Micro-credit for women

State Bank Governor Shamshad Akhtar has called for greater access to micro-finance for women, particularly in rural areas, to make Pakistan prosperous. Talking to a TV channel, she said that micro-finance is successful when people can get together, and share their experiences.
A major impediment in the way of women entrepreneurs, particularly in remote areas of the country, has been inadequate educational opportunities available to them, which has stunted their ability to undertake small-scale income-generating ventures. Poverty in Pakistan's rural areas is highest among those who own no land; while over 40 percent of the landless households are poor, who account for 70 percent of the rural poor, and an overwhelming majority of whom are women.
According to one estimate six to seven million households in Pakistan are in need of micro-credit for poverty alleviation through self-employment and other income-generating activities. Six micro-finance banks have been established since 2001, but their impact on poverty level has not been as substantial as it should have been.
There is also a Pakistan Micro-finance Networking (PMN) which supports 0.6 million of the potential market of these 6 to 7 million poor households.
Rural women, being mostly illiterate and poor because of lack of access to education and finance, are the worst victims of the poverty trap. Rural poverty has a very strong link with unequal land ownership and lack of access to land.
The poor have the lowest earners per household; while female-headed households or households reliant on women's income are more likely to fall into poverty, largely because of gender discrimination. A recent World Bank study has found that around 56.2 percent of Pakistanis run the risk of falling into the poverty trap.
This figure flies in the face of a recent government claim of reduction in the number of those living below the poverty line. There is a perception that Grameen Bank of Bangladesh can be used as a model to ensure micro-credit to the rural poor, particularly women.
The bank has pioneered a non-conventional, trust-based banking system aimed at helping poor villagers. Thanks to the untiring efforts of Dr Muhammad Yunus who has won the Nobel Prize, Grameen Bank (GB) has become a role model for global micro-finance.
According to one estimate, 58 percent of 6.5 million borrowers of this bank have been successfully pulled out of the poverty trap. Secondly, the borrowers of the bank are its real owners, as they own 94 percent of the bank's equity, while the remaining 6 percent is owned by the government.
Over a period of 23 years, the bank has grown to a large size with 6.5 million borrowers, 97 percent of whom are women. It has so far provided loans worth $5.65 million out of which $5.0 billion have been paid back.
Micro-finance has allowed millions of households, which were formerly excluded from classical financial services to begin their own economic activities to become micro-entrepreneurs. Experience has shown that an increase in women's income tends to have a more positive effect on the family's welfare.
Secondly, women's expenditure on health and education of their families strengthens the human resource base of the country, thereby contributing to national progress.
Women's businesses also strengthen local economies through their involvement in retail trade and marketing activities. The government should heed Shamshad's call for empowering women through micro-credit.