Cooperative Microfinance: A New Option for Government & Development Organizations

This study investigates the impact of the Cooperative Microfinance Program (CMFP) on the standard of living of poor marginalized people in Pakistan.

The study uses secondary, time series data from reports of Islamic Relief ranging from 2002-2008 about funds disbursement, number of beneficiaries, and financing methods. It uses beneficiary numbers, disbursement volumes, recovery rates, profitability and viability as proxies for the well being of the poor. The study uses various financial ratios to evaluate the efficiency and performance of financial programs. Key findings include:

• Financial performance of Islamic Relief Pakistan is much better than that of the National Rural Support Program;
• Both programs show similar results about employee efficiency in reaching beneficiaries;
• Average total number of clients per year is 340, with an annual increase of more than 250%;
• Annual average disbursement is Rs. 5,367,913 with an annual growth of more than 690%.

Study findings suggest that the CMFP has great potential for growth in Pakistan. The government should initiate a comprehensive cooperative microfinance program to alleviate absolute poverty levels and improve the standard of living of extremely marginalized groups of society.