The Pakistan Poverty Alleviation Fund

The Pakistan Poverty Alleviation Fund (PPAF) represents an innovative model of public private partnership. Incorporated under section 42 of the companies act 1984 it follows the regulatory requirements of the Securities and Exchange Commission of Pakistan.Sponsored by the Government of Pakistan and funded by the World Bank and other leading donors the PPAF has on September 30th, 2010 a resource base of US$ 1,065.49 million (Rs. 79,941.45 million). More Detail>>

As the lead Apex institution of the country wholesaling funds to civil society organizations, the PPAF forms partnerships on the basis of rigorous criteria. Before finalizing partnerships the PPAF ensures that the partners have well targeted community outreach programs that are committed to enhancing the economic welfare and income of the disadvantaged peoples.

The TARGET POPULATION for the project are poor rural and urban communities, with specific emphasis being placed on gender and empowerment of women. Benefits accrue directly to the vulnerable through income generation, improved physical and social infrastructure, and training and skill development support.

There are several UNIQUE FEATURES of the PPAF, the three most significant features are:

The establishment of an indigenous autonomous Apex institution with resource backed capability of providing financial and non-financial support to civil society organizations on a long-term basis.

A model public/private sector partnership with the role of government as an enabling facilitator, and predominant role of private sector professionals for policy, strategy, and management.

A dedicated market developer committed to the emergence of professional and sustainable civil society organizations.

SOURCES COMPONENT AMOUNT IN MILLION(US$)

Government of Pakistan Endowment for Project I 10.00Endowment for Project II 8.62

Sub Total 18.62World Bank (Project I) To reduce incidence of poverty through

provision of resources and services.90.00

World Bank (Project II) To reduce incidence of poverty through provision of resources and services.

238.00

World Bank (Project II - additional financing)

Rehabilitation and reconstruction in earthquake affected areas of NWFP & AJK

100.00

World Bank (Project II - additional financing)

Rehabilitation and reconstruction in earthquake affected areas of NWFP & AJK

138.00

World Bank Earthquake Disability Project 5.00

World Bank Social Mobilization 75.00

World Bank (Project III) To empower the targeted poor with increased incomes, improved productive capacity and access to services to achieve sustainable livelihoods.

250.00

Sub Total 896.00United States Department of Agriculture (USDA)

To implement long term poverty reduction programmes and sustainable agriculture

25.86

Sub Total 25.86U.S Agency for International Development (USAID)

To promote entrepreneurship and enterprise development

6.31

U.S Agency for International Development (USAID)

to provide relief to flood affected communities of Punjab and Sindh

2.70

Sub Total 9.01International Fund for Agricultural Development (IFAD)

Microfinance Innovation & Outreach Programme

26.00

International Fund for Agricultural Development (IFAD)

Restoration of earthquake affected communities and households

26.00

International Fund for Agricultural Development (IFAD)

Program to increase sustainability Microfinance

35.00

Sub Total 87.00KfW (Development Bank of Germany)

Reconstruction of rural housing and related infrastructure in the earthquake affected areas of NWFP

17.00

Sub Total 17.00Committee to Encourage Corporate Philanthropy of USA

Building and operating health and education facilities in earthquake affceted araes of NWFP

12.00

Sub Total 12.00Total

Obj:

To empower the poor and increase their incomes, especially women To provide credit to partner organizations and assist them expand their poverty targeted

micro-credit programs

To provide grants and loans on a cost-sharing basis for development of small scale community infrastructure

To enable accessibility of disadvantaged communities to infrastructure, Health & Education

To strengthen the institutional capacity of partner organizations and support them in their capacity building efforts with communities

PPAF will endeavor to form partnerships with organizations, which:

Have well-targeted community outreach programs Enhance economic welfare and incomes of the poor and disadvantaged Support and nurture community involvement Build sustainability and make tangible efforts to secure the future Are decentralized and follow democratic decision making

PPAF will address the crucial linkage between environment (social & physical) and poverty by being sensitive to environmental degradation and child labor.

Governance:

The PPAF has a democratic and transparent governance structure, which best assures an independent, non-political organization that is efficiently and effectively managed. The Articles of Association prescribe a three-tier governance structure, comprising a General Body, a Board of Directors and a management team headed by the Chief Executive. Significant features of the governance structure are its system of checks and balances and the predominant role given to members of the civil society. The following organogram demonstrates the governance structure of PPAF:

Unit/Departments/Centre

Positions

CED Credit & Enterprise Development Unit

CE/MD Chief Executive / Managing Director

CPI Community Physical Infrastructure Unit CSO Chief Strategy Officer

HID Human & Institutional Development unit CFO/CS Chief Financial Officer/Company Secretory

H&E Health & Education Unit COO Chief Operating Officer

SM Social Mobilization CTO Chief Technical Officer

ERD Evaluation Research & Development Unit

M&C Media & Communication Unit

WMC Water Management Center

HR/Admin/Proc Human Resource/Administration/Procurement Unit

IA Internal Audit Department

CRM Corporate Relations Management

F&A Finance & Accounts Unit

IT Information Technology Department

ESMG Environmental & Social Management Group

LEP Livelihood & Environmental Protection Unit

Annual report:

ContentsChairman’s Message ..............................................................................................2Chief Executive’s Statement....................................................................................31. Overview .......................................................................................................42. Credit and Enterprise Development ................................................................83. Community Physical Infrastructure ...............................................................154. Water Management Center..........................................................................215. Health and Education ..................................................................................266. Human and Institutional Development .........................................................307. Social Mobilization ......................................................................................368. Livelihoods ..................................................................................................429. PPAF Disability Project ..................................................................................4510. Corporate Relations Managment..................................................................5011. Evaluation, Research and Development ........................................................5412. Media and Communication..........................................................................5713. Human Resources, Procurement and Administration ....................................6014. Internal Audit ..............................................................................................6215. Finance and Accounts..................................................................................6416. Directors’ Report..........................................................................................70Financial Highlights..............................................................................................89Financial Statements ............................................................................................90Boxes3.1 Mission and Objectives....................................................................................................................164.1 Strategic Framework .......................................................................................................................2211.1 Evaluation Research and Development Unit - Case Studies and Reports ............................................5612.1 Video Documentaries ......................................................................................................................5915.1 Findings of the World Bank Supervision Mission ..............................................................................69Case Studies2.1 Women’s Livestock Cooperative Farming .........................................................................................146.1 A Stitch in Time ..............................................................................................................................346.2 Beautifying her Life .........................................................................................................................35

