LAHORE: Kashf Foundation is one of the biggest specialised non-profit microfinance institutions in the country pioneering innovative practices to empower women, men and their dependents with the means for entrepreneurship and sustainable growth opportunities. It was founded in 1996 by Roshaneh Zafar who was awarded the Tamgha-i-Imtiaz for her contributions to the development sector. Following are the excerpts of the interview with her.
Q. How did you initially get interested in microfinance?
A. I am a development economist by training and was always interested in paradigms of development. When I worked for the World Bank, my focus was on problems related to water and sanitation. Through this work, I interacted with communities of women who spent 6 to 7 hours a day collecting water and realised that microfinance could be an effective way to raise their standards of living. I also met Muhammad Yunus and learned about the successful Grameen model in Bangladesh, which further inspired me to associate with this field.
Q. How is the Kashf model different from that of Grameen?
A. Initially, the Kashf model was very similar to that of Grameen and liability was assumed on a community basis. Now, the focus has shifted from enterprises to individuals and we are more focused on customising our solutions. We are also involved in training and developing market linkages i.e. Microfinance Plus. We also design solutions on a sector-wise basis to maximise impact.
Q. What is the current standing of Kashf Foundation?
A. There are Rs2.8 billion in outstanding loans and 157 locations across the country where they are serviced. Twenty more locations will be opened this year and for the first time the province of Khyber Pakhtunkhwa will be brought into the network.
Q. How are the loans used?
A. We start by working on a business plan with those receiving the loans. We try to evaluate cash flows and risks associated with the business and help the enterprise develop linkages. Once capital needs are identified, a loan utilisation check is conducted within 30 days of disbursement. Relevant milestones are monitored over the subsequent 11 months. We tend to invest in businesses that are cash-hungry so the funding is consumed within the first 3 to 4 weeks. This tends to include businesses related to grocery, handicrafts, apparel and livestock or basically businesses without high barriers to entry.
Q. How are the interest rates determined?
A. We raise funds through commercial banks and the Pakistan Poverty Alleviation Fund. The service charges add two percent to KIBOR and then cover our operational costs. We minimise operational costs by auditing staff productivity and making significant use of technology. We have been using UBL Omni for 40 percent of our transactions to increase efficiency since our highest costs tend to be those of personnel. Our service centers are an important part of our strategy and designed to be very welcoming and customer-friendly.
Q. What is your working relationship with other microfinance setups nationwide?
A. We are direct competitors but have different areas of focus. Kashf tends to focus on women. We have also stressed on insurance and over the next 3 years we expect to provide half a million people with health insurance. We are also distinguished by our focus on individuals over groups and focus on educating our clients.
Q. Tell us about your foreign collaborations?
A. We’ve worked with the Women’s World Banking, DFID, CIDA and Grameen Foundation. Another nonprofit micro-lender KIVA initiated a formal partnership with Kashf six months ago and has conducted a first assessment.
Q. Many students are interested in pursuing careers in the development sector. What kind of skills should they focus on?
A. A basic comfort with finance is very helpful in the development sector, though you will find that you will end up un-learning much of what you have already learned while you are on the job. You should be very comfortable with numbers. You should try to get some exposure to field work and develop general knowledge about the development sector. Sociology is a great subject to study for a career in development.
We have had students as young as those in O/A levels all the way up to PhD students involved in our research. Many of the young students who started with us are now pursuing advanced degrees in development. But, perhaps the most important skill for success in the development sector is the curiosity to keep learning. You need to know how to ask the right questions.
Q. What are your plans?
A. We are planning to bring in Shariah-compliant products as part of our strategy of focusing on Khyber Pakhtunkhwa. While others in Pakistan have dabbled in this domain, we are looking to make it affordable and scale it up. We are looking to ramp up our focus on the education sector and reach out to 450 schools over the next 3 years that could use improvement in their administration and management.
—The writer is an adjunct professor at LUMS