· 2012-12-29 · Citibank, Faysal Bank Limited, Habib Bank Limited, Hong Kong and Shanghai...

Contents

Chairman’s Message ...................................................................................................2Chief Executive’s Statement .........................................................................................3

1. Overview.............................................................................................................42. Credit and Enterprise Development......................................................................83. Community Physical Infrastructure.....................................................................164. Water Management Center ...............................................................................245. Health and Education........................................................................................326. Human and Institutional Development ..............................................................387. Rehabilitation and Reconstruction .....................................................................448. Social Mobilization............................................................................................509. Evaluation, Research and Development..............................................................5610. Media and Communication ...............................................................................6011. Human Resources, Procurement and Administration ..........................................6412. Internal Audit....................................................................................................6813. Finance and Accounts .......................................................................................7014. Directors’ Report ...............................................................................................76

Financial Highlights ...................................................................................................93Financial Statements .................................................................................................94

Boxes

3.1 Pilot Project: Harnessing Solar Energy ..............................................................................................214.1 PWMC at a Glance ..........................................................................................................................254.2 Transforming Lives and Lifestyles .....................................................................................................297.1 Earthquake Disability Project ...........................................................................................................498.1 Social Mobilization Project: Outreach ..............................................................................................528.2 Objectives of Social Mobilization Project ..........................................................................................538.3 Social Mobilization Project: Targets & Achievements ........................................................................559.1 PPAF Impact Assessment Surveys (FY 2008-2009) ............................................................................5810.1 External Interface and Feedback ......................................................................................................6313.1 Findings of the World Bank Supervision Mission ..............................................................................73

Figures

2.1 Annual Microcredit Disbursements (Rs. in Million) .............................................................................92.2 Microcredit Borrowers by Location ..................................................................................................102.3 Gender Ratio in Microcredit Loans...................................................................................................112.4 Sectoral Distribution of PPAF Loans (FY 2000-09).............................................................................112.5 Annual Average Loan Size by Sector (Microcredit)............................................................................122.6 Percentage Share in MC Disbursements by PO Type .........................................................................122.7 Capacity Building Grants as Percentage of MC Loans by PO Type......................................................132.8 Sectoral Share in Loans by Credit Facility..........................................................................................153.1 Geographical Distribution of CPI Schemes (FYs 2000-2009) .............................................................203.2 Sectoral Distribution of CPI Schemes (FY 2008 – 09) ........................................................................203.3 Sectoral Distribution of CPI Schemes (FYs 2000-09) .........................................................................204.1 Distribution of Funds Disbursed (Rs.m) ............................................................................................314.2 Beneficiary Households by Province .................................................................................................315.1 Gender Ratio in Beneficiaries by Sector and Type of Intervention-Cumulative ....................................345.2 Health Beneficiaries by Gender and Province ....................................................................................345.3 Gender Ratio in Beneficiaries by Sector and Type of Intervention- Year on year .................................356.1 Annual Community Training Beneficiaries ........................................................................................416.2 Annual Training Grant in Support of Credit Facility...........................................................................416.3 Training Grant in Support of Credit Facility by PO Type .....................................................................4114.1 Share of Funds Disbursed-Core Operations ......................................................................................7914.2 Provincial Distribution of Funds-Core Operations .............................................................................7914.3 Total Income (Rs. in million) ............................................................................................................81

Tables

3.1 Cumulative Infrastructure Projects by Category ................................................................................183.2 Geographical Distribution of Infrastructure Schemes and Beneficiaries (FYs 2000-09) .......................183.3 Geographical Distribution of Infrastructure Schemes by Project Type (FYs 2000-09) ..........................193.4 Rehabilitation of Infrastructure Schemes in Earthquake Affected Areas.............................................224.1 Distribution of Projects by Allocated Funds and Beneficiaries ............................................................304.2 Beneficiaries by Province/Area..........................................................................................................305.1 Beneficiaries by Province/Area..........................................................................................................345.2 Social Sector Interventions by Province ............................................................................................367.1 PPAF Donor-wise Allocation of Funds...............................................................................................467.2 Funding to POs (as of June 2009) ....................................................................................................487.3 Funding to Households-Housing (as of June 2009) ..........................................................................4911.1 Highlights of the Year 2008-2009 ...................................................................................................6714.1 Disbursements-Core Operations ......................................................................................................7914.2 Financial Results.............................................................................................................................. 81

Company Information

Chairman - General Body

Hussain Dawood Chairman, The Dawood Group

MembersMueen Afzal Former Secretary General, Ministry of Finance, Government of Pakistan.Rafiud Deen Ahmad Consultant, Orr, Dignam & Co.Rana Assad Amin Additional Secretary, Ministry of Finance, Government of Pakistan.Muhammad Arif Azim Additional Secretary, Economic Affairs Division, Government of Pakistan.Rashid Bajwa Chief Executive Officer, National Rural Support Programme.Nazrat Bashir Additional Secretary, Ministry of Finance, Government of Pakistan.Javed Burki Former Civil Servant.Naved Hamid Director, Centre for Research in Economics & Business, Lahore School of Economics.Ashraf Muhammad Hayat Former Civil Servant.Akmal Hussain Managing Director, Sayyed Engineers Ltd.Ahlullah Khan Kakarr Former Civil Servant.Shoaib Sultan Khan Chairman, National Rural Support Programme.Rajab Ali Memon Educationist.Nazar Memon Director, National Rural Support Programme.Hamayun Murad Managing Director, Orix Leasing Pakistan Ltd.Kaiser H Naseem Manager, Pakistan Corporate Governance Project, International Finance Corporation.Aisha Ghaus Pasha Director Institute of Public Policy, Beachonhouse National University.Aijaz Ahmed Qureshi General Manager, Sindh Irrigation & Drainage Authority.Fazlullah Qureshi Former Member, National Electric Power Regulatory Authority.Muhammad Ismail Qureshi Federal Secretary, Ministry of Water and Power, Government of Pakistan.Syed Ayub Qutub Executive Director, Pakistan Institute of Environment Development & Research.Sadiqa Salahuddin Executive Director, Indus Resource Center.M Suleman Shaikh Chairman, Thardeep Rural Development Programme.Zubyr Soomro Former Citibank Country Officer & Managing Director.Jahangir Tareen Former Federal Minister, Government of Pakistan.Fareeha Zafar Director, Society for the Advancement of Education.

Company Secretary Iltifat Rasul KhanAuditors A. F. Ferguson & Company, Chartered AccountantsLegal Advisors Azam Chaudhry Law AssociatesTax Advisors A. F. Ferguson & Company, Chartered AccountantsBankers Allied Bank of Pakistan, Askari Commercial Bank Limited, Bank Al-Falah Limited,

Citibank, Faysal Bank Limited, Habib Bank Limited, Hong Kong and ShanghaiBanking Corporation Limited, National Bank of Pakistan, NDLC-IFIC BankLimited, Royal Bank of Scotland, Silk Bank Limited, Standard Chartered BankLimited

Registered Office House No. 1, Street No. 20, Sector F-7/2, Islamabad, Pakistan.UAN: (+92-51) 111-000-102, Tel. 265 3304-05, 265 3597Fax. (+92-51) 265 2246, Email: [email protected]: www.ppaf.org.pk

Board of Directors

Hussain DawoodChairman

Mueen Afzal

Rafiud Deen Ahmad

Rana Assad Amin

Muhammad Arif Azim

Naved Hamid

Aijaz Ahmed Qureshi

Syed Ayub Qutub

Zubyr Soomro

Fareeha Zafar

Kamal HyatChief Executive/Managing Director

BoD Committees

Human Resource Committee


Aijaz Ahmed QureshiMember

Fareeha ZafarMember

Audit Committee

Mueen AfzalChairman

Rafiud Deen AhmadMember

Rana Assad AminMember

Aijaz Ahmed QureshiMember

PPAF — Annual Report 20092

Chairman’s Message

By the close of June 2009, the PakistanPoverty Alleviation Fund had disbursed overRs. 61.61 billion (US$ 996 M) to PartnerOrganizations working in over 51,000villages and hamlets in Pakistan. This is notsurprising for an organization that over thedecade since its inception has grown intoa world class institution with a significantimpact on the lives of people.

This translated in terms of output meansfinancing for 3,004,760 loans, 17,742infrastructure schemes, 206 health andeducation facilities and 10,383 trainingevents for building capacities of partnerorganizations and communities. The scaleof work accomplished over a relatively shortperiod of time is exceptional and the growthin current year continues at the same pace.

However, the lasting legacy of the PPAF isnot its physical achievements but theestablishment of a code of conduct, bothwithin the PPAF and the partner institutions,which places integrity at the core of allactivities. This more ethical approach seesdevelopment in the context of not justmarketing products but the developmentof better people. Changing mindsets in an

environment where the very fabric of acivilized society is fast vanishing is a majorconcern for the organization and the morepermanent way towards sustainabledevelopment.

With the assistance and support of allstakeholders, especially the Government ofPakistan, PPAF has constructed a strongand solid foundation. We now need tomove towards energizing the rural andurban spaces of the country and by doingso contribute to national prosperity.

My special thanks to the Board of Directorsand the General Body, for their very valuableinputs, ideas and support. I am equallyindebted to the management team for theirdynamic performance in difficult times andfor establishing an institution that has theenduring goodwill of all stakeholders.

Hussain Dawood

The year ending June 2009 represents animportant milestone in the history of thePPAF. Ten years of a journey whichcommenced with some trepidation andmany hopes were realized, and substantialgoals and objectives of the project realized.

Major among these was the creation of acredible institution which enjoys support ofall stakeholders and is a role model for aneffective delivery mechanism at grassrootlevel. With the passage of time the identityof the organization has merged with dreamsof the poor and today we share with themthe prospects of a better tomorrow.

Of equal importance has been successfultransition of civil society organizations, whoin partnership with the PPAF are now majorplayers on the development scene. A grantdriven mindset has been replaced by aprofessional approach leading to anunprecedented increase in outreach andunderstanding of the fundamentals ofsustainable development.

All this has been possible due to the supportand facilitation by the Government ofPakistan, and the faith reposed byinternational and bilateral donors in PPAF’s

ability to deliver. Additionally, a climatewhich permitted a free and open debatehas led to a strong relationship of trust withPartner Organizat ions and the i rcommunities, which has paved the way forlooking at development as a sharedexperience rather than diktat from the top.

The congenial relationship between the Boardof Directors, the General Body members, andthe Management team, with clear lines ofresponsibility was exemplary. Credit for creatingthis relationship must go to Mr. HussainDawood who, as Chairman of the institution,brought in a wealth of corporate experienceand a singular passion for doing things right.

I am deeply indebted to management teamfor their extraordinary performance anddedication without which we would nothave succeeded in winning the hearts andminds of all our stakeholders. I would liketo thank them for proving that given goodgovernance and a level playing field ourpeople can perform wonders and establishinstitutions that compare with the best inthe world.

Kamal Hyat

Chief Executive’s Statement

PPAF — Annual Report 2009 3

Overview


Pakistan Poverty Alleviation Fund (PPAF),the largest organization established by theGovernment of Pakistan to alleviate povertyin the country, is the biggest provider offunds and technical assistance to the privatesector development organizations all overPakistan. PPAF provides debt financing formicrocredit and enterprise development,grant financing for small scale infrastructure,water, housing, health, education, socialsafety nets, training, social mobilization,and grant funding for human andinstitutional capacity building for deliveryof services. PPAF activities are currentlybeing funded by six multilateral, bilateral,and international institutions. As of June2009 and since its incorporation ten yearsago, PPAF has disbursed funds worthRs. 61.16 billion.

Soaring food prices, global financial crisis,worsening terms of trade and exchangerate and deteriorating security situation inthe country during the outgoing financialyear have all threatened to reverse the gainsmade to alleviate poverty during the lastfew years of good economic growth. Thissituation calls for a greater emphasis onprovision of some relief to the mostvulnerable groups of people in the country

and enhanced efforts to create employmentand alleviate poverty. Realizing this need,the World Bank and the Government ofPakistan expeditiously negotiated andapproved PPAF-III Project worth US$250million. PPAF-III Project includes a newcomponent on Sustainable Livelihoods torecognize the importance of relief and jobcreation in the current scenario.

During the financial year 2008-09, PPAFdisbursed Rs. 13.07 billion. Out of these,Rs 8.42 billion was disbursed under its fourregular windows of operation, i.e., lendingfor Microcredit and Enterprise Development,Community Physical Infrastructure, Healthand Education and Human and InstitutionalDevelopment. The remaining amount wasdisbursed through two special windows ofoperation, i.e., Social Mobilization, andRehabilitation and Reconstruction. Thesefunds have financed over 700,000 loans,1,500 infrastructure schemes, 22 healthand education facilities and over 1,520trainings for participating communities andstaff of Partner Organizations. Five newdistricts and 20,000 new villages wereadded to PPAF outreach, now totalling 124districts all over Pakistan. (Please see themap on page 7).


Overview

The most important contributions of PPAFremain unquantifiable and invisible.Through effective social mobilization at thegrassroots level, poor people have founda strong voice in affairs that directly concernthem. Programs for special target groupsof the vulnerable, destitute and disabledhave rekindled hopes and recuperated lostenergies that cannot be captured effectivelyby any quantitative measure, howsoeverneatly crafted. Similarly, the degree ofwelfare associated with greater decisionmaking power at the household level forfemale clientele of PPAF loans cannot beeasily quantified. Social mobilization hashelped create peace and harmony amongcommunities by promoting inclusion, equity,and accountability. These achievementshave long term implications for meaningfulchange in the living standards at thegrassroots.

PPAF accounted for 42 % of activeborrowers in the sector at the end of thereporting period, and thus it remains thesingle largest reservoir of wholesale fundsfor microcredit in the country. It continuesto direct to develop and implementinnovative strategies to enable sustainabledelivery of financial resources at thegrassroots. Among the strategies areoffering attractive terms to commercialsector entities for long term investmentsin the sector, promoting innovative modelsof outreach and delivery of financial servicesto the poor, building capacities of promisingnew partners, and preparing currentpartners to excel in an increasingly

competitive market. Women constitutednearly half of all PPAF supported microcreditloans in the current financial year.

The poorest segments living in isolatedtracts and backward rural areas were alsothe main beneficiar ies of PPAF’sinfrastructure interventions. Over the years,PPAF’s interventions in infrastructuredevelopment have gradually moved awayfrom stand-alone projects at the villagelevel towards a more holistic approachbased on the simultaneous developmentof logically interlinked schemes in the sameproject area for maximum benefit to thecommunities. For instance, the DroughtMitigation and Preparedness Program(DMPP) cover large drought affected/waterdeficient areas with each project spanningone to three union councils and comprisingapproximately a hundred infrastructuresub-projects on the average. Similarly, theSindh Coastal Areas Development (SCAD)program takes this integrated approachone step forward by complementinginfrastructure interventions with logicallysequenced interventions in healthcare,education, l ivelihood support andconditional cash transfers followed byprovision of financial services.

Meanwhile, PPAF continued to investsubstantially in building capacities forsustainable service delivery through focusedprograms for participating communitiesand Partner Organizations. These effortsare designed to remove supply and demandside constraints emanating from a lack of


Overview

adequate human and financial resourcesat the grassroots. In addition to providingfunds for meeting recurring and nonrecurring costs of civil society organizations,sufficient funds were distributed for buildinghuman capital through training eventsorganized for participating communitiesand staff of Partner Organizations.

PPAF, through its Partner Organizations,follows an inclusive development strategyprioritizing community needs within aninclusive framework of communitymobilization. In view of the overwhelmingneed to upscale social mobilizationprocesses with greater outreach andcoverage at the grassroots, PPAF hassuccessfully launched a focused project onsocial mobilization with assistance fromthe World Bank, which has channelizedUS$ 75 million for the purpose. A newSocial Mobilization (SM) unit has beensuccessfully initiated with the mandate toappraise partners, allocate funds andmonitor progress against clearly laid outobjectives. The project focuses on theformation of 50,000 additional CommunityOrganizations (COs), with their subsequentorganization into higher order institutionsat the village and union council level,adequately facilitated and capacitated tomanage need based development initiativesthrough a transparent, equitable, inclusiveand accountable process of communitydevelopment. Approximately, one millionhouseholds (rural/semi-rural) will beorganized into COs in 25 of the poorest

districts of the country. At the end of theFY 2008-09, 16,554 COs had been formed.

PPAF’s Social Sector Development Programhas expanded manifold over the last fewyears. While new PPAF facilities continueto infiltrate isolated pockets of deprivationin far off rural areas, many underperforminginstitutions have been upgraded in termsof staff and facilities following theiradoption from the public sector. In all, PPAFsupported health and education institutions,the quality of service delivery is ensuredthrough regular staff training, provision ofrequisite modern technologies and arigorous monitoring and evaluationframework. The latter involves substantialcommunity input through health andeducation management committees, whichare mandated to function in a supervisoryrole and hold the administration of theseinstitutions accountable for any deviationfrom their mission.


Overview

PPAF District Coverage

Iran

Arabian Sea

India

Afghanistan

China

International Boundary

Provincial Boundary

District Boundary

ICT Boundary

AJK Boundary

Coastal Line

Disputed Area Boundary

Northern Area Boundary

Tribal Area Boundary

Administrative Boundaries

Uncovered District

Covered District

Legend

2 – Credit & Enterprise Development


Credit and Enterprise Development

Despite assertions that dispute the role ofmicrocredit as a viable long term strategyfor poverty alleviation, there is substantialevidence to suggest the wide rangingbenefits accruing from delivering financialservices to the poor households. In PPAF’scase, credible third party evaluations havesubstantiated a sustained attributableimpact on microcredit beneficiaries and thepositive correlations have been shown tobe spread over a range of tangible andintangible spheres, including incomeenhancement and the empowerment ofwomen within households.

While facilitating PPAF’s microcreditportfolio to grow exponentially in terms ofboth coverage and outreach over the pastdecade, the Credit and EnterpriseDevelopment (CED) Unit has simultaneouslycontributed towards the entrenchment ofsustainable mechanisms for service deliveryin the sector. These objectives were achieveddespite the inherent risks in spreadingexposure to a varied set of PartnerOrganizations operating in different social

contexts and geographical settings,representing diverse lending methodologies,operational structures and levels of maturity.This strategy has achieved its intendedobjective of demonstrating the feasibilityof running a viable microfinance operationwhile simultaneously reaching out to thepoorest parts of the country.

During the past year, the Unit disbursedRs. 6.3 billion in additional funds for onlending to 48 Partner Organizations underits regular microcredit facility (Figure 2.1).PPAF’s support to the sector hascumulatively crossed Rs. 32 billion, furtherconsolidating its status as the single largestsource of microcredit funds in the privatesector nationwide. The decline inmicrocredit funding in FY 2008-09 was dueto a host of factors including completionof PPAF II project in June 2008, followingwhich PPAF utilized reflows as the onlysource of microcredit funding for a wholeyear. Other factors included the worseningsecurity situation in some districts and

Figure 2.1: Annual Microcredit Disbursements (Rs. in m)

99–01

0

7,000

4,000

1,000

2,000

3,000

5,000

6,000

8,000

9,000

01–02 02–03 03–04 04–05 05–06 06–07 07–08 08–09

CED: District Coverage


increase funding to organizations cateringexclusively to women.

Regarding the distribution strategy of PPAF’smicrocredit portfolio, the Unit strives toattain an appropriate balance between ruraland urban areas while simultaneouslyfocusing on the most deprived parts of thecountry. Consequently, the ratio of PPAF’smicrocredit beneficiaries in urban and semiurban locations has increased from 3% inFY 2004-05 to 24% in the current financialyear (Figure 2.2). Yet, owing to the greaterincidence of poverty in rural areas, PPAF’srural portfolio, which constituted 75% ofall new borrowers and 57% of all femaleborrowers in FY 2008-09, continues to besubstantially higher.

