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Enterprise Development

Microcredit & Enterprise Development Program (MC&ED):

The MC&ED program envisions a community of women in the South Punjab with the freedom, power and ability to access and utilize a range of resources to create self-sustaining livelihoods. WSO works towards the economic and social empowerment of deprived and impoverished women in South Punjab by supporting self-sustaining economic initiatives and social endeavors. The organization is seeking to improve the economic and financial conditions of native women through skills enhancement, enterprise development and microfinance. The MC&ED program is the major and mother program for southern Punjab women. There was no facility for women for work since 1990. WSO initiated the step for enterprise development. MC&ED program gave power to women in decision, money, price and authority.

Goal:
one to reduce poverty among low-income families in rural areas,

Objectives:
The aim of the programme is to help low-income families become entrepreneurs, promote the development of their enterprises, and then create a strong partnership between consumers of micro-enterprise products and services and local service delivery institutions. This is expected to boost micro-entrepreneurs to create a new and dynamic business sector in rural areas of Muzaffargarh. The development aim of the programme is to contribute to the government’s efforts to reduce poverty in the country.

  • The main purpose of the project is to address the issues of rural unemployment and lack of economic opportunities for the poor. In this context, the programme had set out to establish 6,000 micro-enterprises between July 1998 to December 2013 during phase I of the programme. The programme exceeded the target. Likewise, during phase I and II.
  •  In the process of creating income and employment opportunities, the programme’s objective is to build the capacity of state and private institutions that provide necessary services required for setting up micro-enterprises.
  • The programme has set out to advocate for policy change and formulation which could support the development and strengthening of the micro-enterprise sector
  • Facilitating in creating policy conducive environment for rural economies to be linked to national private sector businesses is one of the core objectives of the programme.
  Existing Loan Product:
Group Based Microfinance Loan:
Group based lending is aimed mainly at the rural population of the areas of operation of the organization and generally used for Agriculture and Skill related businesses of the borrowers.
The general features of group based loans are:
Product Design

Explanation

General  Principles As prescribed under the donor agreement
Time span for loan recovery 12 months
Service Charges 20% (Flat) on initial disbursement
Compulsory Savings 5% of the initial disbursement (recovered in 12 equal installments)
Loan Cycle – I 5,000 to 15,000 Based on appraisal
Loan Cycle – II (and subsequent cycles) 5,000 to 25,000 Based on appraisal and performance of previous loan cycle(s). Regard will also be given to the prospective business related need of the repeat borrower.
Loan Cycle – III (and subsequent cycles) 5,000 to 30,000 Based on appraisal and performance of previous loan cycle(s). Regard will also be given to the prospective business related need of the repeat borrower.
Loan Cycle – IV (and subsequent cycles) 5,000 to 50,000 Based on appraisal and performance of previous loan cycle(s). Regard will also be given to the prospective business related need of the repeat borrower.
Recovery Structure Equal monthly installments derived at by adding service charges.
Grace Period 5 Working Days after due date of installment. Formal recovery proceedings will commence at the end of grace period.
Number of installments 12
Usage of loan Agriculture, Live Stock, Handicrafts, Petty Trading, Skill Based. While defining the usage due regard should be given to the agreement with the donor.
Late Payment Fine A late payment of fine of Rs. 5 per day will be charged after the end of grace period for every late installment.
Three year
INDICATORS

Year

2011

2012

2013

Number of COs Formed During Year

35

29

Number of Borrowers

1,387

1,160

1956

Number of Savers

1,387

1,160

1956

Disbursement

20,965,000

22,450,000

36,415,000

Outstanding Loan Portfolio

19,775,459

17,172,722

27,137,382

Recovery Rate

96.08

97.07

93.8

Efficiency & Productivity Indicators:
Efficiency & Productivity Indicators

2011

2012

2013

Number of Active Borrowers per staff member

315

270

326

Number of Active Borrowers per Social Organizer

552

473

489

Number of Active Borrowers per Credit Officer

552

473

489

Outstanding Gross Portfolio per Social Organizer

7,870,262

7,002,325

6,784,345

Yield on Portfolio

24.52

30.32

25.22

Operating Expense Ratio

46.39

69.04

47.63

Financial Operations Expense Ratio

11.73

11.34

10.78

Personnel Expense Ratio

10.67

22.18

16.41

Profitability Performance Indicators
Profitability Performance Indicators

2011

2012

2013

Adjusted Operating Profit

24.52

30.32

25.22

Adjusted Return on Assets

0.36

(4.19)

(1.76)

Adjusted Return on Equity

1.33

(19.95)

(9.87)

Operational Self Sufficiency

66

99

93.19

Financial Self Sufficiency

66

99

93.19

Target Group:
When the programme set out to implement its activities in 1998, its target group and beneficiaries were clearly defined to specifically include those living below the country’s poverty line. According to the National Living Standard Survey those whose per capital income was less than 4,404 according to market prices of 1995/1996 were classified as people below the poverty line. With the progression of time, the figure was adjusted to 6,400 according to market prices of 2003/2004. Likewise, rural women were a sub-sector of the poor target group and WSO set out with an objective to have 100% women participation in its programme. The selection of the target group was within the larger framework of the United Nations Millennium Development Goals to reduce poverty by half by 2015. However, with the country traversing through political instability and conflict, the scopes of the programme’s target group broadened. To act as a catalyst in the country’s peace and development process, new target groups were identified under the UNDP’s Crisis Prevention and Recovery (CPR) initiative. In addition to those living below the poverty line and women, the programme identified its new beneficiaries as the following:
  • Hardcore poor families (those having annual income of less than Rs 4,404)
  • Poor scheduled caste
  • Poor Indigenous groups (there are 59 different indigenous groups of which 12 are ethnic minority groups among which 8 have been listed as endangered ethnic groups).
  • Differently Able (physically and mentally challenged)
  • Deprived Women (divorced women, women-headed households)
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