7.1 Goth Noor Muhammad - An Inspiring Development Initiative ..........................................................409.1 Courage in the Face of Adversity .....................................................................................................4810.1 School Milk Program - Healthy Body, Healthy Mind..........................................................................53Figures2.1 PPAF Share in the Sector ...................................................................................................................82.2 Microcredit Borrowers: by Location ...................................................................................................92.3 Gender Ratio in Microcredit Loans...................................................................................................102.4 Sectoral Distribution of PPAF Loans (FY 2000-09).............................................................................102.5 Annual Average Loan Size by Sector (Microcredit)............................................................................102.6 Capacity Building Grants as Percentage of MC Loans by PO Type......................................................112.7 Percentage Share in MC Disbursements by PO Type .........................................................................113.1 Geographical Distribution of CPI Schemes (FYs 2000-10) .................................................................193.2 Sectoral Distribution of CPI Schemes (FY 2009-10)...........................................................................193.3 Sectoral Distribution of CPI Schemes (FY 2000-10)...........................................................................195.1 Gender Ratio in Beneficiaries ...........................................................................................................275.2 Gender Ratio Beneficiaries by Sector and Type of Interventions-Cumulative ......................................275.3 Health Beneficiaries by Gender and Province ....................................................................................276.1 Annual Training Grant in Support of Credit Facility...........................................................................326.2 Annual Community Training Beneficiaries ........................................................................................326.3 Annual Staff Training Beneficiaries...................................................................................................327.1 Distribution of Community/Village Organization by Type..................................................................398.1 Financing Agreements.....................................................................................................................428.2 LEP Process Flow Chart....................................................................................................................4316.1 Share of Funds Disbursed - Core Operations ....................................................................................7216.2 Provincial Distribution of Funds - Core Operations ...........................................................................7216.3 Total Income ..................................................................................................................................7416.4 Financial Results.............................................................................................................................74Tables2.1 Average Loan Size by Lending Faiclity ..............................................................................................133.1 Distribution of Infrastructure Projects by Category ...........................................................................173.2 Geographical Distribution of Schemes in Province............................................................................173.3 Geographical Distribution of Infrastructure Schemes by Project Type ................................................184.1 Distribution of Projects by Allocated Funds and Beneficiaries ............................................................255.1 Beneficiaries of PPAF Health Interventions (FY 2009-10) ...................................................................285.2 Social Sector Interventions by Province ............................................................................................287.1 Exposure Visits of POs .....................................................................................................................387.2 Field Activities (2009-10).................................................................................................................399.1 Activities for the Year (Gender-wise) ................................................................................................469.2 Training Activities for the Aear.........................................................................................................4616.1 Disbursements - Core Operations ....................................................................................................72

Company InformationCompany Secretary Iltifat Rasul KhanAuditors A. F. Ferguson & Company, Chartered AccountantsLegal Advisors Azam Chaudhry Law AssociatesTax Advisors A. F. Ferguson & Company, Chartered AccountantsBankers Allied Bank of Pakistan, Askari Commercial Bank Limited, Bank Al-Falah Limited,Citibank, Faysal Bank Limited, Habib Bank Limited, Hong Kong and ShanghaiBanking Corporation Limited, National Bank of Pakistan, NDLC-IFIC Bank Limited,Royal Bank of Scotland, Silk Bank Limited, Standard Chartered Bank LimitedRegistered Office House No. 1, Street No. 20, Sector F-7/2, Islamabad, Pakistan.UAN: (+92-51) 111-000-102, Tel. (+92-51) 265 3304-05, 265 3597Fax. (+92-51) 265 2246, Email: [email protected]: www.ppaf.org.pkBoard of DirectorsHussain DawoodChairmanDr. Nuzhat AhmadRafiud Deen AhmadShahid AhmadRana Assad AminDr. Naved HamidDr. Rajab Ali MemonDr. Aisha Ghaus PashaAsif QadirZubyr SoomroKamal Hyat

Chief Executive/Managing DirectorBoD CommitteesBoard Compensation CommitteeHussain DawoodChairmanZubyr SoomroMemberShahid AhmadMemberDr. Rajab Ali MemonMemberDr. Aisha Ghaus PashaMemberAudit CommitteeRafiud Deen AhmadChairmanRana Assad AminMemberDr. Nuzhat AhmadMemberDr. Naved HamidMemberAsif QadirMemberChairman - General BodyHussain Dawood Chairman, The Dawood GroupMembersMueen Afzal Former Secretary General, Ministry of Finance, Government of PakistanNuzhat Ahmad Director, Applied Economic Research Center, University of KarachiRafiud Deen Ahmad Consultant, Orr, Dignam & Co.Shahid Ahmad Additional Secretary, Economic Affairs Division, Government of Pakistan.Rana Assad Amin Additional Secretary, Ministry of Finance, Government of Pakistan.Rashid Bajwa Chief Executive Officer, National Rural Support Programme.Nazrat Bashir Additional Secretary, Ministry of Finance, Government of Pakistan.Javed Burki Former Civil Servant.Naved Hamid Director, Centre for Research in Economics & Business, Lahore School of Economics.Ashraf Muhammad Hayat Former Civil Servant.Akmal Hussain Managing Director, Sayyed Engineers Ltd.Ahlullah Khan Kakarr Former Civil Servant.Shoaib Sultan Khan Chairman, National Rural Support Programme.Rajab Ali Memon Educationist.Nazar Memon Director, National Rural Support Programme.Hamayun Murad Managing Director, Orix Leasing Pakistan Ltd.Kaiser H Naseem Manager, Pakistan Corporate Governance Project, International Finance Corporation.Aisha Ghaus Pasha Director, Institute of Public Policy, Beachonhouse National University.Asif Qadir President Engro Polymer and Chemicals.Aijaz Ahmed Qureshi General Manager, Sindh Irrigation & Drainage Authority.Fazlullah Qureshi Former Member, National Electric Power Regulatory Authority.Muhammad Ismail Qureshi Federal Secretary, Ministry of Water and Power, Government of Pakistan.Syed Ayub Qutub Executive Director, Pakistan Institute of Environment Development & Research.Sadiqa Salahuddin Executive Director, Indus Resource Center.M. Suleman Shaikh Chairman, Thardeep Rural Development Programme.Zubyr Soomro Former Citibank Country Officer & Managing Director.Jahangir Tareen Former Federal Minister, Government of Pakistan.Fareeha Zafar Director, Society for the Advancement of Education.2 PPAF — Annual Report 2010