The exponential rise in PPAF’s urbanportfolio, which caters to a predominantlyfemale clientele, has simultaneously pushedup the ratio of female clients to 49% ofannual beneficiaries in FY 2008-09, up from36% in FY 2004-05 (Figure 2.3). Gender

macroeconomic slowdown in the economy.The pace of disbursements for microcrediton-lending is expected to increase in thenext financial year when additional externalfunding becomes available throughPPAF-III Project.

The above contributions have not onlyaugmented PPAF’s market share in activemicro credit borrowers to 42 % at the endof the reporting period, it has allowedPartner Organizations to leverage additionaloutreach reflected in their 60 % share ofactive borrowers on June 30, 2009.

PPAF’s contribution in terms of enablingreach to a larger number of householdsand communities at the grassroots ismatched by its efforts to deliver a broadbased and efficient framework for deliveringfinancial services. This is reflected in theconsistent focus on achieving an increasinglybalanced and equitable distribution of fundsacross regions and sectors of the economy,as well as in the conscious decision to

0

100,000

200,000

300,000

400,000

Male MaleFemale Female

Rural Urban

Figure 2.2: Microcredit Borrowers: By LocationFY 05-06

FY 06-07

FY 07-08

FY 04-05

FY 08-09



asymmetries in consumption, health status,educational attainment and a whole set ofother indicators have been shown toincrease proportionally with the povertylevel. In FY 2008-09, PPAF’s microcreditsupport to women beneficiaries crossed1.37 million loans, with 339,000 womenbenefiting from PPAF’s microcredit facilityin the current year alone. These loans havecumulatively helped in bringing greaterinfluence to women in intra-householddecision making processes. In many cases,independent access to credit has facilitatedeconomic empowerment for women and

directly led to the unravelling of patriarchalstructures within PPAF communities. Withsufficient evidence verifying increasedspending on child nutrition and educationas a direct result of greater transfer offinancial resources to women, participatingcommunities stand to gain immeasurablyfrom the growth in PPAF’s femalebeneficiaries in the long term.

The larger number of women borrowers inurban areas, where most loans are utilizedin the commerce sector, has increased scopefor a high rate of women employmentwithin PPAF communities. Overall, thecommerce sector constitutes 34% of PPAFportfolio, while 37% and 19% loans haveso far been distributed in the agricultureand livestock sectors respectively (Figure2.4). More importantly, the average loansize in all three sectors has progressivelyincreased over the years (Figure 2.5). Incomparison with an average loan size ofapproximately Rs. 8,600 in FY 2002-03,

Figure 2.3: Gender Ratio in Microcredit Loans

FY 04–05

0%

100%

25%

50%

75%

FY 08–09FY 07–08FY 05–06 FY 06–07

Female Male

64% 61%53% 52% 51%

36% 39%47% 48% 49%

Figure 2.4: Sectoral Distribution of PPAF Loans (FY 2000 - 09)

Agriculture(37%)

Livestock(19%)

Commerce(34%)

Handicrafts(3%)

Others(7%)



PPAF microcredit loans in FY2008-09 hadan average size of approximately Rs. 15,800.

Essentially, this rise in the large partrepresents a growing number of repeatloans, as organizations tend to increaseloan amounts in subsequent loan cycles.The large number of repeat loans hasdirectly impacted both individual welfareand institutional sustainability. Not only dorepeated loan cycles ensure a steady flowof credit to susta in growth inmicroenterprises on the demand side, theyhelp in increasing profitability and reducingrisk of default and delinquency, which is attimes loosely linked to a high ratio of newborrowers in an organization’s loan portfolio.

The Unit’s success in achieving a moreequitable regional distribution of funds haspartly been made possible by its willingnessto spread funding exposure to a variety ofservice providers of varying sizes andexperiences. Whereas most of PPAF’sportfolio was concentrated in rural supportprograms in the initial years, it is now muchwidely distributed across a range of serviceproviders inc luding microf inancei n s t i t u t i on s , non -gove rnmen ta lorganizations and formal sector institutions.Compared to a share of 92% in FY 2000-01 and 74% in FY 2001-02, Rural SupportPrograms accounted for only 32% of PPAFmicrocredit disbursements in the currentfinancial year (Figure 2.6). Concomitantly,the share of MFIs has grown from 22% inFY 2001-02 to 44% in the period underrev iew, whi le non-governmenta l

organizations accounted for 22% ofdisbursed microcredit funds in the currentfinancial year, up from 4% in FY 2001-02.

While greater equity in the spread ofportfolio across regions and PartnerOrganizations has resulted in a more broad-based outreach, the Unit has remainedefficient in supporting PPAF fundedmicrocredit operations with adequatecapacity building grants to meet requisitenon-recurring and recurring expenses ofPartner Organizations. At the same time,the policy has been systematicallyrationalized to encourage institutional

Figure 2.5: Annual Average Loan Size by Sector (Microcredit)

99–01

6,000

15,500

10,500

7,500

12,500

13,500

16,000

01–02 02–03 03–04 04–05 05–06 06–07 07–08 08–09

9,000

Agriculture Livestock Commerce Overall

Figure 2.6: Percentage Share in MC Disbursements by PO Type

0%

100%

20%

40%

80%

08-09

RSPs

07-0806-0705-0604-0503-0402-0301-0200-01

MFIs NGOs Formal Sector

60%



sustainability by progressively decreasingthe quantum of grant funding in supportof microcredit. Consequently, grants formeeting the operational and capital costsof Partner Organizations declined from26% of microcredit funding for on lendingin FY 2001-02 to 5% in the current financialyear (Figure 2.7). Additionally, the declinein capacity building grants has beencalibrated to vary with coping capacity,which is largely a function of anorganization’s size, income generatingpotential, geographical spread and maturityin terms of operational experience.

The strategy to progressively decrease grantfunding in support of microcredit as ameans of enhancing self reliance andsustainability flows inextricably from PPAF’swider approach to prepare the sector forlarge scale growth. The IFAD-fundedProgram for Increasing SustainableMicrofinance (PRISM) is designed to furtherthis objective by putting in place effectiveinstruments that would allow sustainablePartner Organizations to leverage a

potentially large reservoir of funds in thecommercial sector.

PRISM envisions providing greaterleveraging capacity to Partner Organizationswith sustainable or near sustainablemicrofinance operations through creditenhancement facilities given to banks inthe shape of cash collateral, letters of creditand direct guarantees. It further seeks togrant equity funds to viable microfinanceinstitutions allowing Commercial FinancialInstitutions (CFIs) to invest greater resourcesin the sector. However, given the liquiditycrunch experienced by the financial sectorin the last one year, PPAF had to work hardfor the project to take off.

Intensive efforts were made to raiseawareness levels within the commercialsector as part of a deliberate strategy todemonstrate the viability of MFIs asattractive and safe avenues for investment.PPAF’s credibility in the sector furthercomplemented these efforts allowingcommercial sector institutions to providefinancing facilities to selected MFIs. Similarly,successful negotiations were held withbanks for higher leveraging on guarantees.As a result of continued efforts by PPAFand its Partner Organizations, four banksshowed interest in the program andsubmitted term sheets for financing selectedPPAF partners. Two transactions have sofar been successfully completed, while anumber of other MFIs have been identifiedas suitable prospects to avail similar fundingfacilities over the course of the next year.

Figure 2.7: Capacity Building Grants as Percentage of MC Loans by PO

01-02

0%

40%

20%

30%

02-03 03-04 04-05 05-06 06–07 07–08 08–09

10%

MFIs NGOs RSPs Overall

50%



The possibility of evolving sustainablestructures for delivering financial servicesnecessitates an overall framework focusedon minimizing risk and reducingdependence on subsidized funds. Inaddition to cutting down on capacitybuilding grants, PPAF has introduced anattractive regime of incentives for financiallyand operat ional ly sound PartnerOrganizations consisting of a series of easierrepayment terms such as quarterly mark-up servicing. At the same time, the Unithas sought to minimize risk of fundingexposure and pricing by implementing anelevated eligibility criterion and linking itspricing policy with KIBOR for large PartnerOrganizations with exposure of overRs. 500 million. The latter risk adjustedpricing mechanism would also apply toPartner Organizations availing a facility ofor above the cited amount, irrespective ofcurrent funding exposure.

Microcredit loans are essentially welltargeted as the non-poor usually tend toopt out due to small loan sizes and intensiverepayment schedules. However, microcreditprograms based on joint liability grouplending methodologies have also been seento leave out the poorest of the poor, whoare largely seen as high risk propositionsby both peer groups and microfinancelending organizations. This has promptedpractitioners to introduce special programsspecifically designed for meeting the needsof such households. PPAF, in collaborationwith Consultative Group to Assist the Poor,IFAD, and the Ford Foundation, has initiated

a pilot project with 1,000 chronic poorbeneficiaries in coastal Sindh. The pilotaims at graduating target communities tomainstream microfinance programs over a30 months period by following provisionsfor initial food and health subsidies withskill development and asset transfer. Theproject is expected to facilitate thedevelopment of newer products and servicesthat directly address the needs of thepoorest and most vulnerable segments.

While striving to provision financial servicesto the poorest with appropriate products,PPAF has also been mindful of the needsof those whose requirements are marginallyhigher than what traditional microcreditproducts offer. The Enterprise DevelopmentFacility, initially financed by USAID andpresently being carried forward with theWorld Bank resources, offers individualloans for microenterprises in a wide rangeof sectors.

With a significantly larger loan size and anunderstandably stricter screening and


Table 2.1: Average Loan Size by Lending Facility

Microcredit EDF MIOP

FY 2000-02 7,626 — —

FY 2002-03 8,649 — —

FY 2003-04 11,061 — —

FY 2004-05 12,583 68,603 —

FY 2005-06 12,803 42,385 —

FY 2006-07 13,578 51,358 —

FY 2007-08 14,819 50,801 17,001

FY 2008-09 15,830 50,885 18,177


appraisal criteria for prospective beneficiaries(Table 2.1), EDF has a lesser rate offungibility and a much higher rate of return.Additionally, most loans under the facilityhave gone into the commerce sectorcompared to microcredit. To date, thefacility has benefited over 4,800 individualsin 420 communities in different parts ofthe country.

IFAD and PPAF have further collaboratedto design and implement the US$ 30 millionMicrofinance Innovation and OutreachProgram (MIOP) to enhance the access ofpoor rural women and men to productiveassets, skills, services and improvedtechnologies, with particular emphasis onenhancing productivity through pilotschemes for new microfinance productsand market access initiatives. For instance,MIOP’s Innovation and Outreach (I&O)component is supporting the developmentand testing of a range of microfinanceproducts and approaches, whi leencouraging the development of newfinancing systems to reduce debt burden,minimize risk and promote asset creation.To date, Rs. 106 million have been disbursedto around 5,900 beneficiaries under thiscomponent, which include 38% women.

Under MIOP, the Unit is further imple-menting two sub-components of the YoungPartners Program (YPP), which seeks toenhance PPAF’s ability in developing newmicrofinance institutions in rural areas.Under these initiatives, the Unit hassuccessfully graduated two partner

organizations to PPAF’s regular microcreditprogram, while six new organizations arein queue to achieve a similar status.

As the range and scope of lendinginstruments and loan produces widens inresponse to the growing maturity andcompetition in the sector, PPAF is poised tomeet the challenges of a diverse and fastemerging microfinance market. (Figure 2.8).

Figure 2.8: Sectoral Share in Loans by Credit Facility

0%

100%

20%

40%

80%

AmountLoans

60%

Amount AmountLoans Loans

21%36%31%

7%5%

24%23%40%6%8%

3%45%10%14%29%

2%41%8%

21%26%

40%34%17%3%7%

37%35%19%3%7%

AgricultureCommerceLivestockHandicraftsOthers

Microcredit MIOPEDF


3 – Community Physical Infrastructure


Community Physical Infrastructure

An environment characterized bysustainable access to basic infrastructurecan be considered to be a major tool ofeffective poverty reduction strategies.Keeping this in view, the CommunityPhysical Infrastructure (CPI) Unit serves asa vital link in PPAF’s multi-faceted approachtowards defeating poverty. While deliveringdevelopment grants for small-scalecommunity infrastructure assets, the Unitfocuses on schemes with maximum impacton community welfare and productivity.Simultaneously, all of CPI’s interventionsare developed with a participatory approachmeant to better target grass root issues.

A key factor that makes infrastructurerelated schemes more challenging todevelop and implement as compared toincome transfer programs is their non-excludable nature. While income transferschemes can directly focus on deservingindividuals and households, infrastructureschemes cannot be so specific in terms ofbeneficiaries. However, PPAF has aparticipatory development framework thatovercomes this constraint by mobilizingthe poor at the grass roots and puttingthem in charge of the whole process.Al l CPI supported infrastructureinterventions are preceded by months ofintensive activity centred on mobilizing andsubsequently organizing the poor intoCommunity Organizations (COs), which arecapacitated to work as vibrant developmentinstitutions at the grassroots. Further, the

organizations receive necessary financialand technical support from PPAF throughits Partner Organizations. PartnerOrganizations facilitate each stage of thedevelopment process, from projectidentification to implementation andmaintenance.

In addition to the transfer of skills andresources for better implementation andmanagement of infrastructure schemes,the Unit places a high premium on projectsustainability. This is secured by buildingcommunity ownership through a costsharing mechanism, with compulsorycommunity contributions in the shape offinancial and/or labour and material inputstowards the construction of communityinfrastructure assets. Project sustainabilityis further ensured through the compulsorycollection of maintenance resourcessufficient for bearing one year of such costsby a project maintenance committee. Such

CPI: District Coverage



a committee is empowered to develop anongoing participatory mechanism for thecollection of maintenance funds once theasset becomes operational. To date, 17,392Community Organizations have beenformed to implement and maintain CPIsupported infrastructure schemes.In nine years of operations, the Unit hasaccepted community demands for over15,200 infrastructure projects through 48Partner Organizations spanning 117 districtsof Pakistan, Northern Areas and AJK, fouragencies of the Federally Administered TribalAreas (FATA) and the Islamabad CapitalTerritory (Table 3.1). Of these, 6,854infrastructure interventions including standalone conventional schemes as well ascomposite Integrated Area UpgradingProjects (IAUP) were operationalized underthe CPI component of the first World Bankfinanced project (PPAF-I, FY 2000-04),while another 8,433 schemes have beeninitiated under the World Bank’s PPAF-IIProject (FY 2004-09).

The above schemes have cumulativelybenefited a population of over 7.7 millionpoor households in over 1,093,799 ruraland urban communities throughout thecountry (Table 3.2). The average numberof beneficiaries per project is higher inPunjab where the populat ion iscomparatively more concentrated than inother regions. At the same time, PPAF targetcommunities on the whole represent largerhousehold sizes in comparison with nationalaverages. This indicates an efficient targeting

approach as household size has been shownto be positively correlated with the level ofdeprivation.

The Unit mainly approves resources forinfrastructure interventions in the Irrigation,

Table 3.1: Cumulative Infrastructure Projects by Category

PPAF- I PPAF - II TotalConventional 6,742 8,143 14,885Drainage and Sanitation 993 1,983 2,976DWSS 2,805 2,332 5,137Flood Protection Works 85 120 205Irrigation 2,054 2,642 4,696Roads & Bridges 805 1,066 1,871DMPP* 83 83DWSS 26 26Irrigation 45 45Flood Protection Works 12 12IAUP+ 1 135 136TIP 28 155 183Irrigation 1 4 5Bio Gas - 8 8Incinerator - 1 1Micro Hydel 3 41 44Reverse Osmosis - 3 3Solar Lights - 6 6Solar Water Pump - 13 13Wind Mill 24 73 97Wind Turbine - 6 6Grand Total 6,854 8,433 15,287

* This pertains to the pilot Drought Mitigation and Preparedness Project(DMPP) in Baluchistan initiated during PPAF-I. The whole programme (notreftected here) is being managed by the PPAF Water Management Center.

+ These do not include sub-schemes initiated under IAUP

Table 3.2: Geographical Distribution of Infrastructure Schemes and Beneficiaries (FY 2000-09)

Projects* Beneficiary BeneficiaryHouseholds Population

Punjab 5,574 476,735 3,117,174NWFP 3,044 270,035 2,018,656Sindh 2,930 149,961 1,078,660Balochistan 2,354 105,821 820,129Others 1302 91247 714484Grand Total 15,204 1,093,799 7,749,103

* These projects do not include 83 schemes initiated under the Pilot DMPPProject of PPAF-I.

19



Sanitation, Drinking Water Supply and

Communications sectors (Table 3.3). Each

sector further constitutes a number of sub-

categories. For instance, irrigation sector

interventions include a variety of schemes

focused on efficient management of water

resources ranging from watercourse liningand pipe irrigation projects to irrigationchannels and karez rehabilitation. Allparticipating communities are empoweredto select the appropriate set of interventionsfrom the above range of options inconformity with their specific needs.

The Unit has ensured that an equitabledistribution of resources, particularlyfocused on the most deprived regions, ismade while approving funds for demandresponsive community infrastructure assets.For this reason, the geographical distributionof CPI interventions is consistent with themagnitude of regional needs in specificsectors. For instance, while 13 percent ofPakistan’s overall population lacks direct

Table 3.3: Geographical Distribution of Infrastructure Schemes by Project Type (FY 2000-09)*

DWSS Irrigation Sanitation Roads & Flood IAUP+ TIP TotalBridges Protection

Punjab 320 2,810 1,591 795 3 46 9 5,574NWFP 1,134 390 922 425 83 47 43 3,044Sindh 2,055 255 189 339 3 20 69 2,930Balochistan 873 1,118 195 29 73 5 61 2,354NAs 161 112 13 71 43 7 1 408AJK 472 6 4 189 - 1 - 672FATA/ICT 122 5 62 23 - 10 - 222Grand Total 5,137 4,696 2,976 1,871 205 136 183 15,204

* The table does not include the 83 schemes initiated under the Pilot DMPP of PPAF-I+ These projects do not include sub-projects initiated under IAUP

access to a drinking water supply sourceinside their homes, there are markedvariations across provinces with Punjab(8%) much better placed than Sindh (16%),NWFP (26%), and Balochistan (45%).Understandably, 80 percent of all CPIinterventions in drinking water supply haveto date been initiated in the latter threeprovinces. Similarly, the overall percentageshare of rural Sindh, NWFP and Balochistanin terms of total number of schemes hastended to be much higher than theirrespective population share in the country(Figure 3.1).

The results of these well targeted resourceallocations have improved livings standardsamong marginalized communities. Anapproximate 4,700 irrigation schemesinitiated to date have helped increaseagricultural growth through efficientmanagement of water resources, whilediversifying income and employmentopportunities for the poor. Similarly, CPI



led interventions in drinking water supplyand sanitation have critically decreased theincidence of mortality and morbidity,enabling backward rural communities infar flung areas to enjoy a much healthierand productive life style.

In the reporting period, the Unit initiatedwork on 2,115 new infrastructure schemes,of which the irrigation sector accountedfor 656 schemes, while 441, 569 and 326schemes were initiated in the sanitation,safe drinking water, and communicationssectors, respectively (Figure 3.2). Whileinterventions in the sanitation and irrigationsectors constituted the two largest priorityareas during the reporting period, theprovision of safe drinking water to poorcommunities still represents the largestconcentration of infrastructure interventionsin cumulative terms: DWSS constitute 34percent of all CPI conventional schemesinitiated to date, followed by interventionsin the irrigation (31%), sanitation (20%)and communications (12 %) sectors(Figure 3.3).

