Case Studies in Microfinance: Pakistan - Aga Khan Rural Support Program 1982-1994
Dichter, T. & Charitonenko, S.
Publication Date: Aug 1998
Published by: World Bank - Sustainable Banking with the Poor (SBP)
Document Type: Case Study
Microfinance in rural Pakistan
This paper summarises a thorough evaluation of the Aga Khan Rural Support Program (AKRSP) by the operations and evaluations department of the World Bank in 1995.
AKRSP's savings and loan operations are unusual because they are only one part of an especially large development program. AKRSP has also worked to accomplish its mission through several types of operations, including:
- Organizing village-level institutions;
- Funding physical infrastructure projects;
- Promoting natural resource management in agriculture, livestock, and forestry;
- Training and human resource development;
- Marketing and enterprise development.
Three hallmarks of AKRSP's success are the organization's: - Community focus;
- Savings emphasis and
- Flexible operations.
However, AKRSP's savings and credit operations are increasingly subsidized, loan portfolio quality is declining and loan portfolio risk is increasing as the program expands its services and activities.
It concludes that providing microfinancial services can be problematic even when evolved out of a program that has had great success in other areas. Although AKRSP's has a history of relatively good performance in savings and credit operations, it also can be improved.
It provides recommendations for future directions:
- Professionalization of financial intermediation;
- Creation of debt capacity, defined as the amount an individual or entity can borrow on a sustainable basis;
- Strategic focus on savings and credit patterns to define the role of the new bank likely to take over AKRSP's savings and credit operations.
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