Author: e-MFP

As part of our efforts to understand the impact of the COVID-19 pandemic on microfinance markets around the globe, e-MFP reached out to Kashf Foundation in Pakistan, a good and long-time friend of e-MFP, having been a winner of the European Microfinance Award in 2016. Via an email exchange, Roshaneh Zafar, Founder and Managing Director, brought us up to speed on the situation on the ground. 

e-MFP: What is the current public health and economic situation in your country regarding COVID-19?

Roshaneh Zafar (RZ): The novel coronavirus has wreaked havoc in the country. To date 31,728 cases have been confirmed in the country with 691 deaths. The province of Sindh and Punjab have been most impacted by the virus with 12,017 and 11,568 cases respectively. They are followed by KP (4,875), Balochistan (2,061), Islamabad (679) and GB/AJK (442/86). Moreover, as the country grapples with the coronavirus, the economic impact is mounting, with the economy expected to shrink to negative 1-1.5% against an expected growth rate of 2.4% during the current fiscal year. In addition, the imports are expected to decrease by 50-60% and the exports by 10-20%. The employment loss is also estimated at 20%.

Furthermore, Kashf Foundation undertook an impact assessment of COVID on most frequently occurring micro enterprise trades such as tailoring, beauty parlor, kiryana (small grocery stores), rickshaw, fruit/veg lending and livestock. The study highlighted that across the sector 55% of the businesses had completely shut down, 23 % have irregular business activity, 19% have regular limited activity while 3% are operating at the same level as before. In addition, the overall loss of income experienced by the sample was 76% i.e. from Rs.22,920 per month to Rs.5,550. Furthermore, the highest loss of income was experienced by beauty parlor owners and cloth traders (96% each), while for dairy businesses and kiryana store owners it was much lower - 48% and 56% respectively.

e-MFP: How have you supported clients and staff during this crisis?

RZ: In response to COVID-19, Kashf undertook a client’s assessment to understand the short term and medium term challenges faced by our clients. The study highlighted that 46% of the interviewees had financial resources to sustain themselves for only 15 days or less. Moreover, 81% of the clients reported that their top spending priority was rations. Hence, when asked, what support they require from Kashf Foundation, an overwhelming of the majority i.e. 69% stated they wanted ration packages. Therefore, to provide immediate relief, Kashf Foundation was one of the first organizations in the microfinance sector to reschedule all outstanding loans to give temporary relief to our 550,000 clients who have been negatively impacted by the corona virus. The organization also raised awareness regarding COVID-19 and has educated 550000 clients regarding the same over the past 4 weeks through telephonic contact. 

In addition, the organization has also initiated a food relief program and has distributed food rations to more than 3000 women headed households in poverty stricken districts across Pakistan whose businesses have been severely impacted by the outbreak. Kashf is also designing, developing and rolling out specialized lending programs and business continuity trainings to help its clients rebuild their businesses.

At the organizational level, Kashf has designed and implemented SOPs to ensure safety of our staff. Kashf regularly sends emails and videos to its human resource on the preventive measures such as maintaining social distance, regularly washing hands, and wearing mask etc. that should be practiced at home and office to protect themselves from the virus. Moreover, the organization also conducted a training on how to effectively work from home for its employees on its recently launched E-Learning platform. As the lockdown is easing in the country, the organization is also providing its staff with the necessary personal protective equipment such as gloves, masks and hand sanitizers to ensure their safety in the workspace. Moreover, the staff members who may have been exposed to the virus are encouraged to work from home. 

e-MFP: What coordinated response have policy-makers, financial supervisors or networks taken to protect the financial inclusion sector in your country?

RZ: To protect the financial inclusion sector in the country, the State Bank of Pakistan issued a circulation which has allowed one year deferral of principal amount without any penalty for the organization. This circulation has aided the organizations in the sector to have enough liquidity to undertake its operations. In addition, this policy is applicable to the both the organization and its clients in the sector to reduce their financial burden in these testing times.  The Pakistan Microfinance Network has also been taking on an active role to lobby with regulators and lenders to assist the sector at this critical juncture, especially regarding liquidity needs. This involves looking the possibility of loan rescheduling, loan guarantee schemes, risk mitigation fund for the sector etc.

e-MFP: What kind of support (financial or otherwise) have you received from your investors, funders and any other relevant partners?

RZ: The local investors are allowing deferral of amount without penalising the microfinance organizations to ensure they have enough liquidity to undertake their operations. In addition, Kashf Foundation is working with various international and local donors such as Philip Morris, UNDP and Jubilee Insurance etc. to provide immediate relief to women headed households by distributing food rations. At the same, all foreign investors have also been looking at the possibility of injecting fresh capital to ensure that there is adequate liquidity at the level of the institution during the next 18-24 months, as that time period will be critical for getting back to business post COVID.

e-MFP: What do you see as the top priorities to support and protect your clients from the economic consequences of the COVID crisis?

RZ: To understand the support and protection for our clients from the economic consequences of the COVID crisis, Kashf has undertaken a comprehensive sector wise analysis on the challenges faced by micro entrepreneurs in various trades. The research highlighted to protect and support our clients it is important to roll out COVID response financial products such as Top-up loans Business Loans for Illiquid Businesses, recapitalization loans and/or nano ration loans. Hence, the first priority that of the organization is to provide the necessary financial access to ensure our women micro entrepreneurs have the required capital to rebuild their businesses.

In addition, Kashf is also prioritising a “Don’t let Corona Put You Out of Business Trainings” to build the capacities and knowledge of women entrepreneurs to revive their businesses. The training will include topics such as creating/Generating Sales in Low Demand Phase, Increasing Efficiency of Business, Budgeting, Planning and Forecasting to improve margins and return. In addition, the training will also include components on the importance of digital financing and online marketing/virtual sales platforms to build the skills of women micro entrepreneurs to improve the efficiency of their business systems and process. Hence, the organization is undertaking a multi-pronged approach to ensure our women micro entrepreneurs’ don’t only have the necessary capital but also the necessary skills and knowledge to use this capital effectively to revive their businesses.

For more on how Kashf Foundation is dealing with the crisis see our video interview:
Financial Inclusion Conversations: Learning from the past - a conversation between e-MFP's Sam Mendelson and Kashf Foundation's Roshaneh Zafar

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