Microfinance: A Tool for Financial Access, Poverty Alleviation or Gender Empowerment

400 Pages·2016·3.31 MB·English

University of Massachusetts Boston
ScholarWorks at UMass Boston
Graduate Doctoral Dissertations Doctoral Dissertations and Masters Theses
12-31-2013
Microfinance: A Tool for Financial Access, Poverty
Alleviation or Gender Empowerment ? - Empirical
Findings from Pakistan
Ghazal Mir Zulfiqar
University of Massachusetts Boston
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Zulfiqar, Ghazal Mir, "Microfinance: A Tool for Financial Access, Poverty Alleviation or Gender Empowerment ? - Empirical Findings
from Pakistan" (2013).Graduate Doctoral Dissertations.Paper 144.
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MICROFINANCE: A TOOL FOR FINANCIAL ACCESS, POVERTY ALLEVIATION
OR GENDER EMPOWERMENT? – EMPIRICAL FINDINGS FROM PAKISTAN

A Dissertation Presented
by
GHAZAL M. ZULFIQAR

Submitted to the Office of Graduate Studies,
University of Massachusetts Boston,
in partial fulfillment of the requirements for the degree of

DOCTOR OF PHILOSOPHY

December 2013

Ph.D. Public Policy Program
© 2013 by Ghazal M. Zulfiqar
All rights reserved
MICROFINANCE: A TOOL FOR FINANCIAL ACCESS, POVERTY ALLEVIATION
OR GENDER EMPOWERMENT? – EMPIRICAL FINDINGS FROM PAKISTAN

A Dissertation Presented
by
GHAZAL M. ZULFIQAR

Approved as to style and content by:

________________________________________________
Christian E. Weller, Professor
Chairperson of Committee

________________________________________________
Donna H. Friedman, Research Associate Professor
Member

________________________________________________
Craig N. Murphy, Professor
Member

________________________________________________
Christopher Candland, Associate Professor
Wellesley College
Member
_________________________________________
Mark R. Warren, Program Director
Department of Public Policy and Public Affairs

_________________________________________
Christine T. Brenner, Chairperson
Department of Public Policy and Public Affairs
ABSTRACT

MICROFINANCE: A TOOL FOR FINANCIAL ACCESS, POVERTY ALLEVIATION
OR GENDER EMPOWERMENT? – EMPIRICAL FINDINGS FROM PAKISTAN

December 2013

Ghazal M. Zulfiqar, Ph.D., University of Massachusetts Boston
M.Sc., University of London
M.B.A., Institute of Business Administration, Karachi

Directed by Professor Christian E. Weller

In just 30 years microfinance has transformed from a credit-based rural development
scheme that has claimed to reduce poverty and empower poor women, to a $70 billion
financial industry. In the process, the traditional NGO-led model has given way to
commercialized institutions, resulting in an increased emphasis on profitmaking. This has
also led to confusion in the sector around its mission: is it to alleviate poverty and
empower poor women or simply to provide the “unbanked” with access to formal sources
of finance? This research considers the main debates in microfinance with regard to its
mission and presents empirical evidence on the effectiveness of microfinance.
The study is based on the Pakistani microfinance sector, which provides an ideal
opportunity for a comparative analysis of two distinct models of microfinance – the
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nonprofit microfinance institutions (MFI) and the microfinance banks (MFB). The
research compares the depth of outreach, mission, practice, and borrower experiences of
MFIs and MFBs, employing a political economy framework. The data includes 140
interviews with policymakers, donors, senior, mid and low-level microfinance officers,
and their clients; as well as observations of practitioner-client interactions, including the
process of disbursement and collection, group meetings, and field visits with loan officers
in urban Pakistan. It also comprises two district-level surveys: the microfinance outreach
survey from the Pakistan Microfinance Network (PMN) and the Government of Pakistan’s
Social and Living Standards Survey (PSLM). The surveys are analyzed econometrically to
test whether district-level socioeconomic differences affect patterns of outreach.
This study broadens our understanding of the extent to which the local political economy
shapes the outcomes of a market-based intervention, such as microfinance. It also provides
an insight into the evolution of microfinance, specifically as framed by the global
development discourse and subsequent public policy choices. Finally, the study provides
an authoritative account of how institutional structure affects microfinance’s effectiveness
as a tool for poverty alleviation, empowerment and financial access.
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ACKNOWLEDGEMENTS

