Grameen Bank in Pakistan?

Society Pakistan & World Affairs
1

Notwithstanding the tentative micro-finance initiatives adopted by Pakistan, why has no one really capitalized on expanding what seems to be the successes of Bangladesh’s Grameen Bank, within Pakistan. i am not talking about the few measures taken here and there… i am talking about expanding those measures into something that is more tangible, larger, and substantial. Are there any moves towards doing that in Pakistan?

Very important, would appreciate any insights re this. Thanks in advance.

(i opened this thread in this Forum because i think the individuals who understand Pakistani politics/business the best, are the ones who frequent this Forum BUT final decision is obviously Mods’ so if necessary it can be moved to anywhere else).

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Re: Grameen Bank in Pakistan?

[QUOTE]
*Originally posted by Nadia_H: *
…. why has no one really capitalized on expanding what seems to be the successes of Bangladesh's Grameen Bank, within Pakistan. ....
[/QUOTE]

Pakistan needs mega projects and appropriate "macro" funding. Instead of Bangladesh, Pakistan ought to be looking up to Singapore, China, and South Korea.

Pakistan has the resources, environment, and manpower that Bangladesh can only dream about.

KBD, Bhasha, Motorways in North-South (at least 2) and East-West (at least 5) corridors is the key for Pakistan's future.

Pakistan also needs to establish independent tax office with an emphasis on lowering business costs and increasing income-tax base.

Gramin may be a success in Bangladesh, but Pakistan should secure its major banks and let them drive the economy.

Examples of Asian tigers with export based economy, and closed links with the West should be the roadmap of Pakistani planners.

Khuda Hafiz

3

Nobody can deny the importance of large banks, but that does not mean that microfinancing is useless. Even in the largest of economies, much of the economic activity and employment comes out of the small businesses. These are the people who need micro financing. Grameen bank has been tremendous work and there is a need for all developing economies to encourage micro financing.

Please note that micro financing does not equate to low interest rates, something a few economists tend to think is the route to successful small businesses; rather, it is the sheer availability of finance, in small amounts, even if the interest rate is twice that of what large banks would charge their customers, as many NGOs and grassroots politicians know. This higher interest takes care of the higher cost of managing a large number of small accounts, and the lack of 'securitisation' of these loans. A high repayment rate through social pressures minimises the risks involved.

I think Grameen Bank was a success because there wasn't much of religious protests in Bangladesh. We may never know what would happen in the future though.

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[QUOTE]
*Originally posted by cscraja: *
.....Grameen bank has been tremendous work and there is a need for all developing economies to encourage micro financing......
[/QUOTE]

Idea is great but we ought to look at the targets specific to Pak economy. Pakistan has an annual budget of $12 billion at present.

For a healthy Pak-economy it should somehow be elevated to $40 billion a year, in the next 5 years. That gives us the task to add $28 billion of revenues. For such a large chunk (double the current budget) there is a need of substantially large projects. Grameen based activities may add $0.5 to 1 billion a year in the next 5 years. How does one go about the adding the rest of $27 billion a year to Pak economy?

Any ideas?

Khuda Hafiz

P.S. For comparison sakes “yearly budget” for different countries is:
US budget is $2400 billion a year (200 times Pak budget),
China stands at $230 billion a year (20 times Pak budget), ,
Bharat around $ 80-100 billion a year (8 times Pak budget),

Pakistan $12 billions a year
Bangladesh is $7 billion a year (roughly half of Pak budget)
----source: newspapers, government reports, and CIA factbook

5

No ideas.

Oh yeah. One. Please pray.

You need a miracle if you are talking about an annual growth rate of @27.3% for the next five years, if you are talking of moving from 12 to 40 bn. You can get up to 20 bn if you aim for a more realistic 10% growth.

Khuda Hafiz

6

[QUOTE]
*Originally posted by cscraja: *
..Oh yeah. One. Please pray.
...
[/QUOTE]

So do we agree that Nadia_H idea of Grameen bank in Pakistan won't work. Even for 10% growth, Mega-banks, and massive construction projects are the way to go.

[QUOTE]
*Originally posted by cscraja: *
You need a miracle if you are talking about an annual growth rate of @27.3% for the next five years…
[/QUOTE]

No miracles here, just pragmatism! 27% growth is achievable if we think “out of the commie-leftie box”. Here is how:

Year-1 ($3 billion added), Year-2 ($4 billion added), Year-3 ($5 billion added), Year-4 ($7 billion added), Year-5 ($7 billion added),

Pakistani businessmen have already shown that they can work on Mega projects like an international airport. Given a chance, they will come out with infrastructure development projects with the following projections (modest off course):

Year-1 ($2 billion spent), Year-2 ($2 billion spent), Year-3 ($3 billion spent), Year-4 ($3 billion spent), Year-5 ($3 billion spent),

That leaves us with the additional spending of:
Year-1 ($1 billion needed), Year-2 ($2 billion needed), Year-3 ($2 billion needed), Year-4 ($4 billion needed), Year-5 ($5 billion needed),

Improvement in income tax collection (Easy 1 page income declaration for every earning citizen), corresponding reduction in utility rates, establishment of independent tax office:
Year-1 ($0.5 billion earned), Year-2 ($0.5 billion earned), Year-3 ($1 billion earned), Year-4 ($1.5 billion earned), Year-5 ($2 billion earned),

That leaves us the need of additional exports and foreign remittances as:
Year-1 ($0.5 billion needed), Year-2 ($1.5 billion needed), Year-3 ($1 billion needed), Year-4 ($2.5 billion needed), Year-5 ($3 billion needed),

This is very much achievable if we have pro-West policies implemented as soon as possible. Good trade policy with US alone can give us 20-50% of the export orient income.

Khuda Hafiz