‘Investment in agri-value chain imperative for poverty reduction’

An interview with Simi Kamal, Head of Programmes at Pakistan Poverty Alleviation Fund

Simi Kamal is no stranger to the development sector in Pakistan. A geographer by training, she has been associated with areas of poverty reduction, social uplift, women empowerment, water, and environment for nearly four decades.

In her current role at Pakistan Poverty Alleviation Fund, she serves as Head of Programs. Here, she oversees grant-making and donor-funded programs across the various social sectors covered under organization’s mandate. In addition, Simi is also the founder chairperson of Hisaar Foundation, which focuses on water, food and livelihood security.

A development specialist, she has worked as a consultant and headed multi-million-dollar programs both in Pakistan and across the globe; and worked in over fifty countries. In the past, she has worked with the Planning Commission on several poverty reduction policy papers and on the state of poverty in Pakistan and South Asia.

Passionate for both physical and human geography, her career has revolved around the themes intertwining land, people, and water. In this two-part conversation, BR Research discusses her current involvement with PPAF. The second part of this conversation will focus on themes related to water insecurity in Pakistan.

Below are the edited excerpts:

BR Research: For our readers, who may not be familiar with PPAF’s history, please share a brief overview of your organization’s roots and its current mandate.

Simi Kamal: Pakistan Poverty Alleviation Fund (PPAF) is Pakistan’s premier organization working on poverty alleviation and poverty graduation. Started 20 years ago, PPAF is the pioneer of the microfinance sector in Pakistan and is assisting the government of Pakistan in meeting its development agenda. Specifically, PPAF’s objective is graduating and moving people out of poverty and into prosperity.

Initially, PPAF was supported through funds from the Government of Pakistan, a small grant from International Fund for Agriculture Development and extensive funding by the World Bank through three big programs encompassing micro finance, social mobilization and infrastructure development. To date PPAF has disbursed more than $2 billion through grants and financial services to effectively respond to poverty alleviation needs in Pakistan.

The core values of the organization are inclusion, participation accountability, transparency & stewardship. We ensure that all affected groups and communities are catered to without any domination by elites or by the perspectives of any single group.

We have in place legal and reporting frameworks and organizational structures, processes and procedures to ensure that funds are used in the most optimal manner. We are very transparent because we substantiate our achievements by evidence and clear reporting on our activities.

Our fifth core value is very interesting. We refer to it as stewardship; that is, responsible management of that which has been entrusted to us in the ecosystems and communities we serve. As caretakers of the environment and its resources, we believe in making a constructive effect within the ambit of our influence.

BRR: What areas of social uplift does PPAF specifically focus on?

SK: We work on improving quality of life of communities and their environments. We achieve that through a variety of interventions. These include social mobilization, financial inclusion, renewable energy sources, livelihood advancement, public goods, small infrastructure and enterprise development.

We also engage when necessary in rehabilitation of health and education. Due to its vast and well-developed network, when needed PPAF have stepped in to assist governmental bodies in disaster management?

BRR: Could you identify the focal geographic regions where PPAF’s activities are most concentrated?

SK: Most of our work is concentrated in extreme poverty zones of Pakistan: Balochistan, KP, coastal Sindh, and districts of southern Punjab. Similarly, former FATA and PATA regions of KP province have received PPAF’s special attention in the past due to extremely high levels of poverty and lack of state intervention.

We believe that we need to bring these backward areas at par with the relatively more developed peri-urban and urban regions by reducing the incidence of extreme neglect. And the way to achieve that goal is to concentrate our efforts there and to help lift these areas out of poverty.

In Pakistan the notion of rural economy, sadly, is intertwined with underdevelopment. Thus, our focus remains on rural poverty as we believe that rural districts not only suffer from higher incidence of extreme poverty in percentage terms, but also as a larger nationwide scale.

However, the phenomenon of rural to urban migration has picked pace in recent years, as economic growth has become concentrated in what are traditionally considered urban sectors. Therefore, we foresee that over time PPAF we will have to also start working on programs that alleviate urban poverty.

BRR: What is your view of social welfare and poverty focused programs led by the government of Pakistan? Is PPAF engaged with the same in any way?

SK: Under the mandate of Benazir Income Support Program (BISP), the government has made itself responsible for the welfare of families who lie between 0 and 16.7 on the Poverty Score Card. Social safety nets and unconditional cash transfers are among major social protection services that are offered under this program. Other programs geared towards achieving the same goal are funded through other government related initiatives such as Bait-ul-Mal and Zakat.

We believe that in order to move people up the Poverty Score Card ladder, it is insufficient to hand out cash transfers and social protection that takes monetary form only. We help poor people graduate out of poverty by providing them with livelihoods, assets, vocational training, interest free loans, linking to micro credit and developing social capital and physical and economic infrastructure.

BRR: You spoke of interest-free and concessionary loans disbursed to provide economic support. Does PPAF run a structured operation for microfinance loans or does this exist as an ancillary service on the organization’s radar?

SK: PPAF is a major player in the microfinance sector. Back when we entered this area, there were only two to three microfinance institutions. That’s nearly 15 years ago - at that time, microfinance lending constituted a major part of our developmental initiatives portfolio.

Since then, more than 60 microfinance institutions have been established, a majority helped and supported by PPAF. Meanwhile, the government has brought microfinance under banking laws. Under these regulations, only those organizations can issue micro finance loans that are registered as micro finance institutions.