Chairman’s MessageThe year in review marked a decade of PPAFin service of the nation where we haveendeavored to deliver resources, servicesand opportunities at the doorstep of poor

and marginalized across Pakistan as wellas respond flexibility whenever confrontedby national challenges and emergenciessuch as we experienced in the 2005earthquake and the more recent devastatingand widespread floods.The last ten years have seen PPAF expandits outreach to almost every district of thecountry. This outreach is exemplified by adiverse range of products and servicesanchored in social mobilization, institutionaldevelopment and individual empowerment.The emphasis remains on deliveringcustomized solutions tailored to addressspecific constraints of households andcommunities and at the same time, beculturally sensitive and contextually relevant.The PPAF’s vision has always been that wewere not going to be regulators, butfacilitators. Our intentions were not toexercise authority, they were to developand enable the sector to be more efficientand effective. The objective was to synergizealready existing capacities and capabilities,bringing them together and weaving theminto a coherent delivery system. That iswhat has been our real achievementto-date.PPAF has brought about professionalizationof the social sector by selecting qualifiedpartner organizations who will have passeda stringent assessment criterion. For us itis never a question of size; it is always aquestion of presence and the aim is toreach out to the vulnerable in remotestareas of the country.Poverty can only be alleviated if there isownership and buy in at all levels withaction delivered by equal zeal anddetermination. By following marketprinciples and yet focusing on inclusionand quality, we have institutionalized asinnovative approach to helping the poorand the vulnerable at the PPAF. I am sincerelyproud of the facilitation and supportextended by all our stakeholders, mostnotably the Government of Pakistan andthe donor community, who continue torepose confidence in our institutionalcapacity. I would like to thank themanagement team in particular for provingthat given good governance and anopportunity to perform, it is possible tocreate an organization whose performanceis being increasingly acknowledged forinternational comparison and reference.

Hussain DawoodChief Executive’s StatementPPAF — Annual Report 2010 3the program is now being replicated inother countries.The price of success is even higherexpectations from all our stakeholders. Thechallenge is to meet these expectations,knowing that our principal responsibility isto ensure the welfare of vulnerable peoplewho have shown, that despite the difficulttimes, they continue striving for a betterfuture for themselves and their children.Kamal HyatThe year ending June 2010 celebrates animportant milestone in the history of thePakistan Poverty Alleviation Fund. Thecoming to age of an institution that isrecognized in its own right and hasestablished a national and internationalreputation for both effectiveness andtransparency.For this remarkable achievement, there area host of players to whom credit is due.First of all the role of the Government whichhas facilitated our work and stood by us intimes of need, of equal significance hasbeen the role of the Board of Governorsably led by the Chairman. Similarly, theGeneral Body has provided a platform forconstructive dialogue and improvements.The confidence shown by international andbilateral donors in the ability of the PPAFto meet forecasts and targets resulted insustained financial support. This enabledcontinued interaction with our partnerorganizations resulting in extended outreachto the remotest parts of the country. As aconsequence our partners have nowmatured into world class organizations.The role of the PPAF management team hasbeen outstanding. Their remarkable workin the earthquake areas has won theminternational recognition, and their rapidresponse to the recent devastating floodsis commendable. It is not surprising that

Overview4 PPAF — Annual Report 2010

The Pakistan Poverty Alleviation Fund (PPAF)has successfully completed a decade ofexcellence in service of the poor andmarginalized. As one of the largest sourcesof pro poor funding of developmentnationally, PPAF has contributed to the

evolution of sustainable networks for servicedelivery through focused and calibratedinstitutional support to grassrootsorganizations. Simultaneously, it has beenable to mainstream and empower poorcommunities through effective socialmobilization into community groups forcollective action and self help.With unmatched experience, PPAF’sapproach to alleviating poverty has maturedinto a unique model of participatorydevelopment subsuming carefullysynchronized interventions that arecontextually responsive towards thespectrum of basic community needs. Withinthis framework, each innovation in PPAF’sprogression towards finding effective,integrated solutions for community issueshas been based on empirical researchanchored in a culture of continuous learningand improvement.To date, PPAF has successfully disbursedover Rs. 13,846 million through 87 partnerorganizations under various fundingwindows, i.e. lending for microcredit/enterprise (Rs. 9,048 million), developmentof infrastructure (Rs. 1800 million), healthand education (Rs. 1088 million), humanand institutional development (Rs. 463million), social mobilization (Rs. 999 million),and the successfully completedreconstruction and rehabilitation programin earthquake affected areas (Rs. 448million).These funds have cumulatively financedover 3.8 million loans, 22800 infrastructure,health and education facilities and over11,100 training events for participatingcommunities and staff of partnerorganizations. Additionally, 120,000seismically safe housing units werereconstructed in the earthquake affectedareas. PPAF’s coverage has simultaneouslyincreased to include 80,000 villages/settlements spanning 127 districts acrossall provinces and regions in the country,making it the largest national operation incommunity based development.Having played a key role by investing indevelopment of sustainable mechanismsfor delivering financial services to the poor,PPAF — Annual Report 2010 5OverviewThe Pakistan Poverty Alleviation Fund (PPAF)has successfully completed a decade ofexcellence in service of the poor and

marginalized. As one of the largest sourcesof pro poor funding of developmentnationally, PPAF has contributed to theevolution of sustainable networks for servicedelivery through focused and calibratedinstitutional support to grassrootsorganizations. Simultaneously, it has beenable to mainstream and empower poorcommunities through effective socialmobilization into community groups forcollective action and self help.With unmatched experience, PPAF’sapproach to alleviating poverty has maturedinto a unique model of participatorydevelopment subsuming carefullysynchronized interventions that arecontextually responsive towards thespectrum of basic community needs. Withinthis framework, each innovation in PPAF’sprogression towards finding effective,integrated solutions for community issueshas been based on empirical researchanchored in a culture of continuous learningand improvement.To date, PPAF has successfully disbursedover Rs. 13,846 million through 87 partnerorganizations under various fundingwindows, i.e. lending for microcredit/enterprise (Rs. 9,048 million), developmentof infrastructure (Rs. 1800 million), healthand education (Rs. 1088 million), humanand institutional development (Rs. 463million), social mobilization (Rs. 999 million),and the successfully completedreconstruction and rehabilitation programin earthquake affected areas (Rs. 448million).These funds have cumulatively financedover 3.8 million loans, 22800 infrastructure,health and education facilities and over11,100 training events for participatingcommunities and staff of partnerorganizations. Additionally, 120,000seismically safe housing units werereconstructed in the earthquake affectedareas. PPAF’s coverage has simultaneouslyincreased to include 80,000 villages/settlements spanning 127 districts acrossall provinces and regions in the country,making it the largest national operation incommunity based development.Having played a key role by investing indevelopment of sustainable mechanismsfor delivering financial services to the poor,PPAF has accelerated efforts to restructurethe microfinance sector along commercial