I am deeply grateful to my advisors for their encouragement, support, patience and
guidance during these past few years. Christian Weller, my chair and mentor, has guided
me on just about all aspects of my professional and academic life. Whether it was writing
a grant, putting a conference panel together, choosing a career path, or teaching my first
class, he has been a source of constant guidance and encouragement. It was also Christian
who suggested that I look at microfinance as a possible dissertation topic, provided critical
feedback, and suggested ways to broaden and refine the research.
I am grateful to Donna Friedman for her support as a teacher, supervisor, and friend these
past five years. Through her I have acquired my qualitative research and analysis skills
and the Center for Social Policy has always been a home for me on campus. I am also
exceptionally lucky to have Craig Murphy as an advisor. Craig has inspired me with his
ideas on development and marginalization, his extensive but engaging scholarship, but
most especially his genuine kindness. I continue to be in awe of him. Thank you also to
Christopher Candland for his guidance during the research and writing process.
Randy Albelda, Michael Johnson and Francoise Carre have been wonderful advisors
during my time at the Program. Michael has been a source of support, advice and
encouragement since the first semester at UMass and I continue to be touched by his
genuine concern for me and his open-door policy at all times. I am grateful to Francoise
for being ready to listen and to provide suggestions whenever I knock on her door. I have
also been lucky to have Tim Shaw and Jane Parpart provide great advise during the last
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stages of writing this dissertation. They have shared important insights on writing the first
and last chapters and in thinking about the dissertation as a cohesive whole. To Karen
Means for her support, help and kindness. To Christine Brenner for unhesitatingly writing
a letter of support when I began fieldwork in Pakistan.
To Mahnaz Fatima I am grateful for introducing me to Development, for inspiring me to
change my career path and for giving me this dream in the first place. To Nageen Malik
for nurturing a love of scholarship, may she rest in peace.
I have many people to thank for helping me make connections in the field. The first few
friends to fire off their social networks were Haroon Ahmed Malik, Shehlah Zaheeruddin,
Fahim Ahmed Shafiqi, Ahsan Ali, Zulfiqar Haider Ali and Rizwan Mamdani. Haroon
alone was able to get in touch with 12 people who found several dozen others for me to
meet. Among them I am especially grateful to Zulfikar Khokhar for all the time he spent
arranging interviews for me in Karachi, Hyderabad and Islamabad and for candidly
sharing his own experience with me. I am grateful also to Brigadier Tariq Mohar at
Tameer Bank for opening every single door of the Bank for me. I am grateful to Aban Haq
from the Pakistan Microfinance Network, the staff at the Pakistan Poverty Alleviation
Fund and Qazi Azmat Isa, and to Ayesha Baig from the First Microfinance Bank for going
out of their way to help me. I am thankful to Inshan Ali Nawaz, for sharing his valuable
insights as an industry insider all the way from Geneva on multiple occasions and for
connecting me to Ayesha Baig.
I am grateful to all the officers I met at the various MFI and MFB branches and their
clients for opening their doors and pushing aside their own work to make time for me,
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sharing their food and cold drinks with me and when the heat got unbearable for fanning
me with handmade fans while patiently answering all my questions. I feel humbled by
these fine individuals.
I love Khidhr, Eesa and Maryam for their interest and curiosity about my work. I am
delighted that we as a family have learnt important lessons through this research that have
altered the way we think about the world around us. I thank them for their patience during
the time that I have taken away from them to work on this project. They have also
provided me with insights rarely available to adults, which have served me well during
this research.
To my parents I have no words that can describe what they have done for me by putting
their own lives on hold and reengineering their work schedules around my needs during
fieldwork in Pakistan and otherwise. To my mother for her prayers, inspiration and
emotional support throughout this period, and for the time she spent with my children
while I was away, taking better care of them than I would have. To my father for being on
the constant lookout for potential interviewees, for arranging conversations with key
informants, for travelling with me all over Karachi with his incorrigible good humor over
potholes, high security barbed wires, racial tensions and heaps of garbage in the streets of
our beloved Karachi, for keeping his word and not letting my interviewees figure out that
he was a journalist but for keeping his eyes and ears open while staying in the background,
for the many days and nights he spent editing these chapters, for keeping my children
occupied with Karachi Club chicken tikkas, mangoes, snake charmers, Liberty Books and
rock stars, so I could get my work done despite his own punishing schedule.
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Thank you to Faraz and Amna for entertaining the children while I was away and Nayana
and my parents in-law for their prayers. To Mummy, Uzma and Nabiha for their prayers
and constant vigil from the other side of the world. To Zia Mamu for the trip to Hyderabad
and Tando Allahyar and for waiting patiently while I conducted interviews, for the stay at
Indus Hotel and the visit to Bombay Bakery afterwards. To Dulhan Chachi and Rashida
Mami for their warmth and hospitality in Karachi.
In Lahore I am grateful to Ayesha Aunty and Haris Uncle for opening up their home to me
and my fellow travellers, for the fresh flask of sikinjabin that was ready and waiting for us
every morning as we set out in the searing Lahore heat and for providing us with
uninterrupted air conditioning upon our return as Lahore sagged from 16 hour power
breakdowns. In Rawalpindi I am grateful to Asif Bhai, Fariha and Aunty for their
welcoming home, engaging conversations, and an endless supply of mangoes and lychees.
In Islamabad, thanks to Aunty, Nadia and Shery for wonderful food, conversation and
much needed air conditioning. Back in Boston, I am grateful to Samira who took such
good care of my new baby when I nervously began the program five years ago and
refusing compensation of any kind. To Risa who has always pitched in at short notice,
helped with the children, changed diapers, melted chocolate chips to make hot cocoa and
allowed herself to become their favorite Aunt in Boston.
And thanks of course to my best friend, fellow idealist, and beloved husband who stalled
his own career to move to Massachusetts so I could do this research in the first place. And
whose support has been vital every single day to make this dissertation happen. The best
part of this research was the time we spent in the narrow alleys of Lahore and Rawalpindi,
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