The third Pakistan Poverty Alleviation Fund (PPAF-III) builds on these successes while simultaneously incorporating lessons from PPAF I and II. The cardinal goal is to empower the targeted rural poor with improved productive capacity and access to services to achieve sustainable livelihoods. Coursing through the programme are some concurrent themes reckoned essential by the World Bank for making a serious and sustainable dent in poverty canvas of Pakistan: these include participation; inclusion; saturation; integrated and holistic plans; and accountability.

The programme is modeled on a multifarious approach based on stimulating organization and inclusion of the rural poor – including youth, ultra poor households, and marginalized groups – in community organizations and enabling participation of the poor in economic activities that in turn are galvanized through interventions designed to improve asset base, infrastructure, and linkages with the public sector and markets. The programme mainstreams gender into its objectives and design.

PPAF III program is implemented through five components:

Social Mobilization and Institution Building:

Social mobilization serves as the underpinning of all of PPAF’s interventions that are based on community demands and can only ensue from effective implementation of this component. The objective of this component is to target and empower the poor by supporting their organization into three tiers starting at the community level which then federate into village and local support organisations to develop voice and scale for effective interface with local government, other development programmes, and markets.

Livelihood Enhancement and Protection:

The objective of this component is to develop the capacity, opportunities, assets and productivity of community members to reduce their vulnerability to shocks, improve their livelihoods initiatives and strengthen their business operations. This component supports community members to create and boost their savings capacity and proficiency in funds management through internal lending while complementing these efforts with grants and technical support to increase assets, productivity and incomes. Furthermore, mechanisms are developed and implemented to identify and support innovative micro-enterprises and value chain development to generate better livelihood opportunities. Facilitating and promoting linkages with private and public sector and civil society service providers constitutes a crucial part of the initiative.

Micro-credit Access:

The objective of this component is to improve availability and access of the poor to micro-finance to their capacities, productivity and returns from livelihood schemes. In most areas, the intention is to improve access to existing microfinance (both PPAF financed and other sources). Nonetheless, this component of PPAF III also includes a facility to provide micro-credit to poor borrowers through POs working in areas that are unable to access finance from the mainstream micro-finance sector (i.e. in districts where potential market penetration is less than 5%). Thus necessitating capacity building support for selected POs to improve their ability to work in these least developed areas and providing them training and technical assistance to review and improve their existing systems, loan methodology and cost recovery. Provisions are also made for flexible lending mechanisms between POs and PPAF to encourage and assist POs to expand and sustain the microcredit services in such areas. All of the above complements the livelihood finance provided in the form or grants for productive assets and is only available for those community members that have reached credit worthy status and have viable livelihood enterprises.

Basic Services and Infrastructure:

The objective of this component is to establish and upgrade basic services and community infrastructure to serve the poor and improve health and education facilities. A ‘saturation’ approach is employed at the village and Union Council level that puts emphasis on working in areas where previous investments have already been made under PPAF I and II. This segment of the programme covers basic infrastructure, additional productive and integrated community infrastructure projects (such as drought mitigation and preparedness and integrated area up-gradation), alternative energy projects, and health and education facilities. Additionally, the federation of community organizations under PPAF III seeks to help poor communities to access and leverage external public and private sector financing for infrastructure projects.

Project Implementation Support:

This component sets out to facilitate various governance, implementation, coordination, monitoring & evaluation, learning and quality enhancement efforts in the project. It consists of the following four sub-components: (i) Governance Management; (ii) Project Management; (iii) Monitoring and Evaluation; and (iv) Capacity Building for institutional development.

Keeping in sight the overarching goal of poverty reduction, promotion of economic growth, and enhancement of livelihood opportunities for the rural households, PPAF joined hands with the United Nations agency of International Fund for Agricultural Development (IFAD) in June 2008 to start “Programme for Increasing Sustainable Microfinance,” (PRISM). The programme is implemented through microfinance institutions that are able to demonstrate sufficient scale of operations and deemed to have a vision for sustainability.

The objective of PRISM is to improve and increase poor people’s access to a wide range of financial services and products with a particular focus on rural poor and women. Programme’s four components that include: Credit Enhancement, Equity Fund, Institutional Strengthening, and Knowledge Management & Policy Dialogue - are specifically designed to encourage existing microfinance institutions and PPAF’s current and potential partners to seek ways of broadening and deepening their outreach. To that end, the programme supports the development and testing of many microfinance products, including livestock insurance, leasing arrangements, and equity partnerships, as well as Islamic modes of financing based on profit-sharing. It encourages innovation through creation of new financial models seeking to reduce burden of debt, minimize risk, and promote asset creation. Concomitant with its efforts to achieve the aforementioned targets, the programme inevitably sets out to surmount cultural and religious barriers relating to traditional credit, gender bias and inappropriate delivery systems.

PRISM envisages providing greater leveraging capacity to partner organizations with sustainable or near sustainable microfinance operations through credit enhancement facilities