Microfinance Role in Conflict and Post Natural Disaster Areas Roshaneh Zafar Managing Director Kashf Foundation

What Microfinance does for the Unbanked Helps build sustainable businesses through  Increase in incomes  Fostering entrepreneurship Helps reduce vulnerability through:  building safety nets  providing access to formal savings accounts  Increasing food security  Increased expenditure on social wellbeing, e.g. visits to doctor, children’s education

Kashf Foundation Outcomes Key Trends First specialised MFI in Pakistan Demonstrated a business case for investing in women Designed effective pro-poor pro- women products and services Achieved financial sustainability First MFI to be rated (investable grade) First MFI to raise over $36 million as commercial loans Impact on Clients Economic Impact  32% of clients have moved out of poverty line  Households were able to spend 13% more on education  22% more on health care  85% increased monthly income by 30% annually ($27) Social Impact 82% mentioned gains in self confidence, self esteem (through ability to plan for the future, reduced dependency) 40% stated less domestic fights 54% husbands respected them more 42% saw a new future for their daughters

SPI Trends

Impact of Natural Disasters on Low-Income Households Directly Affected Communities:  Impacted through the actual loss of life, property and savings  Absence of formal safety nets increases vulnerability to exogenous shocks Indirectly Affected Communities  Impacted through price hikes, especially food inflation  Impacted through diversion of aid, government subsidies, and NGOs towards disaster struck areas

Inflation and Low-Income Households 90% of clients said food prices placed a significant financial burden. The average client household has seven family members and a monthly household income of Rs. 9,469 (US$123). Clients spend an average of Rs. 6,250 (US$81) per month on food expenses, which is roughly 66% of average household income.

Strategies for Indirectly Affected Communities – Improving on Business As Usual Scenarios Continue with the provision of microfinance, micro- insurance and savings products Introduce new products such as the emergency loan to deal with inflationary pressures Extension in loan repayment tenure/rescheduling of loans Modification of the loan process to ensure proper utilization of loans through business appraisals Introduction of financial literacy programs to help clients increase the ‘value’ of their money Help communities build formal financial safety nets through savings Increased focus on Consumer Protection Code Special emphasis on Responsible Finance to ensure proper loan targeting and reduce over-indebtedness Indirectly Impacted Communities

Impact of Disaster = Vulnerability x Natural Disaster Microfinance helps reduce vulnerability and thus mitigates the impact of natural disasters on low- income households Microfinance also enables clients to build social safety nets through savings programs Moreover, some MFIs take on the role of providing relief and welfare to disaster hit populations

Strategies for Directly Affected Communities – Beyond Business As Usual Start a fund for immediate emergency relief with a pro women focus and emphasis Corroboration of information about affected communities through internal research teams Undertaking needs-analysis and survey to prioritize community needs Supplement relief with more grant led aid for reconstruction and rehabilitation activities Develop products and services for the post hazard communities Directly Impacted Communities

Case Study: Kashf Foundation’s Initiatives in the August 2010 Flooding Relief Phase  Distribution of relief packages comprising dry ration, first aid, and basic household necessities.  Targeted communities- Charsadda,, Multan, Ranjanpur, Muzaffargarh, Jacobabad, Jamsharo, Bhubak, Jampur, Badin, Dadu, Thatta and Shikarpur.  15,000 families served- approximately 100,000 individuals

Case Study: Kashf Foundation’s Initiatives in the August 2010 Flooding Reconstruction and Rehabilitation  Phase I Selection of 10 communities for rehabilitation and income transfer scheme (currently working in 1 community)  Phase II Provision of microfinance, microinsurance, and savings products to the communities Initiating a community rebuilding program targeted towards securing a clean drinking water supply for the community or helping the community rebuild schools

Kashf Foundation’s 1 st Adopted Village – Manah Village Profile of the village  Size of village – 7000 inhabitants  Extent of damage – over 60% people affected  Water filtration plant present at periphery of village  Primary school present, no secondary school in the area  No hospitals “If I don’t have a roof over my head how is my family expected to be productive. We keep getting sick because there are so many diseases and also it is getting very cold. It is important for us to be healthy because for us our bodies are our machines through which we make a living” - Qudrat (resident of Mannah village) “We are willing to give all it takes to make our communities better. We are willing to provide labor for reconstruction and are willing to work day and night to maintain our livestock. The future of our children depends on it” - Nasreen, resident of Mannah village

Reconstruction costs are estimated to be $9.7 billion More than 20 Million people have been displaced due to the flooding Photos from Flood Affected Villages