A low concentration of clients, less developed business links and much higher cost of transport may have put microfinance interventions in Balochistan at a relatively disadvantage compared to similar programs elsewhere. However, visits to some remote communities in Khuzdar and Kech districts of Balochistan offer an alternative perspective on community demand for financial services to increase their income.
Balochistan ranks lowest in terms of human development indicators among all the provinces of Pakistan. According to a United Nations Development Program (UNDP) report, 71.2% of Balochistan’s 12.34 million people are multidimensionally poor. It is much worse in the villages where 85% of the population lives below the poverty line. Islamabad’s political elite has long ignored these figures and the underlying socio-political crises plaguing Balochistan. It is in this context that a European Union Delegation in Pakistan has joined the Rural Support Programs to help the government of Balochistan reduce poverty through community institutions. The Balochistan Rural Development and Community Empowerment (BRACE) program based its interventions on a household level census called the Poverty Scorecard (PSC) which ranks each household in the target districts according to their means of subsistence. The diversified program offers specific interventions for households in each poverty bracket. The most interesting of these interventions is the Community Investment Fund (CIF), a sub-grant to local community organizations so that they can lend it to community members who plan to initiate or strengthen income-generating activities. .
“When we started giving loans people were skeptical, some even used religious rhetoric against us. But we were able to establish our credibility,” said Sanaullah Umrani, who heads a rural community organization, Gwarikh, in the Abi Noghay union council in Khuzdar. For an initial capital of Rs 2 million, the community has already helped 201 borrowers in two years. “Now we have to hide from community members who desperately turn to us for community loans to increase their income.”
Gwarikh in the Brahvi language means “tulip”. This small, community-based institution is one of hundreds across Balochistan that benefits its members through the Community Investment Funds (CIFs) under the program. Appreciating the high demand for financial services, community members of this union council recently submitted an application to the Balochistan Rural Support Program (BRSP) for more funds.
While it is true that not all rural communities manage financial interventions as effectively as the few mentioned above, Balochistan suffers from a lack of financial solutions.
“It’s an idea that has traveled from bottom to top. We did not offer the CIF to the communities; it is the communities that have practiced such interventions and we have learned from them,” says Agha Ali Javad, Director General of the National Rural Support Program (NRSP). Community members in the Makran division pooled their savings and offered loans to members who had income-generating ideas.
Traveling further south reinforced the belief in communities capable of managing financial services on their own. A rural community institution, Mirani, in Turbat, had been circulating a fund of only Rs 200,000 for over a decade, benefiting hundreds of households. This idea was taken up and scaled up by the National Rural Support Program (PNRA). With a grant of Rs 2.7 million under the BRACE program a few years ago, Mirani then disbursed funds worth Rs 19 million to 500 households. Their current portfolio is worth Rs 3.4 million and you can bet that many banks would envy their 100% recovery rate.
Poorly educated Balochi women lead some of these community initiatives. In the case of Shoorma, a community institution run by women in the Solband Trade Union Council, women managed a Rs 3 million grant benefiting 476 households in two years. Sammi Hussain Jan, a borrower, used the loan to set up a heavy vehicle tire repair shop along the Makran coastal road, hiring a worker under a partnership agreement.
The Rural Support Programs Network (RSPN), which draws on these experiences of rural communities across Pakistan, commissioned a third party to measure the impact of community loans on the income of borrowing households. An average loan of Rs 27,000 was found to have triggered an average increase of 25% in the monthly income of poor households.
While it is true that not all rural communities manage financial interventions as effectively as the few mentioned above, Balochistan suffers from a lack of financial solutions. Besides the public sector, there are also many things that the private sector can do. There are neighborhoods like Jhal Magsi, for example, which do not have a single private bank and residents have to travel to Shahdadkot for almost all services. Taking note of experiences such as those of the BRACE programme, the government could focus on partnering with the private sector to find innovative financial solutions to bring Balochistan up to par with the rest of the country.
The writer is a Rotary Peace Fellow and a graduate of goverall sstudied at the University of North Carolina at Chapel Hill. His research and activism revolve around human rights and development challenges in the Pakistan-Afghanistan region. It is associated with the Rural Support Programs Network (RSPN) and tweets @Changovski