Islamic Relief Pakistan
Islamic Microfinance Program
1st Interim Report
Islamic Microfinance Enterprise Development Phase 2 (IMED-2)
Funded by
IRP Revolving fund account
DFID (PPA Program)
Project Sheet
Project Title / Islamic Microfinance Enterprise Development Phase 2 (IMED-2)Location / Rawalpindi / Implementation
Agency / Islamic Relief Pakistan
Pin Code / 020_001458 / Donor
Agency / DFID (PPA)
Contact Person
at IRW / Ateeq Rehman
Country Director/Regional Programme Coordinator –Asia
19-Rea Street Birmingham B5 6LB
;
+441216220709
Contact
Person
In IR Pakistan / Sumayya Sajjad
Head of Programmes (interim)
Manager Programme Learning & Development
+92 345 8535206
Reporting period / July 01, 2014 – March 31, 2015 (9 months)
Key Achievements /
- 2,397financings services amounting to PKR 66,186,942 extended to existing and newsmall businesses
- Portfolio At Risk for more than 30 daysremained 0.07% in last six months
Project Budget: / £ 4,069,482
PPA £ 200,000 / Project Start/End Dates: / July 01, 2014 – June 30, 2017
List of Acronyms
AI
/Area In-Charge
AO
/Area Office
BC
/Bangash Colony
BI
/Branch In-Charge
CO
/Country Office
CRA
/Client Relationship Assistant
DR
/Dhok Ratta
HSBC
/Hong Kong and Shanghai Banking Corporation
IMED
/Islamic Microfinance and Enterprise Development
IMED-2
/Islamic Microfinance Enterprise Development Phase 2
IRP
/Islamic Relief Pakistan
IRUK
/Islamic Relief United Kingdom
MFP
/Microfinance Program
NA
/Naseer Abad
OSS
/Operational Self Sufficiency
PAR
/Portfolio at Risk
PKR
/Pakistan Rupee
SSBD
/Small Scale Business Development
SSBD-2
/Small Scale Business Development Phase 2
SSED
/Small Scale Enterprise Development
SSEW
/Small Scale Enterprise for Women
Project Background
Islamic Relief Pakistan is amongst the pioneer organizations that are providing services to clients under Islamic Micro Financing to the poor in Pakistan. The first project ‘Small Scale Enterprise for Women’ (SSEW) was started in 2001 to support widows and guardians of orphans through provision of small amounts of financing. Later in 2002, Islamic Relief Pakistan (IRP) changed the title of the project to ‘Small Scale Enterprise Development’ (SSED) widening its scope beyond orphan families.
Islamic Relief Pakistan witnessed substantial growth in portfolio by implementing ‘Small Scale Business Development’ (SSBD-1) July 2010 to March 2013, Islamic Micro Finance Enterprise Development Phase (IMED- from 1st January 2011 to 30th June 2012 and SSBD-2July 2013 to June 2014. So far Islamic Relief Pakistan has extended services to 14,500 small entrepreneurs under Islamic Micro Financing. Out of these clients, more than 70% are women, who are playing pivotal role in sustenance of their families.
Islamic Relief Pakistan is committed to strengthen small entrepreneurs through sustainable Islamic Micro Finance services. In this respect Islamic Micro Finance Enterprise Development Phase (IMED-2 from July 2014 to June 2017) has been initiated in Rawalpindi to assist 18,346 beneficiaries. The project started with some delay due to late approval and disbursement of funds took place during mid of September2014.Despite these challenges, Islamic Micro Finance programme has reached 2,397 clients to establish or revitalize their businesses.
Project Achievement
During the first nine months of the project ending by Mar2015 the project has achieved 63% (2,397 out of 3,780) of its target set for this timeframe. Financial situation reflects that PKR 66,186,942 out of PKR 120,960,000 have been disbursed that makes 55% of total amount in given time period.
Project key success is maintaining 100% recovery rate in the first 9 months. The PAR > 30 days is 0.07% which is ideal for any microfinance project with monthly installment recovery schedule. Staff productivity indicators are moderatebut are improving very rapidly. Sustainability indicators are also improving as the scale of disbursement as well as staff strength is increasing.
As disbursement started from July 2014, none of the borrowers has completed repayment cycle under IMED-2 project to help us actually gauge the impact and success of the project. Mainstatisticalhighlights of the portfolio are as following:
Disbursement Analysis
Gender
Gender / Financings / Disbursement / Average Size (PKR)Number / Ratio / Amount (PKR) / Ratio
(%)
Male / 427 / 18% / 12,620,000 / 19% / 29,555
Female / 1,970 / 82% / 53,566,942 / 81% / 27,191
Total / 2,397 / 100% / 66,186,942 / 100% / 27,612
The ratio between male and female beneficiaries of 2,397 loads is 18% and 82% respectively. In terms of load disbursement this corresponds to 19% of the total amount to males and 81% to female beneficiaries.
