Social Impact Assessment of Microfinance Programmes - weman

Figure 3.3
Funding Sources
NGO
5%
Donors
36%
Financial
Institutions
59%
In 2002 when the State Bank of Pakistan decreased the interest rate, it was then that First
Capital became interested in Asasah. It took 6 months more to convince the next investor,
Orix Leasing. However, overtime as Asasah performed well other investors showed
interest. In October 2005, Save the Children chose Asasah as a long term strategic partner
as they believed Asasah to be one of the leading MFIs in Pakistan. Asasah looks to gain
international recognition and exposure to best practices and access to additional funding
for rapid expansion from the partnership. While, Save the Children will further its
Economic Opportunities programme which focuses on creating sustainable incomes for
mothers and their children by supporting MFIs.
Over the years due to Asasah’s noteworthy performance the attitude of commercial
investors has improved. At the beginning, First Elite Capital provided finance at an
interest of 15 percent with a financing limit of Rs 7 million. However, by March 2006,
they decreased the interest to 12 percent and raised the finance limit to 20 million.
Similarly, Orix Leasing decreased interest from 12 to 10 percent over the years and
increased the finance limit to Rs 20 million.
The latest Bank that has pledged funds to Asasah is Zarai Taraqeeati Bank Limited
(ZTBL) and the amount they will be extending is Rs.300 million. However, as Asasah
cannot provide security for the funds, the clients will be a part of ZTBL’s portfolio.
3.1.6.2 Asset, liability and equity composition
Asasah’s asset utilization in its loan portfolio is around 50 percent while the average for
the industry is 42.5 percent and cash in hand and in the bank is 36 percent. The capital
asset ratio for 2006 was 2.35 percent and shows the inadequacy of capital faced by
Asasah. On the liability and equity side, Asasah is in a dire situation. It has made a loss of
Rs.15 million since 2003, as it is not sustainable as yet. The main liability for Asasah
which constitutes 97 percent of the total liabilities is the funds it borrows to finance the
loan portfolio as its equity was only Rs.7 million as of September 2006. The major chunk
of income for Asasah is from the loans disbursed and in FY2006 it was Rs.24 million.
Asasah has to pay a large amount for the mark up on money it borrows to lend out and
for FY2006 it was Rs.12 million. However, the major expense for the organization was
on personnel and amounted to Rs.36 million.
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