Posted by: Administrator | 25 January, 2005

President at Inaugural Ceremony of the first Micro-Finance Bank in Private Sector

11 March 2002

You’re Highness Prince Karim Agha Khan, Her Highness Begum Karim Agha Khan, Prince Amyn Agha Khan, Chairman Micro Finance Bank, Aalana Sahib, and Excellencies. Ministers, Ladies and gentlemen,

It is indeed my honor, my privilege to be here at the formal launch ceremony of the initiative of the Agha Khan Foundation, obviously with the blessing and support of His Highness Prince Karim Agha Khan. I on my own behalf, on behalf of the government of Pakistan and the people of Pakistan would like to express our extreme appreciation for the concern, for the involvement and for the commitment that His Highness, Prince Karim Agha Khan always shows towards Pakistan and the people of Pakistan.

And on a personal note, may I also express my personal gratitude for all the concern and moral support that he has always been giving to me in the administration of the country and his personal commitment to helping out in all spheres of activity, my gratitude to you sir. As you all may be knowing, when we took charge of the government, we right in the beginning, focused on four areas of strategic concern for the improvement of Pakistan, for the change that we needed to bring about in Pakistan. And these four areas of concern, of focus were the economic revival of Pakistan, bringing in good governance into Pakistan, political restructuring of Pakistan and poverty alleviation in Pakistan.

So, poverty alleviation forms the focus of the strategy that we wanted to apply towards the well-being and progress of the country, right from day one. We also analyzed where poverty and deprivation lies in Pakistan and we saw that it lies in three areas.

• Number one it lays in the rural areas of Pakistan because 70% of our population is there. They are poverty stricken. They are deprived.

• Number two it lays in the urban areas in two ways. Firstly, the urban educated unemployed and secondly the urban uneducated unemployed. These were the three areas, we thought where poverty and deprivation lies and it needs to be addressed separately, each one demanding a separate focus. So, therefore, the government economic revival plan which stood as number one issue in the four areas that we were focusing on, really involved, when we went into the details, these four issues and these were;

1. Agriculture,

2. Information technology

3. Small and medium industry

4. Energy sector. 2

Now why we selected these areas were for two reasons because we thought that we will be killing two birds with one stone. Where as agriculture is the fastest means of economic development in the immediate future. It not only gives you an economic revival on a fast track but also addresses the core of poverty alleviation in the rural areas. When we talk of information technology, it is again a fast track economic revival strategy but at the same time it addresses the unemployment and deprivation of the educated unemployed in the urban areas.

 When we talk of small and medium enterprises, again it gives economic revival to Pakistan but at the same time it provides jobs to the uneducated urban unemployed. So, therefore, our policy, our strategy is well next right from the beginning on the four core issues that we devised for the uplift of Pakistan, for taking Pakistan out of the morass that we were in. But at the same time we evolved the sub-strategy in each department. The first being the economic revival towards addressing two issues simultaneously in one goes.

The real poverty alleviation, we believe is the economic revival of Pakistan and that is what we are doing when I say that we are addressing the issue of agriculture, information technology, small and medium industry and energy sector. But, however these are all indirect means, one does understand. Although this is the main area how poverty alleviation could be addressed, but we thought. that over and above this indirect measure, we need to take some direct measures on poverty alleviation and in the direct measures we evolved a number of areas, a number of methods that we could address poverty and these I would like to highlight a few.

Zakat strategy that we evolved, really, is addressing the poorest of the poor. In this we have the funds available and we thought instead of doling out these funds and using them and consuming them without much effect on ground, if we start giving a bigger amount to the poor so that they stand on their own feet, they become financially self sustaining that would be a better strategy and therefore, we launched a Zakat strategy.

We are giving up to 50,000/- rupees as a grant to individuals — the most deserving the poorest of the poor. We have identified areas where they need to be helped, like in the Punjab, opening a shop for them — a small shop. In the Balochistan, may be giving them 10 or 20 goats, or if you are in the coastal areas giving them a boat. So these were the areas that we identified for them and we are giving them money. I think, this Zakat strategy has been launched, we have already given an average of 20,000/- rupees to 100,000 people and we are monitoring the progress that they are making.

We are even monitoring that they are using that money for the purpose that we have given to them. So, it is a hard task. It is not just giving the money and forgetting. Here, it is a different ballgame. We give the money, we want to see that the person is utilizing it in the proper manner and he is financially self-supported and then we have taken him out of the Mustahkeen’ list. We are not going to give him the doles that we had been giving in the past. So, this was the Zakat strategy. Then we also have this poverty alleviation programme which we now call Khusshal Pakistan Project.

They are roughly about 5000 projects going on every year, since 1999-2000 and 2000-2001 and even now employing about 500,000 poor of the respective areas in these small programmes which give them jobs as well as give uplift to the area where these are being undertaken. Small programmes, if I was to give an example, in the northern areas, we launched a small bridge across a stream — a fast stream and this bridge cost us something like seven hundred thousand rupees but what it meant was, there was a school on one side of the stream, whereas the other side could not even attend the school because it needed a tour of about 8 – 10 kilometers.

With this small effort, we opened the gates of the school to the population on the other side of the stream. So, these are the kind of projects which we are in the process of launching all over Pakistan, every year, roughly giving jobs to about 500,000 people.

Then there is a food Support programme, I would not want to go into the details. There is a nutrition programme for girls which we have recently launched. I would now like to address what government action has been towards addressing this issue. I will broadly explain step-wise what we have done.

1. The first step was that we designed the micro finance policy back in June 2000, almost two years back. In this, I would like to appreciate the effort of the Ministry of Finance and my Finance Minister and the Finance team, the State Bank of Pakistan, Dr.Ishrat Sahib and also the Asian Development Bank’s assistance expeditiously gave effect to the implementation of the policy.

 The policy contained innovative micro finance sector development programmes; it will give boost to the micro finance sector. 3

2. The second step that the government took was that the government facilitated establishment of the Khushhali Bank, the Micro Finance Bank, Micro Credit Bank of Pakistan.

3. The third step that the government took was the legal supervisory and regulatory arrangements which were instituted to ensure orderly development of micro finance sector and protect the financial assets of the poor.

4. The fourth step we took was a Micro Finance Social Development Fund of dollars 40 million which was opened. It has been created for building social capital for the poor.

5. The fifth step we took was the Community Investment Fund of dollars 20 million which was established to increase access of the poor for improving their own livelihood.

6. Then the sixth step as a pro-poor innovation, a risk mitigation fund of 5 million dollars has been established to assist the poor in case of unforeseen loss of their income generating activities.

7. The seventh step that we took was that the government allocated 12 million dollars for institutional strengthening of micro finance institutions to enhance their outreach for retailing services to the poor.

8. And lastly to compliment effort of micro finance sector development programme, the government is restructuring the ADBP to mainly focus on rural economy and sustenance of the poor.

I am particularly pleased that all this has been achieved in a period of less than 1 8 months and the development of a realistic pro-poor financial system is progressing as envisaged by us. In this context I greatly value and appreciate the gesture of the Agha Khan Foundation in supporting the government’s poverty reduction effort.

I thank you, Your Highness and ladies and gentlemen.

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