Sustainable Livelihoods through Microfinance for the Poor

Name: Sustainable Livelihoods through Microfinance for the Poor
Duration: July 1997 - December 2011
Donor: United Nations Development Program (UNDP)/United Nations Office of Project Services (UNOPS)

The Sustainable Livelihoods through Microfinance for the Poor project was first introduced in 1997 and extended in 2008 under the UNDP's Human Development Initiative program to address the lack of access to working capital for the rural poor in Myanmar. Initially working only in Myanmar's Dry Zone, in March 2008 Pact assumed management of the UNDP's microfinance projects in the Ayerwaddy River Delta and Shan State. 

Pact based the design and delivery of the microfinance project on its Capital Plus philosophy, which is based on the belief that long-term poverty alleviation is attained through the combined development of:

• Financial capital in the form of savings and credit for the poor
• Institutions in the form of sustainable microfinance organizations
• Human resources in the form of informed and empowered clients.

Pact's approach encompasses a two-pronged strategy that consists of 1) facilitating access to microfinance services for the poor using a group lending methodology, and 2) stimulating small business ventures through a range of critical small enterprise/business development support services. To implement this strategy Pact helps organize villagers into five-member savings and credit groups that provide financial services to varied microbusiness sectors, from marginal farming to small trade activities. The loan processing and paperwork is based on a simplified format designed for use by preliterate managers and clients.

Pact's microfinance project now includes 475,000 active borrowers across Myanmar's Dry Zone, Delta Region, and Shan State, and is among the 30 largest in the world with a loan fund valued at approximately $42 million. Pact's approach has proved successful with an annual client growth rate of 36% and a 99% repayment rate. Pact's commitment of community participation is realized in 5,102 villages in which sustainable structures have been created to form an institutional foundation for the long-term viability of Pact's microfinance work. After the devastating 2008 Cyclone Nargis the Microfinance Project shifted into a relief effort. After a period of recovery, by May of 2009, Pact was successfully able to cross pre-cyclone levels of lending and continues to lend and assist those in need of loans throughout the country.