While the CPI Unit’s interventions areconstantly increasing in volume and size,its primary focus remains on finding costefficient and sustainable strategies formeeting community demands. For instance,wind and solar energy technology has beentapped for powering a variety ofinterventions, including reverse osmosisplants for clean drinking water, solar lightsfor village electrification and solar pumps

Figure 3.2: Sectoral Distribution of CPI Schemes(FY 2008 - 09)

Drainage andSanitation (21%)

Irrigation (31%)DWSS (27%)

Roads &Bridges

(15%)

Others (6%)

Figure 3.3: Sectoral Distribution of CPI Schemes(FY 2000 - 09)

Drainage andSanitation (20%)

Irrigation (31%)DWSS (34%)

Roads & Bridges(12%)

Others(3%)

Figure 3.1: Geographical Distribution of CPI Schemes(FY 2000 - 09)

Balochistan (15%)

Other (9%)

Punjab (37%)

NWFP (20%)

Sindh (19%)

AJK (4%)

NA (3%)

FATA (2%)

21


for irrigation. Simultaneously, the problemof water scarcity in some of the most aridregions of the country is being met throughwater efficient mechanisms like drip andsprinkler irrigation systems. Further, 26Micro hydel projects have been completedduring the current financial year alone asa sustainable solution to providing electricityin isolated mountain communities currentlynot connected to the national grid. SuchTechnological Innovations Projects (TIP)have successfully been introduced in 269communities at a cost of Rs. 158,369,462of which the communities have on theaverage born 18.8 percent of the cost.In addition to stand alone conventionalschemes, the Unit has introduced an


Integrated Area Upgrading Program (IAUP)to implement a larger number ofinfrastructure schemes at the village levelfor dealing more effectively with multipledeprivations. A typical IAUP includes threeto six schemes including interventions indrinking water supply, sanitation,communications and irrigation sectors. Todate, 136 integrated projects have beeninitiated at the national level in partnershipwith 18 Partner Organizations at a cost ofRs. 386,199,134 with participatingcommunities contributing 20.56 percentof the costs.

Box 3.1: Pilot Project: Harnessing Solar Energy

Solar energy offers a clean and viable alternative to communitiesnot connected to the national grid. In Pakistan, with plenty ofsunlight available throughout the year, the alternative is particularlyfeasible. Solar Home Lighting Systems (SHLSs) are highlydecentralized and particularly suitable for remote areas withlittle hope of getting connected to the grid in the near future.

PPAF, in partnership with Indus Earth Trust (IET), initiated a pilotproject on SHLSs at village Arab Soomar in the outskirts ofKarachi. A total of 15 centralized SHLSs, each benefitting 3 to5 households, have been installed. Each system consists of a solar module, charge controller,batteries, inverter, pole, wiring and fixtures and energy savers. The community has contributedapproximately 10 percent of the total cost of Rs. 1,477,224 and taken charge of maintainingthe facility.

The village now has access to an innovative and environment friendly technology that isaffordable and easy to maintain. Additionally, the demonstrative effect of the project hasled to burgeoning demand for similar projects in other villages and settlements of the area,making electrification of isolated communities in the whole area a not so distant dream.



Community demands for PPAF-supportedinfrastructure schemes have escalated withtime, prompting the Unit to venture outin search of additional financing partners.During the year, the Unit was successful inestablishing linkages with the corporatesector to leverage maximum possibleresources for the benefit of poorcommunities. An MoU was signed withENGRO Chemicals Pakistan for the provisionof social sector services, including sanitationfacilities on a cost sharing basis at mutuallyagreed locations. Subsequently, anagreement was signed to initiate schemes

for providing better sanitation in two villagesof Sindh.

As an integral part of the its mission toprovide quality infrastructure assets to thepoor, the CPI Unit continued to undertakesuperv i s ion miss ions to Par tnerOrganizat ions and part i c ipat ingcommunities. Immediate steps were takento sustainably improve weak service deliveryand targeting and monitoring frameworks.For instance, certain field observationsindicated the need to further strengthenCPI implementation processes and recordkeeping practices. In response, the Unitpromptly developed standard formats andrecord keeping guidelines for PartnerO rgan i z a t i on s and Commun i t yOrganizations. Simultaneously, a series ofworkshops to capacitate PartnerOrganizations in the proper implementationof these guidelines were carried out.

The wide scale destruction followingearthquake in October 2005 left hundredsof thousands of people in dire need ofimmediate relief and rehabilitation. Almostcomplete destruction of basic infrastructure

Table 3.4: Rehabilitation of Infrastructure Schemes in Earthquake Affected Areas

PO Districts Projects Projects Cost of InitiatedInitiated Completed Projects (Rs.M)

SRSP Battagram, Mansehra 386 240 236NRSP Bagh, Poonch 91 91 39.79IRP Bagh 35 35 12.30WWOP Bagh, Poonch 76 76 31.21Sungi Abbotabad 48 48 29.76OAKDF Abbotabad 16 13 7.1Total 652 503 356.146

23



in most parts of the affected region meantthat any long term recovery prospects werequestionable. The CPI Unit joined PPAF’srehabilitation and reconstruction strategyby facilitating the reconstruction of smallscale infrastructure projects includingdrinking water supply schemes, drainagesystems and link roads. Out of the total652 initiated schemes by the end of thereporting period, the CPI Unit hassuccessfully overseen the completion of503 infrastructure projects in the affectedareas (Table 3.4). The 652 schemes initiatedduring the period collectively benefited over43,952 households in the earthquakeaffected districts.

During the reporting period, the CPI Unitdisbursed Rs. 462.9 million to 6 PartnerOrganizations. A total of 652 additionalcommunity organizations were mobilizedto take active part in the identification,development and management of PPAFsupported infrastructure schemes, whilethe coverage of PPAF’s infrastructureprogram increased to incorporate 652 newvillages/localities.

The Unit’s success in provisioning basicinfrastructure to poor communities hascumulatively established a vibrant andsustainable agency for empowering thevoiceless. Simultaneously, the demonstrationof participatory development as a viablestrategy for delivering cost efficientinfrastructure assets to marginalizedcommunities has won an increasing numberof supporters to the cause.

4 – Water Management Center


Water Management Center

Over two-third of Pakistan’s populationlives in rural areas and is directly or indirectlyreliant on the agriculture sector, whichemploys nearly half of the country’s workforce and accounts for approximately aquarter of the country’s GDP. In recenttimes, growing levels of water scarcity hasadversely affected sector growth whileinadequate policy responses at the national,sub-national and community level havefurther stalled prospects of alleviatingpoverty in the long run. The establishmentof PPAF’s Water Management Center(PWMC) in anticipation of its eventualgrowth into a policy, research andtechnological hub was in recognition of thisimportant overlap between sustainableaccess to water resources and long termprospects of poverty alleviation in the region.

PPAF’s comparative advantage in beingable to efficiently harness local resourcesand mobilize indigenous communities forthe effective management of cost efficientwater infrastructure projects puts it in aunique position to redress the problem ofwater deficiency at the national level.Conceptually, water is being viewed as aneconomic and social good that needs tobe managed at the lowest possible levelwith the proactive involvement ofconsumers at the grassroots. PPAF’sdemand responsive and community drivenapproach, as embodied in WMC’s modeof operations, reflects this emergingconsensus (Box 4.1).

All PWMC interventions prioritize community

demands through an institutionalizedframework of community participation anddecision making. All participatingcommunities are in turn encouraged tofunction within a coherent organizationalstructure following clearly definedresponsibilities and a transparent set ofrules and procedures. The whole processis guided by Community Organizations,

Box 4.1: PWMC at a glance

ApproachStrategic PerspectivesLocal SolutionsParticipatory ProcessesAppropriate Technology Applications

ResourcesEfficient Organization StructureHigh Caliber Team of ProfessionalsState of the Art GIS Studio

Current AgendaWater Sector Strategy FormulationFormulation and Implementation of 20 DMPPsImplementation of 50 Micro-Hydel ProjectsImplementation of about 200 IWEI Projects

CoverageAll the four provinces, FATA, Northern Areas & AJK

PWMC: District Coverage


which are trained and empowered to makewell informed choices on a whole set ofissues ranging from the selection of servicelevel, technology, and the location offacil ities to the management andmaintenance of created infrastructure.The PWMC follows PPAF’s traditionalmethodology of asset provision tocommunities but also refines these elementsto suit its needs, as its interventions typicallycover larger project areas and focus moreon integrated infrastructure development.For instance, the larger geographical scopeof PWMC interventions has necessitatedthe organization of participatingcommunities into correspondingly largerstructures varying from single-tierinstitutional frameworks to those withnested hierarchies of representativeinstitutions. These include either a singleunion council level task force or a federationcomprising several such task forces.

Simultaneously, all PWMC programs offerholistic solutions through an integratedscheme of diverse interventions usuallycovering a large number of villages withinan objectively defined geographical area.All constituent schemes are complementaryand collectively work towards meeting theparticular needs of individual communityclusters. As such, the mix of constituentschemes varies with region, terrain, andthe particular nature of community needsarticulated through the multitude ofCommunity Organizations working asrepresentative community forums at thegrassroots.


The Drought Mitigation and PreparednessProgram (DMPP) is one instance of theCenter’s integrated approach. Inheritedfrom PPAF’s conventional infrastructureprogram, DMPP was initiated to negotiatesevere drought conditions in some of themost adversely affected parts of the country.The Center has successfully built upon theDMPP pilot in Rodh Malazai, Balochistan,through a continuous process of refinementand the incorporation of context specificinterventions for better results in other partsof the country with similar conditions. AllDrought Mitigation and Preparednessprojects cover large drought affected areaswith each project spanning one to threeunion counci ls and const i tut ingapproximately a hundred sub-projects onthe average. These typically include delayaction/check dams for restoring waterbalance in addition to meeting thecommunity’s domestic and agriculturalrequirements, interventions for rehabilitatingcrucial aquifers, schemes aimed at moreefficient water management for irrigation

27PPAF — Annual Report 2009


along with a variety of other interventionsfor flood protection, land reclamation,rangeland management and theoptimization of cropping patterns.

PWMC has to date initiated work on 25Drought Mitigation and PreparednessProjects consisting of 1,657 water focusedinterventions with a cumulative investmentof over Rs. 819 million from fundingwindows made available by the World Bankand the United States Department forAgriculture (USDA). These projects havecollectively benefited 1,300 communitiesin 16 drought affected districts, followingintegrated strategies aimed at rechargingdepleted aquifer resources and their efficientexploitation through a variety of waterefficient irrigation mechanisms andinnovative agricultural methods. Allparticipating communities have experienceda range of tangible and intangible benefits.For instance, the two successful DMPPs inSoon Valley, Punjab, have achieved a30-40 percent reduction in water lossesthrough the successful operationalizationof efficient water conveyance systems, whileirrigating an additional 2,500 acres of rainfed area. Already, communities have savedan estimated Rs. 7-10 million in potentialcost of diesel engine operated pumps inaddition to substantial increments in incomefrom higher agricultural yields.

The Sindh Coastal Areas DevelopmentProgram (SCAD) is another instance of theCenter’s focus on integrated developmentof infrastructure assets. The Sindh coastline

has suffered repeatedly from naturaldisasters including several spells of seaintrusion resulting in the deterioration ofbasic infrastructure, poor sanitation andlarge scale migration of resident population.Under SCAD, 561 schemes have so far beeninitiated in the region including protectionworks for reducing vulnerability to seaintrusion, improved sanitation andcommunication facilities as well as theintroduction of innovative solutions forprovisioning safe drinking water andelectricity through tapping renewable sourcesof energy.

Given the context of multiple vulnerabilities,SCAD incorporates several layers ofdevelopment initiatives, combining theprovision of infrastructure assets withinterventions in healthcare, education,livelihood support and the provision offinancial services. All of these lead towardsthe establishment of Rural Growth Centers(RGCs). Fol lowing the successfulimplementation of one RGC at Keti Bander,17 similar centers have been planned forimplementation in the program area.

The program has simultaneously openedup space for greater institutional integrationboth within PPAF as well as between PPAFPartner Organizations. As various PPAF unitsdevelop operational synergies within asingle overarching development frameworkfocused on coastal Sindh, PWMC wassimultaneously successful in building bridgesacross Partner Organizations through theSindh Coastal Areas Development Network



(SCAN). This initiative focuses on bringingthe ten participating organizations togetheron a single platform. The network has beensuccessful in promoting linkages amongmember organizations through workshops,exchange visits, study tours and regularinformation sharing.

The advantages inherent in successfulinstitutional networking amongst grassrootsservice providers have encouraged PWMCto establish similar networks at a muchwider scale. For instance, the Center iscurrently engaged in strategizing theformation of a Pakistan DroughtManagement Network (PMDN) as a nationalforum for deliberating policy relevant issueson drought and other water relateddisasters. Such steps have undoubtedlyadded weight to PPAF’s struggle againstpoverty by allowing it to act as a focal pointfor greater generation and disseminationof knowledge on issues relevant to itsorganizational objectives and vision.

While continuing to support large programslike DMPP and SCAD, as integrated solutionsto community problems on a wider scale,the Center has reacted to communitydemands for comparatively smaller projectswith a potentially similar impact on livesand livelihoods. For instance, IntegratedWater Efficient Irrigation (IWEI) projectsare implemented at the village level forbetter management of community waterresources by combining four to fiveinterventions including sprinkler/dripirrigation, water channels, water course

lining, and conduits. To date, a total of 100such projects constituting 243 schemeshave collectively benefited over 8,200households with an overall cost of Rs. 198.7million, of which 20 percent has beencontributed by communities.

Similarly, the Center has contributedimmensely to the lives of isolated mountaincommunities in the Northern Areas andChitral region through a series of smallscale Micro/mini Hydroelectric PowerProjects (MHPs) addressing cooking, heatingand lighting needs of households throughsustainable power generation. Theseprojects have benefited 8,000 householdsin 48 mountain villages at a cost ofRs. 308.20 million. The latter investmentshave revolutionized the lifestyle ofbeneficiary households that were previouslywithout electricity (Box 4.2).

To date, PWMC interventions have benefitedover 324,000 households in approximately1,700 communities across Pakistan(Table 4.1). DMPP and Integrated Water



Box 4.2: Transforming Lives and Lifestyles: Micro/mini hydro-electric Power Projects

Better Lighting, Cooking and Heating: Access to electricity has transformed old and cumbersomeways of lighting, heating and cooking. Electric bulbs, heaters, geysers, electric butter churners,electric stoves with chimneys etc. have to a large extent supplanted kerosene lanterns, oil lampsand traditional stoves. In essence, there has been a sudden transformation toward a morehealthy and comfortable lifestyle.

Stimulating Local Economy: The availability of electricity in remote mountain areas is stimulatingthe local economy by increasing aggregate demand for goods and services and adding morevalue to the tourism industry. Additionally, the changing patterns of consumption is creatingspace for greater employment opportunities in an increasingly diversified market, reducing levelsof poverty and deprivation in the long run.

Enhancing Income and Savings: Electricity directly contributes to higher levels of incomes andsavings by increasing productive time and reducing unproductive expenditures. By reducingvaluable time spent on laborious household chores (washing, ironing, cleaning, etc.) duringthe day and providing extra light hours during the night, women are contributing moremeaningfully to household incomes by devoting more time to producing saleable homemadeproducts including traditional cloth, caps, woolen socks, gloves, shirts, mufflers, etc. Similarly,household savings have increased by minimizing the use of expensive kerosene oil and naturalgas for lighting.

Improving Health and Education Status: The health status of households has improveddrastically with a corresponding decrease in indoor smoke pollution caused by an almostcomplete reliance on fuel wood and kerosene for cooking, heating and lighting. In additionto a decrease in respiratory diseases, weaving and knitting in better light has further reducedthe incidence of eye related ailments. Similarly, the risk of scorpion bites has reduced sharply,while it has become easier to clearly spot other harmful insects like centipedes and spiders.Refrigeration has further improved health status by helping to diversify diet throughout theyear. Additionally, it has promoted better healthcare by making sterilization of medical equipmentand the refrigeration of vaccines, medicines and specimens possible.

Simultaneously, electricity has a direct impact on the educational status of the new generation.Not only do children have more study hours, the girl child benefits more as less time is wastedon previously labor intensive household chores made easy by the use of electrical appliances.Moreover, electricity has also made it more attractive for good teachers and health practitionersto come to these areas, vastly improving access to a good education and better healthcare.

Better Access to Information: Electricity has further provided communication benefits – e.g.computer connections, radios, TV, cassette players, weather forecasts and general connectionwith the outside world.

A Cleaner Environment: Reduced emissions of green house gases resulting from the restricteduse of firewood and fossil fuels will have positive impact on the environment, reduce deforestation,and help in safeguarding natural habitats of rare plant and animal species.



Resource Management (IWRM) projectsconstitute the largest share in PWMCbeneficiaries. IWRM projects are a hybridof DMPP and all other PWMC interventionsand cover a large number of communitiesspread over several villages. Together, DMPPand IWRM interventions constituteapproximately 56 percent of allocatedPWMC funds, 75 percent of PWMCsupported sub-projects and 86 percent ofthe households benefitting from PWMCindicators. Another landmark in PWMC isthe Second Generation Interventions inDMPP areas. These interventions focus onsofter side of the DMPPs like awarenessraising, rangeland management, watershedmanagement, cropping patterns, marketlinkages, etc. Two of the three IWRMinterventions are located in the NorthernAreas, benefitting 34% of the Center’s total

beneficiary households (Table 4.2). The restof PWMC beneficiaries are largely distributedequally in NWFP (20%), Punjab (21%) andSindh (18%). Balochistan constitutes 6percent of the beneficiaries (Figure 4.1&4.2).

Equipped with state of the art technologiesincluding satellite imagery and geographicalinformation system for better identification,formulation and implementation of holisticsolutions, the Center has simultaneouslyestablished increased levels of coordinationwith national institutions such as SUPARCO,Geographical Survey of Pakistan and theMetrological Department etc to effectivelyaddress issues in drought mitigation andwater resource management.

The Center has contributed meaningfully

Table 4.1: Distribution of Projects by Allocated Funds and Beneficiaries

Programme Funds Allocated Funds Disbursed Number of Sub Coverage BeneficiariesCategory (Rs. Million) (Rs. Million) Projects Projects (Villages) HHs

DMPP/IWRM 1,029.05 819.42 25 1,657 1,199 272,185IWEIP 198.70 139.45 100 243 100 8,247MHDP 308.20 214.95 39 39 48 12,319SCAD 256.10 208.14 358 561 358 29,157SGI 55.00 34.50 7 13 13 2,201Grand Total 1,847.05 1,416.46 529 2,513 1,718 324,109

Table 4.2: Beneficiaries by Province / Area

Number of Sub-Projects Coverage (Villages) Beneficiary HHsBalochistan 496 400 20,476FATA 23 23 596NAs 141 133 110,305NWFP 273 212 65,703Punjab 666 301 67,709Sindh 915 649 57,320Grand Total 2,513 1,718 324,109



Corporate Philanthropy (CECP) providedPPAF a grant of USD 12 million for theconstruction and post operation of 16health and education facilities in the twoearthquake affected territories (NWFP andAJK) of Pakistan. The overall projectobjectives include;

Following the theme of ‘Build-Back-Better’ in reconstruction, refurbishingand operation and management to putin place better than pre-earthquakefacilitiesEnsuring seismic stability of all structuresin conformity with ERRA guidelines andrelevant international building codesProviding equal opportunity to all schoolage boys and girls for quality education,up to a secondary levelProviding access to primary andsecondary health care facilities to theentire population of the project unioncouncilsEnsuring sustainability of all facilities byformulating BOT (Build Operate Transfer)mechanism

DMPP, 819.42

IWEIP,139.45

MHDP, 214.95

SCAD, 208.14

SGI, 34.5

Figure 4.1: DIstribution of Funds Disbursed (Rs.m)

NWFP 20%

Punjab 21%

Sindh 16%

Balochistan 6% FATA 0%

Figure 4.2: Beneficiary Households by Province

NAs 35%

to the welfare of participating communitiesthrough provisioning need based waterrelated infrastructure within a sustainable,holistic and participatory framework ofgrassroots development. Its integratedapproach has helped enhance employmentopportunities, assuage health burdens, andreduce vulnerabilities to seasonal shocksfor a large number of poor households,who have simultaneously been mobilizedand capacitated to work effectively for thecontinued empowerment of theirhouseholds and communities.

