Microfinance for Women in Northern Pakistan

In Mastuj, a remote area in the Chitral district of Pakistan’s North West Frontier Province, a
young, divorced woman with three children feared that she would not be able to make ends meet.
Tradition held that women should not work outside the home, further complicating her efforts to
generate income. Nevertheless, in 1998, she applied to the Aga Khan Rural Support Programme
(AKRSP) for training in sewing. Soon after her course, she took out an AKRSP loan, which
included business training to buy a sewing machine. She then set up a business stitching and
selling ready-made clothes.

When AKDN’s The First MicroFinanceBank Ltd, Pakistan (FMFB) took over AKRSP’s loans, it
continued providing microfinance services to all AKRSP customers, including micro-insurance.
As with all FMFB loans the credit package included two types of micro-insurance at a premium
of Rs.100 ($1.60 per annum), the insurance covers the outstanding loan balance in case of her
death or permanent disability and another policy that would ensure a Rs.10,000 benefit payable to
the family for funeral-related costs and other exigencies in case of her death. The micro-
insurance shielded the woman’s children from debt and should she have suffered death or
disability.

She has taken several other loans for machinery and material. Each time she has paid back her
loan in full and on time. Her monthly income has risen over six-fold from Rs.1000 (US$16) to
Rs.7000 (US$120) in four years (2000-2004). She has been able to send her three children to a
private school, extend her one room house and set up a shop near her house. Hygiene and health
have improved thanks to better food and the installation of a proper toilet. As of 2004, she had
saved over Rs.30,000 (US$500).

Perhaps most importantly, she has gone beyond self-reliance to help those who are less fortunate
than herself. She has hired six employees and conducts sewing classes for other women in the
community. In 2004, in recognition of her efforts, Ms Shahira was the recipient of the top prize in
the United Nations Global Entrepreneurship Award for Pakistan.