ISLAMABAD: President General Pervez Musharraf on Monday urged the private entities to invest in the micro-finance sector as the government has created a conducive policy and supporting mechanism for the sector. "It is now up to the private entities to take advantage of the favourable policies the government has developed," the president said here at the inauguration of the first micro-finance bank in private sector.
The MicroFinance Bank Ltd, set up by the Aga Khan Rural Support Programme with Rs 200 million and the Aga Khan Fund for Economic Development with Rs 300 million, aims to provide small loans to poor people on a non-collateral basis and open 30 branches nation-wide.
Musharraf said the establishment of MicroFinance Bank Ltd is a major private sector investment in Pakistan and will encourage other domestic and international entrepreneurs to invest in the micro-finance sector. He was confident that this bank will contribute very positively and substantially the access of the poor to micro-finance services.
Musharraf said the agriculture sector provides fastest development and employment to the 70 per cent of rural poor. The information technology addresses unemployment of the educated unemployed in urban areas while small and medium enterprises jobs to the uneducated and helps in economic revival.
Turning to the measures taken by the government to address the issue of micro-financing, the president said the government designed the micro-finance policy in June, 2000 and facilitated the establishment of Khushhali Bank. This bank is expanding its operations to 30 districts and will be targeting one lakh households every year, he said.
Musharraf said the government provided legal, supervisory and regulatory arrangements to ensure orderly development of financial sector. To build social capital for the poor, a micro finance social development fund of $40 million has been set up in addition to a community investment fund of $20 million to increase access of the poor to micro-financing. A risk mitigation fund of $5 million has been created to assist the poor in case of unforeseen loss of their income. Twelve million dollars have been provided for institutional strengthening of micro-finance institutions, he said.
He said to compliment efforts of micro-finance institutions, the government is restructuring the Agricultural Development Bank of Pakistan to focus on rural economy and sustenance of the poor. He said all this has been achieved in a period of less than 18 months. The pro-poor progressive system is moving forward, he said.
Musharraf appreciated the gesture of the Aga Khan Foundation in supporting government's poverty eradication efforts. He expressed his extreme appreciation for the concern, involvement and commitment that Prince Karim Aga Khan always shows towards Pakistan and its people. "Out of 6.5 million poor households, only five per cent have access to micro-credit," Musharraf said. "So, they turn to other (lenders)... They mortgage their future."
The spiritual head of the Ismaili community, Prince Karim Aga Khan, praised the policies of the government to achieve a turn around and managing the economy. He said the favourable policy environment and private sector initiative in this field will work for the benefit of the needy in Pakistan. Prince Karim Aga Khan said the decisions taken by the government will pave the way for brighter future of Pakistan and the Ummah.
He offered the government of Pakistan fullest support of his person as well as institutions of Aga Khan Foundation in the development of the country and poverty eradication. He said he will seek to encourage other international and multilateral organisations to engage with the development institutions dedicated to alleviation of poverty in Pakistan. He said the first micro-finance bank will serve not only in rural areas but also major population centres and by June this year establish branches in Karachi and Rawalpindi.