MICROFINANCE Forum 2015

Transcription

1 SHAMROCK CONFERENCES INTERNATIONAL PAKISTAN MICROFINANCE Forum TH ANNUAL ASSEMBLY OF MICROFINANCE STAKEHOLDERS 26 November 2015, Ramada Hotel, Islamabad Theme Time to move forward from Regulations to Actions RECOMMENDATIONS INTERNATIONAL

2 RECOMMENDATIONS 9 th Pakistan Microfinance Forum 2015 The 9th Pakistan Microfinance Forum 2015 was organized by SHAMROCK Conferences International in Islamabad on 26th November, The learned speakers and Chairpersons in their deliberations presented the following recommendations: 1. In order to impact poverty, the Pakistan Microfinance Network (PMN) has prepared an ambitious plan to raise the number of Microfinance (MF) loan customers from the current 3.3 million to 10 million customers by the year The PMN is striving to raise the gross loan portfolio from the current level to Rs.84 Billion to Rs.400 Billion by The Rs.84 Billion loan portfolio is not even half a percentage point of the total amount of debt outstanding in the country. 2. A comprehensive roadmap was shared during the forum, along with the associated challenges. The MF industry has shown robust growth and achieved many milestones, but it still has not reached a scale, where it can make a major impact on poverty, GDP or the national economy. However the MF sector has successfully created a robust foundation and technological infrastructure for achieving accelerated growth in the near future. It simply needs to provide a viable delivery mechanism, while ensuring the availability of funds with lower financing cost. 3. Microfinance has currently attracted around 10.4 million depositors, with a deposit base of 50 billion, which is only 0.4% of the total deposit-base of Pakistan. The PMN has plans to achieve 50 million deposit customers by the year 2020 while raising the deposit portfolio to Rs.150 Billion. Currently, the number of Microinsurance policies in the country is 4.4 million. PMN has planned to increase this figure to 15 million Micro-insurance policies, by the year One major challenge for the MF industry s growth is the high rate of interest (nearly 35%). PMN has plans to reduce these interest rates down to 25% by the year All these growth figures are challenging but achievable, as experts have estimated that currently there are 30 million eligible MF customers in the country. By 2020 the market demand will increase to 35 million potential customers. Once this quantum leap in growth is achieved, the MF sector will have a larger impact on the number of households served through Micro-financing, and this diligent sector will enjoy much more attention and focus from the Government regulators, the Finance Ministry and the economic leaders.

3 6. Various learned speakers urged that Microfinance should preferably be a practiced as a purely humanitarian intervention, rather than one that focuses on robust profitability. Social development and uplift of the masses should be the spirit behind all microfinance initiatives. Islamic Mode of finance and Qarz-e-Hasana can be easily incorporated in the Microfinance arena, as it is less exploitative and based on EQUITY creation and sharing. Profit and Loss is shared in every deal. 7. The innovations in Branchless Banking and Mobile-Wallet accounts has revolutionized the MF industry, as currently a million new mobile accounts are being opened every month, even by many customers who reside in the remotest parts of Pakistan. Deeper collaborations are needed between Microfinance Institutions (MFIs) and Telecom companies for launching new branchless and mobile banking ventures with a wider spectrum. There still are 90 million unbanked cell phone subscribers, who form a huge potential market for Mobile Banking. The recent bio-metric verification of over 100 million SIMs, has further secured the Mobile banking facility percent of Pakistan is rural, and needs to be explored further to ensure the delivery of long-term MF advantages in agriculture. With a supportive regulatory environment in Pakistan, 35% of the adult population could be served by the year The government needs to facilitate MFIs with low-cost finances, regulatory support, infrastructure, risk-management, technical, logistics, training and marketing support. A more collaborative approach is needed to enhance SBP s role in Microfinance progress, financial literacy and strengthening the capital base of MFIs and ensuring wider outreach. Microfinance Credit Guarantee from SBP needs to be enriched for catering to such a large population. 10. In the rural areas, loan-sharks and unsafe modes of exploitative private financing should be discouraged and replaced with safe and regulated Micro-credit services. The existing 12,000 brick and mortar bank branches network cannot cater to this population of 180 million people. It should be replaced with extensive Mobile Banking networks, transforming more cellular service agent shops into M-banking outlets, equipped to offer 24/7, Over-the-counter services with compliance-trained agents. 11. National Database and Registration Authority (NADRA) is also offering special Identity cards, with a safer Bio-Metric Verification system to help enhance Financial Inclusion through the cellular eco-system. A strict scrutiny of each mobile subscriber s data is being ensured to improve security. Credit information is being compiled by the SBP, to centralize the data on the credibility of each customer and his capacity to pay.

