In terms of the cities covered in the sample, Karachi and Tando Allahyar are located in the province of Sindh, while Lahore and Rawalpindi are in the province of Punjab. The other two provinces were not included in the present sample due to the separatist conflict in the province of Balochistan and the terrorist conflict in the province of Khyber
Pakhtunkhwa. Due in large part to the threat of violence, microfinance outreach in these areas is at present very low, as shown in the outreach map in Appendix C. These regions shows up on the map in Appendix C as mostly grey, signifying little or no microfinance outreach.
Another limitation is that 79 percent of the sample consists of female borrowers, while in Pakistan women represent only 58 percent of active microborrowers. The sample,
therefore, can be criticized for not adequately representing the perspective of male borrowers.
But perhaps the single most important limitation of the present study is limited funding. In response to this, I have chosen to concentrate most of my fieldwork to Karachi, where
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the cost of interviewing each respondent was the lowest due to the fact that this is my hometown. Since microfinance outreach in Karachi is second only to Lahore, by focusing on Karachi I was able to reach a wide range of borrowers, from multiple institutions. The table in Appendix B shows that 36 clients were interviewed in Karachi, 14 in Lahore and Rawalpindi combined and only 2 in Tando Allahyar.
But fieldwork in Karachi was also problematic. The port city of Karachi is not just the country’s largest urban metropolis with a population of 21 million (Khan, 2012), its commercial and financial center, it is also home to the largest migrant population. This makes it is the most ethnically diverse city in the country. Karachi’s situation is
characterized by tension between the different ethnicities in the city, which has resulted in a prolonged spate of violence and general lawlessness. This is discussed in detail in chapter 4.
During the summer of 2012 when interviews were being conducted, Karachi was particularly tense with “target killings” having become a daily event in several parts of the city (Gayer, 2012; Gazdar, 2011). In Karachi, target killings refer to politically motivated murders. Between January and August 2012 these killings had claimed the lives of 1,725 people (Human Rights Commission of Pakistan, 2012).
The violence is the result of ethnic clashes between the Pathans, the Pushto-speaking migrants from the Northern province of KPK, and the Muhajirs, the Urdu-speaking descendants of the migrants from India, who arrived in Karachi at the time of the country’s independence from British controlled India in 1947.
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in Karachi is almost always concentrated in low-income Muhajir or Pathan majority areas (Ghazi, 2011), the very places where microfinance institutions and clients most often live and operate their businesses in.
The institutions themselves have to take several precautions for the safety of their personnel. For instance, the branches of all institutions I visited in Karachi had armed guards at the entrance and the gate was padlocked even during daytime hours. In areas such as the town of Liaquatabad in the heart of Karachi and a Mohajir stronghold, the situation was particularly tense and the institution had to arrange for clients to come into the closest branch so the interviews could take place in relative safety.
In other instances, I could only visit a client in her home, which also served as her workplace, when accompanied by a loan officer. This was mainly because of cultural considerations rather than issues of security.
The following factors, however, reduce the threats to validity of this purposive sample: 1. Most of the interviewees were clients who happened to visit the MFI/MFB branch
the day of my visit, either for disbursement or collection, or those whose homes/workplaces were most easily accessible to the loan officer who took me around by foot, or those who were at the monthly or weekly group meetings attended that day by the loan officer – these meetings are typically pre-scheduled, determined by the start date of the loan cycle. This reduces the likelihood that the institution would only introduce me to their best clients.
2. The sample includes borrowers from a varied economic background. It is widely accepted that the poor are not a homogeneous category, and their socioeconomic
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backgrounds tend to vary widely (Kabeer, Huda, and Kaur, 2012). Thus, the poor neighborhoods covered in the sample include both the poorest neighborhoods where microfinance institutions operate as well as relatively better-off
neighborhoods. For instance, in Karachi the poorest neighborhood covered was Ibrahim Haidery, while the least poor was Liaquatabad. Nevertheless, both were impoverished neighborhoods.
3. The sample covers different branches of the same MFI or MFB within and across cities. For instance, the sample includes both Karachi and Lahore-based clients of Kashf Foundation. Similarly, the sample includes Tameer Bank’s clients from different branches within Karachi, such as Manzoor Colony and Liaquatabad. This ensures that differences in client experiences were not based on inter- institution, inter-neighborhood, inter-city differences, or some combination thereof.
There remains one limitation to this study, however, which the above factors do not mitigate. This relates to the fact that I have only interviewed currently active clients and there is no consideration of non-borrowers. This must be kept in mind when reading the section on findings below, which begins with a discussion of the sample institutions’ mission and practice parameters before detailing the findings related to the client sample.
III. Findings
The findings detailed below show that due to increased commercialization in the sector, MFBs have experienced a dilution in their mission. MFIs, on the other hand, on average emphasize poverty alleviation more than MFBs but institutional practice does not always
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translate this mission uniformly down to the lowest management levels. Secondly, each MFI spin-off has handled its transition differently and it is hard to make a conclusive statement regarding mission dilution during transition and after. In terms of practice, while MFIs are generally more pro-poor, MFBs appear to offer more transparency and flexibility to their clients. Lastly, client experiences have been affected by institutional outreach and practice, but the experiences of MFI and MFB clients cannot be compared since they do not share the same socioeconomic characteristics, as detailed in the last sub-section of Section III.