On behalf of the South Asia EarthquakeRelief Fund (SAERF), Committee Encouraging

5 – Health and Education


Health and Education

A variety of credible research undertakenin a variety of contexts suggests that thecorre lat ion between educat ionalattainment, good health and welfare is apositive one. Additionally, these linkagesexist at multiple levels and affect severaldimensions of individual and householdwelfare including income, productivity,consumption and gender equity in resourcedistribution. PPAF’s interventions in basiceducation and healthcare are thus part ofan integrated and holistic poverty focusedstrategy for affecting meaningful changeat the grassroots.

The Health and Education (H&E) Unit strivesto provide poor communities with accessto quality health and education servicesthrough PPAF’s Social Sector DevelopmentProgram (SSDP). The latter subsumes theestablishment of schools and communityhealth centers in areas lacking such services,in addit ion to the adopt ion ofunderperforming health and educationfacilities in the public sector.

Gains from educational attainment andmedical treatment are mutually reinforcingand have reciprocal positive externalities.Not only does prenatal care and vaccinationlead to better health outcomes for children,it also affects their performance in schooland future income earning potential.Similarly, a mother’s education level hasbeen found to be positively correlated withthe health status of her children. If theseconditions are not met, these linkages havebeen found to work in the opposite

direction as illiterate parentage, on average,leads to less healthy children who generallyexperience late enrolments, bad educationalperformance and early dropout fromschools. This, in turn, leads to a much lowerincome earning potential and a higherprobability of persisting in poverty.

Gender gaps in education and healthindicators are particularly disconcerting andmarkedly higher amongst the lower incomegroups for all regions and provinces ofPakistan. For PPAF, bridging the genderdivide in the provision of health andeducation services is of immediate priority.While approximately 65 percent of PPAF’shealth sector beneficiaries in the currentfinancial year were female, the latterconstitute 52% of currently enrolled childrenin PPAF financed schools (Figure 5.1).Increasing education levels of women aregenerally seen as directly proportional todecreasing levels of maternal and child

H&E: District Coverage



mortality, lower fertility, higher use ofcontraception, better child nutrition, alower incidence of early marriages and agreater willingness to use medical services.

PPAF interventions in the health sector focusmore directly on affecting the aboveoutcomes. During the current financial year,PPAF supported health facilities in the privateand public sectors administered over 23,000vaccinations, dealt with over 18,000 casesof maternal care and provided OPD servicesto approximately 129,000 adult patientsand almost 62,000 patients under the ageof 18 (Table 5.1).

Gender disparities in the actual take up ofmedical facilities is largely a function ofsocio-cultural constraints that are morewidely prevalent in rural areas, particularlyin the highly conservative pockets ofBalochistan, NWFP, and FATA. Despite thehighly restrictive environment, PPAF PartnerOrganizations in these areas have managedto operate successfully in the face oftraditional hostilities. In Balochistan, 95%beneficiaries of the four community healthcenters were women (Figure 5.2). Similarly,

Figure 5.1: Gender Ratio in Beneficiaries by Sector and Typeof Intervention-Cumulative

0%

100%

25%

75%

Private SectorPublic Sector

8,68240,606

16,42417,441

2,7783,702

7,5087,579

MaleFemale

Education Health

50%


50%

50% 43%

57% 52%

48%

18%

82%

Table 5.1: Beneficiaries by Province / Area

OPD (Over 18) OPD (Under 18) Maternal Care Vaccinations TotalPunjab 31,128 11,933 5,110 1,363 49,534Sindh 23,776 11,260 3,104 8,548 46,688NWFP 27,238 18,850 3,590 3,211 52,889Balochistan 12,001 557 500 0 13,058AJK 16,085 7,642 1,168 5,921 30,816FANA 12,170 5,549 4,100 3,573 25,392FATA 5,534 6,073 444 483 12,534Federal Territory 1,280 113 80 76 1,549Grand Total 129,212 61,977 18,096 23,175 232,460

Figure 5.2: Health Beneficiaries by Gender and Province

0%

100%

25%

75%

NWFPBalochistan9,688

25,65517,07521,065

15,02433,147

62312,435

MaleFemale

50%

OthersPunjab Sindh AJK20,62429,054

10,24014,655

95%

5%

42%

58%69%

31%45%

55% 59%

41%27%

73%



sector 51) and 57 health facilities (publicsector 15; private sector 42). All these arelocated within marginalized communitiesand cater to the basic health and educationneeds of the poorest segments of thesociety. For instance, 46 out of the 64adopted education facilities in Punjab arelocated in the Rahim Yar Khan andBahawalpur districts. These are amongstthe educationally deprived areas of theprovince in terms of indicators such as adultilliteracy, children out of school and genderdisparities in educational attainment (Table5.2). Similarly, PPAF supported educationfacilities in Jamshoro (public sector 11;private sector 7), Sanghar (private sector9), Khairpur (public sector 3; private sector6) and Thatta (public sector 3) cater tosome of the most deprived areas of theprovince: Nara taluka in Khairpur, KetiBandar in Thatta, Shahdadpur taluka inSanghar, and Sehwan and Manjhandtalukas in Jamshoro.

women constituted approximately 60%beneficiaries of the two health centers inthe highly conservative Khyber Agency,where restrictions on the mobility of womenare particularly strict.

Enrolment in PPAF-supported educationfacilities has grown by 8 percent over thelast financial year. Moreover, the growthhas affected a higher ratio of girl students,particularly in the public sector: comparedto boys. Twice as many girl students asboys were enrolled in PPAF’s adopted publicsector facilities during the current financialyear (Figure 5.1 and 5.3). At the end of theperiod under review, 3,702 girls and 2,778boys were enrolled in PPAF supportedprivate sector facilities, while another 7,579girls and 7,508 boys were enrolled in thepublic sector supported facilities.

All in all, PPAF is currently financing a totalof 146 schools (public sector 95; private

Figure 5.3: Gender Ratio in Beneficiaries by Sector and Type of Intervention-Year on year

0%

8,000

2,000

6,000


2,6822,778

7,0007,508

3,6273,702

6,5767,579

JUN 08JUN 09

Girls Boys

4,000


1,000

3,000

5,000

7,000



Table 5.2: Social Sector Interventions by Province

Education HealthPublic Sector Private Sector Public Sector Private Sector

Punjab 64 18 - 10Sindh 18 24 8 5NWFP 6 2 3 5Balochistan - 2 - 4AJK 6 - 4 -FANA - - - 14FATA - 5 - 2Federal Territory 1 - - 2 Total 95 51 15 42

As part of PPAF’s massive reconstructionand rehabilitation effort in the earthquakeaffected areas, three Partner Organizationswere contracted to reconstruct selectedhealth and education facilities in AJK andnorthern NWFP. With financial supportfrom CECP, which awarded PPAF US$ 12million from its South Asia EarthquakeRelief Fund (SAERF), the task ofreconstructing sixteen facilities, two primaryand three high schools for girls, threeprimary and two high schools for boys,two rural health centers and four basichealth units, was initiated in March 2007.By the end of the reporting year, work onall the above facilities had been successfullycompleted. The implementing PartnerOrganizations have worked tirelessly todevelop state-of-the-art institutionsequipped with requisite equipment andfacilities for quality service delivery. BHU’shave labour rooms, pharmacies,laboratories, facilities for safe delivery andquality OPD services, while schools areequipped with physics, chemistry, andbiology laboratories, computers, tuck shops,playgrounds and other recreation facilities.

PPAF social sector interventions prioritizequality control through a layered monitoringframework involving both PartnerOrganizations and communities. The latterare empowered to influence decisionmaking in critical areas of managementand supervision through community basedhealth and education managementcommittees. These committees aremandated to identify gaps in service deliveryand suggest proposals for theirimprovement. During the period underreview, 46 health committees and 146education committees were furtherstrengthened in PPAF supported privatesector facilities and adopted public sectorinstitutions. With an eye on maximizingthe potential of these Committees, regularcapacity building sessions are conductedto equip the latter with requisite skills andknowledge for effective implementation ofa vigorous monitoring and supervisionstructure at the community level.

The quality of service delivery is furtherensured through capacity building eventsorganized for the staff of PPAF supported



schools and CHCs. In the health sector,these events cover training in subjects likehygiene, counselling, mother-child andreproductive health, balanced diet, familyplanning, immunization, communicableand non-communicable diseases, safemotherhood and infant care. Similarly,teachers in PPAF-supported schools areregularly provided with opportunities toattend subject specific refresher courses.They are further trained in the developmentof child responsive teaching methodologies,which are complemented by capacitybuilding sessions in syllabus and classroommanagement , l e s sons p lann ing,development of teaching material andphonics. In both sectors, additional trainingsessions on record keeping, planning andmanagement issues are conducted todevelop administrative skills necessary foroperational efficiency in all PPAF sponsoredsocial sector interventions.

By the end of the reporting year, H&E Unithas cumulatively sanctioned disbursementsof over Rs. 238.6 million in the educationsector through 12 Partner Organizationsand approximately Rs. 145.6 millionthrough 14 Partner Organizations in thehealth sector under funding made availableby the World Bank. Similarly, anotherRs. 624.68 million has been sanctionedunder CECP funds for the effectiveoperationalization of reconstructed Healthand Education facilities in earthquakeaffected areas.

The SSDP has grown in stature over the

years into an innovative model of servicedelivery at the grassroots. By empoweringcommunities with a meaningful role inservice delivery, PPAF has managed toensure transparency and accountabilitywithin a natural demand responsivestructure of governance.

6 – Human and Institutional Development


Human and Institutional Development

The Human & Institutional Development(HID) Unit has evolved into an apex trainingoutfit with an agenda of building capacitiesfor effective long term poverty alleviationat the national level. Following thesuccessful restructuring of the Unit, thescope of its operations has expanded toinclude a host of new and exciting activities.These range from establishing nationwidenetworks of civil society organizations tocreating sustainable linkages with academia,for leveraging quality poverty focussedresearch in pol icy planning andimplementation.

The restructured HID Unit is composed oftwo complementary sub units: a core sub-unit and an extension sub-unit. The coreUnit’s mandate is to institutionalize anefficient capacity building framework forserving PPAF’s internal clients and PartnerOrganizations, while the extension sub-unit is geared towards engaging macro,mezzo and micro level institutions formeaningful contributions to povertyreduction and grassroots development.

As the leading private sector national apexorganization with the distinction ofdelivering the largest quantum ofdevelopment funds at the grassroots, PPAFis uniquely placed to drive the agenda forreform on a whole set of relevant strategicthemes. These include conceptualconstraints and methodological weaknessesin the planning and implementation ofdevelopment strategies, respectively. Whileeffectively demonstrating a viable

operational framework for grassrootsdevelopment, PPAF is increasingly focussingon transforming mindsets to maximize thepotential of existing and latent human andfinancial capital for the benefit of the poor.

As a first step, the Unit has focussed onstrengthening PPAF’s internal learningstructures to further consolidate it as athinking organization. A series of innovativeideas have been explored and implemented:including regular short seminars and thedistinguished speaker series. Each of theseprovide PPAF, its PO staff, and participantsfrom other stakeholders with opportunitiesto meaningfully engage each other as wellas interact with eminent speakers fromdiverse fields and of varied expertise on ahost of relevant issues. The speakers in thedistinguished speaker series includedMr. Sartaj Aziz (Food Security), Mr. FazleHasan Abid of BRAC Bangladesh(InnovativeApproaches to Development), Mr. ShafiqulHaque Chaudhary of ASA, Bangladesh,

HID: District Coverage



initiatives. While preparing the grounds forbetter future research, the HID Unit is alsoaware of the need to disseminate existingknowledge and has arranged an on-goingseries of conferences at the national andinternational level.

This will allow distinguished speakers fromhome and abroad to share knowledge witha wide array of practitioners, academiciansand decision makers. Further, the Unit plansto reach out to the broadest possibleaudience by focussing more on the printand electronic media for effectivelymainstreaming the agenda for grassrootsdevelopment and poverty alleviation.

The HID Unit has signed a Memorandumof Understanding with a number of wellrenowned organizations called “ProfessionalServices Providers” for the provision oftraining, consulting, survey and researchfor PPAF and its Partner Organizations.

Mr. Shoaib Sultan of RSPN (DevelopmentExperiences in the Northern Areas) and Ms.Roshan-e-Zafar of Kashf (Microfinance).

Similarly, a monthly e-magazine – KnowBites – has been developed to disseminateinformation on a range of topics directlyor indirectly related to PPAF’s scope of workincluding rights, gender, teamwork, effectivecommunication, creative thinking, etc. Thesehave in turn impacted institutional normsby creating space for a continuous learningprocess through constructive dialogue anddebate.

The Unit’s objective of poverty alleviationthrough changing mindsets involves aconstructive engagement with a broad setof other stakeholders including PartnerOrganizations, Government agencies anddepartments, universities, regulatoryfinancial sector institutions, corporate sectorentities and the media. For instance, theUnit plans to establish linkages withuniversities to develop poverty focussedcourse modules for inclusion in curriculaat the undergraduate and graduate level,while initiating collaborative research inrelevant fields. Simultaneously, focussedefforts are planned to initiate greaterstudent interest through a range ofinnovative tools including essay writing andquiz competitions, debates and summercamps. Such linkages with academia will,undoubtedly, foster better prospects ofwide ranging research on hitherto underexplored areas of academic enquiry whileproviding empirical insights for better policy



These organizations will bring the depthand the state of the art tools and techniquesthat are regularly needed by the staff ofour Partner Organizations to operateeffectively.

Strategic Reviews of 10 Partner Organizationshave been planned for the fiscal year 2009-2010 to help identify system gaps of theseorganizations with a view to help them fillthe gaps and become more effective atdelivering the project requirements.

As part of its routine activities, HIDcontinued to appraise training needs andfacilitate disbursement of grant funds toPartner Organizations. Particularly, the Unit’ssupport for delivering sustainablemicrofinance services at the grassroots hasbeen critical in the development of a skilledhuman resource base at the communityand PO level. This has fundamentally driventhe sector forward by fuelling additionaldemand for microfinance services, whilemaking supply lines more efficient foroptimal growth in the sector. During theyear, 40,741 community members including14,559 women were trained with PPAFfinancial and technical support in fieldsranging from Agricultural and LivestockManagement to Enterprise Developmentand Vocational Skills. Similarly, 1,308 staffmembers from Partner Organizationsattended PPAF-supported training sessionson diverse subjects including communitymobilization, credit appraisal, loan portfoliomanagement, delinquency managementand interest rate setting (Figure 6.1).

Figure 6.1: Annual Community Training Beneficiaries

0%5,000

10,00015,00020,00025,00030,00035,00040,00045,000

Male Female

99-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09

Figure 6.2: Annual Training Grant in Support of Credit Facility

0%

25

50

75

100

125

150R

s. in

mill

ion

99-01 02-03 03-04 04-05 05-06 06-07 07-08 08-0901-02

Figure 6.3: Training Grant in Support of Credit Facility byPO Type

0%

100%

25%

50%

75%

08-09

RSPs

07-0806-0705-0604-0503-0402-0301-0200-01

MFIs NGOs Formal Sector



The decline in annual community and stafftraining beneficiaries in the reportingfinancial year compared to the previousyear is due to the reduced allocation oftraining grants, which fell from Rs. 131.93million in FY 2007-08 to Rs. 55.3 millionin FY 2008-09 (Figure 6.2). This is atemporary trend primarily driven by theclosure of the PPAF-II Project in the lastfinancial year. As the PPAF-III project takesoff, these numbers are expected to increasesubstantially over the next few years.

HID has disbursed Rs. 539.13 million incumulative training grants to PartnerOrganizations over the last 9 years. Thesefunds have collectively led to the effectivecapacity building of 320,342 communitymembers and 13,028 staff of PartnerOrganizations. As can be seen from Figure6.3, share of bigger Partner Organizations(RSPs) in the training grant has beendeclining over time.

In addition to capacitating participatingcommunities and staff of PartnerOrganizations, the Unit has in place aregular mechanism for focused capacitybuilding of enterprising individuals throughroutine internship programs. For instance,HID has in the past run a Junior Professionals(JP) program designed to support a sixmonths training period for universitygraduates in selected Partner Organizations,which could then take up their services aspermanent employees. Similarly, the Unit

continues to run a successful internshipprogram for young graduates whoreceive field attachments with PartnerOrganizations for a three month period,following intensive one month trainingwithin the Unit.

Similarly, the IFAD-funded YoungProfessionals Scheme (YPS) provides youngpeople from poor rural households theopportunity to join PPAF’s current internshipprogram, with an additional provision forsupporting a further eight monthsattachment to a Partner Organization onthe latter’s request. Under YPS, threebatches constituting 67 internees completedtraining with the Unit during the year, with55 Young Professionals successfully movingto complete field attachments with PartnerOrganizations. Such assistance greatlyfacilitates Partner Organizations sufferingfrom a high turnover rate resulting fromindustry growth. Four batches, each



comprising of 22 interns, are planned forthe fiscal year 2009-10.

A special internship program for graduatesof Balochistan (Balochistan InternshipTraining Program) was launched in 2009to contribute towards fulfilling the acuteshortage of trained human resource in thedevelopment sector. Twenty internsbenefited from this program.

While striving to adequately meet thehuman resource requirements of PartnerOrganizations through grant transfers andtraining needs assessment exercises, theUnit also focuses on developinginstitutional structures by leading strategicplanning and systems developmentexercises. Additionally, it conducts randomspot checks of training events at regularintervals to ensure the quality of PPAFsupported capacity building events. Theseactivities have collectively ensured thequality of training portfolios.

The Unit seeks to complement its focuson building human and institutional capitalof PPAF’s PO’s with a more holistic exercisedesigned to establ ish long terminstitutional links through establishingeffective networks at the provincial level.For this purpose, the Unit plans to holdannual events prov id ing PartnerOrganizations with opportunities to shareknowledge and discuss best practices insocial mobil ization, microfinance,entrepreneurship, sustainable livelihoodsand grassroots development.

7 – Rehabilitation and Reconstruction


Rehabilitation and Reconstruction

Despite the enormous challenges of thepost-earthquake scenario in 2005,Rehabilitation and Reconstruction (R&R)Unit has successfully completed majoroperations in the affected zone withdistinction and a level of professionalismacknowledged by all stakeholders. Thesuccess has reinforced PPAF’s stature as anefficient framework for deliveringdevelopment funds to disadvantagedcommunities with the tested ability todesign and implement effective strategiesin a variety of socio-economic contexts anddisaster situations.

PPAF’s relief efforts, which were initiallycoord inated through a DisasterManagement Center in the immediateaftermath of the catastrophe, the R & RUnit was a logical extension of these efforts,made possible with generous financialsupport from a diverse set of donororganizations including the World Bank,Development Bank of Germany (KfW),International Fund for AgriculturalDevelopment (IFAD) and the Committeefor Encouraging Corporate Philanthropy(CECP). The Unit was made responsible fordelivering a multifaceted large scaleprogram aimed at the rehabilitation oflivelihoods and the reconstruction ofdestroyed housing Units, small scalecommunity infrastructure schemes, healthunits and educational institutions.Additionally, focussed interventionsincluding capacity building of house owners,indigenous labour and grassroots servicedelivery organizations were initiated to

support PPAF’s reconstruction programwhile concentrated efforts were undertakento prioritize and address the special needsof people with disabilities and othervulnerable sub groups.

The Earthquake Reconstruction andRehabilitation Authority (ERRA) of theGovernment of Pakistan assigned 34 unioncouncils in five affected districts to PPAF’sR&R Project. With an overall financial outlayof US$ 298 million, it was by far the largestprivate sector Reconstruction andRehabilitation Project of its kind in theearthquake affected region with housingreconstruction accounting for US$ 227.18million (76 percent) of the funds (Table7.1). In addition, approximately US$ 32million were allocated for the reconstructionof non-housing infrastructure includingschools, rural health centres, communitycentres, drinking water supply schemes,link roads and sanitation facilities. Further,a sum of US$ 3 million was set aside forprovisioning livestock assets to vulnerablehouseholds while another US$ 5 millionwere allocated for the rehabilitation ofPeople with Disabi l i t ies (PWDs).