4 12. Banks will be in the information and knowledge business or they will be out of business. MFI s have been successful in lending operations, but they must enhance their deposit-mobilization operations and promote savings in mobile accounts, in order to achieve complete sustainability. By reducing the role of Cash transactions, mobile Microfinance facilities can help in making the country s economy more documented. It will revolutionize the way business is conducted. 13. Future growth strategy for Branchless Banking includes untapped segments like; MSME Finance, Rural & Agriculture Finance, Housing Finance, Digital Payment Systems, Consumer Protection, Financial Literacy, Insurance and Pensions. 14. Exclusive Micro-Insurance for small enterprises and agricultural producers is a high-potential market promising great returns for the social investors. It covers the key risks facing poor and vulnerable people. Risk management helps reduce vulnerabilities of the poor; Health and accidents, Natural calamities, life risk and death, old age and retirement. Livestock and assets also have risks. MFI and MFBs should be more aware and motivated about micro-insurance. Lack of credible data on mortality rates creates pricing challenges for micro-insurance. 15. With loans from DFID and SBP funding, Institutional-strengthening funding is being extended to the smaller MFI s to help them graduate and become larger MF banks with more administrative control over the funds. SBP sees the average loan size as too small, thus creating challenges. It is only currently, so it does not go towards income-generating activities. The SBP should upscale the loan sizes to around 500, Earning profiles are diverse in different areas, e.g. the areas with sugarcane crops and sugar mills have different needs. So the microfinance products should be customized for each area and segment. The educated youth and women are also critical segments to cater. 17. The cellular companies have a combined strength of well over 150,000 cellular agents across Pakistan, thus technology can enable wider outreach at lower costs. International remittances also promise a huge potential, illegal financial channels should be replaced with formal, documented and secured Mobile remittances. 18. Simplified procedures can also help the illiterate and handicapped people to access MFI services. Special facilities and MF provisions need to be developed for the handicapped segment, to provide more entrepreneurial opportunities for them and empower these special people.

5 Microfinance in Pakistan has developed immensely in the past decade; the large market proves to be of high potential for this sector and grants opportunities for social and commercial investors, to explore the Microfinance market. Increasing competition, limited management capacity, shallow product-base and high transaction costs are some key challenges facing the microfinance sector. But there are also multiple opportunities that the sector can exploit for its sustainable expansion. These include poverty reduction, women empowerment, rural development, financial inclusion and going green. Over the recent years Microfinance sector is diligently operating and expanding its outreach. Currently, the 46 retail Microfinance Providers (MFPs) collectively account for approximately *16 million of the total microfinance outreach in Pakistan. At least million credible and needy people require affordable microfinance assistance in Pakistan. The commercial banking sector is accessible to only about 14% of the population; this makes Pakistan a very attractive destination for the Social-investors. To facilitate growth, the State Bank of Pakistan has revamped and simplified the Microfinance Credit-Guarantee Facility for microfinance banks and institutions so that they get inexpensive funds from banks, for onward lending. The government should provide more attractive incentives and realign its microfinance regulations, according to changing needs, to facilitate fresh ventures and social development. Softer rules should be implemented for Microfinance lending. Now, the MFBs and MFIs can borrow from banks and Development Finance Institutions (DFIs) at a maximum interest rate of 2pc plus KIBOR of the relevant tenure. That is perhaps why MFIs have done consistently well in last five years. Between 2009 and 2013, according to official statistics, the number of active microfinance borrowers increased from 1.4m to 2.4m; the percentage of female borrowers rose from less than 43pc to over 58pc; the gross loan portfolio expanded from Rs16.8bn to Rs46.6bn; the deposit base grew from Rs7.2bn to Rs32.9bn; and the number of MFB and MFI branches went up from 1,221 to 1,606. The MFI beneficiary count in Pakistan is still restricted to 3.4 million. Therefore, the relevant institutions, global donors and stakeholders must contribute and collaborate regularly, to design and implement a powerful strategy to overcome major national challenges, such as; high population growth, low literacy, unemployment, security, health concerns, etc. The focus must remain on Financial inclusion, financial access, value-chain financing, training and branchless banking to maintain low cost of operations for MFIs. The involvement of microfinance banks in branchless banking, in collaboration with a number of cellular companies, has revolutionized the sector, by reaching out to customers in the remotest areas of the country. The 9 th Micro-Finance Country Forum, 2015 invites you to participate in this insightful debate to enhance the sector s growth, performance and future strategy. Some of the most knowledgeable experts and experienced social investors of the sector will be sharing their experience and insights with the stakeholders. * 3.4 million borrowers & 12.7 million depositors INTRODUCTION

