In the rural areas in general and livestock sector in particular, farmers have little access to formal or informal financing options. Thus most small farmers distress-sell their animals whenever a household need for cash arises. However, the meat middleman usually makes the full payment to the farmer only after he has sold the animal in the market place. The milk middleman may provide credit but that limits the farmer’s capacity to choose the buyer who offers the highest price. He also provides inputs on credit but mostly this is limited to traditional feed. Thus farmers do not have sufficient capital to invest in increasing the herd size or purchasing quality inputs. They also do not have information on yield enhancing methods, as extension service is currently present in scant locations and is mostly provided by private businesses to large farmers. The situation is much worse for women involved in livestock who almost never have access to finance. Even when informal finance is accessed through relatives, men make the final decision, with or without consulting their wives. Women are dependent on their parents and husbands for income sources and it is extremely rare for women to obtain a loan, nor do they have any avenues for savings. Even though they are the ones taking care of animals in small farming households, they can neither interact with the extension workers nor directly engage in commercial transactions (including purchase of inputs, purchase and sale of animals, and sale of milk).
Kashf Foundation is a microfinance institution registered as a non-profit since 1996. It is one of the pioneers of microfinance lending in Pakistan. The target market of Kashf is female clients. It provides loans for microbusinesses to women, along with insurance and savings options, and supplements these with trainings on financial literacy and business management. As a result of Kashf’s solid lending methodology and risk assessment, the default rate (measured at payment overdue by 30 days) stands at less than 1%. Kashf operates across 41 districts in Pakistan through a network of 188 branches and 13 service centres. Currently Kashf is primarily an urban program, however approximately 25% of Kashf branches are in semi-urban areas.
MDF supported Kashf in designing and launching a new financial product for rural women engaged with livestock on microfinance.
More than 1000 loans have been disbursed till yet that includes loans for both dairy and meat. Moreover, 10 new branches would be opened by Kashf soon.