KARACHI: The number of active borrowers under microfinance industry will hover around six million in 2018, but there is a dire need for head-on measures to achieve the customer base of 10 million by 2018.
This was the crux of speeches and presentations made at the inaugural session of 8th Microfinance Country Forum (MCF) held here.
On the occasion, the experts unveiled the plan to achieve ‘growth’ through rapid customer acquisition and enhanced funds to finance the industry.
According to Pakistan Microfinance Network (PMN), the micro finance industry has been posting an impressive growth of 20-25% per annum for the past many years which has resulted in 3.1 million active micro-borrowers. With 30 million customers as the potential size of the microfinance market, the current penetration rate stands at only 11.4%.
The experts believed that through mining data of 60 million prepaid telecom users to identify and reach potential microfinance customers will create up to six million new customers. They expressed their optimism that it would reduce the cost of lending because the costs of acquisition, maintenance and collection will also come down.
They claimed that another 4 to 5 million people could be added to the customer base if microfinance banks start Shariah-based lending, which was currently outside its scope.
The speakers underscored the role Pakistan Poverty Alleviation Fund (PPAF), which provided microfinance institutions (MFIs) with both funds and grants. They said that MFIs customers increased rapidly when PPAF started lending to its partner organisations following the receipt of additional funding from the World Bank.
They pointed out that estimated funding of Rs210 billion required to achieve the outreach of 10 million customers by 2018, he said the microfinance industry should seek it through mobile wallets.
Currently there are approximately 4.2 million mobile wallets with an average deposit of up to Rs2,000. Through the latest biometric verification system, one can now open a mobile account in a minute without any paperwork. The branchless banking agent can obtain one’s information from National Database Regulatory Authority digitally and populate the mobile account that has no monthly charges or minimum balance requirement.
The experts said they anticipated the industry would open 50 million mobile accounts in the next four years which would result in Rs100 billion additional funding if the average balance in these mobile accounts was Rs2,000.
Referring to Tameer Microfinance Bank’s bond issue that raised Rs1 billion last year, the speakers said that microfinance banks can potentially borrow up to Rs15 billion from capital markets to meet their funding needs.
Speaking on the occasion, Sindh Minister for Finance Murad Ali Shah said the Sindh government would set up a microfinance bank. However, he did not give any timeframe for the establishment of the proposed bank.
Dr Noman Ahmed, chairman of the department of architecture and planning at the NED University, said most of the population didn’t think tap water to be fit for drinking so they preferred bottled water.