Pakistan is one of the most populous countries in the world, with 208 million inhabitants. Although it faces significant economic, governance and security challenges, Pakistan has made substantial progress in reducing poverty during the last two decades. Rapid urbanization and population growth, however, are putting a strain on the quality of life in urban areas, especially in terms of housing and clean water.
FINCA entered Pakistan in 2013 by purchasing Kashf Microfinance Bank, a fully-licensed financial institution with an extensive network of branches. In recent years, it has become one of the fastest-growing banks in the country, offering a full range of financial services. In 2017, FINCA was awarded Smart Certification, which recognizes the highest standards of ethical practice in banking. This commitment to the well-being of its clients extends to every area of service, including SimSim, a no-fee mobile banking platform that is the first of its kind in Pakistan.
Reaching the Financially Excluded
Pakistan has one of the highest rates of financial exclusion to be found anywhere. Over 80 percent of adults are shut out from formal financial services. FINCA is expanding rapidly in the country to fill this gap.
When FINCA purchased Kashf Bank, most of its customers were located in densely-populated urban areas. Since then, ongoing expansion in agricultural and livestock loans is shifting this balance towards more rural communities. This trend will hopefully gather strength as FINCA Pakistan rolls-out its mobile banking platform.
Reaching women poses a challenge in Pakistan. reflecting social norms that constrain women's activities outside the home. As it grows and diversifies its client base, FINCA Pakistan will continue to experiment with strategies to overcome these barriers, including increasing its female staff and special efforts to enroll women in its mobile banking platform.
Quality of Life
Virtually all of our borrowers in Pakistan enjoy electricity in their homes. This may change as FINCA acquires more rural customers. As we have observed in other FINCA locations, however, access to clean water is a problem. A third of our borrowers live in homes with no running water, which poses difficulties for sanitation and food preparation. The other, longer-term issue for our clients' quality of life is the high incidence of breadwinners who have less than a secondary education -- a problem that is not unique to FINCA customers This issue is equally common in neighboring Afghanistan, and it signals the difficulties that many of our clients face in improving their family's quality of life.
Income & Employment
Income & Employment
Our borrowers in Pakistan earn an average profit of $3,225 annually, which is less than $10 a day. Even so, they maintain a high rate of employment in their businesses. Each FINCA-funded enterprise in Pakistan employs 2.7 people (including the owner), the second-highest in our network after Malawi.
Over half a million people currently work in the enterprises funded by FINCA. The net employment impact of FINCA's loans, however, is not particularly high -- about 8 percent, according to our borrowers. Job-creation among our Pakistani clients is highest in manufacturing and services. Because the profit margins are quite low, however, clients are unable to pay high salaries to their workers, two-thirds of whom are earning wages below the national poverty line.
Women's empowerment faces many hurdles in Pakistan. At present, FINCA's female borrowers, while few, present a very specific profile. They are mostly single parents running their own business. This profile may change as FINCA rolls-out new services, such as SimSim. These digital services could potentially reach a broader swath of un-banked women, providing them with practical tools to improve their family's financial circumstances.
Attaining Business and Personal Goals
Our customers in Pakistan are firmly focused on growing their businesses. Almost 3 out of 4 borrowers cite this as their main goal -- more than anywhere else we've surveyed. About 14 percent of borrowers are using FINCA’s loans for routine activities and expenses, and did not cite a specific goal. Starting a business, paying down debts, and improving their homes are each mentioned by 5 percent or less of borrowers.
On the whole, FINCA's borrowers are very confident that the loan from FINCA is instrumental instrumental in achieving their goals. The percent of clients who have met (or expect to meet) their goal is highest for those whose objectives relate to business growth, buying an asset or improving their home.
Poverty, Economic Sectors, Jobs and Profits
FINCA Loan Sectors
Most of the loans in Pakistan are for businesses in the trade, services, crops and livestock industries.
Profit and Profit/Sales Ratio by Sector
FINCA tracks the average annual profit in USD for our clients, as well as their average profit/sales ratio by sector. Across our borrowers the average annual profit is $3,255 USD. The average profit/sales ratio is 22.2%. The sectors that perform above average when it comes to profit/sales ratio are both crops and livestock.
Jobs by Sector Due to FINCA Loan
A total of 24,633 jobs have been created in Pakistan as a direct result of FINCA loans. Nearly 300,000 people are employed by the enterprises that FINCA has provided loans to.
The numbers found in this section represent the total number of jobs in each sector created as a direct result of a FINCA loan, each year. These numbers are also provided by sector as a percentage of the total jobs created in Pakistan directly resulting from FINCA loans.