Feisal Khan

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For its advocates, microfinance has become a near-panacea for ensuring that the poor of the developing world would benefit from growth and development. In short, microfinance would ensure that trickle down would actually trickle down. Microfinance became more than 'just' a policy option when its staunchest proponent spoke of it in moral and social justice terms: Muhammad Yunus, the Nobel laureate founder of Bangladesh's Grameen Bank, declared access to credit as a basic human right. One of the world's largest and most successful rural development Non-Governmental Organizations (NGOs) is the Aga Khan Rural Support Program (AKRSP), operating since 1982 in Pakistan's Northern Areas (NAs). Despite covering over 85% of the NAs million-plus rural population and offering a full range of rural development services (credit, agricultural, forestry and veterinary extension training, business consulting services, civil engineering, etc), the AKRSP has been relatively unsuccessful in facilitating a successful transition to a market-oriented focus among its overwhelmingly subsistence-farmer beneficiary base. The AKRSP has devoted substantial resources to trying to create a successful and self-sustaining microenterprise culture among its clients but its results have been far from encouraging. Given how few NGOs fall into the 'successful' category and how few have AKRSP's resources and institutional resources, AKRSP's relative failure to promote successful microenterprises in the NAs of Pakistan is a clear sign of the limits of microfinance success. While microfinance may well provide some hope for poverty alleviation and social welfare indicator improvement, it cannot provide all of the conditions necessary for sustainable economic development and long-term success for the poor.