Khatima is the president of the all woman village organization (VO) Romania in Killi Nazim Abdul Malik of district Killa Abdullah. In her late 20s, she has been married for 15 years and has eight children. Khatima and her fellow community women organized themselves into a VO in April, 2018.
The women of VO-Romania meet on the fifth of every month and put aside approximately 50 Pakistani rupees per month ($0.32) as “bachat money” at each meeting. Khatima and her fellow members of VO-Romania are very proud of their savings and becoming more informed about financial management at the household and community levels. Their total savings so far amount to 28,000 Pakistani rupees ($180.81) which is truly impressive.
Kochai, a teenage girl in the community slipped and broke her shoulder blade and her family did not have money to pay for her treatment. The VO gladly offered the “bachat money” to Kochai’s family to help her get proper and timely treatment. Out of the 6,500 Pakistani rupees saved at the time, they happily gave 5,000 to Kochai for her treatment. Kochai is recovering swiftly. She has diligently paid back her loan in 50 small installments. Had it not been for the VO’s readily available savings at hand, Kochai would not have been able to access timely treatment for her injury.
Identifying the Problem
Recent academic literature shows that although globalization has reduced inequality across nations, the gap between the rich and the poor within nations (intra-national inequality or inequality at a local level) is wider than ever. Where high income nations have government financed, managed or subsidized services for the poor, low income nations are unable to protect their most socio-economically vulnerable citizens in the same way. Social protection services in high income nations provide citizens with social services, like pensions, free education, healthcare, insurance, unemployment allowances, and so on.
Pakistan, a developing nation with 39 percent of its population living in multidimensional poverty, has so far struggled to safeguard its citizens’ socioeconomic wellbeing. The rural poor in the nation are especially vulnerable to natural disasters, health calamities, illiteracy, lack of employment or self-employment opportunities, and more that push them further into poverty.
Balochistan, with its history of military unrest, an influx of refugees in various waves from Afghanistan and a lack of basic infrastructure, has lagged behind in progress and development from the rest of Pakistan. Only 14 percent of Pakistanis are using formal financial products or services. Balochistan is further financially excluded; there are only 314 scheduled banks in Balochistan, most of which are concentrated in a few districts. The available banks are inaccessible to the rural poor, given only one-fourth of the province’s population is literate (the lowest literacy rate in Pakistan) and not everyone is able to understand and use formal banking systems. Furthermore, 71 percent of Balochistan’s population lives in multidimensional poverty and thus the population faces numerous socioeconomic challenges, especially in times of crisis.
An Evidence-based Solution
In such conditions, where financial safety nets are unavailable, a large population of the rural poor in Balochistan have come to rely upon their communities’ collective savings to help them in times of crisis. Under the European Union-funded Balochistan Rural Development and Community Empowerment (BRACE) Programme, the Balochistan Rural Support Programme (BRSP) and the National Rural Support Programme (NRSP) are organizing rural households into a network of three-tiered Community Institutions (CIs).
The CO (Community Organization) comprises 15-20 households living in a close proximity sharing common socioeconomic conditions. Each CO is led by a president and a manager who are elected by the corresponding CO members. COs are then federated into VOs (Village Organizations), with the VO having two representatives from each CO. Once a Union Council (UC) has several VOs, these are further gathered into LSOs (Local Support Organizations), with two representatives from each VO. Members of these organizations meet weekly, monthly or bi-monthly depending on their convenience to discuss community as well as individual socioeconomic problems and potential solutions. Through collective wisdom, they find feasible solutions to their problems and resolve them through self-help approaches. These community institutions form an important social pillar which begins the process of finding a voice and engaging with local authorities.
COs, which occupy the lowest tier, have a savings program which encourages the members to save little amounts of money every month, so they have a resource pool to be used in times of need, to buy income generating assets, or to rotate the money among the members.
A 16-member, all-woman CO in the village Danaysar, district Kech, was able to save 5,000 Pakistani rupees over a few months by contributing 50 rupees each. This enabled the CO members to support a widowed member by paying for her child’s school fee. The CO members are continuing with this saving scheme and hope to support other community members in their times of need.
