Interview with head of grass roots finance NGO

Established in 1996 as a research project to replicate the outstanding success of Bangladesh's Grameen Bank, the Kashf Foundation - a non-profit organisation that provides credit, financial services and training to help poor rural and urban women in Pakistan - has blossomed into a service that has over 60,000 clients and a network of 30 branches with 250 staff members. The project was begun by Yale-educated managing director, Roshaneh Zafar, after she did a stint as an intern with Grameen Bank. Kashf provides micro-loans, savings services and micro-insurance to its clients in eastern Punjab province. It plans to expand to the rest of Pakistan within the next few years. Sadaffe Abid, Kashf's Chief Operating Officer, spoke to IRIN at the organisation's head office in Lahore. QUESTION: What is the Kashf Foundation and how does it work? The idea is to work with low-income households, particularly women so that we can economically and socially empower them. It's through the provision of financial policies. The idea came from the Grameen Bank [a micro-credit initiative in Bangladesh] where we saw that financial services were really the key towards women's empowerment. We did a lot of research in Pakistan and found that the outreach of financial services to women was very low. For every rupee that was lent out, only 25 paisas were actually going out to women. And, in any case, the outreach of financial services was extremely low to low-income households. There were very few NGOs that were working on the financial services approach. Q: Is there any interest charged to the loans? We charge 20 percent interest. There's a lot of thought that's gone into that as well. You see, the cost of transactions in micro-finance are very high. We are giving small loans: our average loan size in the first year is about US $100-120. That's about Rs. 6,000-8,000. So the supervision and monitoring - because all our transactions are done at the local level; we are going to the clients' doorstep - are very high. Secondly, if you look at the money market right now, where can these households really go to? We've done some extensive research on moneylenders and, you'd be amazed, there are a lot of women moneylenders out there and they're charging 300 percent, 350 percent annually. And people are going to them because they don't have other choices. So what clients really want is access, quality and security. They want to be with someone they can rely on. And, I think, Kashf has established a reputation where we've met those needs. So people are happy with us. Q: What kind of work do women usually take loans for? A: Mostly, it's in trade. I would say between 70 to 80 percent of our portfolio is in trade. And this can be anything, from setting up a grocery store to selling vegetables to selling fruits, making kites, making candles, making bangles, selling cloth. Interestingly enough, some of our women go as far as Peshawar [the capital of North West Frontier Province] buy things over there and come back and sell them. So it's a lot of interesting enterprises that women are involved in. Q: So this micro-finance programme has been a success? A: The great thing about micro-finance is that you can measure performance. It's all a lot about numbers, but those numbers really have faces and values and feelings, and it's about bringing change. So you can see that Kashf is really making a difference. It's reaching out to 60,000 women, 60,000 households. and, if you multiply that by seven [the size of the average household], that's really the outreach of the programme. Visibly, when we go out in the field, we can see from people's faces that it's making a difference. They come and acknowledge the work that Kashf is doing, they appreciate it. There's a loyalty that's developed amongst the clients. They see it as an institution that really looking after their needs. Then, we've got the product that we call the "credit card for the poor". It's an open-ended loan: you can use it wherever you want. And we're one of the few NGOs who actually has such a product which clients can draw on if there's a health emergency, if they have to pay some school fees or any such expenditure where a cash-flow is necessary. Now, this really gives that household confidence. These are households whose life-cycles are going up and down. Q: Any independent assessments of your work? A: We do regular impact assessments This time, our impact assessment was done by DFID [UK government's Department for International Development], one of our donors; there were independent researchers who came and picked out about 200 Kashf clients and tracked them with a control group. What that study proved was that about 90 percent of our clients had experienced economic gains. What was even more remarkable was that about 30 percent of the households had crossed the poverty line. Q: Who are your other donors? Apart from DFID, it's the World Bank, the Pakistan Poverty Alleviation Fund and the Aga Khan Foundation. Q: How many countries is the Grameen Bank model being replicated in? They are actually replicating the model in 50 - 60 countries. In Pakistan, in 1997, we had started an action research. We had a very systematic approach, it was really new so one had to start from scratch. When I joined in 1997, we had about a hundred clients in just about a year. So we did the action research, we designed the forms, everything had to be done from scratch. So we designed the loan applications, the collection sheets, the disbursement sheets. It was a two-room office. That's when I joined in - there were six people; all women. Initially, people wouldn't believe it. The idea was just so amazing for them: they could not conceive that someone would actually come out there and give them this money. And, even when we were not asking for any money in return, it was just so mind-boggling that people just wouldn't believe it. And, of course, there'd be others who would ask: "Oh, credit? What are you going to do? Interest? Are you a moneylender?" So all those concerns came out. But what kept us going was the fact that we kept trying, we kept going back, we kept on meeting our promises. Q: Has the government been involved in this? We have actually not, in terms of finances, been supported by the government. But we have been part of a network called the Pakistan Micro-finance Network. This was again initiated by a core group, us included, that really believed that we needed a forum where we could lobby for policy changes, educate the other stakeholders, policy-makers, also share best practices and experiences. And increase the transparency in this sector. We take out a report every six months on key financial indicators. So that is one way, we feel, that the government of Pakistan now has definitely become more supportive towards micro-finance, their awareness has increased, a special unit has been set up for micro-finance - which is a great effort - and they are educating themselves.