Micro-finance to spur growth, alleviate poverty

REALIZING the promise offered by micro-finance sector where access to financial services facilitates the creation of enterprises, gives poor people access to working capital and provides insurance and saving facilities, the government has decided to set up a Micro Finance Investment Company with the financial support of Germany and Britain.
The company to be made operational by July this year, is being established in the face of growing potential customers for the microfinance which according to Finance Minister Ishaq Dar currently hover around twenty five million and the figure is likely to grow further in the years to come. This indeed is the first major step towards financial inclusion of the people of un-served and underserved areas ever since the inception of Pakistan Poverty Alleviation Fund. Microfinance indeed offers a long-term solution to meet national crises, besides alleviating poverty among the large rural and poverty-stricken segments, which have unfortunately remained ‘unbanked’ or financially underserved for many decades now, even in this modern day and age. Micro-finance is not, however, limited to loans alone as it also includes saving opportunities, remittances and insurance facilities — all of which are critically important for the poor, especially during emergencies or crises where savings and insurance can provide that vital cushion for survival. Availability of funds to fuel the growth of micro-finance sector has remained a challenge and it is now expected that the establishment of this company will provide the necessary resources for the sector by crowding in and leveraging commercial sources of fund. There is also a dire need for the players to develop innovative products to raise deposits and develop delivery mechanisms to reach out to un-served markets. Provision of loans for small enterprises will go a long way in not only generating hundreds of thousands of new job opportunities and also contribute towards pushing up the growth rate which the government eyes to take to six to seven percent in the next two years.

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