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Integrating The First MicroFinanceBank and Social Protection

Integrating The First MicroFinanceBank and Social Protection. Next Generation Access to Finance September 18, 2007 Washington DC. Structure of Presentation. Situation Analysis; Poverty in Pakistan State of social protection in Pakistan

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Integrating The First MicroFinanceBank and Social Protection

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  1. Integrating The First MicroFinanceBank and Social Protection Next Generation Access to Finance September 18, 2007 Washington DC

  2. Structure of Presentation • Situation Analysis; • Poverty in Pakistan • State of social protection in Pakistan • Strategy for Improvement; Integrating The First MicroFinanceBank Ltd and Aga Khan Development Network

  3. Poverty in Pakistan Defined • Rural Poverty: 36% in 1998-99 (71% population in rural areas) • 56% of sample population – vulnerable • 75% of vulnerable are chronic poor • 42% of population in households with illiterate heads is poor • Literacy rate among poor is 28% (49%; non-poor) • Literacy in Poor rural women: 9% • Net primary level enrolment is 42% for poor (lowest for rural women) Source: World Bank Experience of AKDN

  4. Poverty in Pakistan Defined • Mother and Child Care • Infant and Child Mortality at 82 and 116 per 1000 • 41% of births unattended by trained professionals • Built Environment • 59% of poor live in houses with no toilets • 8% poor have access to underground drains Social Protection by The First MicroFinanceBank Ltd

  5. Situation Analysis Social Protection Funding • Zakat and Ushr • Employee Old Age Benefits Institution • Wheat Subsidy • Worker’s Welfare Funds • Khushal Pakistan • Social Action Program • Microfinance

  6. Comparative Analysis

  7. challenges with design

  8. The First MicroFinanceBank LtdNot a profit maximizing institution • Permanent Establishment; Bank • Corporate Objective: Poverty alleviation while covering inflation adjusted costs • Financial Transparency Awards for 2005 and 2006 • Non-executive board of directors • 20 years rural microfinance experience / 6 years MFB • Credit rating ST A1+ and MT A+ for 4 years • Year end 2007 branch network of 81 • Fully automated branch network

  9. The First MicroFinanceBank • Increased funding driven by credibility • Low administration cost given cross sell • Trained human resource to identify poorest • Network with Aga Khan Development Network and other agencies • Aga Khan Health Services • Aga Khan Education Services • Social Welfare institution for food security

  10. poverty as defined by The First MicroFinanceBank Ltd

  11. Identification by The First MicroFinanceBank Ltd

  12. identification mechanism

  13. client-fmfb-development agency nexus

  14. smart card technology • Client family data stored • Reduced leakage • Strong implementation of beneficiary exit strategy • Improved efficiency

  15. tailormade

  16. Exit Strategy for Poorest of Poor

  17. fund movement

  18. new structure • Institutional Credibility • In-built mechanism to filter non destitute • Classification of destitute • Permanent • Temporary • Temporary protection to latter group • Well defined exist strategy • Smart card technology

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