Conference on Commercial Capital: Pakistan

This report is about the seminar - Beyond Charity: Commercial Opportunities in Micro and Small Business Lending - that was part of USAID, Pakistan's three-year Widening Harmonized Access to Microfinance (WHAM) program.

The seminar:

• Assessed ways in which the commercial sector could increase its involvement in the delivery of microfinance services;
• Explored the following three questions:
  • How can Pakistani financial sector actors drive scale and profitability in microfinance with new kinds of financing and relationships?
  • What are the challenges and alternatives for greater scale of outreach and profitability?
  • How can the participants give credibility to new kinds of credit-worthy transactions and partnerships between the financial sector and traditional microfinance providers?

The conference discussions identified the following key factors for increasing scale and outreach to microentrepreneurs:

• Improving the external operating environment for microfinance including policy, regulation, access to capital and money markets;
• Advancing MFI's commitment to sustainability;
• Diversifying the sources of funding;
• Strengthening and increasing the transparency of internal systems, such as governance, accountability and internal control.

The conference also highlighted the following factors that can help prospective commercial institutions gain confidence in an MFI:

• A viable competitive and regulatory environment;
• Quality management of the MFI;
• Profitable and efficient operations;
• A high ratio of equity to assets;
• Strong internal controls and management information systems.