Musharraf opens Micro-Finance Bank in private sector


ISLAMABAD (March 12 2002) : President General Pervez Musharraf on Monday inaugurated the country's first private financial institution, The First Micro-Finance Bank Ltd. The institution is dedicated to address the problems of endemic poverty, starting out with a capital of Rs 500 million contributed by the Aga Khan Rural Support Programme and the Aga Khan Foundation.

President Musharraf, in his remarks, said that the poverty alleviation is one of the four strategic concerns that his government had outlined at its inception, the other three being economic revival, good governance and political restructuring. He went on to summarise the impact of the government's efforts to date, enumerating a series of initiatives in this regard, including the Khushhali Bank and the Micro-finance Social Development Fund.

Expressing his appreciation for the establishment of The First Micro-Finance Bank, President Musharraf pledged all his support and that of the government for the common cause of building efficient micro-finance intermediaries to retail affordable financial services to the poorest of the poor.

A press release from Aga Khan Development Network said that The First Micro-Finance Bank Ltd would build upon two vast sources of experience. The Aga Khan Rural Support Programme's highly successful micro-credit and savings initiative have been serving some of the country's poorest populations since 1982. Institutions of the Aga Khan Development Network have provided financial services for more than sixty years through a range of entities from small savings and micro-credit organisations to major commercial banks and insurance companies listed on national stock exchanges in Asia and Africa.

Prince Karim Aga Khan, Chairman of the Aga Khan Fund for Economic Development, was also present on the occasion. He said, "Poverty is a problem whose import is ignored at great peril. Perhaps, the greatest lesson of the tragedy of conflict that has recently engulfed this region is the need to attack its true roots. These lie not in religion or in corruption, but rather in deprivation, poverty, exclusion and lack of opportunity - and therefore hope." The First Micro-Finance Bank will be one amongst several efforts the Aga Khan Development Network will make to address those root causes. "We are also actively reviewing the possibilities of initiating micro-finance programmes in Afghanistan where we have begun discussions with international development agencies for potential partnerships."

Explaining the rationale underlying the creation of the Bank, the Aga Khan said, "we firmly believe that the disadvantaged amongst us must be able to build a sound and secure future with dignity and pride - and not merely to survive."

According to the Aga Khan, "the Bank seeks to marry entrepreneurship with capital formation. Whilst it will give people scope to expand their economic base, and over time, enable diversification beyond traditional small enterprises, through the discipline that it will seek to impose, the Bank will also endeavour to introduce good practices, ethical precepts and the highest standards of rectitude in the conduct of business."

"Extending the experience of AKRSP," he said, "we are hoping to create of this Bank, an institution that is ever respectful of the needs of the least fortunate."

The Bank will reach out to disadvantaged populations throughout the country not currently able to receive financial services in rural and urban areas. Specific emphasis on vulnerable groups, women in particular, is a governing principle of the institution. To ensure its sustainability, the Bank aims to fully cover its inflation-adjusted costs with its revenues. It will lend to individuals and groups as well as to micro-finance institutions and financial co-operatives for on-lending to undeserved populations. Savings will be mobilised from individuals, groups and institutions. Branches are expected to be opened in Rawalpindi and Karachi by June of this year. The Bank plans to have established about thirty branches at the end of the fifth year of operations. Mobile banking services will be provided extensively from all branches to allow increasing the outreach.

AKFED is the economic development arm of the Aga Khan Development Network (AKDN), a group of private, non-denominational development agencies seeking to improve opportunities and living conditions in specific regions of the developing world, especially Africa and Asia.

The Aga Khan Development Network (AKDN) is an international group of private development agencies and institutions that seek to empower communities and individuals, often in disadvantaged circumstances, to improve living conditions and opportunities. The mandates of the Network's agencies and institutions range from architecture and culture to health, education, rural development and the promotion of private sector enterprise.

In Pakistan, the AKDN's activities encompass the operation of an extensive system of schools and healthcare institutions, a renowned rural support programme, industrial and tourism development, cultural restoration, financial institutions and one of the region's pre-eminent centres of higher learning and research.

Copyright 2002 Business Recorder (