Impressions from a first time visit to Pakistan

Most cities have them ... In fact most towns, villages and neighbourhoods do too. The lofty saying that marks that particular place out from all the rest. London’s is the famous Samuel Johnson quote that says "those that are tired of London are tired of life." So it was not surprising when I visited the cultural heart of Pakistan a couple of weeks ago, Lahore, that I was informed by many proud Lahoris that I could now count myself amongst the ranks of those lucky enough to say they have truly lived. As the famous Punjabi quote goes, those who have not seen Lahore have not been born.

Shakeel, Joana and I outside the Lahore Cultural Museum

The purpose of my visit was not to ensure this advantageous position but instead kick-off Lendwithcare's first in-depth investigation into the impact of small business loans on the lives of the entrepreneurial poor. Since Lendwithcare’s inception we have been collecting updates on the micro-entrepreneurs we have supported and we conduct regular in country evaluations on all our microfinance partners. However, this time we plan with the help of our local microfinance partner in Pakistan, Akhuwat, and the University of Portsmouth to embark on a much bigger impact assessment. When we visited Pakistan a couple of weeks ago it was to start collecting the first of over 500 interviews with people taking their first microloan. The plan is to monitor any changes in their poverty levels over the next 3-5 years.

This is an exciting and important project for us and we will keep you updated on its progress. In the meantime I wanted to share with you three reflections from my first visit to the ‘land of the pure’ – otherwise known as Pakistan.   

1. Ignorance is not bliss.

I guess I have always believed this yet sometimes, like most people, I have been tempted to stick my head in the sand or surround myself with nice, fluffy things when times are hard or events difficult to bear. However, my trip to Pakistan profoundly reconfirmed my belief that not only is ignorance not bliss but it can also be very dangerous. Like many people in the UK, and I’m sure around the world, over the last 10 or so years I have been presented with a pretty evocative image of Pakistan and before travelling, despite all my best intentions, I did find myself unusually concerned about my security and how I would be received as a non-religious, Western woman. And guess what … all my concerns were completely unfounded. Not only was I welcomed with the widest and warmest arms by everyone I met in Lahore but I also found myself in the centre of a very ordinary and bustling Asian city where millions of people are busily getting on with life and just trying to improve their lot.

 

Importantly, I also had some time to observe for myself the role religion plays in the lives of the average Pakistani and see how it simply provides a set of principles by which people lead their lives. Principles I also hold dear such as charity, compassion and solidarity. It was also interesting to observe how Pakistan’s main religion, Islam, entwines and interacts with the country’s strong cultural traditions.

And so the images of Pakistan I will be taking away with me are quite different to those that have been presented to me on the TV and among other things will include a welcoming and enormously hospitable people and delicious food! 

2. Tackling poverty is hard.

This might sound obvious but during my visit I was starkly reminded just how fragile and permeable the line between surviving and not surviving is for the poor. I was reminded of this most poignantly when I met one time Lendwithcare recipient Anwar Bibi. In 2013 Anwar Bibi requested a loan of less than £100 from Lendwithcare lenders in order to invest in her Silma Sitra (specialist embroidery) business. A year later she had successfully repaid her loan and things seemed to be going well. Anwar had been able to expand her business and was employing six local women to help meet the demand for her services. And so when the local branch office suggested meeting Anwar, I was keen to find out how she was getting on.

It became obvious quite quickly that things were not going quite as well for Anwar and her family – she looked much older than she appeared in the pictures I had seen of her and she looked visibly stressed. Anwar told us that her business was not doing well; she could no longer afford to pay her employees and she had just made the tough decision to remove her son from school so he could find work and contribute to the household income. Her distress was difficult to witness and I was anxious to find out what had gone so wrong. It was not surprising to learn that it was a family illness that had led their family’s fortunes on a downward spiral. Anwar herself was ill having been diagnosed with diabetes a few months ago and her daughter was now very unwell. With no free healthcare, insurance or equivalent social security, Anwar and her family had been forced to fork out for high medical bills (which are ongoing in the case of her daughter) and as a consequence have been plunged back into poverty. I was shocked by how quickly their situation had changed and how utterly destructive one shock could be on their lives. In the long run what we hope to see is people like Anwar being able to build up their assets and increase their resilience to such shocks.

Anwar Bibi at Kahna Nou branch

The local branch, who were also unaware of the change in Anwar’s circumstances,told us that Anwar now qualified for Zakah (an obligatory donation given by Muslims) since her current circumstances meant access to loans was no longer an appropriate form of poverty alleviation intervention.

I left that meeting with a confusing mix of sadness and hope. Sadness about Anwar’s story and the acute vulnerability of people like her yet hopeful that with Akhuwat’s assistance she might one day be celebrating her successes again. Above all, I came away with a deep sense that this is the reality of the work we do. It’s not easy, it doesn’t always work out but for the sake of all the Anwars' out there it’s important to keep on trying.
 
3.   Good microfinance organisations do exist and are key in delivering effective microfinance. 

Akhuwat is not like most microfinance organisations. I knew this before I visited Pakistan and saw the organisation for myself. What makes Akhuwat unique is that it doesn’t charge any interest to its borrowers. Guided by the Islamic doctrine that prohibits charging or paying interest, Akhuwat’s founder decided back in to 2001 that it was possible to create an organisation that offered microfinance services to Pakistan’s poor and still conformed to their religious principles. There has been some scepticism about whether interest-free microfinance works, with sceptics pointing in particular to an organisation’s unsustainable reliance on donations. However, the proof is in the pudding as they say and Akhuwat is now in its 14^th year of operation and has served over 800,000 families at a repayment rate of 99.89%. So what is the secret to their success?  

The secret seems to be faith. A faith that is so deeply embedded in the organisation that it runs from the very top (where Akhuwat’s founder relentlessly preaches the principles of compassion, community and duty) down to every single loan officer out on the street interacting with Akhuwat clients. And although not perfect, the problems that might typically plague a microfinance organisation – timely repayments, reliable and trustworthy loan officers, and access to sufficient capital – seem to be largely avoided. Clients appear to feel an extra obligation to repay their loans since their loans have been given interest-free in the name of God, loan officers feel to some extent that they are fulfilling their obligation as a Muslim by serving the poor. And funders seem keen to provide streams of loan capital since the organisation boasts high repayment rates and uniquely charges zero interest to its clients. 

This model is undoubtedly impressive. However, it is hard to imagine how or if it could be replicated in other contexts. Nonetheless, it stands to remind us that there are some exciting and inspiring microfinance organisations out there and I hope I continue having the pleasure of meeting them and helping them to achieve their aims through Lendwithcare.

Borrowers at an Akhuwat disbursement ceremony

By Nancy Thomas
Lendwithcare Executive, CARE International UK