MICROCAPITAL STORY: Khushhali Bank (KB) of Pakistan to Receive Human Resource Training Support from ShoreBank International (SBI) Under Widening Harmonized Access to Microfinance (WHAM) Program

Khushhali Bank (KB), a Pakistani microfinance institution, signed a contract to receive consulting, training and technology support of ShoreBank International, Limited (SBI), the international consulting arm of ShoreBank Corporation. The SBI will develop and deliver to KB a customized training on staff management and financial analysis & management, under the Widening Harmonized Access to Microfinance (WHAM). WHAM, a program implemented by SBI, is sponsored by the United States Agency for International Development (USAID) as a part of USD 1.5 billion, 5-year-long USAID aid to Pakistan.The training by SBI aims for enhancement of the capacity of branch-level management to undertake greater delegation from senior management and to manage decentralization of quality control and decision-making, ultimately enabling KB to achieve sustainability at scale. The training will be provided throughout the country-wide network of branches of KB. The SBI will first assess, in cooperation with KB’s management, KB’s large body of employees to design the relevant training content. The training will follow methodology and practices institutionalized within the Human Resource Development Initiative (HRDI) of the SBI for the maximization of impact. The SBI will also provide technical assistance to improve KB’s internal staff development systems and its capacity to track the impact of the training.

KB, the largest licensed microfinance institution in Pakistan, was established in 2000 as a part of Pakistani government’s Poverty Reduction Strategy and Microfinance Sector Development Program that was developed with the assistance of Asian Development Bank. According to MIX market, the microfinance information clearinghouse, KB reported total assets of over USD 112 million and gross loan portfolios of over USD 35 million at the end of 2006. In 2006, it marked Return On Assets of –3.29 percent and Return On Equity of –12.26 percent. KB is rated as the region’s fastest growing; it has shown 1.25 percent average annual growth in total assets since 2003. KB operates across all provinces of Pakistan including Azad Jammu and Kashmir, servicing 85 districts through 73 branches and 12 district service centers.ShoreBank, a US-based community development and environmental bank, reported over USD 2.1 billion in assets at the end of 2006.

The SBI, the consulting arm of ShoreBank Corporation, provides consulting and research services to financial institutions and governments around the globe to create easier access to capital for underserved clients and generate economic wealth in target markets. Gregory Chen is the Chief of Party for the USAID-funded WHAM project and represents ShoreBank Internatoinal in Pakistan.

SBI and USAID launched WHAM in May of 2005. The goal of WHAM is to improve overall effectiveness of the microfinance industry in Pakistan, and to provide financial services to the “missing middle” that seeks loans of amount from USD 500 to USD 30,000. The traditional microfinance threshold is at USD 500 and the traditional commercial financial sector provides loans above USD 30,000. WHAM seeks to downscale commercial banks and upscale microfinance loans to cover the missing middle, while strengthening the overall microfinance industry. The program will facilitate more than 40,000 loans by 2008.

USAID has provided nearly USD 7 billion to support Pakistan’s developmental efforts since 1951. In July of 2002, USAID resumed aid to Pakistan after 7-year-long hiatus due to US-imposed nuclear non-proliferation sanctions. The new aid focuses on the areas of economic growth, education, health, governance, and earthquake reconstruction. In the area of economic growth, USAID has implemented several initiatives to strengthen the microfinance industry. It is working with KB to provide microfinance service to communities in Balochistan, Sindh, and the Federally Administered Tribal Areas (FATA) since September of 2003 for projected span of 7 years; the Pakistan Poverty Alleviation Fund (PPAF) is also implementing a project similar to WHAM in Punjab and Sindh since September of 2003.

Additional Resources:

International The News: “Khushhali Bank to Develop Human Resource Capacity”

SBI: “WHAM”

USAID: “Partnership For Economic Growth”