Em­pow­er­ment of the poor

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Poverty is a global phe­nom­e­non and a num­ber of ini­tia­tives in the form of gov­ern­ment and pri­vate fo­rums are cam­paign­ing for the anti-poverty cause. Fi­nan­cial ex­perts and so­cial ac­tivists have found that char­ity and gov­ern­ment aid does not serve as an ef­fec­tive tool in re­vers­ing poverty. They say that debt and equity in­vest­ments in busi­nesses that sell cru­cial prod­ucts and ser­vices to the poor are prov­ing to be far more ef­fec­tive.

The Acu­men Fund has made a ma­jor break­through in help­ing the poor to ar­rive at a turn­ing point in their lives. The Fund builds new mar­kets that sell crit­i­cal prod­ucts and ser­vices to the poor and makes debt or equity in­vest­ments for en­trepreneurs who are not seen as pas­sive re­cip­i­ents of char­ity but as agents who wish to solve their own prob­lems. One rea­son tra­di­tional cap­i­tal fails to ad­dress low-in­come mar­kets is be­cause it is too dif­fi­cult and costly to ac­quire and does not ap­peal to in­vestors seek­ing quick re­turns. Tra­di­tional char­ity is also vul­ner­a­ble when there is a pri­or­ity shift at the fund­ing end.

While Pak­istan has ex­pe­ri­enced rapid eco­nomic de­vel­op­ment in re­cent years, ap­prox­i­mately 66 per­cent of its 180 mil­lion pop­u­la­tions still live on less than $ 2 a day. The Acu­men Fund has in­vested in Pak­istani or­gan­i­sa­tions by build­ing sus­tain­able and scal­able so­lu­tions to poverty. These in­clude or­gan­i­sa­tions pro­vid­ing slum-dwellers with affordable and legal hous­ing, mi­cro­fi­nance in­sti­tu­tions of­fer­ing in­no­va­tive fi­nan­cial ser­vices that al­low low-in­come clients to raise their in­comes and pur­chase health in­surance; en­ter­prises fo­cused on affordable agri­cul­tural in­puts such as live­stock en­hance­ment and drip ir­ri­ga­tion; and a com­pany that is es­tab­lish­ing com­mu­nity wa­ter sys­tems to pro­vide safe drink­ing wa­ter in ur­ban ar­eas.

In the fi­nan­cial ser­vices sec­tor, Kashf foun­da­tion is Acu­men’s ma­jor on ground pres­ence. The Foun­da­tion has pi­o­neered mi­cro­fi­nance ser­vices that em­power and pro­mote the eco­nomic self-re­liance of poor women and their fam­i­lies in Pak­istan. Kashf is now one of the premier mi­cro­fi­nance in­sti­tu­tions in the coun­try, dis­burs­ing about $ 202 mil­lion in loans to date and pro­vid­ing more than one mil­lion peo­ple with ac­cess to fi­nan­cial cap­i­tal.

Razia, res­i­dent of a vil­lage in Pak­istan, says, “I be­lieve in mak­ing more money, out of money.” Her first loan from Kashf en­abled her to ini­ti­ate a kite-mak­ing busi­ness. Her earn­ings started from Rs. 1200 and reached up to Rs. 6000 a month.

In an­other case, Sha­reefan was found by Kashf Foun­da­tion in a ter­ri­ble state with a large fam­ily liv­ing in a ram­shackle sin­gle room house with bare ne­ces­si­ties. She took her first loan of Rs. 6000 from Kashf to buy a small elec­tric loom for pro­duc­ing bet­ter qual­ity can­vas. Over the six years that she has been associated with Kashf, her eco­nomic sit­u­a­tion has im­proved from a cramped room to spacious liv­ing quar­ters with all the ba­sic needs. Sha­reefan has also been elected un­op­posed as a coun­cil­lor to pro­mote the wel­fare of her area.

An­other suc­cess story re­volves around on­ceop­pressed Guddo, who took a loan of Rs. 8000 to start a small con­ve­nience shop out­side her home. Her con­fi­dence in­creased and she ne­go­ti­ated with a whole­saler in the lo­cal mar­ket to buy in­ven­tory. Over a span of five years, she says, “I am very happy to­day to be run­ning my own busi­ness and de­riv­ing an in­come to sup­port my chil­dren. I have truly found free­dom.”

Sim­i­larly, through a Kashf loan, Yas­meen was able to re­vive her hus­band’s fruit stall and also ex­pand the busi­ness. She later ven­tured into sell­ing hand em­broi­dered fab­ric to big bou­tiques, thus trans­form­ing her fam­ily’s well-be­ing.

Kashf has spe­cial­ized cat­e­gories of loan as­sis­tance. The Kashf Busi­ness Sur­maya Loan tar­gets fast-mov­ing small en­trepreneurs through a credit scor­ing model. Kashf Emer­gency Loan has been de­signed to pro­vide credit to clients dur­ing fi­nan­cially volatile pe­ri­ods keep­ing them away from tra­di­tional money len­ders. Kashf In­surance keeps the fam­ily out of li­a­bil­i­ties in the event of a bread win­ner’s death. The Kashf Home Im­prove­ment Loan aims to in­crease the as­set value of clients’ homes and im­prove their liv­ing stan­dards. While, the Kashf Gen­eral Loan serves the over-arch­ing goal of al­le­vi­at­ing poverty, where the fam­ily de­cides the area of loan in­vest­ment through con­sen­sus.

The or­ga­ni­za­tion aims at closely man­aged growth through a fran­chise model with branches in both ru­ral and ur­ban ar­eas. Kashf cur­rently op­er­ates more than 150 branches across Pak­istan. It has reached more than one mil­lion in­di­vid­u­als and 306,000 fam­i­lies and has dis­bursed $202 mil­lion in loans.

Kashf is to­day a premier mi­cro­fi­nance in­sti­tu­tion in Pak­istan and is ranked in the top quar­tile in the lo­cal and re­gional mi­cro­fi­nance sec­tor

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