Micro Leasing Moving into Rural Finance for Agriculture

Agriculture is central to economic development and growth in Pakistan. Being the dominant sector of the economy, agriculture contributes 25 percent to GDP, employees 44 percent of country's work-force and contributes substantially to export earnings. It also contributes to growth as a provider of raw materials and as a market for industrial products. What happens, therefore, to agriculture is bound to have a substantial impact on the growth of overall GDP.

We at Al-Zāmin Leasing Modaraba have started to expand our operations and products into agricultural areas of rural Sind. Techniques developed for rural financing/leasing includes tailoring procedures and products to agricultural seasonal needs, applying risk management techniques, and joining hands with local intermediaries. Rural areas are dependent on a few principal crop and livestock activities; the seasonality angle of the rural financing has to be kept in mind while developing products for the rural population

MATCHING DISBURSEMENT AND REPAYMENT TO AGRICULTURAL PRODUCTION CYCLES:

Flexibility in loan disbursement and repayment.

FLEXIBILITY IN COLLATERAL REQUIREMENTS:

Land hold little value as collateral in rural areas, personal guarantees, movable assets, and group guarantees have been identified as adequate alternatives.

USING INTERMEDIARIES:

Partnership with different intermediaries and vendors have increase operational efficiency and lower costs of operating in rural areas.

FLEXIBLE DELIVERY MECHANISMS:

Making use of existing delivery outlets, rather than investing in expensive new branch networks.

HID Values:

This rural financing has helped in improving quality and production in the target sectors and thereby enhance income generating activities of the farmers. It has also enhanced per acre yield, created employment opportunities in agri-business sector and lead to poverty alleviation. :

• Income generation

• Community development

• Confidence building of the small farmers

• Additional income will help in getting rid of the traditional money lenders.