Over two million borrowers of micro-loans in country: experts

The existing studies on the impact of micro-finance in Pakistan have looked at its on clients and have not studied the broader range of services, such as savings and insurance. The gap in this existing literature is that it is based on quantitative non-experimental methods or quasi-experiments, which have a problem of sample selection bias.
This was observed in a brainstorming session jointly organised by the Pakistan Micro-finance Network (PMN) and Citi Foundation, here on Friday, to discuss the proposed methodology of the first ever comprehensive impact assessment study of the micro-finance sector in Pakistan. The session was held to facilitate the discussion on assessment methodologies and role of key stakeholders in this regard.
The participants were informed that the impact-assessment study initiative is based on a US $60,000 grant by the Citi Foundation to the PMN. It will be conducted to assess various ways in which the micro-finance sector has had an impact on different communities across the country at a social level, generating best practices and share the lessons learnt.
It was told that there are more than two million active borrowers of micro loans in Pakistan with an average loan size of Rs 20,270 and the micro-finance sector has seen phenomenal growth in the country during the last one decade with more than two dozen active players including banks, NGOs and rural support programmes.
The participants were informed that the proposed impact evaluation study by PMN will seek to overcome limitations of the existing body of knowledge on the impact of micro-finance in Pakistan. It will deliver more sound and robust estimates of benefits accruing to the MF clients in terms of higher income and lower poverty levels, improved education and health outcomes and greater empowerment of women, etc.
In terms of the scope and design of the proposed study, three options were explored ie sector level study of impact of micro-finance using quasi-experimental methodology, sector level study of impact of micro-finance using randomised control trials methodology, and national level study on the contribution of micro-finance to the overall level of poverty reduction and improvement in social outcomes in Pakistan.
The participants discussed the three options at length and decided to form a steering committee to provide stewardship and guidance to the conduct of the impact assessment, from the design of the study to the drafting of the final report. The regulator, government, apex donors, practitioners and academia are all represented on the steering committee.
Arif Usmani, MD and Citi Country Officer, who has also been a staunch supporter of the growth of the micro-finance sector in Pakistan said, "Pakistan Micro-finance is a longstanding partner for Citi on the micro-finance front. This pioneering social impact study with PMN is particularly significant as it reiterates Citi's commitment to developing intellectual capacity in the micro-finance space in Pakistan." He added, "As we celebrate 50 years in Pakistan this year, we also mark the completion of the three-year Citi Network Strengthening Programme (CNSP) (2007-10), in conjunction with SEEP and PMN, based on a US $650,000 grant by the Citi Foundation."
In his address, Syed Mohsin Ahmed, CEO PMN expressed hope that the study will help the industry and other stakeholders interested in the impact of micro-finance to understand the level of improvement that the financial services bring at the base of the pyramid. It is also expected that more information will reach us over the course of this study to understand the role of different financial services like credit, deposit, insurance and remittance play in smoothing household consumption, generating incomes, reducing health related expenditures and increasing empowerment of clients, especially women clients. The session was also attended by Hashim Bakht, Head of Corporate Banking Islamabad for Citi, Imran Cheema, Area Manager for South and Central Branch Banking for Citi, Ms Nazrat Bashir, Additional Finance Secretary, Ministry of Finance, Muhammad Ashraf Khan, Executive Director, DFG, State Bank of Pakistan among other experts from the micro-finance, social and public sectors.