ISLAMABAD, Dec 19: Prime Minister’s Adviser on Finance Shaukat Aziz said here on Thursday the government has formulated new rural finance support programme aimed at poverty reduction and self-reliance in commodities.
Inaugurating a 3-day international workshop on micro-credit for sustainable rural development organised by “Lachi Poverty Reduction Project” of Sarhad Rural Support Programme (SRSP)in collaboration with UNDP, he said that availability of adequate and affordable rural credit is central to the implementation of poverty reduction strategy.
He said the government would facilitate the development of rural financial markets that would provide the economic actors with sustainable financial services and significant outreach in terms of clients served and services offered.
“The ultimate aim will be to bring in private sector investments and build public private synergies,” he added. He assured that the government will not intervene directly in granting loans, setting interest rates and discouraging debt recovery. “The State Bank is actively pursuing new initiatives to expand quality and availability of rural finance,” he said.
Aziz said mandatory credit quotas for commercial banks will be gradually phased out and they would be encouraged to adopt international practices in rural finance and provide rural financial services on a sustainable basis.
He said commercial banks can only meet a fraction of the demand of financial services for rural poor. The government would vigorously pursue the micro-finance sector development programme objectives to meet the demand and supply gap in rural financial services. This, he said, will be done by expanding the role of Khushhali Bank and promoting the establishment of more micro finance institutions. The government, he, however, pointed out, was required to intervene in the sector to ensure sufficient flow of rural credit and that banks both commercial and specialised had a social responsibility to serve the rural clientele even if it incurs losses.
Aziz said that rural financial market needed to operate efficiently with a view to facilitating better performance by the rural economy and to help promote economic growth and poverty reduction — the key national priorities.
“A systematic response to the issues in rural finance is essential for reviving the rural economy through investments in agriculture and rural enterprises,” he said. For this, he pointed out, rural finance must be seen as an integral part of equitable development with a framework of macroeconomic stability as enumerated in the Interim Poverty Reduction Strategy Paper.
The US Ambassador to Pakistan, Ms Nancy Powell, cautioned against focusing exclusively on microfinance for poverty reduction. It had to be balanced with other measures particularly education, healthcare and nutrition.
Pakistan, she further remarked, was the only country in the world where men far outnumbered women in availing of microfinance. Yet women were a better risk by dint of being particular about proper management and repayment of loan.
Ms Lena Lindberg, Deputy Resident Representative of UNDP, said her organization followed participatory approach instead of imposing solutions on local communities. Thus SRSP had established effective linkage between community and government departments, which were now realising their role as cooperators rather than as controllers.
The Lachi Poverty Reduction Project (LPRP), she explained was one of the projects jointly financed by UNDP and Department for International Development in Lachi, Kohat district.
A continuation of South Asia Poverty Alleviation Programme (SAPAP) started in January 1997, the main objective of LPRP is to develop and demonstrate poverty reduction models based on the concept of social mobilization that would be of help to organizations with similar objectives.
It aims to bring about sustainable improvements in the livelihoods of poor people living in Lachi by focusing, inter alia, on poverty reduction, support to devolution plan 2000 and Union Council-based Self-Sustaining Micro Credit Programme.
The Workshop, being attended also by delegates from Bangladesh, India and Nepal, was also addressed by Shoaib Sultan, Chairman, National Rural Support Programme, and Barrister Shahida Jamil, Special Assistant to the First Lady.