For effective implementation of the R&Rproject, PPAF selected and assignedresponsibilities to six Partner Organizationson the basis of a clearly laid out criteriaprioritizing organizational capacity and pre-earthquake operational presence in theregion. Accordingly, National Rural SupportProgramme (NRSP) in AJK and the SarhadRural Support Programme (SRSP) in NWFP



were assigned larger project areas than theother four Partner Organizations, i.e. IslamicRelief (IR), Sungi Development Foundation(SDF), Omar Asghar Khan DevelopmentFoundation (OAKDF) and Women WelfareOrganization, Poonch (WWOP).

The project area had suffered immeasurablelosses in terms of lives, livelihoods andinfrastructure. The first challenge facingPPAF and its Partner Organizations was tothoroughly and fairly assess the extent ofdamage. For this, an extensive capacitybuilding program had to be launched totrain relevant PO staff. Initially, damageassessment training workshops wereconducted to familiarize participants withseismically safe housing models andconstruction techniques in addition todeveloping their skil ls in damageidentification and data collection.Subsequently, a total of 110 SocialMobilization Teams (SMTs) were formedfor conducting the damage assessment

exercise. The success of the project is largelyowed to the dedication and resourcefulnessof these teams, who worked in adversecircumstances to meet challenging targetsin a short span of time while adheringunwaveringly to prescribed standards ofassessment.

Overall, more than 122,000 housingstructures were successfully documentedfor prospective funds allocation. Eachassessed house was placed into one of thefollowing three categories in accordancewith standardized criteria: CompletelyDestroyed (CD), Partially Damaged (PD) andNon-Structural Damage (NSD). Thesubsequent transfer of funds followedguidelines issued by the ERRA, with a singleinstalment of Rs. 50,000 for each householdwith a partially destroyed housing structureand Rs. 150,000 for each household witha completely destroyed housing structure.For the latter category, funds were transferredin three instalments of Rs. 75,000, Rs. 25,000

Table 7.1: PPAF Donor-wise Allocation of Funds (US$ million)

WB IFAD KFW CECP TotalHousing Reconstruction 198 17.51 11.67 - 227.18Small Scale Physical Infrastructure 16 1.67 .75 - 18.42Community Buildings 4 - - - 4Community Health Centers - - - 3.27 3.27Rural Health Center - - - 1.29 1.29Schools - - - 4.76 4.76Livestock Assets - 3 - - 3Operational and Training Support (PPAF) 5 0.72 0.86 - 6.58Operational and Training Support (POs) 15 1.9 1.42 1.39 19.71Consultancy - - 0.6 0.37 0.97Contingencies - 1.57 1.5 0.93 4Disability Project 5 - - - 5

243 26.37 16.8 12 298.17



and Rs. 50,000 each at different stages ofhousing reconstruction following spot checksby qualified engineers ensuring adherenceto pre-defined construction designs.

The objective of building seismically safehousing units could not have been achievedwithout a massive campaign to raiseawareness at the community level and thetransfer of requisite construction skills tothe labor force. There was a completedearth of indigenous expertise in buildingseismically safe housing structures, whilethe general population was largelyindifferent to the viability of earthquakeresistant building techniques and structuralmodels.

Following damage assessment, SMTs werereorganized to train craftsmen and orienthouse owners at the grassroots. While oneSMT in each Union Council operated as aCTU, others worked as Mobile TrainingTeams (MTTs) with the responsibility toorient house owners in earthquake resistanttechniques at their doorstep. The over 2,100community sessions conducted by MTTswithin communities were decisive inspreading awareness and readiness tostrictly follow earthquake resistantconstruct ion codes and designs.

The vulnerable including widows, orphans,elderly and the disabled were grantedcareful consideration in the project design(Box 7.1). This is manifested in thedistribution of livestock assets, as well asin the development of participatory

Community Action Plans (CAPs) for assistingvulnerable households during housingreconstruction.

The World Bank-financed Disability Projectseeks to improve quality of life for personswith disabilities (PWDs) and their familiesthrough targeted interventions ensuringbetter mobility, improved health andincreased participation in community life.The project is designed to support a wholerange of activities from raising communityawareness and provisioning qualityrehabilitative services to sensitization andcapacity building programs aimed at Projectstaff, communities and service providers.

By the end of the reporting period, PPAFhad successfully disbursed over Rs. 15,700million as grants for reconstructingdestroyed housing units, while anotherRs. 522.92 million had been disbursed forthe reconstruction of communityinfrastructure including drinking waterschemes, link roads and sanitation facilities



had civil society organizations accomplisheda project so extensive in scope in extremelydifficult terrain and within a very tighttimeframe. It turned out to be a uniquelearning experience, capacitating grassrootsorganizations and field staff with invaluableskills in dealing with adverse circumstances.It also helped them to revisit organizationalprocedures for addressing urgent problemsmore expeditiously.

Table 7.2: Funding to POs (as of June 2009) (Rs. million)

Geographical Housing Infrastructure Health and Operational & TotalArea Education Training Grant*

SRSP 15 UCs (NWFP) 7,661.03 361.37 - 351.68 8,374.08NRSP 12 UCs (AJK) 5,102.43 51.77 163.08 170.07 5,487.35IR 4 UCs (AJK) 1,751.80 16.29 - 89.02 1,857.11SUNGI 2 UCs (NWFP) 714.45 40.58 - 44.65 799.68OAKDF 1 UC (NWFP) 506.33 11.78 - 31.75 549.86WWOP 1 Rev. Village (AJK) 49.40 41.13 - 9.07 99.61MGPO - - - 282.75 - 282.75CUP - - - 178.86 - 178.86Total - 15,785.43 522.92 624.69 696.24 17,629.30

* This does not include Rupees 16.572 million in additional costs disbursed for fulfilling training requirements in the affectedareas, e.g. Disaster Management Trainings, GSPs etc.

(Table 7.2). Similarly, substantive grantfunds have been transferred to PartnerOrganizations for the development of healthand education facilities (Rs. 624 million) inaddition to funds allocated specifically formeeting their operational and trainingrequirements.

PPAF had affected and managed overalldisbursement of almost Rs. 16 billion forhousing reconstruction to 121, 787 affectedhouses with completely destroyed orpartially damaged housing structures(111,638 completely destroyed; 10,149partially damaged) by the end of thereporting period (Table 7.3).

The R&R Project was a monumentalundertaking and perhaps the mostchallenging task ever taken up by PPAF andits partners. Although PPAF and its partnershad prior experience of working in areashit by natural calamities like droughts andfloods, their human resources andinstitutional capacities had never beentested as seriously as in the aftermath ofthe October 2005 earthquake. Never before



Table 7.3: Funding to Households - Housing (as of June 30, 2009)

Processed Cases Disbursement to Affectees (Rs. in million) CD PD Total

SRSP 56,501 4,331 60,832 5,573.60NRSP 35,075 1,927 37,002 3,997.18IR 12,006 259 12,265 1,247.00SUNGI 4,149 2,334 6,483 516.43OAKDF 3,561 1,176 4,737 392.15WWOP 346 122 468 40.75Total 111,638 10,149 121,787 11,767.10

Box 7.1: Earthquake Disability Project

The project aimed at improving quality of life for persons with disabilities (PWDs) and theirfamilies through targeted interventions ensuring better mobility, improved health and increasedparticipation in community life, while supporting a whole range of activities from raisingcommunity awareness and provisioning quality rehabilitative services to sensitization andcapacity building programs aimed at project staff, communities and service providers.

As the main component of the disability project, Community Based Rehabilitation (CBR) targetsPWDs, their families and communities through community based activities designed to helpraise awareness and facilitate increased community participation for PWDs. The CBR approachfurther aimed at provisioning basic rehabilitative disability services at the community levelthrough professionals, volunteers, trained community organizers and specialized serviceproviders/institutions. These services included medical treatment, physical rehabilitation, provisionof prosthetics and other aids, psycho-social counselling and other specialized services. Keyactivities under this component include needs assessment and identification with people withdisabilities; formulation and realization of individual rehabilitation plans; mapping and capacityassessment of service providers for prospective referral of PWDs; monitoring quality ofrehabilitation services; and mobilization, social integration and empowerment throughinformation, education and communication (IEC).

8 – Social Mobilization


Social Mobilization

The development process in Pakistan needsto be more efficient, cost effective andbetter targeted towards the economicdevelopment priorities of the country.

Unfortunately, the progress in welfareindicators is both insufficient andasymmetric across different regions of thecountry. International evidence suggeststhat a bottom up rather than a top downapproach is more effective in addressingdevelopment issues and problems at locallevel. The top down or supply drivenapproach generally lacks context andperspective, and tends to ignore specificneeds and preferences of individuals andhouseholds. Even when such needs aresupposedly addressed, poor implementationand ineffective monitoring results in dilutedbenefits.

For the past decade, PPAF has followed aninclusive development strategy through itsPartner Organizations. This approachprioritizes community needs within aninclusive framework of communitymobilization under which it seeks tomainstream the poor, vulnerable and themarginalized into the overall developmentprocess. It makes appropriate adjustmentsto suit the peculiarities of socio-culturalenvironment, terrain and type ofintervention.

In view of the urgent need to upscale socialmobilization processes with greateroutreach and coverage at the grassroots,PPAF has successfully launched a focused

project on social mobilization withassistance from the World Bank. The Projectplans to utilize US$75 million for thispurpose while a new Social Mobilization(SM) Unit has been successfully initiatedwith the mandate to appraise partners,allocate funds, and monitor progress ofpartners in mobilizing communities.

The project focuses on the formationof 50,000 addit ional CommunityOrganizations (COs), with their subsequentorganization into higher level institutionsat the village and union council level. Theseinstitutions have been adequately facilitatedand capacitated to manage need baseddevelopment initiatives through atransparent, equitable, inclusive andaccountable process. Approximately onemillion households (rural/semi-rural) willbe organized into COs in 25 of the poorestdistricts of the country (Box 8.1).The selection of the project area wascarefully undertaken on the basis of credibleindependent sources reflecting lower levels

SM: District Coverage


Social Mobilization

of welfare and development in the selecteddistricts. The rationale for going into aselect number of districts is based on thenational and international experience thatconcentrated development of an area bringsabout greater synergies in a shorter periodof time and with lesser resources.

The project aims at federating COs intoLocal Support Organizations (LSOs) at theunion council level while subsequentlyfostering institutional linkages with entitiesand development programs in the privateand public sectors (Box 8.2).

Box 8.1: Social Mobilization Project: Outreach

The project was initiated in June 2008 with 07 Partner Organizations. There are12 organizations currently deployed to implement project deliverables at thegrassroots.

POs Districts Province

1. NRSP Panjgur BalochistanAwaranBahawalpur PunjabBahawalnagarDG KhanRajanpurKhushabBhakkar

2. TRDP Tharparkar Sindh3. SAFWCO Sanghar4. SRSO Gothki5. SRSP Kohistan NWFP

BattagramUpper DirShanghla

6. BRSP Khuzadar BalochistanJhal MagsiKharan

7. TF Jhal Magsi8. PRSP Muzaffargarh Punjab

Layyah9. BEEJ MusaKhail Balochistan10. BRDRS MusaKhail11. CMDO Bannu NWFP

Lakimarwat12. PIDS Kohlu BalochistanTotal 24


Social Mobilization

Box 8.2: Objectives of Social Mobilization Project

Mobilization of poor households in over 500 Union Councils in 25 districts intoapproximately 50,000 well-managed transparent and accountable CommunityOrganizations, able to participate in PPAF’s microfinance and community infrastructureprograms and undertake other activities, including linking with local governmentand rural development programs of provincial and federal governments and micro-finance organizations;

Mobilization of these and existing COs to form federations at Union Council (tobe called Local Support Organizations) and higher levels to leverage public andprivate sector resources and services, and link to local governments (e.g., the PrimeMinister’s Livestock Programme; line departments at Tehsil and District governments;banks and commercial enterprises);

Development of a leadership cadre of 100,000 women and men, who will betrained to manage their COs and federations and to link them to service providersand local governments. These will be capitalized through the provision of a networkof specialized professional expertise in project identification and execution in health,education, natural resource management, agriculture and related rural developmenttechnologies.

In backward regions such as those in theProject area, rent seeking behaviour of localelites often sidetracks resources fromreaching the poorest segments of thepopulation. The project seeks to circumventsuch problems through a mandatory 50%membership of poor households in all COs.Similarly, the project requires a compulsory40% participation of women.

The Project has a special focus towardsspreading awareness amongst women asa means to alleviating gender asymmetriesat the grassroots and seeks to educate allmembers of COs in their rights as citizensunder the Constitution of the country.

Evidence proves that a lack of awarenessof such rights can lead to further socialdisparity and a general lack of transparency


Social Mobilization

and accountability. On the other hand,citizens who are knowledgeable about theirrights are much more likely to be able toinfluence the development process to theirbenefit.

The SM Unit is particularly mindful of puttingin place an effective performance monitoringframework to measure progress against clearindicators. For this purpose, the Unit hasdeveloped a customized ManagementInformation System (MIS) and vigorousefforts have been made to institutionalizethis within Partner Organizations througha concerted and focused training program.During the period under review, threeworkshops were conducted in Multan,Quetta and Islamabad on the effective usageand implementation of the MIS for 75 POstaff members. Similarly, three moreworkshops were organized to orient PartnerOrganizations on record keeping and MISformats, attended by 73 staff members. Atthe same time, field visits have been regularlyconducted to oversee progress on theground while identifying weaknesses in theProject implementation.

By the end of the reporting period, the Unithad successfully disbursed Rs. 740 millionto 12 Partner Organizations. A total of16,554 new COs have been formed, ofwhich 54% were composed for womenalone. A large number of these COs havebeen federated into 409 Vi l lageOrganizations (VOs), of which 36% involvedwomen participation either completely orpartially (Box 8.3).

Figure 9: Distribution of Community/Village Organizationby Type

0%

100%

20%

40%

80%

60%

MixFemaleMale

63261

Village Organizations

85

Community Organizations

8,9926,751

811

64%

15%

21%

5%

54%

41%


Social Mobilization

Box 8.3: Social Mobilization Project: Targets & Achievements

As per the objectives, target of more than 50,000 COs formation has been setamong 12 Partner Organizations. The achievements against total project targetsare presented in the table:

COs Formation VO Formation

S.No. PO Name Total Targets Achievements Total Targets Achievements

1. NRSP 25,008 8,330 1,771 2332. TRDP 3,700 1,304 240 703. SAFWCO 3,626 2,670 256 944. SRSO 3,550 1,450 230 105. SRSP 488 956 316 26. BRSP 2,528 1,153 179 07. PRSP 9,200 473 598 08. BEEJ 500 70 34 09. CMDO 1,500 96 105 010. TF 500 0 34 011. BRDS 500 0 34 012. PIDS 500 52 34 0

Total 55,993 16,554 3,831 409

CO: Community OrganizationVO: Village Organization

9 – Evaluation, Research and Development


Evaluation, Research and Development

The Evaluation, Research and Development(ERD) Unit is mandated to critically evaluatethe impact and progress of PPAFinterventions in addition to regularlycollecting and disseminating informationto all stakeholders at the national andinternational level. Simultaneously, the Unitworks diligently to capacitate PartnerOrganizations in developing effectivemonitoring systems within a cost effectiveand transparent framework set with relevantand verifiable measures.

During the year, the Unit has beensuccessfully consolidating and analyzing arich and vast reserve of technical, financial,and socio-economic data received fromPartner Organizations, third party evaluatorsand in-house assessment exercises. The ERDUnit regularly disseminates this informationthrough a series of ongoing and periodicreporting formats including quarterlyprogress reports, annual reports, casestudies, thematic reports, baseline reportsand impact assessment studies.

The quarterly progress reporting of all PPAFfinanced field operations and activities iscritical to efficient and timely decisionmaking within the organization. Duringthe reporting period, ERD undertook thetask of designing and streamlining astandardized web based data collection anddissemination application, called the Progressand Benefit Monitoring System (PBMS).

For this purpose, systematic training andcapacity building exercise was undertakenfor the PPAF Partner Organizations. One-on-one sessions were held with most of thePartner Organizations to train their staff onthe use of the PBMS. The PBMS is designedto update quarterly data in real time whilegenerating a range of analytical reports forthe benefit of PPAF and the PartnerOrganizations. The PBMS is likely to increasethe speed of reporting, promote transparencyand two-way communication.

Progress & Benefit Monitoring System

Actual image of the online system



The ERD Unit has been central to PPAF’sdrive towards a results based evaluationframework with an eye to scientificallymeasuring the impact of interventions atthe grassroots. During the year, most ofthe work on a baseline survey of a PartnerOrganization for the IFAD’s MicrofinanceInnovation and Outreach Program wascompleted while work on the baselinesurvey of two more Partner Organizationswas initiated. Three impact assessmentsurveys were conducted to quantify thepossible impact of PPAF supportedinfrastructure interventions in the Punjaband the Sindh provinces (Box 9.1).In each case, data on a whole range ofsocio-economic indicators was collected

for a representative sample of randomlyselected beneficiary and non-beneficiaryhouseholds. In line with best practices inimpact evaluation, all three surveysenumerated households for whom baselinedata had already been collected before theinitiation of PPAF interventions. The paneldata was then analyzed by credible thirdparty consultants to verify the magnitudeof attributable impact using robustanalytical techniques.

Simultaneously, the Unit continued tocontribute thematic reports and studies tothe growing body of PPAF’s initiatives inprimary research with quality input at theprogram and policy levels. During the year,

Box 9.1: PPAF Impact Assessment Surveys (FY 2008 – 2009)

During the year, ERD conducted three follow up impact assessment surveys involvingtwo DMPP projects in two districts (Khushab and Sanghar). Another impact studyof CPI schemes in 10 districts of Punjab was also undertaken. Impact Assessmentreports for DMPP projects have already been compiled and verifiably demonstratea positive accrued impact on household incomes. Data for the impact assessmentsurvey of CPI schemes in Punjab is currently being processed for analysis and adetailed impact assessment report is scheduled to be released soon.

Implementing Program Project Area Sample SizeUnit Category Province District (Households)WMC DMPP Punjab Khushab 120PWMC DMPP Sindh Sangarh 226CPI Conventional Punjab Khushab,Muzzafargarh, 447

Projects Sheikhupura, Lodhran, Nankana Sahib,Rahim Yar Khan,Attock, Mianwali,Gujranwala, Kasur



three thematic studies were undertaken tounderstand the relevance, scope and efficacyof renewable energy projects as sustainablesolutions for meeting community demandsin diverse geographical settings.

For instance, a case study on PPAFsupported micro-hydel projects in NorthernAreas and Chitral examined the positiveenvironmental, economic and social impactof renewable hydel power as a sustainablesource of electricity in isolated off gridmountain areas. At the same time, thestudy cautioned against the implementationof such projects without putting in placebroad based participatory mechanisms forproject maintenance at the communitylevel. Similarly, research reports titled“Biogas: The Potential of Renewable Energy”and “Solar Energy: The Potential ofRenewable Energy” provided the basis forthe Research and Discussion Series onrenewable energy and explored thepotential for renewable energy in Pakistan.

Additionally, research studies wereconducted in other thematic areas rangingin scope from context specific sustainablelivelihood strategies to issues with sectorwide implications including the delivery ofmicrofinance and education services topoor households and communities. Forinstance, in recognition of the positive impactof supporting well designed microenterpriseventures, a case study was undertaken toanalyze the potential of wicker basketweaving in improving the lives of poorwomen and their families in Karachi. Another

study on alternative delivery instruments forprimary education provided key insights tothe Health and Education Unit for futureprogram implementation following a closescrutiny of data collected from 27 PPAFeducation facilities.

