Micro finance has had big success in economically vibrant and densely populated areas. In areas like Khyber Pakhtunkhwa and FATA were economic opportunities are few, the population is thinly spread, and cost of delivery very high because of the spread of population and poor infrastructure the challenge for having a successful micro finance programme are daunting. Because of these reason the traditional micro finance has not been very successful in the province and has had to cope with a high level of risk. SRSP has therefore had to be innovative to attain the goals of reaching the poorest, making delivery of financial services empowering for the community and also brining the programmes closest to the best practices found in this field around the world.
SRSP Microfinance services strategy is based on and linked to Rural Support Programmes’ three-tier social mobilization strategy
Our Strategy is to provide opportunities to make financial services easily accessible to rural poor, are created through the formation of predominately, women organization and encouraging their subsequent federation into Village Organizations (VOs). VOs are envisaged to act as focal point for the delivery of financial services (CIF and microcredit) because of their potentially large outreach, better knowledge of the people and capacity to deliver services at costs that are more economical. Funds are granted in the light of Poverty Score Card to different categories using grants for vulnerable, subsidized credit for those economically not so strong and a financially sustainable credit for the economically active categories. The fund management lies with the communities and aims at building their capacity as a group. This capacity building process involves electing their own leaders, selecting their own members, creating their own bylaws, doing their own bookkeeping, funds management (disbursement and deposits), resolving loan delinquency problems, and levying their own fines on members who come late, miss meetings, or fall behind in their payments. As capacity building organization, SRSP provides technical and back stopping support to communities, as and when required. It is ensured that all processes have clearly set out targets so that the community remains goal oriented
SRSP has experimented with different models to cope with the peculiar environment of the province in the delivery of financial services: rural-retail (2005-09), urban-retail (2006-11) and rural-wholesale Banks (2007-11). SRSP has learnt through experience that the VO-banking model addresses the issues of financially viability and social sustainability (acceptability) most effectively in the province. VO-banking has been observed to be very successful in remote regions where formation of women COs has always been a challenge. The community investment funds, a recent addition, are given to women as seed capital to reach the poorest groups which generally do not benefit from traditional micro finance. SRSP has been successful in mobilizing over thousands of women-headed poor households in a relatively short span of time in KP where remoteness and cultural sensitivity discourages women participation in any development activity. Whether it is a micro-loan, a training opportunity, an infrastructure scheme, it is the men’s needs that always take priority. The VO-banking program encourages empowerment of women, enhance their confidence and improve upon their skills to run a program which they own and can manage all by themselves.