lines with less dependence on subsidizedfunding. To this end, PPAF has facilitatedlinkages between microfinance institutionsand formal financial institutions throughsuccessful intermediation, allowing selectedpartner organizations to leverage fundsfrom the financial sector. At the same time,PPAF has continued to expand outreach ofmicrocredit services with a particular focuson areas with low penetration and highincidence of poverty.6 PPAF — Annual Report 2010OverviewDuring the year, PPAF management tookan important policy decision ofsystematically increasing penetration ofmicrocredit services in 37 of Pakistan’s leastserved districts. PPAF’s support to buildingcommunity infrastructure assets in a widerange of sectors including drinking watersupply, irrigation, sanitation, renewableenergy and communications hascumulatively improved hygiene, reducedhealth burdens and increased market access,while helping to augment and diversifyincome sources for poor households. Thegains for women have been particularlysignificant in terms of expanding space formore productive use of time and energies.The strategic shift towards holisticinfrastructure solutions spanning numerousinterventions has substantively impactedlives and livelihoods, particularly in areasconsistently stressed by water scarcity. Indealing with issues of water deficiency,PPAF has moved beyond its traditional focusfrom ensuring provision of infrastructureassets for efficient water management,towards a broader agenda alsoincorporating the development of bettertechnologies and stronger institutionallinkages amongst various stakeholders.PPAF’s Social Sector Development Program(SSDP), incorporating health and educationinterventions, has received further impetusduring the year with inclusion of another1025 facilities.By allowing poor families access to qualityhealth and education services, the programhas helped reduce critical gaps in thedevelopment process at the grassroots.Through SSDP, PPAF has made valuablecontributions in terms of restructuringunderperforming public sector schools andhealth facilities as viable and accountablecommunity services cognizant of user needs

and customer satisfaction. PPAF’s healthand education interventions in thecommunity based sector arestructured on similar principles.Social mobilization constitutes the bedrockof all PPAF interventions. Owing to theimportance of organizing disparatecommunities into active participants witha capacity to effectively guide thedevelopment process, PPAF has dedicateda separate unit for this purpose. The socialmobilization unit is mandated to form50,000 new community organizations withsubstantial representation of women andpoorest households. The successes achievedby the unit have already yielded far reachingresults in terms of mainstreaming hithertovoiceless communities, through allowingthem full participation in the decisionmaking process.Additionally, the social mobilization unit isplaying its part in national integration bypaving the way for increased contactamongst citizens from ethnic, linguistic andcultural backgrounds. Through exposurevisits for community members acrossregional and provincial boundaries, PPAFhopes to unravel divisive and isolated elitestructures restricting the nation’s fullPPAF — Annual Report 2010 7Overview

PPAF: District Coverage in 2010IranArabian Sea

IndiaAfghanistanChinaInternational BoundaryProvincial BoundaryDistrict BoundaryICT BoundaryAJK BoundaryCoastal LineDisputed Area BoundaryNorthern Area BoundaryTribal Area BoundaryAdministrative BoundariesUncovered DistrictCovered DistrictLegend

8Credit and Enterprise Development (CED)unit facilitates delivery of targeted financialservices to the poor, while simultaneouslyseeking to develop the sector nationallythrough building institutional capacitiesand introducing innovative solutions forcontinued growth. The unit has successfullyhelped expand coverage and outreach ofthe microfinance market exponentiallythrough implementing partners exhibitingdiverse structures and lending

methodologies in various cultural andgeographical settings across Pakistan.In June 2010, PPAF resources accountedfor 44.7% market share in active microcredit borrowers, while PPAF POsconstituted 45.2% share (Figure 2.1). Whilethe former represents PPAF’s directcontribution to the sector currently, thelatter exhibits its success in facilitatingimplementing partners to attain requisiteinstitutional capacities, enabling them togenerate resources from other sourcesincluding their own.During the current year, CED unit successfullydisbursed Rs. 8.463 billion under itsmicrocredit facility for on lending to 48partner organizations. PPAF’s support to thesector has cumulatively crossed Rs. 40 billion,which continues to constitute the largestsingle source of private sector microfinancefunding nationally. Simultaneously, steadygrowth in PPAF funding exposure has beencarefully calibrated to attain theorganization’s social objectives and helppoor groups break out of poverty.CED has been able to strategically invest inregions and sectors of the economy that

2 –Credit andEnterpriseDevelopmentPPAF — Annual Report 2010Figure 2.1: PPAF Share in the Sector (Rs. in m)Jun 06080%40%60%100%Jun 07 Jun 08 Jun 09 Jun 1041%17%46% 43%37%17%PPAF POs (PPAF Funded) PPAF POs (Non PPAF Funded) Non-PPAF Org20% 45%17%38%61%9%30%42%11%47%

PPAF — Annual Report 2010In addition to redressing gaps in microcreditoutreach through equitable distribution of

funds across regions and sectors of theeconomy, the unit focuses on closing thegender gap in terms of access to financialservices. Growth in PPAF’s annual femaleclients from approximately 36% in FY 2004-05 to a high 54% in the current financialyear epitomizes a resolve to focus more onmarginalized segments at household andcommunity levels, (Figure 2.3). In FY 2009-10, PPAF microcredit support to womenbeneficiaries crossed 1.63 million loans, with438,600 women benefitting from PPAF’smicrocredit facility in the current year alone.Also, the number of PPAF POs cateringexclusively to women has increased from8% in FY 07-08 to 10%in FY 2009-10.The focus on extending outreach tomarginalized communities gained furthermomentum during the year with thedecision to increase outreach services in 37districts with low microcredit penetration.The unit aims to gradually increase averageare mostly populated by less affluent andmarginalized segments of society. WhilePPAF’s growing urban portfolio has facilitatedthe poor in generating economic activitythrough provisioning financial assets insupport of small scale enterprises, the unit’srural investments are largely concentratedin agriculture and livestock sectors.Although PPAF’s rural portfolio continuesto be substantially large with a 78% shareof all new borrowers in FY 2009-10, ratioof PPAF’s microcredit beneficiaries in urbanand semi urban locations has graduallyincreased from 3% in FY 2004-05 to 22%in current financial year (Figure 2.2). At thesame time, continuous growth in PPAF’surban portfolio has steadily increased shareof loans in commerce sector. Overall, thelatter constitutes 34% of PPAF microcreditloans distributed to date, while 38% and17% loans have so far been distributed inagriculture and livestock sectors respectively(Figure 2.4).0100,000200,000300,000400,000Male Female Male FemaleRural UrbanFigure 2.2: Microcredit Borrowers: By LocationFY 05-06FY 06-07FY 07-08FY 04-05FY 08-09FY 08-09