So, PPAF has separated its microfinance operations into a new company called Pakistan Micro Finance Investment Company (PMIC). Forty-nine percent of the shareholding in this institution is held by PPAF, and income generated is used to fund PPAF programs.

Remaining share is held by German Development Bank and Department for International Development (DFID) of United Kingdom, UK through its Karandaaz initiative.

Now that microfinance is handled by a separate entity, most of PPAF’s core activities are focused around creating livelihoods, asset transfers, interest free loans, community infrastructure and integrated development.

BRR: Could you please describe examples of few specific initiatives taken by PPAF in these key areas? Are these initiatives mostly funded by foreign donors or PPAF’s own revenue sources?

SK: Two ongoing programs in KP are funded by the German development bank, called KfW. One provides infrastructure for renewable energy in rural areas. The second project aims to achieve integration of small infrastructure with rural livelihoods through area development.

A five-year IFAD funded National Poverty Graduation Program has just commenced, as have a series of pilot programs focusing on agriculture and livestock funded by our own sources.

BRR: You referred to a program funded by the Italian government? Please share its broad contours.

SK: The Program for Poverty Reduction is currently operating in two provinces, Balochistan and KP. It was developed with the Italian Government through its agency for development cooperation.

The idea is sustainable condition of social and economic development in districts with extreme poverty such as Upper Dir; Lower Dir; Bajaur; Swat; and Chitral districts in KP. Districts from Balochistan include Zhob; Qila Saif Ullah; Pishin; Qila Abdullah; Gwadar; Panjgur; and Lasbela.

The initiative has been running in these districts for several years and we are now working towards closing the core development activities. The objective was to reduce poverty through the creation of sustainable conditions of social and economic development including income and productive capacity. Social mobilization, livelihood enhancement, small scale infrastructure, basic health services and basic educational systems were our core guiding principles.

Right now, we are experimenting with some interesting new concepts. For example, we are working on integrated area development where all the inputs go into the same area through various programs. We are also working to see if we should concentrate on entire districts and consider pulling the whole district out of poverty. In that context, we have developed the Chitral Growth Strategy and we are working to develop Chitral district.

BRR: You are identified as a major feminist voice in the developmental community. Does that also reflect into PPAF’s initiatives? Please name any specific projects aimed at women empowerment.

SK: Women are at the heart of our work at PPAF. We ensure that they are addressed in all our programs. Women’s share in all our programs is well above 50 percent, as they are specially targeted as beneficiaries of these initiatives. We define the share in terms of benefits and participation in institutions of the people that we foster at different levels (community organizations, village organizations and UC based organizations). PPAF has 120,000 community groups, 11,800 village organizations and 800 UC based organizations.

So, for example, in terms of micro-credit granted, over 60 percent beneficiaries were women. Similarly, over 46 percent of revenue-generating assets have been issued to women. This is not an unintended consequence but a matter of policy. We feel proud to note that in terms of community organization membership, three-fifth of our members are women.

BRR: In terms of a breakdown in percentage, what is the extent of donations received by PPAF from foreign agencies and multilateral development sector organizations?

SK: It needs to be emphasized that most of PPAF funding comes through the government of Pakistan in Pak rupees.

Loans and contributions made by foreign donor agencies to Government of Pakistan are disbursed to PPAF as grants from Government of Pakistan. While the government does not define the mandate of our programs, it is a party to agreements reached with multilateral and bilateral donors.

Thus, funds are disbursed to PPAF by the government of Pakistan, while we have full control of its planning and execution. The organization has an independent board comprising of nine members, three of whom are nominated by the government. The government is therefore fully aware of the work that we are doing and is part of the governance of this organization.

BRR: Could you identify your organization’s major planned initiatives for the future?

SK: We are undergoing a phase of developing a strategy for the future in sync with global trends and in line with the mandate of the new government in Islamabad. We don’t believe that the spectrum of our work will change but we may develop better ways of working in terms of reaching our goals.

We would like to work on building and funding valuing chains and help them progress into SMEs. For example, we have worked on olive cultivation in Balochistan and KP, which is currently in nascent stages. To expand this initiative, we are initiating a study tour to Italy. And we want to create a value chain for olive oil, which is a growing market in Pakistan.

BRR: Given PPAF’s significant footprint in rural areas, what is the organization’s involvement in developing infrastructure for water?

SK: Over the past 20 years, PPAF has had a huge footprint on water sector in the rural areas of the country. As a trained geographer, I work with PPAF to create a balance in using water resources and preventing unsustainable exploitation. We ensure that all the work that we do on social infrastructure does not damage the environment and does not further exacerbate the challenges currently facing the water economy.

BRR: As concluding remarks, how would you spell out PPAF’s vision for poverty alleviation in Pakistan?

SK: We want all of Pakistan lifted out of poverty. In this respect, we are very clear that we need to redouble our focus in the rural economy, because that is where most of Pakistan’s population still resides. Thus, we envision an increase in our footprint in agriculture, livestock, and water-related infrastructure as part of an integrated approach and taking financial inclusion in all its forms to the least served areas. We believe Pakistan’s economy is largely agriculture and livestock based, and thus developing agriculturally based value chains (and providing assets, interest loans and training in these areas) can prove instrumental in lifting people out of poverty. This will, of course, involve developing in the long run a series of downstream high-value social enterprises, businesses and industries that rely on locally produced raw material.