Loan Product
Product / Financings / Disbursement / Average Size (PKR)Number / Ratio / Amount (PKR) / Ratio
(%)
Qard Hasan / 825 / 34% / 16,585,000 / 25% / 20,103
Murabaha / 1,572 / 66% / 49,601,942 / 75% / 31,553
Total / 2,397 / 100% / 66,186,942 / 100% / 27,612
Both the Qard Hasan and Murabaha financings were undertaken for the business purpose only. The average financing size was higher under Murabaha than that of Qard Hasan. This is because unlike in Qard Hasan, as the beneficiaries of Murabaha complete the repayments of a cycle they become entitle to apply for larger financing in the next cycle. Overall 34% of the total financing was undertaken through Qard Hasan and 66% of the total financings were made under Murabaha.
Further details about the demography of the financings under both the tools are provided in the following tables.
Branch Network
Branch / Financings / Disbursement (PKR) / Average SizeNumber / Ratio / Amount / Ratio
Naseerabad / 770 / 32% / 21,505,000 / 33% / 27,929
Dhok Ratta / 812 / 34% / 23,423,000 / 35% / 28,846
Bangash Colony / 815 / 34% / 21,258,942 / 32% / 26,085
Total / 2,397 / 100% / 66,186,942 / 100% / 27,612
Marital Status
Marital Status / Financings / Disbursement (PKR) / Average SizeNumber / Ratio / Amount / Ratio
Widow / 141 / 6% / 3,540,000 / 5% / 25,106
Unmarried / 175 / 7% / 4,805,000 / 7% / 27,457
Married / 2,081 / 87% / 57,841,942 / 87% / 27,795
Total / 2,397 / 100% / 66,186,942 / 100% / 27,612
New vs. Repeat Client
Client Type / Financings / Disbursement (PKR) / Average SizeNumber / Ratio / Amount / Ratio
New / 1,654 / 69% / 38,388,426 / 58% / 23,209
Repeat / 743 / 31% / 27,798,516 / 42% / 37,414
Total / 2,397 / 100% / 66,186,942 / 100% / 27,612
New clients mean those clients who are availing the first time loan from Islamic Relief Pakistan. Repeat clients are those who have already successfully repaid at least one cycle of financing before applying for next financing.
Staff Productivity Analysis (IMED-2)
Branch / Clients / CRAs / Staff / Active Clients per CRA / Active Clients per staffNaseer Abad / 770 / 4 / 5 / 193 / 154
Dhok Ratta / 812 / 3 / 4 / 271 / 203
Bangash Colony / 815 / 4 / 5 / 204 / 163
Area Office / 4
Total / 2,397 / 11 / 18 / 218 / 133
Staff productivity indicators are moderate but are improving very rapidly. Currently average active clients per CRA stands at 218 compare to the industry standard of 300. The difference is because the staff turnover some old CRA left during this period. After the joining of new CRAs productivity is on the rise and within next two quarter this will be on par with market standard.
Recovery Analysis
Amount due as on Mar 31, 2015: PKR 20,203,050
Amount recovered as on Mar 31, 2015: PKR 20,184,550
Recovery Rate:100%
Loan Portfolio (as on 31/03/2015)PKR 60 054,999
Amount in overdue as on Mar31, 2015:PKR 18,500
Naseer Abad BranchPKR 00,000
Dhok Ratta BranchPKR 18,500
Bangash Colony BranchPKR 00,000
PAR > 01 day0.17%
PAR> 30 days0.07%
Amount recovered is higher than due amount because of early recovery. The program is operating at almost 100% recovery rate for IMED-2.
Operational Income
Fee from Qard HasanPKR 1,218,500
Profit from MurabahaPKR3,171,961
Profit from Bank AccountsPKR 2,431,201
Total IncomePKR 6,821,662
Operational Expenses
Payroll Expenses:PKR 5,380,147
Staff BenefitsPKR 393,536
Project Deliverables:PKR 679,940
Running Cost:PKR 3,560,591
Total Cost:PKR 9,334,274
Net Operating Loss: PKR 2,512,612
Operational Self Sufficiency (OSS):73%
Monitoring
For the success of every programme monitoring is indispensable factor so supporting the clients through provisioning of working capital for micro enterprises requires consistent monitoring. Field staff monitors the performance of the micro entrepreneurs and ensures that recovery is on time. For the recovery from the clients field staff was provided with monthly recovery sheet depicting the monthly receivable from each client with due date. Further contact place in-charge monitored that loans are issued to targeted clients and also ensured the proper utilization of loan.
In connection with 30% increase in the monthly income of 30% clients, it is clarified that so far loan cycle is not completed. It would be programmatically appropriate to measure the impact of increase in monthly income once loan cycle is completed.
Constraints
- Delayed start of operations at field (Operations started after 2 months lapse).