9Credit and Enterprise Development

10 PPAF — Annual Report 2010

penetration of financial services in thesedistricts from 6.2% to 8% while maintainingan equitable gender balance. The selectioncriterion for districts is based on an analysisof welfare status and involves areas thatare amongst the poorest in the country.Greater diversification in PPAF’s loanportfolio in terms of gender, regions andsectors of the economy has helped extendoutreach and deepen its loan impact.Growing average loan size has had a similarimpact as it reflects a higher incidence ofrepeat loans (Figure 2.5). Overall averageloan size has increased by approximatelyRs. 9700 in 8 years from Rs. 8,600 in FY2002-03 to approximately Rs. 17,300 in thecurrent financial year. Repeat loans are notonly significantly proportional to a higherdegree of welfare impact on clients, theyhelp organizations in maximizing prospectsof financial sustainability by increasinglybanking on clients with low risk of defaultand sound repayment credentials.In its role as the leading wholesaler ofmicrocredit funds nationally, PPAF hasassumed a responsibility to build thecapacity of partner organizations throughprovisioning administrative grants in supportof microcredit funds. However, such supporthas been progressively curtailed toencourage growth of in house capacitywithin POs and systematically discouragereliance on subsidized funding.Consequently, grants for meetingoperational and capital costs of partnerCredit and Enterprise DevelopmentFigure 2.4: Sectoral Distribution of PPAF Loans (FY 2000 - 09)Agriculture(38%)Livestock(17%)Commerce(34%)Handicrafts(3%)Others(7%)Figure 2.5: Annual Average Loan Size by Sector (Microcredit)01–02 02–03 03–04 04–05 05–06 06–07 07–08 09–10Agriculture Livestock Commerce Overall08–09(FY 2000-10)6,00018,00012,0008,00014,00016,00020,00010,000

Figure 2.3: Gender Ratio in Microcredit LoansFY 04-050%100%FY 05-06 FY 06-07 FY 07-08 FY 08-09

Female Male64%36%61%39%53%47%52%48%51%49%FY 09-1046%54%20%40%60%80%

PPAF — Annual Report 2010 11organizations have declined from 26% ofmicrocredit funding for on lending in FY2001-02 to 4.1% in the current financialyear (Figure 2.6 ).Over the years, the unit has successfullymanaged to spread funding exposure to avariegated set of service providers includingmicrofinance institutions, non-governmentalorganizations and formal sector institutions.Compared to a share of 92% in FY 2000-01 and 74% in FY 2001-02, rural supportprograms accounted for only 43% of PPAFmicrocredit disbursements in currentfinancial year. The share of MFIs has grownfrom 22% in FY 2001-02 to 34% in periodunder review, while non-governmentalorganizations account for 23% of disbursedmicrocredit funds in the current financialyear, up from 4% in FY 2001-02.Progressively decreasing grant funding forenhancing prospects of self reliance andsustainability within POs in long termconstitutes an important lever in PPAF’sstrategy of facilitating large scale growthin sector. IFAD funded PRISM is consistentwith the above strategy and is specificallydesigned to putting in place effectiveinstruments allowing sustainable partnerorganizations leverage funds from thecommercial sector.PRISM aims at creating linkages betweenmicrofinance institutions and the formalfinancial sector with an overarching goalto reduce poverty, promote economicgrowth and improve livelihoods of ruralhouseholds. PRISM envisions providinggreater leveraging capacity to partnerorganizations with sustainable or nearsustainable microfinance operationsthrough credit enhancement facilities tobanks in the shape of cash collateral, lettersof credit and direct guarantees. It furtherseeks to grant equity funds to viablemicrofinance institutions allowing

commercial financial institutions (CFIs) toinvest greater resources in the sector. Duringthe year, four major transactions werecompleted under the credit enhancementfacility. Additionally, disbursements wouldCredit and Enterprise DevelopmentFigure 2.6: Capacity Buildings Grants as Percentage ofMC Loans by PO Type01–02 02–03 03–04 04–05 05–06 06–07 07–08 09–10NGOs RSPs MFIs Overall08–090%15%5%25%30%10%20%35%40%45%01–02 02–03 03–04 04–05 05–06 06–07 07–08 08–09 09–10

Figure 2.7: Percentage Share inMCDisbursements byPOType080%40%60%100%RSPs MFIs NGOs20%Formal Sector

12 PPAF — Annual Report 2010

aims at provisioning grants for assettransfers, subsistence allowance and healthinterventions and livelihood trainingfollowed by carefully sequenced and flexiblefinancial services. The successful SSN pilotproject initially undertaken by PPAF withone thousand beneficiaries has since beenup scaled. Currently, the SSN project is invarious stages of implementation in fourdistrict spanning three provinces.Young Partners Program (YPP) under MIOPis aimed at strengthening PPAF’s ability todevelop new microfinance institutions inrural areas. The unit is responsible forimplementing two sub components underYPP – Young Partner Development Initiative(YPDI) and International Linkage PartnerInitiative (ILPI). While the former is designedto help organizations set up sustainableoperations through provisioning funds foron-lending and institutional support, thelatter allows young individuals to link upwith renowned regional MicrofinanceInstitution for gaining relevant experiencestart from the equity component of theprogram in the next financial year in supportof funding from commercial resources.Innovations in improving access to financialresources for microcredit on-lending toservice providers have been complementedwith equally focused efforts to introducenewer, more suitable, products for the poorat the grassroots. MIOP, for instance, aims