6 KEY OBJECTIVES & OUTCOMES THE KEY OBJECTIVES OF THE FORUM To contemplate the pros & cons of the Policy & Regulatory Framework aimed at boosting output to achieve sustainability. To examine the performance of this sector by understanding the endeavors of the key players, with respect to national goals. To discuss and learn how this sector can reach out and fulfill the aspirations of the investors, regulators, stakeholders and consumers at large. To deliberate and recommend appropriate solutions and technological interventions to meet future challenges. To understand how the Microfinance sector leaders can; better forecast market dynamics, maintain stability and fully exploit the available resources to facilitate growth on the grass roots level. To generate opportunities for small scale businesses and human resources by recognizing training needs and optimum utilization of skill sets for capacity building. THE OUTCOME OF THE CONFERENCE A sector-wide consensus on required modifications in the Microfinance Regulatory framework, for facilitating success in our national pursuits. Recommend collectively beneficial financial plans, to enhance and develop a strong facilitating infrastructure, by combining wisdom from the experts, public and the private sector. WHO SHOULD ATTEND CEOs and CFOs of Microfinance Banks Heads of Microfinance Division, Commercial Banks International Donors Agencies Non-Governmental Organization Social Sector Development Organizations HR Consultants and Trainers Financial Advisors Technology Consultants & Service Providers Commercial Law Consultants Marketing Consultants Business Incubators Chambers of Commerce & Industry Regulatory Bodies Entrepreneurs

7 SHAMROCK CONFERENCES INTERNATIONAL PAKISTAN MICROFINANCE Forum TH ANNUAL ASSEMBLY OF MICROFINANCE STAKEHOLDERS 26 November 2015, Ramada Hotel, Islamabad Theme Time to move forward from Regulations to Actions INAUGURAL SESSION Time Activity Participants Status 9:30-10:30 AM Tilawat-e-Quran Welcome Remarks Chief Guest Keynote Adnan Mughal Mr. Menin Rodrigues, Chairman, SHAMROCK Conferences Internationl Mr. Nadeem Hussain, Chairman, Pakistan Microfinance Network (PMN) Session # 1 MORNING TEA - From: 10: am FUNDING - Creating new affordable resources of FINANCE Session Chair: Mr. Noor Ahmed, Head of Agriculture & Microfinance Department, State Bank of Pakistan - Invited Time Proposed Topics Participants Status 10:45-12:15 PM Session # 2 Mr. Ghalib Nishtar, President, Khushali Bank Limited Mr. Ghazanfar Azzam, CEO, Waseela Bank Limited Mr. Rehan Butt, Country Manager, MicroEnsure Pakistan QUESTION & ANSWER + SUM UP and DISTRIBUTION OF PLAQUES TECHNOLOGY - Broadening outreach by optimizing deployments Session Chair: Mr. Yasir Ashfaq, Group Head Financial Services, Pakistan Poverty Alleviation Fund - Time Proposed Topics Participants Status 12:15-01:30 PM Status Syed Mohsin Ahmed, Chief Executive Officer, Pakistan Microfinance Network Mr. Muzaffar Ud Din, Country Representative & CEO, BRAC Pakistan Ms. Fatima Rasheed, Head of Research & Development, AKHUWAT QUESTION & ANSWER + SUM UP and DISTRIBUTION OF PLAQUES PANEL DISCUSSION - Measuring the Social Impact of Microfinance Session Chair: Mr. Saquib Mohyuddin, Chairman, Pakistan Enterprise Development Facility PEDF - P A N E L I S T S TIME: 1.30 p.m. to 2.30 p.m. Ms. Tabinda Jaffery Chief Executive Officer, ASASAH Dr. Rakhshinda Parveen Co-Founder & Founding Executive Director SACHET - Pakistan Closing Remarks by Session CHAIR Mrs. Farida Tariq Founder & CEO, WASIL Foundation Syed Mujahid Hussain Chief Executive Officer, AAS Foundation Status The Way Forward Mr. Menin Rodrigues, Chairman, SHAMROCK Conferences Internationl DISTRIBUTION OF PLAQUES LUNCH and CLOSE OF CONFERENCE