Over the years, I have interacted with 1500+ founders, spoken to micro-entrepreneurs from across Pakistan and worked with SMEs. There is one common challenge: access to finance.
One of the ways in which the current government is empowering the youth is through Kamyab Jawan loan scheme. The key objectives of the scheme are to catalyse economic activity, nurture entrepreneurs and create jobs, and financial sustainability of households. More importantly, it builds the esteem of scheme beneficiaries as envisioned by Prime Minister Imran Khan.
Till now PM-Youth Entrepreneurship Scheme (PM-YES) has disbursed PKR 8 Billion among 10,000 entrepreneurs and has created 70,000 jobs. The 4-tiered loan scheme will now offer capital ranging from PKR 1 lac to PKR 50 Million with different collateral requirements.
With this, various segments including micro-entrepreneurs & SMEs will benefit alike.
As for public-sector & development projects, the main question is of sustainability & transparency. Akhuwat presents a tested model that is inclusive, sustainable, transparent & scalable. The main points of the model developed by Dr. Muhammad Amjad Saqib include:
- Interest-free loans for micro-businesses
- Social collateral
- Gender inclusivity
- Use of existing community spaces such as mosques for operations
- Strong volunteer base
One word to describe the model: Empathy
It is a paradigm shift. In building the esteem of borrowers, Akhuwat encourages them to eventually become donors & help others who are going through similar circumstances. The amount received from different sources, including donations from borrowers, is added to a ‘revolving fund’. Money lent as loan is added back over time; in parallel, the inflow of funds continues. In 20 years, Akhuwat has disbursed Rs. 140 Billion among 4.7 Million families via 800 branches nationwide. It has a fascinating recovery rate of over 99% with Rs. 7.6 lacs active borrowers, that makes up a growth rate of 140%.
This shows the model's capacity to both consistently scale and create socioeconomic impact. SAPM Youth Affairs, Usman Dar, with the support of concerned ministries, is all set to support young entrepreneurs to set-up and scale their businesses. The Akhuwat model has much to offer to Kamyab Jawan’s loan scheme based on its experience and evidence-based learnings.
Some of the learnings are listed below:
- Developing public-private partnerships
- Shortening the process time of applications
- Minimizing operational costs (significantly reducing admin/service charges)
- Transparency – digital open data at borrower level & multi-level financial transparency.
In the past few months, I have reviewed Kamyab Jawan Program closely and must commend Usman Dar for the sophisticated technology system being introduced to further enhance the capability of the loan scheme. Use of advanced technology such as Artificial Intelligence put together with Akhuwat’s experience will give Pakistan more effective entrepreneurs - individuals who challenge the status quo and lead a life of purpose, not for themselves but others. Akhuwat’s true strength has been the sense of responsibility of its borrowers. Today, it’s upon the youth to make Kamyab Jawan Program a success for an economically strong Pakistan.