Washington Report on Middle East Affairs, September 2012, Pages 53-54

Human Rights

Kashf Foundation leads Gendered Development in Pakistan

(L-r) Robert Boggs of the National Defense University, Shuja Nawaz, Roshaneh Zafar, and Huma Haque of the Atlantic Council. (Photo Courtesy Atlantic Council)

The Atlantic Council of the United States hosted a June 26 discussion of the lessons learned from gendered microfinance moderated by Shuja Nawaz, director of the Atlantic Council's South Asia Center.

Roshaneh Zafar, founder of the Kashf Foundation, outlined the transformative power of small loans in Pakistan. Formerly a loan officer for a Pakistani bank, she launched the foundation in 1995, inspired by the successes of microfinanced women she saw on a trip to Bangladesh. She recognized the potential for Grameen-style banking in Pakistan. (The word gram means "rural" or "village" in the Bengali language. Bangladesh's Grameen Bank makes small loans available to the poor without requiring collateral.) "When we empower women, we empower families," explained Zafar.

The success of her organization, which currently has 280,000 active female clients with 157 branch locations in two provinces of Pakistan, can be attributed to a few key factors, Zafar said: women's empowerment, restoring pride, providing quality and affordable services, and promoting financial literacy. With these ingredients, she said, women can escape the informal economy they are often forced into during dire economic times.

"Microfinance, for me, is all about myth-breaking," said Zafar, describing the staggering results of small-loan lending using a women-centric approach. "We have loaned $220 million, and have had 90 percent return on these loans," she added. "We proved investing in women is smart economics."

But why women? Zafar cited a number of statistics that point to a female-led economy being highly successful. According to the World Trade Organization, she noted, there is a 37 percent rate of growth in GDP when women are involved in economies. The numbers are backed with long-term social benefits, including lower fertility rates and shifting attitudes toward daughters' roles in families.

The challenges the Kashf Foundation faced—and overcame—in its first two years, according to Zafar, stemmed from the structure of informal loans in Pakistani society. Traditionally, she explained, loans were transferred from urban areas to rural villages via truck drivers. New technology such as Easy Paisa, a phone-based system of transferring funds, has increased mobility with funds.

One of the main concerns women cited with regard to their loans was confidentiality—not just from their husbands, but also within their communities. The community-based lending system in rural villages, called raskas, doles out a common pool of money to one person roughly once a month—but because everyone in the village knows who that person is, they hound that person for loans. For this reason, maintaining the confidentiality of Kashf borrowers is vital in protecting their assets, Zafar explained.

The Kashf Foundation has found success by empowering a vast population that is often underrepresented in the Pakistani economy, its founder said. Zafar cited three reasons why female entrepreneurship traditionally fails to blossom in countries like Pakistan: lack of vision; lack of networks; and lack of self-actualization and self-confidence. With Kashf Foundation's graduated lending approach, educational lending and increasing size, Zafar has addressed these three problems. "You have to take the bank to the community," she concluded. "The community does not come to the bank."

Meher Ahmad

Additional information