Expecting a household suffering at the hands of crippling poverty to save money from their meager household income might seem unrealistic and futile. However, field staff has enlightened and convinced Community Resource Persons (CRPs) and the community members of the benefits of saving through BRACE’s CAT (Community Assistance Toolkit) modules. Following these principals, Shama, president of her CO in Khari, district Jhal Magsi, was able to motivate fellow CO members to initiate savings.
Many members previously did not save any money at all. Shama convinced her fellow community women about the benefits and ease of saving. She said that by calculating the money spent daily on children buying candies and men buying cigarettes, one can find ways of cutting small costs to save. All this money amounted to a sizable amount per month and thus the group of women in Khari started saving money. The CO members have now been able to save 2,000 Pakistani rupees over 3 months despite their deep poverty.
This people-powered saving scheme is fostering the spirit of social responsibility and initiating bottom-up development. With this organized social pillar in place, the community is able to rely on itself instead of turning to exploitative money lenders for help in times of need. This further adds to community-wide self-esteem.
CO Kunchti F, in Kunchti, district Kech, was formed in 2004 under the NRSP core program and was adopted by BRACE in May 2018. It has a membership of 34 women from 30 households. The CO president Banuki and the manager Samina both encouraged the CO members to start saving. They started seeking contributions from each member based on each individual’s household’s capacity so as to ensure everyone was contributing. As of November 2019, the CO’s total savings amount to 334,750 Paksitani rupees. They have used these savings to help the less privileged members of their CO to meet their domestic needs by giving them interest-free loans. Some borrowers have initiated income generating activities. The members have returned the amount in monthly installments. Some was also donated for welfare support to the needy, such as for the purchase of medicines.
By getting organized into their own institutions, poor community households have begun to gain confidence and experience in mobilizing and using local resources, including their own savings, for meeting their own needs and harnessing their own potential. It is heartening that these community institutions have not only accepted and adopted the concept of self-help, they have also become more emphatic to the needs of those less fortunate in their own communities. All this further contributes to the strengthening of their social capital.
The rural poor of Balochistan have started to mobilize available resources to improve their situation. However, the federal government of Pakistan and the provincial government of Balochistan could provide an effective and efficient additional financial support network for rural communities and their institutions. In Pakistan, the financially included are predominantly urban (68 percent) and male. To remedy this in a province which has a scattered population and insufficient infrastructure, the government can work on improving access to digital banking. Mobile banking platforms like Easy Paisa are catching on in rural settings; the state must put in efforts to expedite and support these developments.
In its efforts to educate the low income communities in Pakistan on the basics of financial concepts like budgeting, savings, investments and digital banking, the State Bank of Pakistan and the Asian Development Bank initiated a nation-wide Financial Literacy Programme in 2012. However, all of Balochistan, except for Quetta, was excluded from the program. It is because of exclusionary policies like this that the province is suffering from a stagnant economy. Not only should the federal government work toward accelerating the development of the financial sector in Balochistan, but it must also show ownership of the citizens of Balochistan and educate the rural population on the basics of financial concepts.
Lastly, the government must support efforts like the BRACE Programme and collaborate enthusiastically with the private development sector. The federal and provincial governments have so far been unable to reach and connect with rural communities in Balochistan; projects like BRACE can fill in this gap. The three-tiered, community-driven development approach of the RSPs is a powerful tool that can connect the state with its rural population. The social pillar of BRACE alone is representative of 1.9 million Pakistani citizens, who are in dire need of the state’s attention and efforts. As citizens like Khatima from Killa Abdullah attempt to organize themselves envisioning a more secure tomorrow, the state must also reach out to them in hopes of a poverty-free Pakistan.
Savaila Hunzai is a documentation and reporting officer at Rural Support Programme Network, Pakistan.
Zahra Rao is a monitoring and evaluations officer at Rural Support Programme Network, Pakistan.