at enhancing access of poor rural toproductive assets, skills, services andimproved technologies through newmicrofinance products and market accessinitiatives. It supports development andtesting of microfinance products includingVillage Banking, Settlement Branches,Women Cooperatives, Livestock Farmingand Social Safety Nets in addition tocarefully experimenting with approachesaimed at increasing outreach of existingpartners to hitherto low microfinance accessareas – hilly areas of Baluchistan, deprivedand affected areas of Sindh and KyberPakhtunkhwa – through Innovation andOutreach component. In all, 19 innovativeproducts and 8 approaches have so farbeen introduced in partnership with19 partner organizations.Innovations initiated under the programhave already started to make a visibledifference in the lives of the poor. SocialSafety Net (SSN) Project launched as a pilotin the coastal areas of Sindh targets thepoorest of the poor who are generallymissed out by microfinance service providersowing to low credit worthiness. The projectCredit and Enterprise DevelopmentPPAF — Annual Report 2010 13in addition to helping them set up ruralfinance operations – Linkage PartnerOrganizations (LPOs) – operating asindependent MFIs eligible to become fulltime PPAF partner organizations. Duringthe reporting year, 13 new organizationswere enrolled as young partners underYPDI, which currently supports 19 smallorganizations. Out of these, twoorganizations have already been graduatedto the status of regular PPAF partnerorganizations.While microloans constitute the biggestPPAF window for provisioning financialresources to communities, the unit has alsosuccessfully experimented withcomparatively larger loan products targetingmedium sized entrepreneurs underEnterprise Development Facility (EDF). Todate, it has benefitted over 7,770 individualsin 759 communities across the country.During the current financial year, CED unitdisbursed Rs. 9.648 billion to 49 POs. Ofthis, Rs. 8.5 billion was disbursed undermicrocredit window, while another Rs. 111million, Rs. 474 million and Rs. 600 millionwere disbursed under EDF, MIOP and PRISM

respectively. These funds have translatedinto 856,465 loans (Microcredit 790,644;EDF 2,944; MIOP 19,173; PRISM 43,704).By the close of this current financial year,the unit has cumulatively disbursed Rs. 42billion through 43 partner organizationsfor on lending to a predominantly poorclientele under its various funding windows.These funds have cumulatively benefittedCredit and Enterprise Development3,872,953 individuals across the country(MC 3,784,575; MIOP 38,193; EDF 7,779;PRISM 42,406). The impact of these loanshas been independently verified by crediblethird parties in terms of increase in welfareon a number of important indicators.Continually learning from experience, theunit has worked with stakeholders to evolveinnovative strategies for further expandingoutreach, deepening penetration andstrengthening the capacity of partnerorganizations for effective and sustainableservice delivery at the grassroots.Table 2.1: Average Loan Size by Lending FacilityMicrocredit EDF MIOPFY 00-02 7,626 — —FY 02-03 8,649 — —FY 03-04 11,061 — —FY 04-05 12,583 68,603FY 05-06 12,803 42,385FY 06-07 13,578 51,358FY 07-08 14,819 50,801 17,001FY 08-09 15,830 50,885 18,177FY 09-10 17,294 51,793 17,70714 PPAF — Annual Report 2010Credit and Enterprise Development

Case Study 2.1: Women’s Livestock Cooperative FarmingIn partnership with International Fund for Agricultural Development (IFAD), PPAF launched Microfinance Innovation& Outreach Program (MIOP) in 2006. The program aims at enhancing access of poor rural women and men toproductive assets, skills, services and improved technologies with an emphasis on enhancing productivity through pilotschemes for new microfinance products and market access initiatives. Women’s Livestock Cooperative Farming wasone such initiative.A survey was conducted by Orangi Charitable Trust (OCT), a PPAF partner, in 6 villages of Sindh to ascertain the currentstate of livestock sector. An emphasis was placed on finding possibilities of lending microcredit for goat rearing andmaking it commercially viable, particularly for rural women. Goats were chosen as they are easy to rear, are adaptiveto most environments and can graze in various topologies compared to other small ruminants. Also, most ruralhouseholds rear 1-2 goats for personal consumption. Survey findings revealed that a minimum of 25 goats aged 6-11months, placed in one shed and reared through scientific methods would provide maximum output in terms of weight,minimum feed and increased income.PPAF provided OCT Rs. 5 million (USD 58,140) to introduce the concept in district Khairpur Mirs (Sindh). 100 groupswith 5 female members each were formed; a loan was provided for purchasing 25 male baby goats per group for asix month period with bullet repayments. Training was imparted to the group of women to mitigate risk of diseaseand improve health and weight of the kept animals. The goats were kept in a common shed and raised by the group.Also, experts with the help of Livestock Dairy Board monitored animals on a bi-weekly basis to ensure maximum animalgrowth. They also trained the groups on dry and green feed and vaccination. The goats having been kept in the shedfor 100-120 days were then sold in local markets at an average profit per group member of Rs. 8,000-8,500(USD 93-99).A number of lessons were learnt from an average 17% animal loss. It was concluded the baby goats purchased shouldbe over 6-7 months of age. The optimal time to sell the goats was the first week of December with the next flock to

be purchased in February to minimize outbreak of disease. Also, veterinary doctors needed to be employed forvaccination of goats and help train the women groups.The program in itself was innovative and beneficial leading to increased incomes for poor rural women: at an average,the women received additional income of Rs. 2,500-3,000 (USD 29-35) per month. Market linkages were observedwith the brokers going on to visit localities directly to purchase goats, minimizing the role of middleman, in turndecreasing transportation cost and time for the villagers. Linkages with government institutions such as the LivestockDepartment resulted in provision of technical facilities and scientific methodologies being implemented, decreasinganimal loss. Trainings provided by the Livestock Department also empowered the women and some of them wenton to become trainers.Given the success of the program, the first phase was up-scaled to 4 new districts ( Nawabshah, Nausheroferoz,Sanghar and Matiari). In Phase-II, PPAF provided OCT a loan of Rs.70 million (USD 813,954) and a grant of Rs. 9.72million (USD 113,023) for capacity building under the Innovation and Outreach Facility. The product was up-scaledto 6,520 female borrowers in 77 localities across five districts with an average loan size of Rs. 11,500 (USD 134).PPAF — Annual Report 2010 15Local need-based, demand driven smallscale infrastructure has demonstrated apositive correlation to poverty outcomesand has been found to improve thelikelihood of better returns to human,capital, financial and natural resources.Infrastructure interventions in critical areassuch as irrigation, potable water, electricity,sanitation and roads can transform livesand livelihoods through increasing cropyield, labor productivity and market access,while decreasing the probability of disease,famine and economic shocks. CommunityPhysical Infrastructure (CPI) unit strives tooptimize these linkages through atransparent and community driven processof delivering infrastructure assets to poorcommunities.Access to infrastructure assets generallyvaries with location, socio-political statusof communities and propensity to pay.Rather than simply being a function ofavailability, access to infrastructureencompasses entitlement and capacity ofthe poor to maximize gains from suchendowments. Conscious of theseinteractions, PPAF’s infrastructureallocations are purposively designed toreduce geographical biases and targetedto reach poorest and most marginalizedcommunities. Additionally, PPAFinfrastructure grants attempt to reducethe affordability gap with an equallyconcerted focus on building social capitalas a means to discourage elite capture,increase project sustainability and maximizegains for the poor.As an aggregate of social linkages aimedat common development objectives, socialcapital nurtures communities and laysfoundation for long term cooperationwithin poor communities. The PPAF modelof community mobilization leading

towards a layered institutionalizedstructure of community representation athigher administrative tiers has made itpossible for poor and isolated communitiesto affect change in ways that wereinconceivable in the past.

