Microfinance: A Prescription for Poverty and Plight of Women in Rural Pakistan

In this paper, author presents the macroeconomic scenario in Pakistan citing statistics of the last twenty years to state the plight of rural poor, with specific focus on women.

The author is of the opinion that the structure of the economic growth process in Pakistan constrains its capacity to reduce poverty. It makes a special case for intervention when coupled with the fact that the weight of poverty falls most heavily upon women in rural areas who have:

• Very low level of education and;
• Who are subject to a multitude of cultural and other social constraints.

The author states that in past:

• The cheap credit has leaked to the relatively richer rural households;
• The subsidy dependence of the credit institutions have made them nonviable;
• Only a fraction of credit could flow to women poor who are most deprived of the poor.

The author believes that in order to reach the estimated 42 percent of the 22.8 million economically productive persons in agriculture who are women, where more than 38 percent of these are unpaid family workers, there is a need for an alternative micro credit financing mechanism that:

• Does not demand large collaterals as guarantees;
• Can be scaled to reach out to a large population.

The Grameen Bank model being replicated in 56 countries is therefore a very viable solution.