Pakistan Poverty Alleviation Fund disburses Rs10.836 billion in four years

KARACHI: Pakistan Poverty Alleviation Fund (PPAF) has disbursed Rs10.836 billion in interest free loans to poor and vulnerable families over the last four years to help reduce poverty and promote financial inclusion in the country, a PPAF official said.

The PPAF disbursed total of 0.45 million loans to the poor households under the Prime Minister’s Interest Free Loan (PMIFL) scheme, 66 percent of whom were women. These loans were disbursed in 442 union councils of 45 districts across the country.

“The average loan size for interest free loan applicants was Rs22,000-Rs27,000. The beneficiaries of PMIFL put this financing

to productive use,” Samia Liauqat Ali Khan, senior group head quality assurance and research at PPAF, said during a meeting with reporters.

“We have 98 percent recovery from borrowers on such loans.”

She said PPAF offers interest free loans and eligible individuals could actually take up to three loans (one after the other) until they graduated beyond the 40 score.

“Once people graduate beyond the 40 score, they are able to access and benefit from the conventional microfinance available across the country without worrying about their ability to repay – their businesses have been established and are economically viable,” Khan added.

In 2017, International Fund for Agricultural Development (IFAD) and government of Pakistan signed an agreement to take forward the National Poverty Graduation Programme (NPGP), a six-year $150 million poverty alleviation initiative to be implemented by the Pakistan Poverty Alleviation Fund.

The programme has three main components: social mobilisation, livelihoods development (through asset transfers), and financial inclusion (through the provision of interest-free loans).

Meanwhile, the PPAF in a statement said, it participated in a global research study on poverty graduation in 2008.

This was carried out with 4,000 households (treatment and control group) in Sindh coastal areas. The research in Pakistan was part of the broader global study on Midline (2012) and endline (2015).

The results showed significant improvements in ultra-poor household’s incomes, consumption, asset base, and savings, the statement said.

“The Pakistan Poverty Alleviation Fund went to scale after the midline results of 2012, and extended the programme to reach over 100,000 households across the country, this time using the poverty score-card as a way to objectively identify ultra-poor households,” it said.

The poorest people (also known as the ultra-poor and vulnerable poor) fell between 0-18 on the poverty score card and many of them were also beneficiaries of the Benazir Income Support Programme (BISP), the PPAF said.

The stipend they received from BISP was enough to help them survive, but not enough for them to improve their lives in any meaningful way.

For these people PPAF provides them with an asset that can be used to generate incomes – because these are rural communities many of the assets take the form of either livestock or agriculture associated goods.

The procurement of assets should be done in a participatory and transparent manner and PPAF’s community procurement process was an essential step of this programme.

For those people who were on the higher end of the 0-18 bracket and were willing to earn a skill, PPAF offered them the opportunity to receive vocational training, as a result of which they could either get a job or set up their own small business, the statement added.

The next category of people fell in the 18 to 40 poverty band and they were slightly better off than the poorest and might require financial support to begin their own work. A small capital injection or loan was sufficient to help them become economically active, the PPAF statement said.