Here’s an article I wrote for a friend. My proposition E-Kisan is very dear to my heart but I wonder how viable it is…
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PROSPECTS OF MICRO FINANCE IN PAKISTAN
The poor in Pakistan have generally been left alone because of perceived high risks, their inability to provide collateral and the high cost associated with small transactions. Thus the rich-poor gap widens and the poor have no route to lift themselves out of their misery.
Microfinance is the most powerful poverty alleviation tool being used today. It has been used with great success by Grameen bank in Bangladesh, CrediAmigo in Brazil, Equity Building Society in Kenya and Bank Rakyat in Indonesia. Microfinance calls for a radical change in thinking. The poor should be perceived not as a burden, but as prospective customers capable of bringing in profits. There is a hidden fortune at the bottom of the pyramid which needs to be tapped.
It is fallacious to think that the poor are not capable of returning loans. The credit return rate for Grameen bank is 99.99%. It is also a mistake to think that the poor are defaulters. They have invested their life savings in their plot of rural land and their huts; they will not leave their sole investment and run away. In fact the default rate is much higher in the rich than in the poor! The poor return their loans promptly to be allowed further loans. For example if a woman is given a loan to buy ingredients for her catering business, she will pay it back from what she earns so she can buy more ingredients. Thus profits and social welfare can go together.
Micro financing is acutely needed in Pakistan and there is a huge gap in the market especially where technology related micro financing is concerned. One such service is Amaana which provides the “unbanked” payment solutions via SMS, email, Web checkout, or a voice portal. Mobile phones have great penetration in Pakistan and can be effectively used in the rural areas to reach the poor at low cost.
I propose a microfinance cum auction system called E-Kisan for Pakistan. Farmers register via their mobile phones at the E-Kisan centre for a small fee and are provided seeds of their choice. Once their field ripens they notify the centre as to its quality and quantity and what price they expect. The E-Kisan centre then puts this forth before different buyers from the world and ensures the best price for the farmer. E-Kisan also charges 3% of the transaction.
In case some thing goes wrong with a farmer’s field, E-Kisan will still not make a loss. It will retain the fee paid by the farmer at registration time.
Empowerment of poor farmers will circumvent their oppression by cruel feudal lords. They will have an opportunity to lift themselves out of their poverty and a fair chance at exercising their budding entrepreneurship skills. The enterprise will also sustain along the way because it is based on a proven and successful model.
Allama Iqbal says:
Jis khet se na ho muyassar uske dahkan ko rozi
Uss khet ke har goshai gandum ko jala do!
If a farmer is not able to eat from his field
That country has no right to exist!