In a similar vein, the Unit conducted a studyon the causes and remedies of client attritionin microfinance by reviewing the experiencesof service providers at the national andinternational level. In addition to a thoroughreview of secondary sources, the studyincluded primary field research involving 16Partner Organizations in 8 districts of Punjaband Sindh provinces with a highconcentration of microfinance services.

Through its sustained commitment tosystematic evaluation of PPAF interventionsand rigorous policy research, the Unitcontinues to update and inform PPAF’sstrategic decision making while striving topromote community led development toalleviate poverty.

10 – Media and Communication


Media and Communication

The Media and Communication (M&C) Unitsupports PPAF’s mission of empoweringpoor households and communities throughconcentrated strategies aimed at effectivelypublicizing this effort. By striving to buildcritical linkages across print and electronicmedia, M&C seeks to educate and informthe masses regarding vast potential ofPPAF’s poverty alleviation interventions.This strategy has been effective indeveloping a critical mass of understandingand appreciation amongst a mix ofstakeholders in governmental and non-governmental hierarchies, with betterprospects of propelling the messageforward to a wider audience.

The Unit’s emphasis on using mass mediafor leveraging continued support iscomplementary to its transformative rolein eliminating conventional barriers andintroducing fresher perspectives formeaningful change. This role is particularlyrelevant to PPAF’s efforts towardsinfluencing decision making for pragmatic,need-based and affirmative policyformulation.

The Unit is strongly committed to engagemainstream newspapers and televisionchannels for effective branding andpositioning of PPAF through effectivelysharing the organization’s cumulativesuccesses in transforming the lives ofmillions.

In pursuit of the above objectives, the Unit’swide ranging use of media access includes

radio programs on PPAF supportedcommunity interventions, interviews of keyPPAF staff on popular television channels,as well as widely disseminated news releaseson a range of PPAF activities and events.For instance, a radio program by the nameof Roshan Raahein was launched in thereporting period as a means to educate themasses and raise awareness of PPAFinterventions and their impact onmarginalized communities. The programgenerated a lot of interest and awarenessamong target communit ies andstakeholders – a fact substantiated by thereceipt of a large number of letters fromacross the country.

Similarly, the Unit extended wide rangingsupport to PPAF’s ten year celebrationsthrough a variety of activities including thecompilation of video documentaries,designing multi-media presentations andthe publication of a wide array of supportmaterial. As part of the celebrations, theUnit also designed and printed a specialreport titled A Decade of Accomplishment:Ten Years of PPAF depicting a decade ofachievements and the successfulimplementation of best practices in socialmobilization, human and institutionaldevelopment, and the delivery of sustainableservices in microfinance, health andeducation.

More importantly, the Unit continues toorganize immersion visits for journalistsfrom mainstream print and electronicmedia. By providing the latter with direct



access to PPAF communities, immersionvisits are profoundly helpful in shapingviews through the dissemination of featurearticles and news stories generated in thefield. Such visits help in creating supportfor the paradigm of participatory grassrootsdevelopment: a perspective that still has itscritics in those who lend support to adevelopment philosophy characterized byhighly centralized frameworks.

PPAF experience in rural development, aswitnessed by journalists during such visits,underscores the importance ofcomplimenting large scale governmentsector efforts at different administrativelevels with well designed participatoryprocesses and focused small scaleinterventions (Box 10.1). Immersion visitshave thus played their part in generatingsupport for v iable publ ic-pr ivatepartnerships as a prerequisite forcomprehensive change at the grassroots.

The Unit further facilitates PPAF’s agenda

for prescriptive research through the regularpublication and dissemination of reports,brochures, manuals, flyers and fact-sheets.The quarterly publication of the newsletterPovertyline keeps all stakeholders informedof PPAF’s growth, programs and futuredirections.

Additionally, the Unit routinely conductscase studies and produces videodocumentaries in close collaboration withall units of PPAF to document and criticallyanalyze the impact of PPAF interventionson participating communities.

M&C Unit also plays its part in providingtechnical support and expertise to bothPartner Organizations and participatingcommunities in relevant fields. Particularly,the Unit critically assists them in buildingeffective communication channels forraising awareness and behavioural changerather than solely focusing on publicrelations exercises. Simultaneously, the Unitseeks to effectively compliment the workof other Units within PPAF by providingmedia coverage and preparing supportmaterials for all workshops, seminars andceremonies.

Through its varied set of activities, the Unithas been to a large degree successful inmainstreaming poor communities throughspreading PPAF experience to a largeaudience. At the same time, it hasestablished itself as a critical supportcomponent crucial to the future growth ofPPAF.



Box 10.1: External Interface and Feedback

As a part of its information dissemination, dialogue and discussion mandate, theM&C Unit regularly facilitates independent engagement of print and electronicmedia with PPAF, its partners and development sector at large. Following areexcerpts of coverage in the national media:

“The PPAF programmes aim at alleviating poverty, reducing vulnerability andimproving food security through sustainable development. It is hoped that PPAFwould develop itself as a recognized and highly regarded policy and technologicalhub, addressing the water related issues in South Asia.”– Daily Dawn

“It was indeed an interesting experience to see PPAF-funded Ahmedabad microhydelpower project, producing 350 KW of electricity, and a distribution network tolighten up the lives of those inhibiting this small village and surrounding areasbeing run and managed by the local peoples on their own.”– Daily The News

“Collectively, the foundation has been laid and PPAF today stands at the thresholdof bringing about a wholesale transformation in the lives of the poor across thecountry. Wherever PPAF-sponsored credit, health, education, infrastructure schemesand training programmes are operative, the poor have started reaping benefits ofhigher quality of life, incomes and reduced their dependence on external support.”– Daily The Nation

“I got an opportunity to visit PPAF interventions during the shooting of a PPAFdocumentary in connection with the anniversary of the 2005 earthquake. PPAFhas constructed state-of-the-art health and educational facilities in the affectedareas. These health and educational facilities are offering extremely good servicesto the poor at a negligible cost at their doorstep”.– Pakistan Television

11 – Human Resource, Procurement and Administration


Human Resource, Procurement and Administration

The Human Resource, Procurement andAdministration wings work closely to ensureconsist and high standards in themanagement of its human and physicalresources. The three wings are committedto promoting organizational andadministrative efficiency through the entirerange of activities relevant to their individualsphere of responsibilities including humanresource management, procurement ofgoods and services, logistical support andthe up gradation and maintenance offacilities.

The Human Resource wing has put togetheran efficient and transparent system ofrecruitment with the objective of sustainingprofessional excellence in all aspects ofPPAF’s work. Further, the Unit strives toenhance employee potential through aclearly laid out incentive structure thatincludes multiple on-job trainingopportunities in addition to an establishedperformance management systemimplemented to maintain a productivityand performance driven culture with clear-cut promotion and salary adjustment criterialinked to performance indicators judiciouslyapplied at all levels of the managementhierarchy.

This year, a consolidated training plan wasdeveloped through proper training needsanalysis (TNA). In order to diversify andstrengthen the human resource pool tosupport the PPAF in achieving its strategicand operational objectives, as well as by

ensuring transparency and merit, duringthe year the Human Resource wingcompleted recruitment of 50 new staffmembers and renewal of 54 contracts ofexisting employees.

The Unit regularly provides trainingopportunities for a range of relevantsubjects and courses delivered by crediblenational and international institutions tofacilitate the professional growth ofemployees. In addition orientation trainingprovided to 50 new staff members.

During the year, 127 PPAF support andregular staff attended training courses inrelevant areas including management,monitoring and evaluation, finance andaccounts, development communicationand leadership at eminent national traininginstitutions like Pakistan Institute ofManagement, Lahore University ofManagement Sciences, NGO ResourceCentre, and Pakistan Institute ofDevelopment Economics.

Additionally, 8 staff members availedtraining opportunities in foreign countriesincluding UK, Malaysia, Indonesia, Bangkok,China, and Dubai. These training/exposurevisits to prestigious international institutions– UNESCO-IHE, MDF-Holland, University ofEast Anglia, MIS International – constitutesa crucial element in the unit’s effort tocontinuously refine and update staff skillsin addition to sustaining an increased rateof staff retention for longer periods of time.


The HR and Procurement wing has carefullyapplied the provision of trainingopportunities to all employees, while beingparticularly mindful of the needs of supportstaff. During the year, it arranged severaltraining events for support staff. Theseincluded training sessions for receptionistsaimed at refining their workloadmanagement skills and critical trainingevents for drivers designed in helping themto better address security risks.

The Unit is also mandated to efficiently andtransparently manage the procurement ofall goods and services in conformity withPPAF requirements and donor guidelines.Towards the realization of this aim, theUnit meticulously follows establishedprocurement procedures laid out for variouscategories of goods and services. Particularly,the Unit is aware of the importance ofselecting credible third parties for timebound outsourced activities includingresearch studies, training exercises, baseline

and impact assessment surveys, reports andpublishing contracts. The Unit follows atransparent and well defined criteria withclearly laid out indicators to rate eachconsulting firm and/or individual consultant.

During the year, the Unit processed 82consultancy contracts for a variety of tasksincluding training assignments, baselinestudies, topographic surveys, and povertyassessment of selected districts.

The Unit further ensures the procurementof goods as per PPAF needs with a similarfocus on quality and timeliness. During theyear, the procurement wing successfullyprocessed procurement of 517 itemsinitiated by various PPAF units, whichrequired processing of 146 cases incompliance to PPAF internal procurementprocedures as well as donors’ specificguidelines.

As an apex organization, PPAF worksthrough Partner Organizations whoseefficiency and capacity in delivering servicesat the grassroots is crucial to its ownsuccess. As part of their responsibilities, allPPAF units are geared towards building POcapacities in their respective areas ofexpertise. The procurement wing activelyparticipates in the process by striving tobuild PO capacities in good procurementpractices. During the year, the Unit providedguidance to 65 POs in areas of nationalcompetitive bidding, national shoppingand other general procurement issues.




The Administration wing plays a major rolein managing PPAF’s daily activity scheduleand provides crucial technical support inthe maintenance and upkeep of PPAF officesand physical resources. The Unit hascommendably kept up with the pace ofPPAF’s increasing operations without lettingup on the quality of proceduralrequirements ranging from the maintenanceof travel logs and attendance records,provisioning of logistical support for PPAF’sgrowing itinerary of field visits, and makingarrangements for routine meetings,conferences, and lunches. During the year,the Unit finalized close to 1,000 travelarrangements for PPAF staff including 12foreign visits, in addition to successfullyholding over 70 meetings both inside andoutside PPAF premises.

Table 11.1: Highlights of the Year 2008 - 2009

Category No.ProcurementGoods procurment awards 517Consultancies procurement awards 82Training events of POs 3AdministrationAir Travel country-wide 457Road Travel country-wide 544International travel 12Human ResourceNew Staff hired 50Renewal of contract 54National training 127International training 8

Together, the three wings are committedto ensuring quality support to PPAF withthe overarching objective of sustainingoperational efficiency and smoothfunctioning of all systems and processes.

12 – Internal Audit


Internal Audit

The Internal Audit (IA) Unit is mandated tofunction as an independent source ofadministrative and financial oversight withthe key role to ensuring compliance withlaid out rules, regulations and procedures.The Unit reports regularly to the AuditCommittee of the Board of Directors withkey insights and suggestions for redressingidentified loopholes and weaknesses, whilehighlighting instances of digression fromstandard practices and procedures.

During the year, the Unit performed an in-house review of all PPAF units to ensurecompleteness and accuracy in record keepingand full adherence to standard operatingprocedures in the performance of relevantduties and responsibilities. As mentionedearlier, despite PPAF’s ever-increasing scopeof operations, the Unit successfullycompleted the required tasks within theallocated timeframe. These tasks includedactivities ranging from ensuring compliancewith existing procedures in the procurementof goods and services and verifying thepresence and proper use of all fixed assetsto comprehensively examining all financialdetails, i.e. payments, receipts, bankaccounts and their reconciliation statements,payroll, investments, petty cash, advancesand security deposits. The Unit focused onmaintaining a prescriptive approach so thatany reported issues were addressed withpragmatic solutions within the existingframework.

The Unit shares its activities on a quarterlybasis with the Audit Committee, which

approves its annual plan. The Unit strictlyadheres to the timelines set for variousactivities in realization of the fact that theslightest procrastination might seriouslyjeopardize the very purpose of the exercise.The annual plan includes a schedule forconducting timely audits for both PPAFunits and Partner Organizations. The Unitis particularly mindful of working to ensurecomplete adherence to all laid out rulesand procedures w i th in Pa r tne rOrganizations. This aspect of the Unit’swork is both demanding and crucial forPPAF in effectively meeting organizationalgoals on the ground.

During the reporting period, the Unitsuccessfully conducted the audit of 36existing partner organizations. In eachinstance, the Unit scrutinized availabledocuments and existing procedures for anyissues that could potentially endanger thefinancial and administrative efficiency of theorganization in the short and/or long term.

When such issues were identified, theywere promptly reported along withsuggestions for improvement. In manyinstances, the observations and suggestionsof IA staff produced results with positiveimplications for the long-term health ofPPAF interventions.

The IA Unit thus constitutes a critical meansin ensuring that agreed upon rules andprocedures are followed as a means toeffectively achieve organizational goals andobjectives.

13 – Finance and Accounts


Finance and Accounts

As a custodian of public funds, PPAF isconscious of the need for prudent andappropriate financial control andmanagement. In pursuit of this objective,the Finance and Accounts (F&A) Unit ismandated to execute and record all financialtransactions in a systematic and transparentmanner. In the conduct of its routinebusiness, the Unit strives to maintain thehighest standards of financial management,while strictly following standard operatingprocedures laid out in the comprehensiveand highly standardized OperationalManual of the PPAF.

The F&A Unit further ensures compliancewith regulations of the Securities andExchange Commission of Pakistan andcovenants stipulated in agreements signedwith all parties, including the Governmentof Pakistan (GoP) and donors, i.e., theWorld Bank (WB), the US Department ofAgriculture, the International Fund forAgricultural Development (IFAD), the KfWDevelopment Bank (Germany) and theCommittee Encouraging CorporatePhilanthropy (CECP).

As part of its responsibilities, the Unit worksclosely with operational and support unitsto facilitate funding and ensure adherenceto stipulated processes. Its activities arecarried out in an automated computerizedenvironment through customized softwareadapted to PPAF requirements, while allwork processes and procedures are attunedto a comprehensive manual for financialmanagement developed specifically for the

Unit. Similarly, books of accounts are keptin accordance with the statutoryrequirements and agreements with GoPand donors.

The F&A Unit has implemented a systemof accounting control which is sound indesign and has effect ively beenimplemented and monitored with ongoingefforts to improve it further. The accountingcontrols comprise the plans, proceduresand records that are concerned with thesafeguarding of assets, checking theaccuracy and reliability of financial data,promoting operational efficiency andencouraging adherence to prescribedmanagerial policies. The system providesassurance that the transactions are executedin accordance with managementauthorization and record keeping is donein a way to permit preparation of financialstatements in conformity with generallyaccepted accounting principles.

The Standard Operating Procedures Manual(SOPM) of the F&A unit documents in detail,the internal control framework andaccounting policies and procedures. Workflows and use of an authorization matrixprovide for adequate segregation of duties.Job descriptions for all approved positionsin the Unit form part of the SOPM. Thefinancial management systems have beenset-up to handle extensive reportingrequirements in a flexible manner. SincePPAF’s existing portfolio consists of multi-donor funded projects, the managementinformation system is equipped to handle



a multitude of donor specific reportingrequirements.

Transparency of financial information fordifferent stakeholders is a primeconsideration of the Unit. In order to ensurethis, the Unit has put in place accurate andreliable financial and other reportingframework, effective internal controlprinciples including risk management,setting of targets, planning and monitoringof Company’s operations and performanceunder direct and indirect supervisionthrough delegated authorities. The SOPMlists internal and external reports preparedby the F&A unit. Mechanisms are in placeto ensure that the reporting requirementsrelated to all donor funded projects andregulatory agencies are met. Checklists areused to monitor compliance.

The F&A Unit uses an SQL-based financialmanagement information system. Itcomprises of integrated modules for GeneralLedger, Fixed Assets and Payroll. The systemis regularly updated and has beenfunctioning effectively for maintenance ofcomprehensive books of account. PPAF isusing a detailed chart of accounts. Sufficientdata is captured to enable all external andinternal reporting requirements to be metin a timely fashion. In addition, two stand-alone modules are also in use to monitorloan and grant based operations. Thesemodules produce a number of reportsallowing analysis and monitoring of themicro-credit portfolio as well as grantinterventions. Mark-up schedules of POs

are system generated ensuring accuracyand completeness.

The F&A Unit consciously strives toencourage and facilitate all processes andprocedures aimed at strengthening thelevel of accountabil ity within theorganization. All documentary records andtransactions are subject to strict scrutinyby independent internal and externalauditors, as well as by supervision missionsfrom different donors. In the conduct ofits routine obligations, the Unit hasprioritized true presentation of facts andthe timely issuing of all periodic financialstatements for management, donors andstakeholders.

At the same time, F&A Unit is particularlymindful of maintaining transparency andprompt handling of reporting requirementsat all times and at all levels. These principlesare applied for both internal reporting in



the form of monthly financial updates, andexternal reports important to stakeholdersin the form of quarterly, half yearly andnine monthly un-audited financialstatements, Management Reviews, annualaudited financial statements and theDirectors’ Report.

PPAF operations for the year ended June30, 2009 were audited by its externalauditors the M/s A. F. Ferguson & Co.,Chartered Accountants. In the latter’sunqualified opinion, PPAF’s financialbusiness was being conducted inaccordance with approved accountingstandards as applicable in Pakistan andaccording to the requirements ofCompanies Ordinance 1984, whilemanagement developed f inancialstatements presented a true and fair viewof the company’s affairs. These opinions

were based on the inspection and reviewof company records and details of fundsreleased to Partner Organizations.

In addition to preparing financial statementsas per statutory requirement, the Unit alsoprepared separate financial statements ofa) WB and IFAD Projects for the year endedJune, 30, 2009; b) KfW Project for the halfyear ended December 31, 2008 and June30, 2009. The above financial statementswere audited by external auditors. Inconformity with the best practices, quarterly,half yearly and nine monthly condensedinterim un-audited financial statementsalong with Management reviews were alsoprepared. Subsequently, the annual auditedfinancial statements along with Directors’Report and donor specific audited financialstatements, and interim un-audited financialstatements were submitted to the Audit

Box 13.1: Findings of the World Bank Supervision Mission

“The financial reporting requirements are promptly and satisfactorily fulfilled. Boththe Finance & Accounts Unit (F&A) and Internal Audit Department (IAD) areadequately staffed. The IAD is successfully executing a comprehensive work plan.The PO monitoring system has been further strengthened and now includes severalcomplimentary mechanisms ensuring minimum gaps in the monitoring framework.All these steps have contributed to the strengthening of the control environment.The submission of FMRs by PPAF remained accurate and timely. The mission randomlyreviewed supporting documentation for withdrawal applications and found thesame in order. Financial reporting requirements are promptly and satisfactorilyfulfilled, while quarterly FMRs and annual audited financial statements are submittedto the Bank well within the due dates. The Designated Accounts under all theoperations are running smoothly and replenishment applications are being submittedon regular basis.”



Committee of the Board for review. On therecommendations of the Committee, theBoard of Directors and General Bodyapproved these financial statements alongwith the Directors’ Report and ManagementReviews.

The General Body approved the auditedfinancial statements of the Company forthe financial year ended June 30, 2009together with Auditors’ and Directors’Reports thereon within three months ofclose financial year. The annual auditedfinancial statements along with Directors’Report as well as quarterly and half yearlyun-audited financial statements along withManagement Reviews are published andcirculated to stakeholders. These statementsare also made available on the Companywebsite.

