A number of leading multilateral, bilateral, and international corporate institutions
contribute to PPAF’s poverty reduction goal by providing financial support to promote
The World Bank:
The World Bank has been providing funds for PPAF led initiatives since 2000 under
the umbrella projects namely PPAF I, II, and the ongoing PPAF III. PPAF I and II
have resulted in the formation of 80,000 community organizations, implementation
of 16,000 community infrastructure schemes, and provisioning of 1.9 million microcredit
loans, and enterprise development and skill enhancement training support to 232,000
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.
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.
German Development Bank Kreditanstalt für Wiederaufbau (Kfw) :
International Fund for Agricultural Development (IFAD):
Despite enjoying considerable financial support from bilateral and multilateral
donors and a highly conducive policy and regulatory framework furnished by the government,
the microfinance sector has only been able to tap a small fraction of a potentially
huge market, with current active borrowers standing at roughly two million. Today,
Pakistan has one of the lowest financial penetration levels in the world with 56
percent adult population totally excluded, and another 32 percent informally served.
Thus, harnessing microfinance’s potential to the fullest is pivotal to the success
of any poverty reduction efforts.
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
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
The German Development Bank Kfw, in the past, funded PPAF’s infrastructure initiatives
in earthquake and flood ravaged areas of Pakistan.
PPAF’s most recent partnership with Kfw focuses on small community infrastructure,
health, education, relief and livelihood enhancement in post conflict districts
of Khyber Pakhtoonkhwa (KP) province. The programme targets ultra poor or those
whose lives were gravely affected by the ongoing conflict in their areas. The three
year project aims to benefit about 600,000 people through: The three year long project
is intended to benefit 600,000 people through-increased access to and sustainable
utilization of social and economic infrastructure by the population of the targeted
region; increased employment and income opportunities, especially for the poor;
strengthening of the local civil society and enhanced participation of the population
in the decision making process at the local level.
The project would be implemented with a holistic approach of income generation,
vocational training, provision of infrastructure, health and other basic facilities
so that the poor communities could improve their living standards.