MICROCAPITAL BRIEF: Pakistan Poverty Alleviation Fund Invests in Jinnah Welfare Society Through Newly-Launched Equity Fund for Microfinance Institutions Aimed at Attracting Commercial Funding For Rural Expansion

The nonprofit Pakistan Poverty Alleviation Fund (PPAF) reportedly has established an equity fund to invest in microfinance institutions (MFIs) in an effort to facilitate access to commercial financing, with the ultimate goal of increasing growth and facilitating expansion into rural areas. The new fund will only provide equity to MFIs that are found to meet international criteria on sustainability based on an assessment by an approved independent third party. MFIs’ counterpart funding ability will also be a consideration in this evaluation. The strengthened balance sheets resulting from the investments from the new fund are expected to make the MFIs more attractive to commercial investors. The fund is part of PPAF’s Program for Increasing Sustainable Microfinance (PRISM), which assists microfinance institutions in forging commercial partnerships.
First to benefit from the funding is Pakistani MFI Jinnah Welfare Society (JWS). According to the agreement, PPAF will bring in 60 percent of an undisclosed amount of equity to complement the 40 percent raised by the MFI from unspecified sources.
PPAF is a nonprofit organization that supports the Pakistani microfinance industry. Together with UN agency International Fund for Agricultural Development (IFAD), PPAF started PRISM in June 2008 with the goals of reducing poverty, promoting economic growth and improving the livelihoods of rural households. The program is implemented through MFIs that are deemed to have a vision for sustainability and sufficient scale of operations to make a significant impact on poverty.
JWS is an MFI based in Gujranwala, Pakistan. As of March 2011, JWS reported to US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 2.2 million and approximately 13,700 borrowers.
By Kristha Abores, Research Associate
About Pakistan Poverty Alleviation Fund:
The Pakistan Poverty Alleviation Fund (PPAF) is a public-private partnership that was established in 2000 with USD 90 million in funding from the World Bank and USD 10 million from the Pakistani government. PPAF provides loans, grants and technical assistance to microfinance institutions across the country. Support of the microfinance sector is part of PPAF’s broader strategy of poverty alleviation that includes drought mitigation, education, and health interventions. As of March 2011, PPAF reported total assets of PKR 24.1 billion (USD 276 million).
About Jinnah Welfare Society:
Headquartered in Gujranwala, Pakistan, Jinnah Welfare Society was founded in 1990. It seeks to develop marginalized communities through mobilization, group formation, capacity development, knowledge building, economic support and advocacy. Its programs involve microcredit, enterprise development, small and medium enterprise and rural development through agri financing. As of March 2011, JWS reported to the US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 2.2 million and approximately 13,700 borrowers.
About Program for Increasing Sustainable Microfinance:
The Program for Increasing Sustainable Microfinance (PRISM) assists microfinance institutions in forging commercial partnerships. It was launched by the Pakistan Poverty Alleviation Fund (PPAF) in 2008. PRISM’s main objective is to assist Pakistani microfinance institutions that largely rely on donor funding in forging new partnerships with commercial funders. At the time of its launch, the PRISM program had an operating budget of USD 45 million and partnerships with 72 organizations working in 33,000 villages. In addition to receiving government support, PRISM was founded with a USD 35 million loan from the International Fund for Agricultural Development (IFAD).
About International Fund for Agricultural Development:
The International Fund for Agricultural Development (IFAD), an agency of the United Nations, was established in 1977 as an outcome of the 1974 World Food Conference. IFAD is dedicated to eradicating rural poverty in developing countries by focusing on country-specific solutions. Since 1978, IFAD has invested USD 12 billion in 860 projects and programs. Another USD 19.6 billion has been contributed in co-financing from governments; project participants; and multilateral, bilateral and other donors.
Sources and Additional Resources:
[1] Online-International News Network: “PPAF offers equity fund to Microfinance institutions”, http://www.onlinenews.com.pk/details.php?id=183399
MicroCapital.org article, June 26, 2011, “MICROCAPITAL BRIEF: Afghanistan Rural Enterprise Development Program to Model Microfinance Strategy on Pakistan Poverty Alleviation Fund”, http://www.microcapital.org/microcapital-brief-afghanistan-rural-enterpr
MicroCapital.org article, April 19, 2011, “MICROCAPITAL BRIEF: Pakistan Poverty Alleviation Fund (PPAF), Pakistan Microfinance Network (PMN) to Launch Online Platform to Share Information on Microfinance Providers”, http://www.microcapital.org/microcapital-brief-pakistan-poverty-alleviation-fund-ppaf-pakistan-microfinance-network-pmn-to-launch-online-platform-to-share-information-on-microfinance-providers/
MicroCapital.org article, July 7, 2008, “MICROCAPITAL STORY: Pakistani Government Agency PPAF (Pakistan Poverty Alleviation Fund) Launches USD $45 million PRISM (Program for Increasing Sustainable Microfinance)”, http://www.microcapital.org/microcapital-story-pakistani-government-agency-ppaf-pakistan-poverty-alleviation-fund-launches-usd-45-million-prism-program-for-increasing-sustainable-microfinance/
MicroCapital Universe Profile: Pakistan Poverty Alleviation Fund, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Pakistan+Poverty+Alleviation+Fund+%28PPAF%29
MicroCapital Universe Profile: Program for Increasing Sustainable Microfinance, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Program+for+Increasing+Sustainable+Microfinance+%28PRISM%29
MicroCapital Universe Profile: Jinnah Welfare Society, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Jinnah+Welfare+Society+%28JWS%29
MicroCapital Universe Profile: International Fund for Agricultural Development, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Fund+for+Agricultural+Development+%28IFAD%29
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