The Microfinance Sector in Pakistan

This presentation provides an overview of Pakistan's microfinance sector, and discusses current trends and challenges. The Pakistan microfinance sector is active, with an outreach of 1,200,000 borrowers as of 2007. From 1999-2007, Pakistan's microfinance sector grew by 40 percent, placing the country in the top quartile globally. Trends include:

• Growth is evenly spread across peer groups;
• Microfinance banks (MFBs)and rural service providers (RSPs) lead the sector;
• Growth is spread equally across Pakistan, with the exception of Baluchistan;
• Portfolio yield has gone up, but is still below global benchmarks;
• Sustainability remains flat;
• Portfolio at risk remains low due to a clear vision of microfinance, improved systems and controls, staff training and high growth rate;
• MFBs add capital, but debt continues to finance growth;
• Sector is over capitalized except for RSPs;
• Delivery costs continue to grow, but are globally competitive;
• Industry continues to target the lower end of the market, the rural poor and women borrowers.

Finally, the Pakistan microfinance sector faces challenges in the areas of scale, financing, human resources, credit information system, technology and policy and regulation.