According to participants at a recent roundtable in Islamabad organized by the Pakistan Microfinance Network (PMN), the International Finance Corporation (IFC) and CGAP (Consultative Group to Assist the Poor), last month’s floods in Pakistan caused PKR 2.7 billion (the equivalent of USD 31.4 million) in damage to 86 branches of the country’s microfinance institutions. It is unclear if this estimate includes physical damage to buildings and equipment, loan losses or both [1]. Experts on microfinance in Pakistan predicted flood-incurred losses would amount to PKR 3 billion (the equivalent of USD 35 million) before the roundtable’s official announcement [2].
The Chairman of PMN, Dr Rashid Bajwa, warned at the post-roundtable press briefing that 40,000 people directly involved in microfinance would “suffer” if “proper rehabilitation measures were not taken” [1]. Dr Bajwa also announced that participants had agreed to a number of mitigating actions, but further details are unavailable.
This month in New York City at the sixth Annual Meeting of the Clinton Global Initiative, a forum on international development founded in 2005 by former US President Bill Clinton, Pakistan-based microfinance institution the Kashf Foundation announced that it will launch a new microfinance fund for the rehabilitation of 10 flood-affected communities. The fund will provide cash grants and microfinance services, especially to women, and will support the construction of clean water infrastructure and schools [3].
By Lindsey Shaughnessy, Research Associate
About CGAP (Consultative Group to Assist the Poor): Housed at the World Bank Group, CGAP is an independent policy and research center dedicated to providing financial access for the world’s poor. CGAP is supported by approximately thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.
About the Clinton Global Initiative (CGI): The Clinton Global Initiative was founded in 2005 by former US President Bill Clinton. Through the organization, member individuals or organizations can introduce new initiatives or “Commitments to Action” to meet the needs of the developing world. These commitments reportedly amount to USD 63 billion as of September 2010. It hosts its annual meeting each September.
About the International Finance Corporation (IFC): A member of the World Bank Group, the International Finance Corporation (IFC) offers loan and debt securities, equity investments, advisory services and technical assistance to alleviate poverty and promote open and competitive markets in developing countries. The IFC has 182 member countries that “collectively determine its policies, and approve investments.” In fiscal year 2009, IFC’s new investments totaled USD 14.5 billion.
About the Kashf Foundation: Kashf Foundation is a microfinance institution (MFI) in Pakistan. It began in 1996 as a research program that focused on the demand for microfinance services by poor women. Savings services are available through Kashf Microfinance Bank, which the Foundation established in 2008. According to the Microfinance Information Exchange (MIX), the microfinance information clearinghouse, as of December 31, 2008, Kashf Foundation had a gross loan portfolio of USD 44.2 million, 313,512 active borrowers, 154 branches, total assets of USD 63 million, a return on assets (ROA) of -16.71 percent and return on equity (ROE) of -59.33 percent.
About the Pakistan Microfinance Network (PMN): The Pakistan Microfinance Network (PMN), founded in 1997, is a network of 20 microfinance providers in Pakistan. PMN aims to promote financial access for the country’s poor. PMN’s main objectives are promoting an enabling environment for microfinance; capacity building, especially for retail microfinance institutions; and disseminating information.
Sources and Additional Resources:
[1] Daily Times of Pakistan, “Floods cause Rs 2.7bn worth of damage to MFIs”, September 21, 2010. http://www.dailytimes.com.pk/default.asp?page=20109\21\story_21-9-2010_pg5_15
[2] MICROCAPITAL BRIEF: “Pakistan’s Microfinance Banks Expect Financial Losses of $35m Due to Floods”, September 21, 2010. https://www.microcapital.org/microcapital-brief-pakistan%E2%80%99s-microfinance-banks-expect-financial-losses-of-35m-due-to-floods/
[3] MICROCAPITAL BRIEF: “Obama Attends Sixth Annual Meeting of Clinton Global Initiative (CGI), Microfinance Initiative by Pakistan’s Kashf Foundation Announced”, September 22, 2010. https://www.microcapital.org/microcapital-brief-obama-attends-sixth-annual-meeting-of-clinton-global-initiative-cgi-microfinance-initiative-by-pakistans-kashf-foundation-announced/
MicroCapital’s Microfinance Universe profile: CGAP (Consultative Group to Assist the Poor)
MicroCapital’s Microfinance Universe profile: International Finance Corporation (IFC)
MicroCapital’s Microfinance Universe profile: Kashf Foundation
MicroCapital’s Microfinance Universe profile: Pakistan Microfinance Network (PMN)
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