Unpacking community resilience through Community Fund/Community Development today: – Engaging challenges through Community Fund
We live in an imperfect world with a huge imbalance of wealth and power. God is a God of justice and wants his people to make a difference in the world, standing up for those who cannot stand up for themselves and sharing what we have with those who have nothing.
Shumaila is 32 years-old widow living with her 4 children. The increasingly expensive and daily inflammation of the family repatriated her life. No helper, none was ever present and sadly no sources to earn.She has a skill of knitting and embroidery but have not financial resources and limited mobility due to which she was unable to make things and sell them. She has always been determined to succeed in her skill and make life better for her children. Her dream came true when union council based organization support her for business incubation.
This union council based organization had been provided community livelihood fund (CLF) as a micro credit only for poor of the poorest households of locality for the purpose of businesses. This UC based organization called Local support organization (LSO), supported by the local organization. She applied for loan, started her business, now she earns Rs. 30,000 to 50,000 per month. She is happy, live with dignity and the happiest thing is her children are enrolled. “Now, I am happy, having my own business and day by day my work demand is increasing”.
Poverty in Pakistan increasing as time passes, where local government structure and social action programs failed to address poverty, due to their supply driven methodology and lack on the household economy especially, for the poor. This is why; there is a need to scrupulously designed households level solution to address its versatile nature. Sadly; poor have not courage to do unless they have a platform to raise the voice for their civic rights. The think tank of the development sector Mr. Akhtar Hammed Khan and his student Mr. Shoaib Sultan took an initiative and successfully demonstrated a demand driven development approach by forming local level institutions “of the poor”.
In an apex organization, Pakistan Poverty Alleviation Fund (PPAF) Annual report 2016-2017, shared that PPAF has ensured that change has broken through to rattle the deep seated and inelastic poverty prevalent in Pakistan. PPAF has strived to engage all stakeholders in order to deepen networks essential to truly tackling poverty at all levels. Thus, PPAF workswith grass-root level intuitions andits poverty graduation approach of providing access to finance, increasing income and wealth has led to engagement at all levels”.
To meet PPAF approach, many organizations has initiated the Community Fund projects like PPAF has initiated Livelihood Enhancement and Protection (LEP) program funded by World Bank was initiated in 2010 which was actively contributing towards poverty alleviation through creation of socio-economic development. Through this project a system was developed to fulfills the goal of poverty graduation program, providing trouble-free financial facility at individuals’doorstep. Significant funds were provided to establish a grass root levellegally registered Union Council Based Organizations/LSOby establishing a“Loan Centers”. This is run, own and managed by the community selected representatives for the purpose of benefitting the poor of the poorest household. It was implemented in 117 union Councils of 19 districts of Pakistan. The allocation of districts as per NFC Award, with low socio-economic indicators, high food insecurity, and socialsector investment by PPAF and low or have not coverage by conventional microfinance.
There are many micro-credit organization/institutions (MCO/MFI) exists who claims an alternatives solutions to the “loan-sharks” known to take advantage of clients. The concept of MFIs is reducing poverty in impoverished countries by giving very small loans to people without collateral, was once the most promising innovation in development economics. Unfortunately, these are charging higher interest rates on loans approximately 35%. As per views of LSE economist cum anthropologist, Jason Hickel’s and David Roodman (his book, ‘Due Diligence) that “microfinance doesn’t work. The best estimate of the average impact of microcredit on the poverty of clients is zero”. Their findings being that there exists no real evidence that microfinance-based poverty alleviation projects actually lift their users out of poverty. According to them, microcredit loans simply end up wrapping the poor in layers of more and more debt.Then where lays the solution? I suppose, governments when devising a policy on microfinance, just need to balance the above two starkly different thought processes. Surely a ‘responsible’ microfinance structure in Pakistan has a significant role to play in helping it to alleviate poverty and in ensuring equitable growth.
Here, we can say, community fund is an innovative way-forward, alight ray for the poor and marginalized community members to uplift their socio-economic condition. The beauty of the concept is to strengthen and empower the local institutions by providing on time grant facility. These community institutions need to be “grant ready” which means having appropriate policies and procedures in place to ensure their good governance and accountability. What a great idea! Service charge/interest rates for on-lending amongst CIs members will be determined by themselves. It may also cover the cost of funds & transaction cost. These institutions have the vision to develop a social goal based system.
In order to achieve success, flexibility requires suiting the local needs hence; there is a need to replicate this intervention on the same model to fulfill the local requirements in every aspect. The primacy of social mobilizationand institutional developmentgoes hand in hand with sustainablegrowth and importance of the strengthof the institution and the role that a robustsocial mobilization process andcontinued technical assistance playin generating his outcome. If a strong system is in place, then initiatives with community institution, such as a CLF, can be implemented successfully and be sustainable over time.
Yes… giving grants directly to impoverished communities, micro-lending can offer a sustainable investment option for small entrepreneurs, leading to a renewal in its mission to fight extreme poverty.