Need of the day: bridging development and microfinance

Farhat Abbas Shah

Results are always the best yardstick to measure the affectivity of any endeavor. It is not a matter
of blame game or trading charges. To fight poverty all over the world requires stock taking of all
the efforts made so far.
Let’s take the example of Pakistan and Afghanistan. Pakistan, of course, differs from
Afghanistan as the microfinance sector at least took off but, much to our chagrin could not bear
the expected results. Afghanistan still desperately looks for even the initial stage. In Pakistan the
performance of the sector betrays a kind of rift of vision and mission. The facilitators at local
level also failed to recheck the strategy in cases of utter failures and continued reckless
financing. In doing so, the real players at local level were automatically ignored.  Then,
consciously or unconsciously, undesired results of the microfinance sector were attributed to the
world economic crisis. The fact is that at least so far countries like India, Pakistan, Bangladesh
and China maintained healthy growth rates despite the economic downturn in the first world.
No doubt, there were problems like inflation but failures cannot be attributed to a single factor. A
business-like relation was required between the local facilitators and Partner Organizations (Pos)
instead of personal one. It created a kind of complacency on the part of POs while the sector
began to suffer. The registrations of more than 1,000 police cases also indicate the violation of
Customer Code of Conduct. Then there occurred a crisis of confidence between the senior
management of POs and there staff. In certain instances the management began to demand
security checques from their staff.
This breach of confidence also disillusioned the customers and cast doubt upon the sincerity of
purpose, with which initially the whole exercise of the sector was launched.
Though Islamic finance has offered a viable and effective method, even this direly requires a
sincerity of purpose.
Islamic finance, if taken up as a methodology could help tap a huge market which desperately
needs a response from the sector.
The aspect of Amal-e-Khair (social responsibility) could off set the crisis of confidence between
the POs and customers while hugely contributing to the success of the sector. Farz Methodology
made healthcare, environment and education its components to ensure the sustainability of the
sector, which cannot be had without the sustainability of the customer. 
By bridging the development and microfinance sectors, we can successfully realize the goal of
poverty alleviation. The countries like Afghanistan and Haiti also require this kind of
combination. Poverty alleviation and development should simultaneously take place to isolate
the elements who thrive on poverty, destruction and lack of education in countries Pakistan and
Afghanistan.
The prime goal of the Farz Methodology is rapid and peaceful social and economic change. This
goal requires integrated approach.
Poverty is at the heart of all the ills and problems. I have personally seen the cases where poverty
has pushed the individuals to an unthinkable extreme. After a lot of work with the sector, this
methodology was formulated. A tremendous initial response gave a great deal of encouragement
convincing us that through determination, sincerity of purpose and means, we can a difference.