March 17, 2008	Monday	Rabi-ul-Awwal 8, 1429

NOTWITHSTANDING claims about poverty alleviation, the poor continue to suffer due to record hike in prices of sugar, edible oil, pulses and wheat.

And in the manifestos of all political parties, poverty alleviation had been made a priority issue.

According to government documents, poverty was reduced by 10 percentage points from 33 to 23 per cent during 2001-04. Similarly, unemployment was reportedly brought down from over 10 per cent to seven per cent during this period.

However, the World Bank maintained that poverty had reduced by five percentage points and not by 10 percentage points. Now, both the World Bank and the Asian Development Bank (ADB) are reluctant to offer further direct funding to the government for poverty alleviation. They have, however, indicated to provide $600 million new funding, $300 million each by the WB and the ADB, for the next three years. The funds will be used for providing microfinance through private agencies and reputed non- governmental organisations (NGOs).

The international donors are reportedly concerned over the misuse of poverty-related funds in the public sector and are convinced that the job should preferably be done by private organisations that includes Pakistan Poverty Alleviation Fund (PPAF) and six microfinance banks.

Senior economist and former director of Pakistan Institute of Development Economists (PIDE) Dr A. R. Kamal agreed there was some reduction in poverty during 2000-2004 but said it could not be quantified. He said the government’s claim of 10 percentage reduction in poverty was a controversial issue and as such could not be accepted.

“But the more worrying thing is that there is no poverty alleviation report after 2004, perhaps it has increased and many people believe so”, Dr Kamal said. There was no data available to gauge the government claim of poverty reduction.

Dwelling on the impact of micro-financing on poverty, he said it was a good move but he was not sure whether this funding was available to deserving people.

He also criticised the high interest rate of 20 to 25 per cent charged by microfinance banks and called for reducing it to really help the poor. He was not aware of how productive the small loans were and said that it had to be measured by some credible organisation.

President of the Khushhalibank Ghalib Nishtar told Dawn that there had been some reduction in poverty during the last few years. Our outreach has significantly improved as we have so far provided small loans to 1.5 million households and this is quite an achievement. About 100 districts had been covered by this bank to offer small loans to the needy and deserving people.

He said his bank had disbursed Rs1.5 billion worth of small loans. The bank this year would open new branches equipped with advanced technology. The Asian Development Bank (ADB) had provided $150 million which has been fully utilised by our bank.

The corporatisation of the Khushhalibank is being planned with the help of the Security and Exchange Commission of Pakistan (SECP). Soon the bank will secure a licence to work as a banking institution. It will also go for listing at the bourses at an appropriate time.

He said his bank’s outreach had increased significantly and in this respect, it enjoys 27th position in the top 50 microfinance institutions worldwide according to the Deutche Bank record report.

The bank’s objective is to build an inclusive financial sector in which majority of the poor have access to affordable financial services.

He said the Khushhalibank was the largest microfinance institution in the country and the 16th largest globally in terms of clients reported on Microfinance Information Exchange (MIX) with nearly 300,000 active clients. It will now be required to balance growth with sustainability, he added.

Asked about the impact of micro-financing on the poor, he said that access to credit for the poor had helped to reduce poverty to some extent. Micro insurance has also been started while health insurance would also be launched shortly by the Khushhalibank.

President of Pakistan Poverty Alleviation Fund (PPAF) Kamal Hayat said his organization received over $700 million soft loan by the World Bank over the last few years. “Our work had been appreciated and now we expect a bigger funding by the World Bank.

The new funding would help develop 100,000 new communities to be offered small loans for poverty reduction, health and education. According to Gallop of Pakistan, he said, micro credit from various agencies has helped increase income of borrowers by 12 to 20 per cent..