Disbursements to PPAF under the WorldBank and IFAD projects were on the basisof Financial Monitoring Reports (FMRs).This report based disbursement is allowedonly to institutions with effective and strongfinancial management systems andprocedures. All FMRs and withdrawalapplications related to WB and IFAD projectswere submitted within the period allowedby donors. These were reviewed by thedonors and found to be eligible forreimbursement or replenishment.

Similarly, all information and data submittedwere in compliance with disclosurerequirements and formats. The findings ofthe WB Supervision Mission is a testimony

to the robustness and efficacy of PPAF’sFinancial Management system as well asto the Unit’s strict adherence to allprocedures, processes and requirements(Box 13.1).During the reporting period, F&A played acritical role in the final approval of US$ 250million World Bank facility for the ThirdPPAF Project (PPAF III). Not only did theUnit finalize financial projections fordifferent components, it diligently reviewedand finalized the Financing Agreement(between GoP and IDA), Project Agreement(between IDA and PPAF), as well as theSubsidiary Loan Agreement (between GoPand PPAF) in consultation with PPAF’s legaladvisor and the World Bank team. F & AUnit also actively participated in negotiationsfor PPAF-III between representatives of GoP,WB, and PPAF and execution of Legal andFinancing Agreements, following whichthe project was declared effective onJuly 09, 2009 in the record time of one



month after the signing of the agreements.As a result of the combined efforts of PPAFtax advisors and the Unit, the Federal Boardof Revenue renewed PPAF’s status as awelfare institution. Consequently, there wasno tax liability for the year under review.

During the reporting year, the Unitcontinued to actively participate in themonitoring of financial flows to PartnerOrganizations, ensuring completeadherence to all legal covenants and alsoensured the swift receipt of audited financialstatements from all Partner Organizationswithin six months of the close of thefinancial year, in addition to the submissionof management letters issued by theirrespective external auditors. These weresubsequently reviewed and necessaryact ions were taken accordingly.Not only has the above steps infusedfinancial discipline within PartnerOrganizations, the Unit’s consistentemphasis on the submission of periodicstatements of expenditures and allnecessary documents in support of grantrelated expenditure has further promptedPOs to maintain proper financial andoperational records.

Simultaneously, it continued to conductregular field visits to review the financialmanagement systems of POs and suggestimprovements wherever weaknesses andconstraints were observed. Realizing theimportance of its contributions in thedevelopment of Partner Organizations, theUnit plans to continue efforts in

strengthening the latter’s systems andprocedures, with particular focus on smalland medium organizations.

During the year, the head of F & A Unitcontinued to fulfill his responsibilities asCompany Secretary by ensuring fullcompliance with mandatory secretarialresponsibilities as envisaged by theCompanies Ordinance, 1984. Additionally,PPAF complies with the best practices asset out in the code of corporate governance.Adequate records evidencing statutorymeetings and other formal requirementswere thoroughly maintained, while reportsto the Securities and Exchange Commissionof Pakistan were submitted well in time.

The F&A Unit remains fully committed tointernational best practices in themanagement of its affairs and responsibilitiesas is reflected in all its activities, systems,and procedures. While resolutely committedto continually build on its strengths, theUnit will strive for further innovations tostrengthen its financial management andprocedural efficiency in the next financialyear. Thus far, it has achieved its resultsthanks to its well-coordinated operationalstructure and clearly defined spheres ofresponsibility, equitably distributed amongsta qualified and dedicated staff. The latterhave successfully maintained high standardsin the effective management of funds andtimely dissemination of information: withthe aid of their aggregate competence andskills, F & A Unit looks forward to achievingsimilar standards of professional excellencein the future.

14 – Director’s Report


Directors’ Report

The Board of Directors of Pakistan PovertyAlleviation Fund (PPAF) is pleased to presentthe ninth Annual Report along with auditedfinancial statements of the Company forthe year ended June 30, 2009.

The year 2009 was a challenging year forthe Company. However, despite globaleconomic downturn that negativelyimpacted national macroeconomicfundamentals, PPAF continued to build onthe growth it achieved in the previous yearswith results adding further strength to itsfinancial position. The Company is makingsteady progress in pursuit of its objectivesof poverty alleviation. It maintainedsignificant progress with respect to specificdeliverables, for each of its core componentsof credit and enterprise development;community physical infrastructure;education and health; and capacity buildingin the broader context of poverty alleviation.

In addition to carrying out its mainstreamprogrammes, PPAF continued its multi-pronged strategy for the restoration ofl i ve l ihoods, which has invo lvedreconstruct ion of housing units;rehabilitation of health and educationfacilities, community infrastructure schemesand training of individuals on a large scalein 34 earthquake affected union councilsof North West Frontier Province and AzadJammu and Kashmir. PPAF’s rehabilitationand reconstruction programme was guidedby two fundamental objectives (i) to assistpeople in rebuilding their lives by providingsafe and seismically appropriate housing

and restoring basic infrastructure servicesthrough a community driven approach;and (ii) to build capacities of affectees withthe purpose of enabling them to takecontrol of their lives on a sustainable basis.

Reinforcing its satisfactory performance inthe earthquake-affected areas, PPAFallocated Rs. 134 million to help InternallyDisplaced Persons (IDPs) through anintegrated development program whichincludes social mobilization; initialrehabilitation access to potable water;vocational and skill training; health services;and informal education. PPAF has beenallocated seven IDPs camps where it isimplementing various interventions throughits partner organizations. These includetraining in vocational skills with dailystipend; distribution of clothes amongdisabled children; provision of milk to 9,000children daily, flour to widows and mealsto children enrolled in PPAF schools;establishment of 12 non-formal schoolsand two health centers; sinking of 60 handpumps for fresh water; setting up ofplaygrounds with swings, slides and see-saws to engage children in healthy stress-relieving activities; establishment of tailoringcenters for women. Other activities inpipeline are provisioning of assistive devicesfor disabled children and hygiene productsto women and children of the camps. PPAFstaff has also donated one-day salary tothe Prime Minister’s special fund for victimsof terrorism and is determined to play itsrole as a bridge between the Government,donor agencies and the IDPs.


Directors’ Report

The Second US$ 476 million InternationalDevelopment Association/World Bank projectthat also included US$ 238 millionearthquake project, was successfullycompleted. PPAF achieved and in most casesexceeded all the major targets and forecastsset at the appraisal. On the request of WorldBank, the Food and Agriculture Organization,Rome (Implementation Completion andResults Report Mission) conducted thirdparty review/assessment of Second PPAFProject and observed the following:

“The majority of Programme DevelopmentObjectives have been fully achieved despitesignificant additions to these targets in thecourse of implementation (e.g. earthquakerepair, rehabilitation and reconstruction), aswell as significant constraints arising fromthe deteriorating security and macro-economic situation and the inflow of fundsfrom other agencies. Operating costs of theinstitution were very low (accounting forless than 1% of costs), strong support wasprovided to partner organizations, and strongcommitment was shown by PPAF to theproject objective. A positive rating for overalloutcome is justified not only by PPAF meetingor exceeding most indicator targets in a verylarge and complex series of activities, butalso by the ability demonstrated by PPAF asan institution to successfully adapt tosignificant changes in financing and theexternal environment in which it operates”.

By the end of June 2009, PPAF funding hadbeen disbursed in urban and rural areas of124 districts of the country (to about

141,000 community organizations / groups)through 77 partner organizations of which12 were focusing exclusively on women.On cumulative basis, PPAF financed3,000,000 microcredit loans, of which1,380,000 (46%) were to women. 18,500infrastructure projects were initiated and332,000 staff and community memberswere trained. In earthquake affected areas,PPAF provided financing to 120,000households to build earthquake resistanthomes and, in addition, provided trainingto over 108,000 individuals in seismicconstruction and related skills.

PPAF financial and non-financial servicesare estimated to have, on a cumulativebasis, benefited (directly or indirectly)over 18 million individuals from its creditprogramme and over 11 million individualsfrom infrastructure, health and educationinterventions, across the country.

PPAF Coverage

Afghanistan

IndiaIran

Arabian Sea

China

79

Directors’ Report


Table 14.1: Disbursements – Core Operations Rs. million %

2009 2008 VarianceCredit and Enterprise 6,949 9,075 – 23.43Water and Infrastructure 979 1,332 – 26.50Capacity Building 370 471 – 21.44Social Mobilization 712 — —Health and Education 73 148 – 50.68Total 9,083 11,026 – 17.62

Operational and FinancialOverview

The operational and financial results of theCompany, during the year under review,remained satisfactory. As PPAF approachedthe completion of its World Bank financedsecond pro ject , i t s incrementa ldisbursements were lower due to fullcommitment and utilization of fundsallocated by the donors.

Total disbursements for core operationsduring the year were Rs 9,083 million ascompared to Rs. 11,026 million in FY 2008.Disbursements of loan (microcredit andenterprise development facilities) were Rs6,949 million as compared to Rs 9,075mil l ion; water and infrastructuredisbursements were Rs 979 million ascompared to Rs 1,332 million; capacitybuilding disbursements were Rs 370 millionagainst Rs 471 million and disbursementsfor education and health were Rs 73 millionas against Rs 148 million during thepreceding year.

In addition, Rs. 712 million were disbursedduring the year for social mobilization(Table 14.1).

During the year disbursement for relief,rehabilitation and reconstruction operationsin earthquake affected areas was Rs 3,983million as against Rs. 5,671 million in thepreceding year.

Figure 14.2: Provincial Distribution of Funds –Core Operations

Figure 14.1: Share of Funds Disbursed –Core Operations

(76%)MC

(15%)CPI

(1%)H&E

(2%)SM

(6%)HID

(57%)Punjab

(5%)Northern Areas/AJK

(6%)NWFP

(6%)Balochistan

(26%)Sindh


Directors’ Report

By the end of FY 2009, cumulativedisbursements for core operations stoodat Rs. 42,933 million. Credit and enterprisedevelopment, the largest component ofPPAF, accounted for 76% of cumulativedisbursements followed by communityphysical infrastructure (15%); capacitybuilding assistance (6%); social mobilizationgrants (2%) and health & education had ashare of 1% (Figure 14.1).

In addition, cumulative disbursements forrelief, rehabilitation and reconstructionactivities were Rs. 18,712 million.PPAF resources and funds have beendeployed equitably across urban/ruralsettlements, provinces, regions and areas.About 57% of the resources have beendeployed in Punjab, 26% in Sindh, 6% eachin NWFP and Balochistan and 5% inNorthern Areas/AJK (Figure 14.2).

In line with the Subsidiary FinancingAgreement executed between Governmentof Pakistan and PPAF in respect of WorldBank financed First Project, the repaymentof principal loan amount has commencedwith effect from November 15, 2007.During the year under review, Rs. 109.617million was repaid to the Government ofPakistan.

PPAF has fully utilized the World Bank fundsallocated for microcredit component underSecond Project and is meeting its obligationsthrough its own reserves built up fromrepayments received from partnerorganizations. During the year under review,

PPAF disbursed Rs. 6,831 million as loanfrom these reserves.

Total assets of the Company on June 30,2009 stood at Rs. 18,509 million againstRs. 18,923 million as at June 30, 2008.Amount of loans receivable from partnerorganizations as on June 30, 2009 wereRs 9,696 million as against Rs. 8,301 millionas at June 30, 2008. PPAF continued tomaintain 100% recovery rate in respect ofits lending operations.

The trend of consistent growth in incomecontinued this year in line with previousyears. Total income generated during theyear increased by 27% to Rs. 1,668 millionfrom Rs. 1,314 million in FY 2008. Theenhancement in income is attributableprimarily to service charges on loan topartner organizations that increased by48% due to high volume of amount ofcredit outstanding and introduction ofmarket based rates for large partnerorganizations. Despite reduction ininvestment portfol io, income oninvestments and saving accounts increasedby 11% due to improved profit rates. Duringthe year, capacity building grant increasedby 30% due to the availability of financingfrom Government of Pakistan and donoragencies for PPAF operational support(Figure 14.3)


Directors’ Report

Table 14.2: Financial Results

(Rs. million)

2009 2008

Service charges on loans 744 504

Amortization of deferred grant 200 154

Income on invetments/saving accounts 723 653

Other income 3 3

Total income 1,668 1,314

General and administrative expenses 283 283

Loan loss provision 236 145

Financial charges 80 84

Total expenditure 638 512

Surplus for the year 1,030 802

In order to support enhanced activity,general and administrative expenses forthe year increased by 14%. The mainincreases were in salaries/benefits and travelexpenses. The salaries, wages and otherbenefits increased due to annual incrementsto existing employees to provide reliefagainst higher cost of living as well as hiringof additional staff for managing expansionin core operations and new activities underdifferent donors’ projects. In addition, ahigher number of engineers were inductedfor management of reconstruction activitiesin the earthquake affected areas. Travelcost increased due to extensive appraisaland monitoring visits in view of highcumulative disbursements and enhancedactivities.

Keeping in view the current financial crisis,the general loan loss provision was madeat 5% of the gross outstanding balancesof loans to partner organizations. Inaddition, specific provision for loan losseswas also made against loans which wereconsidered doubtful. The financial chargesinclude commitment and service chargeson long term loan and bank charges.

Sectoral and Programme Overview

As an apex organization, the role of PPAFis to act as a wholesaling intermediary,while its partner organizations undertakeimplementation of projects at the retaillevel under PPAF monitoring andsupervision. PPAF provides its partnerorganizations four types of facilities which

ServiceCharges on

MC

Profit onInvest/Bank

Account

Amortization ofGrants

Others

504

653

154

3

744 723

200

1

Figure 14.3: Total Income (Rs. in million)

0%

800

200

600

400


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consist of (i) extending lines of credit forexpansion of poverty targeted microcreditprogrammes and enterprise development(ii) grants for water and physicalinfrastructure schemes (iii) social sectorservices (health and education) on a costsharing basis and (iv) grants to strengthenthe human and institutional capacities ofpartner organizations as well as socialmobilization and grass root development.Apart from these core areas of operations,PPAF has been repeatedly called upon towork with communities suffering fromnatural disasters and emergency situations.PPAF has also been assigned responsibilityof rehabilitation and reconstruction in theaftermath of the 2005 earthquake in NorthWest Frontier Province and Azad Jammuand Kashmir. Even internationally, there arefew comparable institutions working withcivil society organizations that have such awide spectrum of success within its domainof responsibility.

PPAF has played the role of lead agency instrengthening participatory developmentin the national framework. It has effectivelyenhanced the retail capacity in the countrywhere the poor have had very limited accessto resources and has raised the standardsof civil society organizations to higher levelsof social responsibility, economic disciplineand institutional management. PPAF hasendeavoured to mainstream marginalizedcommunities through provision of broadrange of financial and non-financial servicesleading to better access, improved incomeand quality of life and sustainable livelihood

opportunities at the grassroots, and,simultaneously, catalyzed the enhancedabsorpt ion capacit ies of partnerorganizations. It has positioned itself as aprofessional and highly credible apexinstitution with a strong and efficientcorporate culture.

As the driver of the microfinance market,PPAF has combined the twin role of marketdeveloper and financier for the sector. Ithad maintained a diversified and healthyportfolio without compromising the qualityof its programs. Special consideration hasbeen given to gender and equitabledistribution of funds across the country.These efforts have been so successful thatPakistan is now recognized internationallyas an emerging market for microfinance.In order to ensure long term sustainabilityof the sector, PPAF has focused onstrengthening of market linkages anddeveloping greater leveraging capacity forpartner organization. Through itsProgramme for Increasing SustainableMicrofinance, PPAF provides greater accessto the commercial sector for partners withsustainable operations. Additionally, grantsfor equity funds are provided to dynamicmicrofinance institutions to help build theirbankability for leveraging commercialfinancing. PPAF continuously strives todevelop newer products and services thatdirectly address the needs of the poor.

With international collaboration, PPAF hasinitiated a pilot project of social safety netsfor 1,000 poorest households in 110 villages


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in Sindh Coastal Areas. Health and foodallowances were provided to selected ultrapoor for a period of twelve months. Duringthe same time, trainings on enterprisedevelopment, skill enhancement and bookkeeping were imparted to the target groups.The process of assets transfer has beeninitiated. As the grants programme phasesout, it is expected that most participantswill be prepared to pursue independenteconomic activities and be eligible forinduction in PPAF’s regular microcreditprogramme.

The Microfinance Innovation and OutreachProgram provides flexible funding facilityfor partner organizations to develop newfinancial products/services for rural areas.The project provides access to a wide rangeof sustainable financial services to the poorand develops products that respond totheir specific needs. PPAF, through itspartner organizations, initiated fiveinnovative models that included homeimprovement loans; cooperative farmingfor women; increasing outreach throughset t lement branches ; enterpr i sedevelopment loans in rural areas; and villagebanking in mountainous areas.

Provision of grants for development of ruralinfrastructure lies at the core of PPAF’spoverty alleviation strategy. PPAF’s watermanagement center is del iver ingsustainable, need-based water relatedinfrastructure to marginalized communities.It has facilitated in securing livelihoods,increasing income generating opportunities

and reducing vulnerabilities to seasonalshocks, while mitigating the sufferings ofthe poor living in diverse circumstancesfrom low-lying flood-prone coastal areasto water deficient deserts and mountaincommunities. Advanced technologyapplications (such as satellite imagery) andits state of the art Geographical InformationSystem set the centre apart. The smallinfrastructure schemes and subprojectsfocus mainly in four broad sectors: drinkingwater supply, irrigation, sanitation andcommunications. The distribution ofschemes across geographical areas reflectsthe different ecological conditions, degreeof water scarcity and disparities inagr icu l tura l deve lopment. Theseinterventions have played a vital role instimulating growth of local agriculturaleconomies through better utilization ofscarce water resources and have contributedsignificantly to household welfare throughincrease in incomes and consumption levels.Interventions in the sanitation and drinkingwater supply and communications sectorshave facilitated infrastructure buildingespecially in the isolated rural communitiesand has improved the health of thecommunities. Access to potable water hasrelieved women from carrying water overlong distances, enhancing their productivepotential and increasing economic optionsfor poor households. This componentassumed great importance for the pooragrarian households who are dependenton land and livestock and are particularlyvulnerable to persistent droughts anduneven rainfall.


Directors’ Report

PPAF plays a major role in buildinginstitutional and human resource capacitiesof participating communities and civilsociety organizations. It is committed tothe development of a skilled humanresource base necessary for supportinghigher levels of growth in the sector. Forthis purpose, regular training sessions areconducted for communities and staff ofpartner organizations. Under the juniorprofessionals program, funds are providedto partner organizations for traininguniversity graduates, who are inducted atjunior posts following a training period ofsix months. Two additional initiatives havealso been designed to enhance PPAF’s abilityin developing new microfinance institutionsin rural areas: The “Young PartnerDevelopment Initiative” facilitates new andexisting partner organizations in setting upsustainable rural finance operations throughprovisioning funds for on-lending andinstitutional support covering staff/clienttraining, systems development, capital andoperating costs. The “International LinkagePartner Initiative” provides youngenterprising individuals the opportunity toget hands-on training experience with arenowned regional Microfinance Institutionand facilitates them in setting up ruralfinance operations.

Under its social sector developmentprogramme (health and education), PPAFhas facilitated civil society organizations inestablishing a network of schools andcommunity health centers where suchfacilities were non-existent, in addition to

revitalizing inefficient public sectorinstitutions through injecting requisitefunds, better management practices andquality teaching services. All PPAF supportedinterventions in the social sector prioritizestrict quality control, long term sustainabilityand durable linkages with communities.These objectives become mutuallyreinforcing with an inclusive managementframework that underscores role ofparticipating community based health andeducation management committees withthe mandate to identify gaps in servicedelivery and suggest proposals for theirredressal.

PPAF was actively involved in rehabilitationand reconstruction operations, on a majorscale, in the earthquake affected areas. Inaddition to the reconstruction of seismically-safe housing units, substantive componentsincluding capacity building, livelihoodrestoration, reconstruction of non-housinginfrastructure and focused interventionsfor people with disabilities were built intoprogramme as a holistic and inclusive longterm solution to reviving lives andlivelihoods.