3 –CommunityPhysicalInfrastructureCommunity organization at the village levelis central to planning and management ofinterventions. All CPI supportedinfrastructure interventions are precededby months of intensive activity centered onmobilizing poor communities and organizingthem into Community Organizations (COs),which are then capacitated to work as vibrantdevelopment institutions at the grassroots.Furthermore, COs receive necessary financialand technical support from PPAF throughits Partner Organizations (POs), whichfacilitate each stage of the developmentprocess from project identification toimplementation and maintenance.In addition to equipping communityorganizations with requisite skills andresources, the unit seeks to underlineimportance of building capacities forensuring project sustainability in the longrun. Building ownership throughcompulsory community contribution in theshape of financial and/or labor, and materialinputs forms a critical component of thisstrategy. Project sustainability is furtherensured through compulsory collection ofmaintenance resources sufficient for bearingone year of operations maintenance by aproject committee. The committee isempowered to develop an ongoingparticipatory mechanism for collection ofmaintenance funds once the asset becomesoperational. To date, 17,785 communityorganizations have been formed toimplement and maintain CPI supportedinfrastructure schemes.In ten years of operations, CPI has acceptedcommunity demands for over 17,000infrastructure projects through 51 Partner

Organizations spanning 121 districts ofPakistan, Northern Areas and AJK, fouragencies of the Federally AdministeredTribal Areas (FATA) and Islamabad CapitalTerritory (Table 3.2). Of these, 6,854infrastructure interventions including standalone conventional schemes as well ascomposite Integrated Area UpgradingProjects (IAUP) were operationalized underCPI component of the first World Bank16 PPAF — Annual Report 2010Community Physical InfrastructureBox 3.1: Mission and ObjectivesThe Community Physical Infrastructureunit provisions infrastructure grants as ameans to developing capacity of ruralcommunities and enhancing incomegenerating opportunities at the grassrootswith an aim to;Increasing incomes of the poor andproviding benefits equitably to menand womenBuilding local level infrastructure witha focus on productive needs ofcommunities, especially womenBuilding capacity of local stakeholdersand involving them in identification,planning, execution and monitoringof physical infrastructure projectsEnsuring efficient, productive andenvironment friendly use of localresourcesCreating sense of ownership andresponsibility within poor communitiesPPAF — Annual Report 2010 17Community Physical InfrastructureTable 3.1: Distribution of Infrastructure Projects by CategoryWorld Bank GrandI II III TotalSSIPs 6742 9846 35 16,623Sanitation 993 2361 21 3,375Drinking Water 2,805 2883 5,688Flood Protection 85 176 1 262Irrigation 2,054 3109 9 5,172Roads & Bridges 805 1317 4 2,126DMPP 83 - - 83Drinking Water 26 - - 26Irrigation 45 - - 45Flood Protection 12 - - 12IAUP 1 141 - 142IAUP 1 141 - 142TIP 28 167 - 195DWSS 24 - - 24Irrigation 1 4 - 5Bio Gas 8 - - 8Incinerator - 1 - 1Micro Hydel 3 42 - 45Reverse Osmosis - 3 - 3Solar Lights - 9 - 9Solar Water Pump - 13 - 13Wind Mill - 81 - 81Wind Turbine - 6 - 6Total 6,854 10,154 35 17,043The above schemes have cumulatively benefitted 8.4 urban and rural individuals

in 1.2 million poor households throughout Pakistan (Table 3.2).

Table 3.2: Geographical Distribution of Schemes in ProvinceProvince Projects Beneficiary BeneficiaryHouseholds PopulationAJK 694 32,929 262,791Balochistan 2,821 121,909 938,049FATA 90 9,468 99,764ICT 137 11,251 65,573NAs 434 40,754 314,379NWFP 3,299 292,503 2,194,137Punjab 6,138 501,301 3,300,162Sindh 3,430 179,097 1,234,616Total 17,043 1,189,212 8,409,471financed project (PPAF-I, FY 2000-04), whileanother 10,154 schemes were completedunder World Bank’s PPAF-II Project (FY 2004-10). An additional 35 schemes have so farbeen completed under World Bank’s PPAFII1Project (FY 2009-14).The above schemes have cumulativelybenefitted 8.4 urban and rural individualsin 1.2 million poor households throughoutPakistan (Table 3.2).The unit mainly approves resources forinfrastructure interventions in the irrigation,sanitation, drinking water supply andcommunication sectors (Table 3.3). Eachsector further constitutes a number of subcategories.For instance, irrigation sectorinterventions include a variety of schemesfocused on efficient management of waterresources ranging from watercourse liningand pipe irrigation projects to irrigationchannels and karez rehabilitation. Allparticipating communities are empoweredto select the appropriate set of interventionsfrom the above range of options inconformity with their specific needs.CPI strives to ensure equitable distributionof resources across the country’sgeographical milieu, while simultaneouslyfocusing on most deprived regions. Forthis reason, geographical distribution ofCPI interventions is consistent with themagnitude of regional needs in specificsectors. For instance, while 92 percent ofPakistan’s overall population has access to18 PPAF — Annual Report 2010Community Physical InfrastructureTable 3.3: Geographical Distribution of Infrastructure Schemes by Project Type (FY 2000-09)*Province Sanitation DWSS Flood IAUP† Irrigation Roads & TIP DMPP* Grand TotalProtection BridgesNWFP 1,016 1,223 85 47 417 467 44 - 3,299Punjab 1,710 384 3 49 3,065 917 10 - 6,138Sindh 321 2,302 3 21 297 413 73 - 3,430Balochistan 247 990 127 5 1,270 32 67 83 2,821AJK 5 479 - 1 6 203 - - 694FATA 9 75 - - 5 1 - - 90ICT 54 49 - 12 0 22 - - 137NAs 13 186 44 7 112 71 1 - 434Total 3,375 5,688 262 142 5,172 2,126 195 83 17,043

