FINCA Microfinance Bank Ltd. has set its priority to expand its network and business in commercial sector particularly in the agriculture sector having major contribution to Pakistan’s economy.
This was stated by Muddasar Aqil in an interview with The News Tribe.
Informal lenders have existed for centuries in all societies, particularly in rural areas which tend to be geographically isolated from banking and commercial centres. We believe that rural and agricultural workers will benefit from the high quality, formal financial services that microfinance delivers, as has been the experience with such clienteles in other microfinance markets.
The potential for the growth of the microfinance sector in Pakistan is substantial. The market size is currently estimated at about 27 million clients, whereas all microfinance institutions together are currently serving only about 10 percent of the market. Pakistan has a large population of hardworking, entrepreneurial people who do not yet have access to the financial services everyone needs.
Microfinance is one important solution that has to be aggressively pursued. And moving forward, FINCA intends to be an industry leader. Our greatest strength is our global experience and expertise, derived from being in the microfinance business for nearly three decades and across 21 countries on five continents before we came to Pakistan. We will utilize this experience to become a major financial presence in Pakistan and will lead the industry in innovation, developing and offering a range of new products and services customized to customers’ needs, and focusing particularly on entrepreneurs, farmers and savers.
We believe that healthy competition is good for the consumer, spurring innovation, quality service, and competitive pricing. But the main point is that, as noted, only about 10 percent of the estimated total market for microfinance in Pakistan is currently being served. So there is ample room for growth.
One of the factors that made the acquisition of Kashf Microfinance Bank Ltd. especially attractive to FINCA was the caliber of the workforce. The team’s technical skills and dedication to the mission are the equal of any in the FINCA global workforce, which numbers more than 10,000 people. Our all-Pakistani staff knows the local market probably better than any other microfinance bank in Pakistan. We maintain a permanent customer research department which focuses exclusively on understanding market demand and then designing products to meet that demand. Now we are in the fortunate position of combining that deep understanding of the local market with the world-class expertise and best practices to which we now have access, as a member of the FINCA global family of companies. As far as weaknesses of the sector are concerned, I think the greatest one is that the sector as a whole is not innovating as much or as rapidly as it should be. More than ten years after the State Bank of Pakistan passed one of the most progressive microfinance ordinances in the world, the sector seems stuck in its comfort zone of one-size-fits-all loan products and small-scale business models. Remember that more than 80 percent of the population remains unbanked – we need to develop models that can deliver tailored financial products and that also can achieve massive scale. As an industry, we need to commit to innovation and we need to exhibit a sense of urgency.
FINCA has acquired valuable lessons learned in each of its 21 other countries of operation. We bring nearly 30 years of broad-based international expertise to Pakistan, our latest expansion country, and we look forward to sharing our technical expertise, management practices, and the social performance management skills for which FINCA is internationally renowned. FINCA is also looking forward to learning from its new Pakistani colleagues whose own skill won FINCA’s deep admiration during due diligence and which continues to inspire.