Study on Raising Awareness about Microfinance Finance Essay

The organization involved in microfinance should raise awareness in the community about microfinance and its utility through community meetings, print and electronic media.awareness should also be raised among govt. agencies and other stakeholders to create recognition of microfinance services by lobbying and advocacy.

6.1.2 Capacity Building

The organization should train the front line staffs, who are involved in services delivery, who further train the local leadership at the community level to ensure participatory development process. Training should also be given to the borrowers to help them run their enterprise efficiently and profitably.

Leadership and Motivation

Dependency on leadership should be minimized at operational level with proper monitoring in place. The leadership should keep the staff motivated through incentives based performance appraisal.

6.1.4 Market Linkages

Access to the market for the microfinance clients should be ensured. This could be both for purchase of raw material and sale of finished goods of small enterprise being financed through microfinance.

6.1.5 Non interest based / Islamic mode of financing

Developing new products based on Islamic mode can ensure acceptance of the microfinance programs in communities where the problem of self-exclusion exist. This should be initiated both by govt. and the organization involved.

6.1.6 Diversified Needs of Community

The products should be developed according to the needs of the community. One product can not serve different communities because of the diversified needs and economic and demographic conditions.

6.1.7 Savings

The organization should mobilize the community to create the habit of savings for future needs. Savings can make a community group independent in lending.

6.1.8 Clarity in vision

The microfinance programs should have a clear vision regarding its target groups especially where there are integrated programs. The donors should also fund such organizations that are clear in its vision and services delivery model.

6.1.9 Research and Development

The organization should initiate the R&D to keep service delivery model and products and need based. The donors should also have R&D initiatives to specify funding for products and not for general programs. This will help more focused programs rather than a haphazard program

6.1.10 Human Resource Development

Being in the service industry, the microfinance organization should build their human capital for effective service delivery. There should be proper recruitment procedures and career development plans for employees for motivation, efficiency and retention.

6.1.11 Management Information System

A proper management information system should be design or all microfinance organizations to ensure uniform and proper data maintenance and reporting. It will also ensure proper monitoring and data cleaning at all stages.

6.1.12 Lack of awareness among government agencies

The policy makers at government level are unaware of the importance of microfinance in economic development. They should be oriented through literature, seminars, workshops and exposure visits.

6.1.13

The donors / funding agencies should fund the organization for its capacity building and should push them to work in areas where it needed. It should also push them to conduct need assessment surveys before starting activities in a locality. The survey will also help in developing need-based products and it will be easy for donors to fund for specific products, which will further help in monitoring and impact studies.

6.1.14

The Bank of Khyber with the support of the provincial governments should expand the microfinance scheme up to a desirable limit and streamline the affairs of the current credit operation. The existing loaning system should be revised and improved. The potential cluster/sub sectors for micro finance should be investigated for future operations.

6.1.15

The Bank of Khyber should undertake the cost benefits analysis operation of the micro finance operation in area and should ensure/pursue due compensation for the efforts involved. The area is more viable than commercial operation and can be lucrative at some stages for the bank if properly attended and managed.

6.1.16

The micro finance department of the Bank of Khyber should be re-organized, equipped and strengthened so as to undertake the expand activities in a good manner.

6.1.17

The Bank of Khyber should directly attract international donors for the microfinance programs in different sectors and sub sectors proposals should be launched to the various donor organization through the world.

6.1.18

The Bank should be associated and registered with renown/reputable micro finance organization of the world and their expertise availed. The capacity of the bank is developed to offer advisory services alongside micro finance operations.

6.1.19

The micro finance programs should be properly popularized so that the potential respondents and concerned public/private organization should come forward and promote the micro finance scheme in the target areas.

6.120

The Bank of Khyber required arranging some programs for the women to Become aware from the benefits of this micro finance and deal in the future.

6.2 FINDINGS

6.2.1 Issues related to Governments agencies, Central Bank and Donor were identified as

1: The contribution that microfinance can make towards poverty alleviation and economic development has been recognized yet. 2: Governments agencies and donors/funding agencies do not have a clear vision of the potential of the sector and hence no long-term growth strategy has been developed. 3: Donors prefer to fund big institutions, because of financial viability and organization strength. But most of these big institutions are working in selected areas of the country and the problem of up scaling of out reach is still there. 4: State resource i.e. Zakat and Bait-ul-mal are not being utilized for microfinance. These resources, if canalized properly for microfinance, can add more value than giving it in charity.

