The first United Nations Millennium Development Goal is to eliminate absolute poverty. The UN considers micro-financing an effective tool to help poor people stand up against poverty through self-employment. It is extremely worried that poverty level in Pakistan has jumped to 37.5 per cent. During the last three years, 28.5 million people were pushed below poverty line, increasing the size of population living in extreme poverty to 64 million. Shuki micro financing is completely interest-free with no service charges.
The borrower’s only liability is to return the principle amount. Interest-free financing empowers the rural poor, especially women, to move them out of the poverty trap. Our resource team also provides skills and consultancy for starting small enterprises. Till June 2009, Sukhi has provided training and much-needed interest-free finance to 3,307 women and men to establish and operate small enterprises. Our activities are focused on Azad Jammu and Kashmir where life has not been stable since October 2005 when a powerful earthquake killed 73,000 people and left hundreds of families without viable source of income.
Selection of Borrowers: The identification and selection of borrowers was done through community participation. Sukhi receives a large number of applications for interest-free micro loans. However, the selection of borrowers is made on community recommendations after proper verification of the information provided by applicants.
Delivery of Training, Micro Credit: Training workshops for micro entrepreneurs cover the whole spectrum of small enterprises, from household poultry and livestock to the establishment of small village shops in their homes. Training workshops adopt the techniques in tune with the needs of illiterate and semi-literate people.
These workshops cover important areas of the micro-enterprises business including starting and managing an enterprise, market orientation and access, salesmanship and sales promotion, marketing and display, basic bookkeeping and stock control, credit repayment and saving, and quality control. Apart from formal trainings, Sukhi’s livelihood coordinator or loan officer runs a continuous, community-based programme of capacity building providing coaching to the clients before they receive loans, with regular follow-up throughout the loan’s total term. After preliminary training, a loan of Rs 24,000 is offered to the beneficiaries. Sukhi also facilitates the beneficiaries in setting up businesses.
Repayment: Loan repayment begins four months after loan disbursement. The interest-free loan is repaid in 24 equal installments of Rs 1,000 a month.
Project Monitoring: Sukhi’s loan officer maintains regular interaction with the beneficiaries for feedback so that any activity of the project can be reviewed and revised for the maximum benefits of the beneficiaries. Village organisations also send in regular feedback in this respect.
An investment fund has been set up by Sukhi whose income remains available to finance continuing operations of interest free micro financing, without any fiscal limitation. A loan is made to one person at a time and as repayments are made, funds become available for new loans to other people. Hence the money revolves from one person to another and maximum people get benefit.
The Endowment fund is funded by donations and growing continuously. The administrative expenses of the micro-financing project are also covered from the endowment fund, thus borrowers are not asked to pay any service charges, whereas the interest rate is already at zero percent. Therefore, the only liability left for borrowers is to return principle amount in scheduled installments.
Donations, in shape of capital and goods are always in need for this project.
Interest-Free Micro-Finance Project Areas: The Azad Jammu and Kashmir areas where Sukhi is offering interest-free micro-finance services are as follows:
Salma Jabeen, a housewife living in the remote area of Dogian, Azad Kashmir suffered many years of hardship and tolerance after her husband was left handicapped due to a major accident. After the unfo.....
Rubina Ashraf, a widow living in the remote village of Kotla Jangian,Mirpur, Azad Kashmir endured many years of hardship and suffering after the death of her husband, a driver by profession, about six.....