Empowerment of the poor
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