asia. Journal of International Development, 8 (2), 271-288.

Goetz, A. M., and Sen Gupta, R. (1996). Who Takes the Credit? Gender, Power, and Control Over Loan Use in Rural Credit Programs in Bangladesh. World Development, 24 (1), 45-63

Hashemi, S.; Schuler, S. R.; and Riley, A. (1996). Rural Credit Programs and Women's Empowerment in Bangladesh. World Development, 24 (4),635-653

Hulme, D., and Mosley, P. (1996). Finance Against Poverty, Volumes I and II. London/New York: Routledge.

Johnson, S. (1999). Gender Impact Assessment in Micro Finance and Micro Enterprise: Why and How Development in Practice (mimeo).

Kabeer, N. (1998). `Money Can't Buy Me Love? Re-Evaluating Gender, Credit and Empowerment in Rural Bangladesh. (IDS Working Paper 363) Brighton: Institute of Development Studies, University of Sussex.

Mayoux, L. (1995). From Vicious to Virtuous Circles? Gender and Micro Enterprise Development. Geneva: United Nations Research Institute for Social Development.

________ (1998). Women's Empowerment and Micro Finance Programmes: Approaches, Evidence and Ways Forward. Open University Development Policy and Practice Working Paper No. 41.

Moser, C. (1989). Gender Planning in the Third World: Meeting Practical and Strategic Gender Needs. World development, 17 (), 1799-1825.

Todd, H. (1996). Women at the Center: Grameen Bank Borrowers After One Decade. Boulder: Westview Press.

Zeller, M., Schreider, G., Von Braun, J. and Heidhus, F. (1997). Rural Finance for Food Security for the Poor. (Food Policy Review 4). Washington, D.C., International Food Policy Research Institute.  

5. FWBL's Activities

Editor,

Please find enclosed the completed questionnaire concerning our organization. I hope you find this information useful in devising the mentioned MIS.
Saeeda Magni APO,
Credit and Enterprise Development Sector, Sindh Agricultural and Forestry Workers Coordinating Organization

Editor,
I have gone through your quarterly newsletter and found it useful. I will appreciate if copies of some past issues are also sent to me.
Ashfaq Qureshi, AVP/Incharge USF Cell

Editor,

We have read the latest WCIRC newsletter with avid interest. Thank you for the opportunity of illustrating Kashf's programme and we look forward to contributing to your newsletter in the future as well.
Roshaneh Zafar Managing Director, Kashf Foundation

Editor,
We are thankful for your interest in our organization working in the backward areas of New Kotla Naseer. We also appreciate receiving your newsletter, Credit News.
Rashida Banoo Chairperson, Anjuman Falah-e-Bahbood

7. Contact Information

For additional information concerning the included articles or issues related to them, please contact: