Micro Financing to Help End Poverty in Pakistan
By Abdus Sattar Ghazali
Karachi-based Human Empowerment and Welfare Trust (HEWT) held a meeting of its supporters in the Bay Area where the HEWT founder Zulki Khan gave a presentation about the laudable work of the Trust.
The event was held at the Chandni Restaurant, Fremont/Newark CA on October 29, 2019. Maryam Turab was the organizer of the event.
The HEWT was launched in 2012 under the motto: Let’s end poverty – one by one by empowering poor people through small business loans or microfinance.
Zulki Khan explained the work of the HEWT which is active in all the provinces of Pakistan and Azad Kashmir.
Syed Zahid Yazdani, the Chief Executive of the HEWT, shared three life-changing stories of the persons who were helped by the Trust.
ShakeelaBagum from SufaidDheriNaudebala, Khyber Pakhtunkhwa, is able to earn around $300.00 per month with a microloan of $250.00 for her embroidery business.
Abdul Haleem of Chitral Valley, Kalash can make around $1,500.00 per year through his tailoring& small grocery store with a microloan of $240. Abdul Haleem returned the loan within six months.
Saleema Bibi of Sarai Kharbooza, Islamabad has established a Sewing Training Center to earn around $2,000.00 per year.
Karachi-based Syed Zahid Yazdani was on a visit to the US.
Human Empowerment and Welfare Trust was launched with the intention of helping the poorest of the poor people, so that they could get out of the cycle of poverty and this policy explains why HEWT does not charge any interest on the loans it disburses. All the expenses are borne by the founder to run the organization while all members and affiliates of the organization are volunteers.
The micro loan program is available in few cities in Pakistan presently, but the Trust’s goal is to expand it to all the big and medium sized cities soon.
Interestingly, HEWT loans are offered mostly to women and some men also, regardless of their religious, ethnic, or tribal backgrounds. Loans are mostly given to women because historically when they start making money, they elevate the whole family from children’s education to their diets and their other emotional needs. This way the lifestyle of the whole family gets an uplift.
Donors from the US can donate to HEWT through I-Care Fund America, USA which is a 501 © Tax Exempt status.
Poverty in Pakistan
Tellingly, poverty is one of the least discussed issues in Pakistan. Successive governments have intentionally shied away from this debate. For example, the Pakistan Peoples’ Party government didn’t release poverty statistics for years it stayed in government. Similarly, the Pakistan Muslim League-Nawaz didn’t release reliable poverty figures during its tenure.
Alarmingly, there is considerable ambiguity around the methodology to estimate the rate of poverty. As a result, there is no single and well-accepted poverty rate in Pakistan. Each academic study on poverty estimation gives its own poverty rate that may be different from others. In some cases, there are significant differences between the calculated poverty rates.
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In June 2016, Pakistan’s first ever official report on multidimensional poverty was launched by the Ministry of Planning, Development and Reform. According to the report, nearly 39 percent of Pakistanis live in multidimensional poverty, with the highest rates in FATA and Balochistan.
Pakistan was placed 150th among 189 countries in the UN’s 2018 Human Development Index (HDI)’s annual rankings that is measured by combining indicators of life expectancy, educational attainment and income.
The first UNDP Human Development Report (HDR) was prepared and launched under the stewardship of the late DrMahbubulHaq, a former Pakistan finance minister.
In other South Asian countries, India ranked at 130th on the index; Bangladesh 136th; Sri Lanka: 76th; Maldives: 101st; Nepal: 149th, and Bhutan 130th.
The Role of Microfinance in Poverty Alleviation
Microfinance services have emerged as an effective tool of financing micro-entrepreneurs to alleviate poverty. Since the 1970s, development theorists have considered non-governmental microfinance institutions (MFIs) as the leading practitioners of sustainable development by financing micro-entrepreneurial activities.
More than half of the world’s working-age adults (about 2.5 billion) still do not have access to financial services of regulated financial institutions. Therefore, a good number of working-age adults around the world depend on informal moneylenders for loans to start or maintain a micro-enterprise.
In the past 25 years, microfinance service has been considered as one of the most significant innovations in development policy around the world.
In the 1970s, Muhammad Yunusof Bangladesh presented a model called the GrameenBank or Grameen model. It is a strategy for empowering the poor to reduce poverty and serve as the base of modern microfinance. Microfinance ideologies are more closely linked to the economist Muhammad Yunus, who was a professor in Bangladesh in early 1970.