PPAF has initiated an innovative project forsocial mobilization that entails mobilizing5 million people in 25 poorest districts ofthe country. Under the project, 50,000 newcommunity organizations will be formed.The project supports the Government stancethat poverty reduction goals can only beachieved if community organizations areformed to manage their own development


Directors’ Report

and crowd in local, government and privatesector resources and services.

PPAF is developing linkages with corporatesector through new and innovative modelsof enterprise development. This wouldenable the poor the access, and benefitfrom, the wider private sector markets andopportunit ies for value addit ion.

The collaboration of PPAF and EngroChemical Pakistan Limited for a pilot projectin livestock and dairy development resultedin setting up of milk plants in Sukkur andSahiwal with installed capacity of 300,000liters; establishment of over 475 milk centersin Sindh and Punjab where 400,000 litersof milk with 6% fat content is beingcollected daily and; provision of training tocommunities in animal husbandry andlivestock management. All these initiativeshave resulted in employment generationat the village level, enhanced economicactivity in rural areas and industrial incomegeneration opportunities for the rural poorat their doorstep.

PPAF and Pakistan Dairy DevelopmentCompany (PDDC) have entered into apartnership to facilitate establishment andgrowth of community-based dairy farmsand other dairy development programmesto improve the milk production in thecountry. Initially, the project would belaunched on pilot basis in district Narowalwhere both the parties have agreed to workwith 30 community farms. Later, the projectwould be replicated in other districts of thecountry.

PPAF and Unilever’s leading brand Lifebuoyhave signed an agreement to promote handwash across 2 districts in Punjab under therural hygiene awareness programme. Boththe parties have agreed to provide childrenthrough “Mahfooz (‘Safe’) Pakistan”,awareness and education on theimportance of hand washing in order toreduce incidences of diarrhea. Over 50,000community members of Narowal andBhakkar will be educated.

On October 15, 2008, more than 60,000schoolchildren in 900 PPAF supported/adopted schools and government-runeducational facilities celebrated the first-ever Global Handwashing Day aimed atreinforcing United Nations’ call for improvedhygiene practices among school across thecountry. The core idea was to promotehandwashing among children and inculcatein them the idea of handwashing and itshealth benefits.

The 5th Citi-PPAF MicroentrepreneurshipAwards ceremony was held in Islamabadto acknowledge the extraordinaryc o n t r i b u t i o n s t h a t i n d i v i d u a lmicroentrepreneurs across Pakistan havemade to economic sustainability of theirfamilies as well as their communities.Supported by Citigroup foundation, thegoal of the awards program is to encourageand support best practices among bothmicroentrepreneurs and microfinanceinstitutions throughout Pakistan and todraw public, media and governmentattention to the important role that


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microfinance plays in promoting economicdevelopment at the local level.

Risk Management Policies

Credit riskCredit risk represents the accounting lossthat would be recognized at the reportingdate if counter parties fail to perform ascontracted. The Company’s credit risk isprimarily attributable to loans to partnerorganizations, investments and bankbalances. Credit risk on loans is controlledthrough extensive credit appraisals ofpartner organizations, assessing theircreditworthiness, requiring compulsorysavings from borrowers and creating lienon the assets of partner organizations. Thecredit risk on investments and bank balancesis limited because the counter parties arebanks/financial institutions with reasonablyhigh credit ratings; and Government ofPakistan.

Currency riskCurrency risk is the risk that the value of afinancial instrument will fluctuate due tochanges in foreign exchange rates. It arisesmainly where receivables and payables existdue to transactions with foreign buyersand suppliers. The Company is not exposedto currency risk as there are no foreigncurrency assets and liabilities except forfinancial assets of US$ 3,878.

Interest / mark-up rate riskThe interest/mark-up rate risk is the riskthat the value of the financial instrument

will fluctuate due to changes in the marketinterest/mark-up rates.

Liquidity riskPrudent liquidity risk management impliesmaintaining sufficient cash and marketablesecurities to ensure availability of adequateamount of funding to meet thecommitments. The Company maintainsflexibility in funding and follows an effectivecash management and planning policy toensure availability of adequate funds tomeet its financial commitments in time.Moreover, the Company’s financial positionis satisfactory and it does not have anyliquidity problems.

Fair value of financial instrumentsThe carrying value of all financial assetsand liabilities reflected in the financialstatements approximate their fair valueexcept for investments and loanreceivable/payable which are stated at costor amortized cost.

Reporting and DisclosureThe Management believes in transparencyof information and, therefore, it placeshigh priority on true and fair presentationand timely issuance of periodic financialand non-financial information to regulatoryauthorities, donors and other stakeholdersof the Company. In order to ensure this,the Management has put in place accurateand reliable financial and other reportingframework, effective internal controlprinciples including risk management,setting of targets, planning and monitoring


Directors’ Report

of Company’s operations and performanceunder direct and indirect supervisionthrough delegated authorities.

In addition to preparing to preparingfinancial statements in line with statutoryrequirements, the Company also preparesseparate financial statements for differentdonors’ projects which are duly audited byits external auditors.

The annual audited financial statementsalong with Directors’ Report as well asquarterly and half yearly un-audited financialstatements along with ManagementReviews are published and circulated tostakeholders. These statements are alsomade available on the Company website.

Board of DirectorsThe Board acknowledges the significanceof efficient discharge of duties imposed bycorporate law and stands firmly committedin its objective to add value through effectiveparticipation and contribution towardsachievement of Company's objectives. Aformal schedule of responsibilities has beenspecifically ordained for the Board by virtueof provisions of the Articles of Associationof the Company, the Companies Ordinance1984, the Code of Corporate Governanceand other applicable regulations.

The Board comprises of one executive andten non-executive Directors, including theChairman and the Chief Executive/ManagingDirector of the Company with distinct

responsibilities. The Chairman representsthe non-executive directorship of theCompany.

As part of its duties, the Board reviews andapproves operational policies andprocedures; projects of different donorsand sponsors; financial assistance forpartner organizations; quarterly progress;annual work plans, targets and budgets;un-audited financial statements alongwithManagement Reviews; audited financialstatements alongwith Directors’ andAuditors’ Reports.

The roles of the Chairman and the ChiefExecutive/Managing Director are segregatedand they have distinct responsibilities.Chairman has responsibilities and powersvested in him by law and the Articles ofAssociation of the Company, as well asduties assigned to him by the Board. Inparticular, the Chairman coordinates theactivities of the Directors and variouscommittees of the Board, and presides overthe meetings of the Board and GeneralBody. Chief Executive/Managing Director isresponsible for the operations of theCompany and conduct of its business, inaccordance with the powers vested in himby law, the Articles of Association of thethe Company and authorities delegated tohim through a General Power of Attorneyand Board resolutions from time to time.

The Board held four meetings during theyear. The Chief Financial Officer/Company


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Secretary attended meetings of the Boardin capacity of non director without votingentitled as required by the Code ofCorporate Governance.

Change of DirectorsThe Board joins me in acknowledging ourappreciation for the active participationand invaluable contributions towards theaffairs of the Company by the outgoingdirectors Mr. Junaid Iqbal Ch. and Mr ArifHasan. We are pleased to welcome Mr.Muhammad Arif Azim, Dr. Navid Hamidand Mr. Zubyr Soomro as fellow Boardmembers. We look forward to working inpartnership with them to benefit from theirvision and valued experience.

Board CommitteesThe Board places paramount importanceon good governance that has always beenviewed as the fundamental principle inenhancing the timeline, accuracy,comprehensiveness and transparency offinancial and non financial information. Inorder to follow best practices, the Boardin January 2007, endorsed the Code ofCorporate Governance of listing regulationsby constituting Audit and Human Resourcecommittees.

Audit CommitteeThe Committee comprises of four non-executive members of the Board. TheChairman is an independent non-executiveDirector. The head of Internal Audit Unitacts as Secretary. The terms of reference ofthe Audit Committee have been drawn up

by the Board in conformity with the codeof corporate governance and the Board actsin accordance with the recommendationsof the Committee on matters forming partof Committee responsibilities. The Committeeassists the Board in overseeing Company’sfinancial control, with particular emphasison integrity of internal controls and financialreporting; qualification and independenceof Company’s external auditors; andperformance of Company’s internal andexternal auditors.

During the year, four meetings of theCommittee were held. The Committeereviewed system of internal controls, internalaudit reports, risk management and auditprocess besides recommending for Board’sapproval, annual work plan of internalaudit, appointment of external auditors,annual work plans and budgets for differentdonors’ projects, annual budget of theCompany, policy for loan losses and write-off, proposal regarding submission ofquarterly and half yearly un-audited financialstatements by partner organizations, un-audited condensed interim financial alongwith Management Review, audited financialstatements as per the requirements of thedonor.

The Audit Committee meetings were alsoattended by the Chief Financial Officer. TheCommittee also held separate meeting withthe external auditors.

Human Resource CommitteeThe Human Resource Committee comprises


Directors’ Report

of three members including the Chairmanwho are appointed by the Board from itsnon-executive Directors. The head of HumanResource Unit acts as Secretary. The termsof reference of the Human ResourceCommittee have been approved by theBoard. The Committee assists the Board inoverseeing the Company’s human resourcepolicies and framework, with particularemphasis on ensuring fair and transparentcompensation policy; ensure continuousdevelopment and skill enhancement ofemployees.

During the year under review, theCommittee held two meetings. TheCommittee reviewed and recommendedperformance awards, annual increment forthe employees, cost of living adjustmentfor employees, revised organogram keepingin view expansion in operations, revisedtraining and vehicle policy.

The Chief executive/Managing Director andother management employees are invitedto attend meetings when required fordiscussion and suggestions.

ManagementThe Company Management is supervisedby the Chief Executive/Managing Directorto implement policies and monitorprocedures adopted by the Board, carryout Board directives under delegatedauthorities to achieve objectives of theCompany and provide feedback on thestrategies formulated by the Board.

The Management ensures execution ofbusiness operations including adherenceto cardinal principles, appraising andmonitoring of partner organizations,recommending financing for partnerorganizations, preparation of annualbudgets/work plans and monitoringprogress thereof. Management is alsoresponsible for implementation of internalcontrol including segregation of duties,financial and accounting controls foraccuracy and completeness of accountingrecords, authorization, recording andaccurate processing of transactions,compliance with statutory and otherregulations and timely preparation of reliablefinancial and non-financial information forcirculation to the stakeholders.

Future OutlookPPAF is contributing to securing the futureof the country’s poor through a strategyof community driven development. Thisstrategy capitalizes on a strong platformof partner organizations, and most critically,the inherent strength and resilience of poorand disadvantaged communities, in theface of extreme adversity. PPAF seeks toconsistently deliver on commitments, whichis fully Validated and endorsed by ourpartners and is evident from the fact thatthe Government of Pakistan andinternational development agenciescontinued to response their confidence inthe Company to enhance the quality andquantity of PPAF programmes and takethese to the next level.


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The World Bank Team completed appraisalof third PPAF project in April 2009. LegalAgreements for this project were executedbetween Government of Pakistan,International Development Association/World Bank and PPAF in June 2009. Oncompletion of necessary formalities, theproject was declared effective on July 09,2009, in a record time of one month afterthe signing of the agreements.

The project involves total funding of US$250 million (loan US$ 33 million: grantUS$ 217 million) over a period of five years.Under the proposed third Project, therewould be stronger focus on the mostvulnerable and poorest households. Thiswould be achieved by adoption of a moreparticipatory and integrated approach thatcombines strong targeting mechanismswhich effectively identify the extreme-poorand poor; and building inclusive enhancedinvestments in sustainable livelihoodopportunities. The project componentsinclude:

— Social mobilization and institutionbuilding (US$ 38.50 million).

— Livelihood enhancement and protection(US$ 85.30 million)

— Micro-credit access (US$ 40.00 million)— Basic services and infrastructure

(US$ 80.00 million).— Project implementation support

(US$ 6.20 million).

The KfW (Development Bank of Germany)

Mission appraise PPAF for EUR 32 millionproject on “Livelihood Support andPromot ion of Smal l CommunityInfrastructure” to be implemented in theprovince of NWFP over a period of threeyears. The legal and financing agreementsfor this project are expected to be executedby September 2009.

The Company has started establishinglinkages with corporate sector with a viewto generating funds for implementing itsvarious poverty alleviation activities. Aseparate Corporate Relations ManagementUnit is being set up for this purpose. Themain functions of the Unit includeestablishment of contacts with differentorganizations for obtaining grants forpoverty alleviation activities initiated byPPAF and coordinate between corporatesectors entities and different units of PPAFfor implementation of approved projects.

PPAF has signed agreements with numberof organizations with the aim to workjointly for establishing corporate-socialsector linkages to fighting poverty in thecountry. By involving the business andcorporate sector, PPAF plans to furtherincrease its poverty alleviation activitiesthrough their corporate social responsibilityand social welfare funds.

AuditorsThe present auditors of the Company, M/sA. F. Ferguson and Company, CharteredAccountants, have completed theirassignment for the financial year ended


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June 30, 2009 and shall retire at theconclusion of 13th Annual General Meeting.Being eligible, they have indicated theirwillingness to continue in office as auditors.The Board of Directors, on the proposal ofthe Audit Committee, recommends theirreappointment as auditors for the financialyear ending June 30, 2010.

ConclusionAs the largest wholesaler of credit and non-credit funds, PPAF has contributedsignif icantly to community-drivendevelopment at the grass roots level. It hasfacilitated growth of a large number ofnon-governmental organizat ions,microfinance institutions and rural supportprograms working directly with poorcommunit ies. PPAF’s inst itutionalmechanism is seen as a best practice public-private partnership model. Its governancestructure, private sector management andtransparent funding mechanism areacknowledged as a model for servicedelivery of other government/public sectorprogrammes. In areas of PPAF sponsoredinterventions, the poor have started reapingbenefits of self-reliance and communitydriven development. They are experiencingincreased opportunities for incomegeneration, reduced dependence onexternal support and enhanced quality oflife.

AcknowledgementThe support and enthusiasm of the Boardcontinued to play a constructive and positiverole in the development of PPAF as a world

class institution. The revelation andcommitment of Board towards povertyalleviation has contributed a great deal tothe success of the programme. I am gratefulto all the directors for their time andcontribution. I am confident that we willcontinue to benefit from their vision andvalued experience which will go a long wayin the future growth and prosperity of theCompany.

The Board is grateful for the trust and faithreposed by the Members of the GeneralBody. Their support gives confidence andencouragement in achieving the targetsand strategies formulated by the Board.The Board will also like to commend thepartner organizat ions and the i rcommunities for excellent performance andownership of the programmes that madepossible to overcome most difficult ofchallenges.

The Board expresses its profound gratitudeto the Government of Pakistan and WorldBank for their efforts and support insuccessfully appraising, negotiating andapproving the Third Project. As a result ofcombined efforts of Government ofPakistan, World Bank and PPAF, thefinancing agreements for the project havebeen executed and the project has beendeclared effective in a record time.

We are indebted to the Government ofPakistan for reposing their trust in us andtheir facilitation in developing this exemplarypublic/private partnership to new heights


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and international stature. We also take thisopportunity to thank our donor agencies– World Bank, International Fund forAgricultural Development; U.S. Departmentof Agriculture; KfW Development Bank(Germany); Committee EncouragingCorporate Philanthropy (USA); and USAgency for International Development, fortheir strong backing and belief in our abilityto deliver effectively at the grassroots leveland giving us an opportunity to makedifference in the lives of the poor andvulnerable people of Pakistan.

The Board would like to express itsappreciation for members of themanagement team and all its employeeswho continue to work with dedication andhave developed a reputation of credibilityand trust. Their dedication in the face ofmounting odds and difficulties served theinstitution well. They must continue tomeet the challenges of increased poverty

and hunger which threatens the very fabricof the state.

We have accelerated our efforts aftersuccessful completion of the second projectto deliver better value to our stakeholders,partner organizations, employees andsociety at large. As a responsible corporatecitizen, PPAF will consistently endeavour toinnovate and add value to its work andbring about improvement in the quality oflife of poor and disadvantaged that wehave the privilege to serve.


IslamabadAugust 04, 2009


Financial Highlights

2009 2008 2007 2006 2005 2004 2003

Outreach - Numbers (Cumulative)

Partner Organizations 77 74 70 68 56 42 3 8

Districts 124 117 111 108 97 95 8 4

Villages 51,280 31,752 27,578 23,354 19,863 13,054 8,650

Loans ('000) 3,000 2,300 1,513 947 616 370 2 2 1

CPI Projects 18,500 17,000 14,900 11,700 8,900 6,800 2,900

Disbursements - Rs. in million

Total disbursements 13,066 16,697 15,806 6,246 4,064 2,436 1,777

Microcredit/enterprise development loans 6,949 9,075 6,228 3,705 3,106 1,462 1,314

Grants - Core Operations 2,134 1,951 1,654 1,372 958 974 4 6 3

Grants - Earthquake Rehabilitation & Reconstruction 3,983 5,671 7,924 1,169 - - -

Balance Sheet - Rs. in million

Total assets 18,509 18,923 18,702 13,201 8,747 3,617 2,771

Micro credit/enterprise development loans receivable 9,141 7,982 5,642 3,996 2,598 1,081 1,201

Long term investments 1,000 1,000 1,000 800 900 700 405

Short term investments-specific to projects 530 1,050 1,050 - - - -

Equity and reserves 4,785 3,755 2,817 1,788 1,137 791 7 1 0

Long term loans 11,031 10,770 10,777 10,513 6,482 2,734 1,956

Operational Results - Rs. in million

Total income 1,669 1,314 1,255 763 305 222 230

General and admin expenses - core operations 217 200 159 108 87 71 6 3

General and admin expenses - rehabilitations & reconstruction 105 83 46 12 - - -

Surplus before provisions for loan loss 1,266 947 965 572 152 133 149

Surplus after provisions for loan loss 1,030 802 914 501 196 81 9 2

Financial RatiosSurplus before loan loss ratio 76% 72% 77% 75% 50% 60% 65%

Return on equity 26% 25% 34% 32% 13% 17% 21%

Return on assets 6% 4% 5% 4% 2% 2% 3%

Repayment rate (micro credit) 100% 100% 100% 100% 100% 100% 100%

Total general and admin expenses/total disbursements 2.46% 1.69% 1.30% 1.92% 2.14% 2.91% 3.55%

Income on loans/general and admin. expenses on core operations 252% 252% 205% 164% 101% 97% 89%

Debt/equity 70 : 30 74 : 26 78 : 22 85 : 15 85 : 15 77 : 23 73 : 27

Current ratio 6: 1 4: 1 3: 1 13 : 1 7 : 1 31 : 1 17 : 1


Balance Sheetas at June 30, 2009


Income and Expenditure AccountFor the year ended June 30, 2009


Cash Flow StatementFor the year ended June 30, 2009


Statement of Changes in Fund and ReservesFor the year ended June 30, 2009


Notes to and Forming Part of the Financial StatementsFor the year ended June 30, 2009

Inverting the Income PyramidThe larger outer triangle shows thetraditional distribution of income, whichcounts the number of people at differentincome levels with the top of the pyramidbeing high income bands and the bottombeing low income bands.

Since there are very few people at the topand a great many people at the bottom,hence a broad big base converging into anarrow peak. The two together translateinto a pyramid shape. The inner trianglerepresents PPAF goal: inverting the pyramid,so that there are fewer people at the lowerlevels of income, and a much greaternumber of people at the higher incomelevel.

Window of OpportunityThe central triangle is also a window ofopportunity; an opening that leads out ofpoverty, towards sustainable growth anddevelopment.

· 2012-12-29 · Citibank, Faysal Bank Limited, Habib Bank Limited, Hong Kong and Shanghai...

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Transcript of · 2012-12-29 · Citibank, Faysal Bank Limited, Habib Bank Limited, Hong Kong and Shanghai...