Spotlight on Microfinance

This issue of Microfinance SPOTLIGHT focuses on developments in microfinance in Pakistan from 2005 to 2008. It presents findings on the progress made by industry players and challenges to further expansion of microfinance services.The last three years have seen significant developments in the microfinance industry in Pakistan. Study findings indicate that:

• There has been rapid growth in terms of outreach and gross loan portfolio;
• Industry players have significantly enhanced their geographic footprint, improved operations and introduced several better designed financial products;
• Microfinance players (MFPs) have successfully engaged large national and international financial players;
• Number of MFPs in the country has remained steady;
• Industry has shifted towards specialized programs;
• Multi-dimensional organizations have separated their credit programs operationally and financially;
• Growth in outreach has been achieved by entering new territories;
• MFPs have been facing human and financial resource constraints.

The growth seen in the last three years is likely to continue, provided that commercial sector funding is forthcoming. Given the current macroeconomic situation and the global financial credit crunch, the sector will require support from the State Bank of Pakistan for continued growth.