|
Report 4 (of 4): The Aga Khan
Rural Support Programme - Pakistan
Introduction
Northern Pakistan has a peculiar natural environment.
For centuries, the area has remained isolated from
the rest of the world and until recently, the economy
of the area was mainly dependent on the barter system.
The farmers lacked capital, skills, organisation
and other developmental related resources. The provision
of capital, in small amounts, would allow the people
to make agricultural inputs, mainly for fertiliser,
marketing, plants, seeds, poultry and pesticides
etc. in the short term, and in the medium term, to
develop small-scale businesses, such as, livestock
breeding.
The Aga Khan Rural Support Programme
The Aga Khan Rural Support Programme (AKRSP) was
conceived as a new approach to development, especially
for the small, subsistence-orientated farmers living
in the mountain regions of Northern Pakistan. AKRSP
aims to improve the quality of life of the people
in the programme area, through institutional development
at the grass roots level. The initial objective of
the programme was to make credit available to a large
number of small farmers who in the past have been
bypassed by most institutional creditors because
of the high administrative costs in advancing and
then recovering thousands of small loans. The small
farmer in the Northern regions in the early 80's
needed, on average, no more than Rs.250 as a crop
loan. However, no bank could afford to advance hundreds
and thousands of such small loans and recover them.
An innovative solution was needed to overcome this
problem which AKRSP achieved by fostering a framework
of grassroots institutions and bringing the small
farmers into the organised folds of Village/Women
Organisations (V/WOs). A climate of trust and credibility
had to be created. AKRSP credit officers and social
organisers had to take cash to disburse loans and
accept savings and loan recoveries where branches
of scheduled banks were not easily accessible to
V/WOs. The short term production loans financed by
AKRSP were guaranteed by the Habib Bank and the number
of loans being asked for by V/WO kept on increasing.
A decade later, farmers have turned barren land
into productive pastures. There are now a thousand
village organisations with around 90,000 members.
The pay back rate on the loans has generally been
around 98%. The formation of capital at all levels
and creating accessibility to financial resources
has been one of the essential approaches of AKRSP.
AKRSP has relied on three well tested principles
of small farmers development: organisation for collective
management; capital generation through regular savings;
and upgrading of skills through training. The village
residents are organised into local institutions called
Village and Women's Organisations, and the affairs
of the V/WOs are independently managed by the office
bearers, i.e. President and Manager, selected from
and by the members.
Credit and Savings Programme
Under the terms of partnership agreed between AKRSP
and rural communities, each V/WO member is required
to contribute to the collective savings according
to his/her financial capacity, at each meeting. Total
savings of the V/WOs are then deposited into an account
in the name of the V/WO, at the nearest branch of
a scheduled bank, jointly operated by the office
bearers. This pool of savings serves as collateral
for obtaining credit for the members. Generation
of capital by the small farmer is a prerequisite
for AKRSP's support.
Through the region wide replication of V/WOs, small
farmers of the Northern Areas and Chitral have developed
a mechanism for actively participating in development
initiatives that directly affect their well-being.
Village/Women Organisation
Due to cultural constraints, women were unable to
sit in the village organisation forums and discuss
their problems. However, since the women's credit
programme was started 700 women's organisations have
been formed. The women meet weekly to pay in what
they have saved, to discuss new loans and develop
new plans to save and earn money.
The V/WO is established on behalf of the majority
of village residents, whose economic interests and
social problems are common. It has its own capital,
management and financial systems and trained personnel.
It fills an institutional gap that has always been
a hindering factor in the development process. It
is an effective mechanism for participation of the
rural population in the process of planning i.e.
identification, project formulation and design, implementation
and maintenance of the completed projects.
Over the years, AKRSP has encouraged and supported
the V/WOs to form broad based local commercial institutions.
Major Functions of the V/WO
Institutional: management and administration
Legislative and judiciary
Planning and development
Resource mobilisation
Resource management
Political and religious activities
Conflict management
Village activities and links with other institutions
Provide support to government and other development agency initiatives
The rural communities are organised around an economic
activity identified by the villagers themselves that
provide, on completion, a stream of benefits to the
majority of members. This economic activity is called
the Productive Physical Infrastructure (PPI) and
it is governed by clearly defined terms of partnership
between AKRSP and V/WO. The partnership defines responsibilities
of both the partners in terms of activities and functions,
aiming at achieving the ultimate goal and objectives
of improvement in the quality of the life of the
population.
Responsibilities of the V/WO
Identifying an income generating project that
benefits at least 70-80% of the V/WO members.
Engaging in the process of project design, completion and maintenance, independent
of outside contractors.
Selecting two office bearers from amongst the members to manage its affairs.
(A two-third majority of the members can remove any office bearer.)
Ensuring that each member deposits savings, according to their financial
capacity, at each meeting.
Selecting and nominating suitable members for training in various disciplines.
Responsibilities of the AKRSP
Motivating the villagers about the merits of organisation,
capital and skills for development, and organise
them as V/WO.
Assisting the V/WO to identify and execute an income generating project,
benefitting at least 70-80% of the members.
Providing technical and financial assistance to the V/WO for completion of
the project.
Developing income generating packages and setting implementation and monitoring
systems.
Arranging for training of the V/WO specialists in various disciplines.
Creating accessibility of the V/WOs to financial resources.
Objectives of the Credit and Savings Programme
Promote a capital base through the process of
regular savings.
Provide accessibility to credit.
Improve financial and managerial skills through training in book keeping
and credit management.
Promote the process of opportunities through economic development.
In order to effectively manage the savings and credit
funds at the village level, all V/WOs are required
to maintain and update the following mandatory records
and accounts:
Minutes Book
Savings and Attendance Register
Member's Savings Pass Book
Subsidiary Savings Ledger
List of Member's Savings
Cash/Bank Book
General Ledger
Member's Credit Register
Credit Programmes
AKRSP has recognised that credit is needed by entrepreneurs
who want to kick start the local economy. In response,
it has set up a commercial credit fund to support
local entrepreneurs.
The V/WO credit programme seeks to facilitate the
V/WOs to promote the overall development process
by providing members access to credit opportunities
in the village. The underlying objective is to instill
financial discipline at the V/WO level by undertaking
responsibility and administration of the credit operation
which will lead towards the permanency of institutions.
The micro-enterprise credit programme caters for
the working capital needs of existing and potential
entrepreneurs, starting with small amounts and building
a positive history of credit utilisation for productive
investments.
US$1 = 44.48 Rupees @ June 1998 GBPœ1 = 73.98
Rupees @ June 1998
For further information, please contact:
Aga Khan Rural Support Programme,
Babar Road, PO Box 506, Gilgit, Pakistan. Tel: +92 572 2480/2910 Fax: +92 572
2779 Chitral Tel: +92 533 2979
Intermediate Technology would like to thank the
Aga Khan Rural Support Programme in Gilgit, Pakistan
- in particular, Salim Jiwani and Mutabiat Shah
- for providing the original materials on small
loans.
|
Related
Links 