By: Ommara Raza Ali and Saira Naeem

For Kashf Foundation, Pakistan’s premier women-focused microfinance institution, understanding our impact on clients’ lives has been a central priority since our inception. Why? Because without it, we cannot serve clients well.

We have written previously on this blog about Kashf’s approach to client service—we call it “evidence-based management.” It is a singular focus on clients’ needs and welfare, powered by research and client feedback. This year, we are proud to announce that we took this focus a step further with Kashf’s Impact Assessment Report,  a partnership with IRIS Communications and our in-house Market Research and Product Development team. We undertook this study to assess the impact of Kashf’s financial and non-financial services on its clients and their households. This blog highlights the significant trends and lessons from the study, but is by no means comprehensive so we encourage you to read the report brief and full report on our website.

Kashf’s deep reach

Kashf clients are fairly young (average age of 35 years for new clients and 39 years for mature clients) and are part of big families—the average family size was six. Almost a fifth of clients rely on irregular income sources and there is a high level of illiteracy amongst Kashf’s clients: 30% of clients have not even achieved primary level education. In addition, only 3% have access to a savings account. This tells us two things: Kashf’s “deep” outreach to the most vulnerable women of our society who are most without financial access and underscoring the ongoing need for the financial training and client education we are already offering to ensure that our clients completely understand and properly avail of our products.

Kashf as an investor in women, their families and their communities

We found that more than a third of clients count business income as their main source of income, that 98% of disbursed loans were used for productive purposes: 68% of these clients used the loan for their existing businesses while 30 % used it to start a new business. An increase in the loan cycle was also positively correlated with the ability of a client to purchase minor and major business assets. Moreover, a higher loan amount increases the monthly household income by 33.8% implying that micro-enterprises have the capacity to absorb higher investments over time. Kashf and other MF practitioners may need to re-think the way credit assessments are conducted and in fact there is a potential for linking loan amounts directly to the absorptive and growth capacity of businesses. This highlights Kashf’s role as a key and pioneering investor in microenterprises and supporting them to become self-sustaining ventures.

Household income was seen to be positively correlated to client’s exposure to Kashf, loan amount and participation in Kashf’s financial trainings: for instance, 96% of clients reported an increase in the monthly household income during the last 12 months, and that clients who have attended Kashf’s Financial Trainings save PKR 1,222 more than the clients who have not attended these trainings.

Kashf’s clients experienced economic growth as 74% of the respondents reported expansion of their existing enterprises, while 30% of the clients reported undertaking a new enterprise. Another 10% of the clients reported to have brought in diversification through introduction of new products. In addition, the study also revealed that 8.5% of the total respondents created job opportunities in their local communities, creating 3 jobs on average. The fact that so many new businesses are started using Kashf loans is a strong indication of the catalytic effect of microcredit at the borrower’s household and community level.

Beyond economic empowerment

An overall 99% of the clients reported increase in self-confidence during the past year. The results revealed that participation in social trainings imparted by Kashf increases the likelihood of clients’ enhanced self-confidence by 70.5%.  In addition, 59% respondents reported increased mobility as a result of Kashf’s program. The results also revealed that participation in social trainings is seen to increase the mobility of clients by 45.7% and social awareness by 12.7 times. For women to fulfill their aspirations, it is important for them to attain freedom to go outside the ‘four walls of homes’.

Evidence of the ripple effect

All the clients stated that their living standard improved after taking the loan: new clients reported being able to buy small household items such as water cooler, sofa set, and bicycle, while mature clients purchased bigger assets such as rickshaw, television, and refrigerator.

78% of the clients reported improvement in nutritional intake with repeat clients 73% more likely to have better food consumption than new clients. An increase in the monthly savings was also found to increase the likelihood of improved food consumption by 99%. Furthermore, clients who have availed health insurance are 51.8% more likely to have access to private health care facility as compared to those who have not availed health insurance.

Clients reported that they have been able to spend more on their children’s education due to the businesses they have set up with Kashf’s support and more importantly, mature Kashf clients are 4 times more likely to educate their daughters who are customarily denied the right to formal education. Moreover, as a result of participating in Kashf’s Gender Trainings, 11% of the clients report that there is increase in mutual decision-making between husband and wife, 18% of the clients report that their husbands respect them more now and 66% of the clients report a noticeable change in their husbands’ perception on gender issues.

Conclusion

The study depicts the importance of twinning financial and non-financial services in order to have a greater impact on the clients and their household, impact that increases as the client matures with the institution. We are proud that this impact assessment report shows that Kashf is stimulating the economy at the lowest levels and is also promoting gender-based financial inclusion in the process.