6.2.2 Issues related to Microfinance organization were identified as

1: Organization is not mission focussed, especially where there are integrated programs 2: The operational cost is high while organization has a limit to give subsidy. 3: The investment in human resources is very nominal. Organizations find it hard to retain staff because of thee absence of staff career planning and development. 4: Very organization has institutionalized their system and procedures, rest are driven by single leaders who, in most cases have no succession plan. 5: There is no research and development to identify the changing needs of the clients to develop products according to their needs. 6: Most organization have concentrated in urban areas as the cost of delivery is relatively low as compared to rural areas, but there are no need assessment surveys.

6.2.3 Issues related to the target clients were identified as:

1: Lack of awareness of micro finances institutions among then people. 2: Miss-utilization of borrowed money -Responsibility 3: Poor entrepreneurial skills to manage the enterprise. People know what enterprise to start or what activity to carry out but they lack resource management skills. 4: Self-exclusion is another constraint in scaling up of microfinance services , as some people do not accept interest based loans due to religious factor.

6.3 CONCLUSION

Microfinance in its broadest terms can be defined as provision of a range of financial services such as deposits, loans, payment services, money transfers and insurance to poor and low income households, and their micro enterprises. Primarily, the microfinance customers are large in number, scattered in far-flung areas with very minute transaction sizes. Only government or state bank alone cannot reach out to millions of potential Microfinance beneficiaries; a whole well knitted network with almost doorstep reach is required, which is only possible when the commercial banks will be involved in microfinance Micro Finance has proved to be one of the most effective tools for facilitating socio-economic development through increased access to financial services.The main objective of the micro finance is to improve the access of target households and entrepreneurs to credit facility in income generation activities and micro enterprise. The improved access to credit would enable the expansion of existing and establishment of new business activities and enterprise resulting in higher level of income and employment. While a commercial bank is a financial institution that offers a broad range of deposit accounts, including checking, savings, and time deposits, and extends loans to individuals and businesses. The Bank of Khyber (BOK) has actively sought highly experienced staff from the development sector as resources for its microfinance unit. In this way it has combined local development knowledge with the strength of a commercial bank. The micro finance scheme offered by The Bank of Khyber timergara improve the life of the people of the dir area which is backward area and it was a very good opportunity for the citizen of the district dir who take the advantage of the facility. The Bank of Khyber was in a strong position as compared to the other commercial banks to other banks in the district dir to offer micro finance facility as they have establish their market during the period and have experience. The main credit scheme has enormous impact on the socio-economic interest condition of the target group and the scheme has uplifted the socio-economic interest of the target economy. There is a potential of expanding the micro finance scheme many times of the existing quantum, which needs to be prudently, captured. The loans establish and improve many trading and servicing organization in the vast majority.The microfinance initiative has received an overwhelming response from the respondents. There is need to extreme line the existing and expand the scheme up to a desirable extent in an effective and sustainable manner. The borrowers taken the microfinance loans from the bank of Khyber branch were more but we select 25 borrowers from the whole population, in this 25 respondents about all were male, there were no female because of some problems and limitations, the age of these respondents were different from 18 years top above than 60 years, their education were also different some have primary, middle, high and some were F.Sc by qualification there economic resources were also vary such as business, agriculture land ,transport and livestocts etc, the nature of their business were also of retailing, wholesaling and offering services, these people has been taken the loan for different purposes i.e. starting of new business or expanding and for stability of the existing business.We also find monthly income profile before and after borrowing the increase in the profitability of the respondents which was increased due to microfinance loans of The Bank of Khyber and the loan disbursed by the BoK to the people were of different range from 50000 to about 200000 were given to the people of the area at the mark up rate of about 14% which was affordable for some people and some it is for them , the loans were given to the people on some terms and conditions this was also difficult for about most and also it was not a problem for some people, but this microfinance improve the life of people from about every side. "Access to financial services significantly impacts the lives of the poor, the challenge is to mobilize this knowledge and apply it on a much vaster scale" Microfinance is a viable tool for poverty alleviation and economic development. The environment of Pakistan is suitable for microfinance both in social and commercial sector terms but ample attention has not been given yet to this sector, which has leaded to insufficient resource allocation to this powerful tool of poverty alleviation. In NWFP with most of its population living in rural areas, the poverty level is the highest i.e. 31% urban and 44% rural, which indicates more need of microfinance programs. Unfortunately the pace of progress is very slow in terms of outreach, which has contributed to unemployment and underemployment. Unemployment and underemployment leads to economic chaos and the gap between the rich and poor is widening. This gap leads to frustration and ultimately damages the social fabric of the society. Sustainable development needs balanced and participatory economic and social activities, which can be ensured through effective community mobilization, capacity building, creating conductive environment for economic activities, developing linkages with the service providers and financial assistance for the meeting the capital requirement for business activities because stakes of the majority will be involved and according to Mark twain "when you find that you are on the sides of the majority, it is time to reform"

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