- Delay in loan processing, especially at finance unit
- Heavy load shedding / electric shortfall worsened business situation
- Sectarian /religious/Political conflicts halted proper functioning of microfinance team for number of days.
- Due to limited scale operational sufficiency is not yet attained.
- Due to stop/start nature of project activities for the last two years, staff got worried and insecure about their job security which is resulting in high staff turnover. During last six months four out of nine CRA had left the IRP. Staff turnover delayed new loan processing and disturbed the project expansion
- Extra CRA in every branch was allocated in the budget and were supposed to be provided to each branch from the very first day of project initiation. Unfortunately new staff recruitment was delayed and it was started in December and new CRA’s will joined in Jan-15.
- The new staff recruitment was the most important factor because if we had got the allocated staff hiredin time it would have added almost 105 new cases every month. It could have resulted in increase of active clients to meet the set targets.
Conclusion & Recommendations
The microfinance has on-going nature of transactions; once you lend money, you need to stay there till all amounts are recovered. To ensure recovery collection, regular staff is crucial. Scope of Islamic Micro Finance is quite high so there is need to ensure continuity of this programme. In addition to this quality and recovery need to be equally focused in measuring the performance of the programme.
Log Framework Matrix:
Intervention Logic / Objectively Verifiable Indicators / Means of Verifications / AssumptionsGoal / To improve the living conditions of the poor micro-entrepreneurs in Rawalpindi, Pakistan
Objectives / Income level of the poor micro-entrepreneurs increased on average by 20% by 30 Jun 2017 / Income level of at least 30% of the targeted micro-entrepreneurs increased by at least 30% by Jun 2017. /
- Beneficiary assessments
- Field monitoring reports
- Reports from MIS
- Baseline HH assessment findings on income levels
- No major natural disaster takes place
- Macro-economic conditions remain stable
- Among beneficiaries, wide cases of severe illness and death do not take place
Expected Results /
- 4,586 (25%) new business start-ups are functional in the target areas after completion of the project
- Financial capital provided for the creation of new enterprises through Qardh Hasan
- The new businesses remain functional after completion of the project.
- Beneficiary assessments
- Field monitoring reports
- Reports from MIS
- No major external factor affects the progress of the project
- 13,759 (75%) existing micro businesses provided financing for expansion of their businesses.
- Capital goods are provided to non-service business enterprises under Murabahah
- Financial capital provided to existing service enterprises through Qardh Hasan
- Beneficiary assessments
- Field monitoring reports
- Reports from MIS
- Case studies
- No major external factor affects the progress of the project
Activities /
- Conducting appraisal and thorough assessment of applicants
- Field monitoring reports
- Reports from MIS
- Interactive discussions with beneficiaries
- No major external factor affects the progress of the project
- The risks analysed in Section VI are adequately managed
- Persons with adequate skills are available and willing to start a business through financial support from IRP
- Ensuring policy compliance of applications through telephone and/or physical verification
- Field monitoring reports
- Reports from MIS
- Interactive discussions with beneficiaries
- Review and final approval of applications
- Field monitoring reports
- Reports from MIS
- Interactive discussions with beneficiaries
- Disbursement of approved applications
- Field monitoring reports
- Reports from MIS
- Interactive discussions with beneficiaries
- Regular follow-up and visits of beneficiaries to assess any impact and ensure timely recoveries
- Field monitoring reports
- Reports from MIS
- Interactive discussions with beneficiaries
IMED-2 Project Team
Mohammad Adnan / Area In-charge (AI)Zaheer Iqbal / Finance Officer
Munsif Ahmad / Assistant Procurement Officer
Abrar Ahmad / Assistant Procurement Officer
Khawaja Rameez Anwar / Branch In-Charge (BI) Naseer Abad
Saeed Ali / Branch In-Charge (BI) Dhok Ratta
Qamar-Ul-Islam / Branch In-Charge (BI) Bangash Colony
Asma Ayaz / Client Relationship Assistant (CRA) Dhok Ratta
Muhammad Awais / Client Relationship Assistant (CRA) Dhok Ratta
Sayed Saif Ullah / Client Relationship Assistant (CRA) Dhok Ratta
Qamar-u-Zaman / Client Relationship Assistant (CRA) Bangash Colony
Mazhar Iqbal / Client Relationship Assistant (CRA) Bangash Colony
Asma Sher Dil Khan / Client Relationship Assistant (CRA) Bangash Colony
Nargis Amen / Client Relationship Assistant (CRA) Bangash Colony
Khurram Shehzad / Client Relationship Assistant (CRA) Naseer Abad
Waseem Akram / Client Relationship Assistant (CRA) Naseer Abad
Muhammad Saqib / Client Relationship Assistant (CRA) Naseer Abad
Riffat Parveen / Client Relationship Assistant (CRA) Naseer Abad