International Fund For Agricultural Development

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 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.

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