Microcredit doing wonders in troubled tribal areas

from The Gulf Times

PESHAWAR: It was a loan of just Rs10,000 ($166) from a microcredit bank that enabled Hamim Ullah, a 24-year-old cloth merchant in the Jamrud Tehsil of Khyber tribal agency along Pakistan’s border with Afghanistan to almost double his daily income besides providing him with an opportunity to subscribe to modern banking services for the first time in the remote tribal areas.

Hamim is among 200 small shopkeepers of the main Jamrud bazaar who recently borrowed micro credit of Rs10,000 from the state-run Khushali Bank either to increase their working capital or add new tools and machinery to their workshops to earn a decent livelihood.

"I was hardly earning Rs300 daily from my small cloth shop. I decided to increase my working capital so that I could generate more income through enhanced turnover. Thus I along with some other shopkeepers formed a group and borrowed Rs10,000 each from the Khushali Bank that recently opened its branch in the Khyber tribal agency," he says.

"Now, after adding the amount to my working capital, I earn Rs600 to Rs800 a day," Hamim said on the sideline of a ceremony this week, where US Ambassador to Pakistan, Ryan C Crocker distributed cheques among other borrowers of the bank here.

Washington through the US Agency for International Development (USAID) has awarded $4mn for the lending programme of the bank for the tribal areas apart from $7mn extended earlier to operate in other backward areas of Sindh and Baluchistan.

The Khushali Bank has become the first-ever public sector financial institution that has initiated its lending operation in the tribal areas bordering Afghanistan, as till date no commercial bank has offered loan facility because of security risks there.

However, Khushali Bank’s managers found the perception incorrect during their experience of dealing with the poor tribesmen, who are strictly following the repayment schedule of loan, which is Rs1,000 a month.

"There were fears of losing such capital when we were about to start the lending programme in the tribal areas and also in Baluchistan. But the results are even beyond expectations as the borrowers’ response towards repayment of loans is very encouraging," Khushali Bank president Ghalib Nishtar says.

Nishtar said the Khushali Bank was maintaining almost 95% repayment ratio after lending almost Rs10bn to over 0.5mn clients in 86 districts of the country.

He was of the view that the tribal people are willing to do business with the banks, but the only thing is to ensure lending of credit to right and deserving people.

US Ambassador Ryan Crocker says more than 50,000 families and businesses would benefit from the Khushali Bank programme in Fata with support from USAID.

With the USAID assistance, the bank has opened 22 branches, including two in Khyber and Kurram tribal agencies, hired nearly 200 loan officers in the field and disbursed more than 200,000 loans to clients in Fata, Baluchistan and Sindh.

USAID will further support the bank plans to extend its services in the remaining five agencies of Fata over the next four years. – Internews