FROM URBAN TO RURAL: ORANGI PILOT PROJECT'S JOURNEY
TARIQ AHMED SAEEDI
Mar 5 - 11, 2012
Orangi Pilot Project, the pioneer urban microcredit programme in Pakistan, came into being in 1980 to mobilize local resources and increase community participation in socioeconomic developments. Later, four separate institutions were developed out of it namely Orangi Pilot Project-Research and Training and Institute, Orangi Charitable Trust, Karachi Health and Social Development Association, and Rural Development Foundation.
Having served and still serving the many poor people in Katchi Abadis of Karachi and helped them in earning their livelihoods, the institution has focused its attention to help poor women and bread earners in rural community to avoid falling below the poverty line. The institution has 91,000 active borrowers with total loans in circulation standing at Rs343 million. Mostly, the loans are concentrated in rural areas. Only 7,000 borrowers are from Orangi and Baldia.
There is valid reason of shifting direction to rural locations in interior Sindh and South Punjab. Anwer Rashid, veteran micro financier and a leading man behind the Orangi Pilot Project, said people living in rural areas do not need skill developments. Or, in other words they know well how to use the funds we are dealing them out, he told PAGE. Micro financing produces effective results there, he said. In rural areas, it is easy because women are already skilled. Famers do not need to learn animal husbandry, cultivation, harvesting, sowing, etc. They are doing it for centuries.
Talking about the recent rural development programme in which 9,000 families were given loans to domesticate goats and poultry, he said the programme, running since 2009, has created income sources for many underprivileged families. A borrower makes Rs7,000 to 8,000 net profits after a cycle of four months in this programme. The small ruminants and poultry are hard cash. They are life insurance for people living in miserable conditions, on subsistence, without health facilities, and inadequate food intakes. Their health issues are unheard of in urban localities, said Anwer Rashid, President OPP-RDT.
Comparing those unfortunate lives, dwellers of urban slums are living in heavens, he said. The programme is running mainly in five districts of Sindh, which were badly hit by the floods. Every month, overall three to five crore rupees are distributed among borrowers without collateral. The living conditions of people in these areas are very horrific, according to Anwer, who spends quite a few days in a month along with the neglected lots in the rural areas.
Micro financiers are giving them just oxygen. Micro financing cannot reduce the poverty, he said. It can only reduce the increasing rate of poverty. "We are working with the people and not for the people. We are not giving services to people living below the poverty line," he added.
Recently, the OPP has also assumed the role of intermediary in Khairpur district of interior Sindh to fight out the exploitation of suppliers who purchase mats from mats-makers for low prices in offseason to sell them at high prices in dates-harvesting season. OPP buys mats from the manufacturers who need money to stay afloat, at reasonable rates during offseason. The rate is determined after factoring in cost of warehousing and other basics, he said. According to him, more than 28,000 workers are engaged in mats-making in only small parts of Khairpur district. Mats are in high demand of dates growers during June to August.
The floods and heavy downpours affected the lives and properties of the people of rural areas. Farmlands are submerged in water and livestock washed out. Since August 2011, OPP has refinanced Rs114.9 million. Overall, it has accumulated Rs73 million non-performing loans. Normally, microcredit has almost zero default rate. OPP issues loans from Rs10,000 to Rs50,000 for one year. And, mostly loans are paid back before maturity. The projected bad debts for this year are three per cent of total disbursement.
OPP takes loans from Pakistan Poverty Alleviation Fund (PPAF) and different banks. It has to pay eight to 11.5 per cent mark-up to PPAF and Habib Bank, which are its prime sources of funds.
The institution believes on institution building. It has developed a number of cooperatives and community-based micro financing institutions that extend credits to entrepreneurs. So far, it has linked up 13 institutions to PPAF and is still lending to 42 local institutions.
OPP started micro financing programme in Karachi by the name of Hunar Ghar in which underprivileged people were not only given small business loans but also given business ideas. The programme could not succeed because of weak marketing links, though borrowers successfully started candle making and other businesses.
Slum Dwellers International (SDI) is working in 33 countries for the urban poor. Representatives of the community-based organizations from all over the world meet regularly to exchange knowledge, achievements, and updates related to micro financing. He said it is an information-sharing platform and helps in capacity building of the organizations. For example, Pakistan has technical expertise about rural areas. India has expertise in mobilizing savings. The members share ways of how to enhance capabilities of each other.
There are psychological barriers in tapping the real potential of micro financing sector or meeting the total demand, no less than 90 per cent of which is untapped. People are not willing to change their fates. There is a feeling of helplessness that should be reduced. Generation of funds is an issue for microcredit institutions. Group formation that is bulk borrowing by a group of people has become successful internationally, he said, adding in Pakistan this is not happening because of lack of spirit of team working.
Financial outreach can be increased through capacity building of lending institutions, said Anwer, who has authored seven books of micro financing and rural and urban developments. Economic hardships are the real cause of a number of social evils in Pakistan. Until we stop looking at IMF, the World Bank, and donors to improve our conditions, the change is not possible.