The latent demand for micro financing came alive with social organization inputs in rural areas. This has created vision and introduced the rural population, especially women to entrepreneurial activities. The spread of communication and transportation facilities and market mechanisms into the agricultural economy further escalated the demand for financing services. Many of the citizen organizations initially responded with a micro credit and savings scheme and later developed other financial services and products to cater to the growing financial demands of the emerging business entrepreneurs. Sindh Agricultural and Forestry Workers Coordination Organization (SAFWCO) are amongst the first few pioneers of micro financing. SAFWCO has developed organizational capacity in relation to increasing demand in the rural areas of Sindh, and today has a portfolio of over 21,283  clients and an outstanding loan portfolio of just below Rs.193.88(US$ 2.32) million at the end of 2009 together with enhanced institutional capacity to respond to the changing demand.

Since the turn of the century, particularly with the coming of the PPAF and its credit line to NGOs, micro financing transformed from social action into entrepreneurship. The demand for financial services in the rural areas and the organizational structure set up by the pioneering MFIs led to development of the Micro Finance Ordinance that encouraged private sector organizations like banks and leasing companies to enter the field. The legislation also triggered organizational transformation among the social MFIs, many of which transformed from a “Society” to a “Company” to manage operation and growth more like a business with a social objective. The field also developed infrastructure and related services with the help of international and government funding.

Within the Micro Finance sector in Pakistan, Safwco is identified as a NGO MFI that is nearing transformation into a non-profit company and seeking equity in addition to debt financing. In 2008, the fallout of the financial crisis escalated local economic difficulties causing food insecurity and drying up business investments and government support to small and micro entrepreneurs. In this scenario, Micro Finance Institutions helped small and micro businesses to remain competitive. In the Safwco operational areas, recovery rates remained up to the mark and absorption capacity was more than the increased supply. Micro businesses grew and bloomed and many of them achieved award-winning status. Safwco sustained the growth of rural businesses and farm enterprises with micro finance plus programs while assisting households below poverty lines with asset transfers under the social safety net program. Growth management challenges grew amidst short supply of finance and changing donor priorities.

Safwco’s major thrust in 2008 was to seek debt financing and prepare institutional arrangements for attracting equity. Attendance at Vietnam and India investment fairs showed that investors were reluctant to come to Pakistan and State Bank regulations and general insecurity in the country were major reasons. Discussions with commercial banks in Pakistan on supply of credit line and channeling foreign funds could not materialize due to high bank charges and their unwillingness to share risks. Also changing conditionality for registration of non-profits under the Companies Act hampered Safwco’s transformation. In 2009, much of these constraints have been removed. Safwco’s registration under the Companies Act is complete and the State Bank has removed restraint on debt financing. PPAF under the PRISM arrangement is offering financial collateral for commercial lending and Safwco has improved its financial disclosures, liquidity management and operational outreach making it easy for investors and commercial banks to partner with Safwco.

With these thoughts, Safwco for the next coming years focuses on spreading and increasing outreach and scale through a combination of physical, social and economic development programs. Micro financing in the coming year would reach out to alternate energy development and disaster preparedness and mitigation projects. Within this framework, Safwco aims to work consistently with PPAF and attract other investors to deepen the impacts of the projects and to build knowledge management capacity within the organization.