Paper

Reinventing Microfinance in Pakistan

Extending asset sharing along with provision of microfinance services
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This paper illustrates the benefits of extending asset sharing and services that aid economic activity at individual levels through the microfinance methodology developed by the Farz Foundation, Pakistan.

The Farz methodology is based on the belief that allowing the poor direct access to money does not empower them or alleviate poverty. The paper emphasizes that microfinance institutions should focus on educating the poor and promoting and sustaining economic activity rather than extending credit. The Farz Foundation conducted a pilot study in Shalimar, Lahore, which revealed that asset sharing had a greater impact on poverty than currency disbursement.

The paper cites advantages of using the Farz methodology in Pakistan’s economic context. They include:

  • Promotion of sustainable economic activity among the poor;
  • Greater client buy-in;
  • Accessibility to new markets for the marginalized;
  • Greater focus on social and economic empowerment;
  • Long-term profitability of microfinance;
  • Customized solutions sensitive to religious and cultural context.

About this Publication

By Shah, F.
Published