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SRSP is operational in twelve districts of the province and presently working with over 6,500 community organizations (MC/WCOs). It has a mandate to reduce poverty in the rural areas of the province through the promotion of social mobilization concept, which aims at developing a receiving mechanism for any development inputs that one intends to provide. SRSP employs an approach where MCO/WCOs are identified as vehicles for building the self help capacity and potential of the communities. These organizations are also the vehicles to identify and undertake a variety of diverse developmental projects related to, for instances, microfinance, infrastructure development, natural resource management, enterprise promotion and social development.
Microfinance has it effect if it operates on scale, however scale demands tremendous resources both human and financial, which at time go beyond the capacity of a single organization. Though the government acknowledges microfinance as one of its most important poverty reduction tools, however NWFP have least benefited from this very important tool of poverty reduction. Reasons mainly responsible for this include low population density, the high dependence on agriculture, seasonal migration as an important source of livelihood, fewer economic opportunities, and presence of grass root religious movement, which is opposed to interest, based lending. Combination of all these factors increases the credit risk by manifolds for any institution that want to serve poor, especially rural clients in NWFP. In NWFP unfortunately no institution’s risk bearing capacity has been enhanced to deliver microfinance services on scale. Investments made in the sector have been primarily limited to the extension of credit lines. Reason responsible is the lack of understanding on microfinance in government circles. Resultantly, credit lines to the tune of Rs. 1.3 billion though available but remains unutilized. It is thus high time to design systems that are more cost-effective and efficient to deliver these services.
With a very thin asset base, SRSP is left with the only choice to keep its MF programme geographically skewed until our risk taking capacity is enhanced through a credit risk mitigation fund. The organization however strives to develop alternative systems for enhanced outreach of microfinance to the rural poor of the province. One such initiative is encouraging the emergence of self-reliant Village Banks for the delivery of microfinance services, which are not only locally managed but also self-sustaining.
SRSP, in line with its vision, encourages clustering or networking of community-based organizations. We believe that capacity of such networks can be enhanced initially to a Village-Bank, which will lead to formation of Local Support Organizations (LSO). During the process, vibrant organizations will be encouraged to be the ‘member-organization’ to the bank. Weak community organizations will also be brought in focus and efforts will be made to bring them at par with the standards. SRSP role in the process will be not of a service delivery organization but rather a supporting arm based on the assumption that communities will make the best managers of their own financial systems.
With the financial assistance of a partner organization, SRSP will aim for building the capacities of these perspective LSOs in the management of microfinance operations in a manner that they gain the desired capacity of accessing long-term capital for credit for its long-term sustainability.
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