Microfinance and its impact on the economy of Pakistan

Abstract

Abstract The purpose of this paper is to highlight the challenges and opportunities facing microfinance sector in Pakistan. Micro finance sector in Pakistan is coming to the end of its primary stage and is now in a position to take off towards significant growth. However, the successful transition is subject to strategic thinking by Micro Finance Providers (MFP). Numerous challenges are ahead of this sector like improper regulations, increasing competition, innovative and diversified products, profitability, stability, limited management capacity of micro finance institutions (MFIs).

Work on Pakistan Microfinance Network (PMN) and Kashaf Microfinance Bank Ltd has been undertaken in this research. A few of financial institutions of Pakistan Microfinance Network (PMN) has been discussed with the maximum outreach including, the First Microfinance Bank, Kashf Foundation, Punjab Rural Support Program. Microfinance has seemed to last a positive impacts on the Economy, culture and psychology of the area where it was provided. At the macro level provision of microfinance results in alleviation of poverty, female empowerment and development of overall financial system.

On the other hand, the rapid increase in poverty in Pakistan, along with other opportunities, is paving way for the growth of this sector and offering a huge market potential for microfinance. On this basis the sector presents a lot of opportunities such as stimulating growth of economy, women empowerment, increasing volume, accessibility and outreach, economics of scope etc.