Roshaneh Zafar is the Founder and Managing Director of Kashf Foundation. She established Kashf after meeting with Dr. Muhammad Yunus of the Grameen Bank. Ms. Zafar has won many awards and recognitions for her contributions to the field of social entrepreneurship and women’s development.
Kashf Foundation is Pakistan's first specialized microfinance institution. It was started in 1996 as an action research program, with the aim of alleviating poverty by providing high-quality affordable financial and non-financial services to low-income households, especially women, in order to build their capacity and enhance their economic role. Although Kashf began its journey as a microfinance institution, today it is positioned as a wealth management group since it provides a one-window solution to its clients for protecting and managing their wealth and enhancing their productivity and resources.
Gateway: Last week, Kashf Foundation won the European Microfinance Award for its credit program for low-cost private schools, at a ceremony held at the European Investment Bank in Luxembourg. Congratulations! Can you please tell us about the Foundation’s work? Who are your clients and how do you serve them?
Zafar: Kashf Foundation started in 1996 as a Grameen replicator but over the years we have moved towards an individual appraisal-backed lending methodology. Kashf provides a suite of financial and non-financial services to meet the multitude of needs faced by low-income households, especially women. These include:
Access to finance through micro-credit and micro-savings;
Access to social safety nets via micro-health insurance and life insurance;
Access to capacity building services such as financial management trainings, business development trainings, and vocational trainings; and
Access to social advocacy interventions such as mainstream media campaigns, social theatre, and gender justice trainings.
Kashf’s client base includes women from low-income households, earning less than USD 2/day/capita (in the first loan cycle). The average age of clients is 37, 30% of Kashf clients have not even availed primary education, and the average family size of clients is 6.
Kashf also has a specialized product for low-cost private schools, which offers access to microfinance, school management trainings for school owners, and pedagogy skills trainings for teachers. The client demographic for this product is slightly more mature, as clients are running their own schools and have better levels of education and lower dependency ratios.
Gateway: Universal access to primary education is critical for economic development and growth and it requires substantial investments. Do you think MFIs are in a good position to finance education? What can MFIs do to have a positive impact on access to low-cost high-quality education for children?
Zafar: MFIs are well-placed to meet the immediate needs of small low-cost private schools in Pakistan. A majority of these schools are in rented premises, are not registered, and do not have very high profit margins; consequently they do not have access to credit from banks for improvements or additions. Their profits are usually spread out and/or not high enough to make significant investments.
MFIs can learn from Kashf’s experience and include quality enhancement and capacity building components to their programs, which can help increase the positive impact of the financial investment in the school. Our research has shown that after accessing the Kashf product, 69% of schools saw an improvement in enrollment, 15% of schools set up library corners at their schools, 11% more schools started using work-plans and lesson-plans for their classes, and 29% more schools marked emergency exits and routes in their schools.
Gateway: What role does technology play in Kashf Foundation’s interaction with clients? Do you see a potential for MFIs to significantly reduce costs and improve services for clients via greater use of technology?
Zafar: Using technology is a mixed bag when it comes to microfinance – while there are many returns with respect to the efficiency gains and the speed of doing business, there are also high investment costs, training costs, and menu costs. That said, technology is definitely the only way forward and at Kashf we have initiated a research and pilot on using tablets to increase efficiencies in the loan disbursement – from the collection of information, to its processing and approval. The results of the pilot will help us mainstream technology across other branches.
Gateway: What are the main challenges facing Kashf Foundation currently?
Zafar: With respect to the Kashf Education Finance Program, the first challenge was to understand the dynamics of the segment we were working with to put together a client-centric product that met their needs. Another challenge was re-training staff to shift from the typical segment they were used to working with, i.e. low-income women, to the low-cost private school sector. Moreover, the school finance product is a higher loan size so their comfort had to be built on disbursing higher loan amounts. A constant challenge is including more innovation, while keeping costs low, on the capacity building curriculum and ensuring that new facets are covered in every repeat loan.
Gateway: How will you use the EUR 100,000 from the Luxembourg Ministry of Foreign and European Affairs – Directorate for Development Cooperation and Humanitarian Affairs?
We will be using the funds to innovate further and pilot improvements in teacher training along with developing a new curriculum for child wellbeing and safeguarding. We will also be training teachers on delivering similar trainings to parents and children so that they can be better prepared to deal with child abuse or any other related aspects of child safety.
Gateway: Very important lessons for MFIs who may be interested in designing similar financial products. Thank you for your time, and once again, congratulations!
The excitement around fintech in India is palpable. Many see it as a market-led solution to the policy objective of financial inclusion. Fintech regulation must therefore be designed carefully to prevent and mitigate risks while also preserving the potential for financial inclusion.