he Pakistan Poverty Alleviation Fund (PPAF) has started offering the 'Equity Fund' to the most dynamic microfinance institutions and partner organisations to access commercial financing to realise their growth potential and expansion into rural areas.
An agreement signing ceremony between PPAF and Jinnah Welfare Society (JWS) was held on Monday, attended by PPAF CEO Azmat Isa, JWS CEO Shoaib Babar, PPAF Senior Group Head Ahmad Jamal, PPAF Group Head Zafar Sabri, Pakistan Microfinance Network CEO Mohsin Ahmed and senior staffers of PPAF. PPAF would inject 60 percent equity of the total amount agreed, while JWS has already generated 40 percent of the same.
The first organisation to be selected under the PPAF's IFAD-PRISM "Equity Fund" component is Jinnah Welfare Society (JWS), which has been serving poor and un-banked micro/small entrepreneurs in Gujranwala. PPAF would provide equity to only those microfinance institutions, which meet international criteria on actual sustainability and third-party independent assessment, besides having proven microfinance models and counterpart funding ability, thus making them more attractive prospects for commercial sector lending. This would provide a much-needed boost to expand the outreach of microfinance sector in Pakistan.
Azmat Isa expressed satisfaction at the launch of equity facility and expressed hope that it would help strengthen the relationship between PPAF and its partner organisations, besides strengthening their balance sheet footing thus providing relative ease to funding through commercial sources. "This would also diversify sources of funding, which is the biggest constraint for growth of microfinance sector," he added.
He said that the facility is also recognition of meeting robust eligibility criteria and focus on provision of sustainable microfinance. He said such facilities will be extended to other partner organisations in the future as they meet the eligibility criteria, which have been specifically designed by IFAD and PPAF.
Shoaib Babar thanked PPAF for its trust and continued support, adding that the organisation would strive for strengthening microfinance sector and attracting viable sources of funding aimed at improving access of the poor and un-banked to financial services by creating a sustainable microfinance sector in the country. Pakistan Microfinance Network CEO Mohsin Ahmed also spoke on the occasion.
PPAF and IFAD initiated the Programme for Increasing Sustainable Microfinance in June 2008, with the goal to reduce poverty, promote economic growth and improve livelihoods of rural households with a particular focus on poor and women.
The program is implemented through microfinance institutions with sufficient scale of operations and a vision for sustainability. The program has four components including Credit Enhancement, Equity Fund, Institutional Strengthening and Knowledge Management & Policy Dialogue. PPAF's cumulative operational activities entailed over Rs 4.7 million micro credit loans impacting directly or indirectly 31.6 million with 100 percent recovery rate.
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