* The table include the 83 schemes initiated under the Pilot DMPP of PPAF–I in district Pishin Balochistan.† These projects do not include sub-projects initiated under IAUP.

a comparatively safe drinking water supplysource (tap water, hand pump, motorpump, dug well), there are markedvariations across provinces with Punjab(96%) much better placed than Sindh(93%), KPK(84%) and Baluchistan (61%).Understandably, majority of all CPIinterventions in drinking water supply haveto date been initiated in the latter threeprovinces. Similarly, overall percentage shareof rural Sindh, NWFP and Baluchistan interms of total number of schemes hastended to be much higher than theirrespective population share (Figure 3.1).Results of these well targeted resourceallocations have been proven to haveimproved livings standards amongmarginalized communities. An approximate5,172 irrigation schemes completed to datehave helped increase agricultural growththrough efficient management of waterresources, while diversifying income andemployment opportunities for the poor.Similarly, CPI led interventions in drinkingwater supply and sanitation have criticallydecreased the incidence of mortality andmorbidity, enabling backward ruralcommunities in far flung areas to enjoy amuch healthier and productive life style.In the current financial year, CPI completed1,756 new infrastructure schemes, of whichsafe drinking water projects accounted for551 schemes while 476, 399, and 255schemes were completed in the irrigation,sanitation, and communications sectorsrespectively.Safe drinking water for poor communitiesrepresents the largest concentration ofinfrastructure interventions in cumulativeterms: DWSS constitute 34 percent of allCPI conventional schemes completed todate, followed by interventions inirrigation (30%), sanitation (20 %) andcommunications (12 %) sectors (Figure 3.3).While CPI interventions are constantly19Community Physical InfrastructurePPAF — Annual Report 2010increasing in volume and size, the unitcontinues to focus on finding cost efficientand sustainable strategies for meetingcommunity demands in areas where scarcityand/or inefficient utilization of water hasbeen a constant problem. For instance,wind and solar energy has been tapped for

powering a variety of interventions,including reverse osmosis plants for cleandrinking water, solar lights for villageelectrification and solar pumps for irrigation.Simultaneously, the problem of waterscarcity in some of the county’s most aridregions is being met through water efficientmechanisms like drip and sprinkler irrigationsystems. In mountainous areas, PPAF hasfinanced a large number of micro hydelprojects as a sustainable solution forproviding electricity to poor isolatedcommunities not connected to the nationalgrid. Such Technological InnovationsProjects (TIP) have been successfullyoperationalized in 281 communities at aFigure 3.2: Sectoral Distribution of CPI Schemes(FY 2009 - 10)Roads & Bridges (15%)DWSS (31%)Irrigation (27%)Sanitation (23%Flood Protection (3%)Others (1%)(TIP &IAUP)Figure 3.3: Sectoral Distribution of CPI Schemes(FY 2000 - 10)Sanitation (20%)DWSS (34%)Irrigation (30%)Others (2%)Flood Protection(2%)Roads & Bridges (12%)Figure 3.1: Geographical Distribution of CPI Schemes(FY 2000 - 10)Balochistan (16%)Other (4%)Khyber Pakhtunkhwa(19%)Punjab (36%)Sindh (20%)ICT (1%)FATA (1%)NA (3%)AJK 4% (4%)20 PPAF — Annual Report 2010Community Physical Infrastructurecost of over Rs. 165 million, of which thecommunities have borne approximately19 percent of the cost.In addition to stand alone conventionalschemes, the unit has introduced anIntegrated Area Upgrading Program (IAUP)to implement a larger number ofinfrastructure schemes at village level fordealing more effectively with multipledeprivations. A typical IAUP includes threeto six schemes including interventions indrinking water supply, sanitation,communications and irrigation sectors. Todate, 142 integrated projects have beencompleted at the national level inpartnership with 18 partner organizations

at a cost of over Rs. 403 million withparticipating communities contributing 20percent of cost.CPI has made a visible and verifiabledifference in the lives of poor communitiesin relation to increasing incomeopportunities, productivity andempowerment at a national level.Simultaneously, the unit has facilitatedtransfer of community assets to the poor,ensuring greater access with betterentitlement and improved prospects oflong term project sustainability.PPAF — Annual Report 2010 21The future of Pakistan’s agro-basedeconomy is critically reliant on thedevelopment of a holistic watermanagement regime incorporating a seriesof interventions at different levels. Thesolutions could range from erecting welldesigned and environment friendly megastructures for storing and diverting waterto building efficient and self sustaininginterventions at a community level.Simultaneously, the traditional bricks andmortar approach focused on buildinghardware needs to be supplanted with anapproach that is equally focused ongenerating, disseminating and usingknowledge through institutionalizedprocesses as a basis for progress.PPAF’s Water Management Center (PWMC)was established to play a proactive role indeploying effective policies, strategies andsystems for prudent water management,better preparedness as well as focusedgeneration and dissemination ofknowledge. The center is thus pivotal toPPAF’s long term strategy of alleviatingpoverty and reducing food insecurity andThe center utilizes PPAF’s conventionalbottom up approach to development byallowing communities to play a key role inselection, design, implementation andmaintenance of all interventions (Box 1).Grassroots community organizations, whichform the centerpiece of all PWMC operations,are systematically equipped with requisiteknowledge and capacity through technicaland administrative training, enabling themto make informed choices for collective goodof the community.Conceptually, the center’s raison D'etre wasdriven partly by intent to treat watermanagement more holistically throughdesigning interventions for spatial entities

larger than small villages that had till nowbeen the primary focus of PPAF infrastructureprojects. This strategic shift has allowed theintroduction of better and more efficientwater management practices andinterventions covering larger administrativeunits with similar characteristics andproblems. Simultaneously, the shift hasfurther allowed purposive formation of

4 –WaterManagementCenterBy the end of the current financial year, 25DMP projects consisting of 1,657 waterfocused interventions have beenoperationalized with financial resourcesfrom World Bank and the United StatesDepartment for Agriculture (USDA). Theseprojects have to date benefitted 1,300communities in 16 drought affecteddistricts. In each case, the projects haverevitalized local economies in several waysincluding among others, reducing waterlosses through efficient water conveyancesystems, rejuvenating depleted aquifersthrough building strategically located waterstorage facilities and increasing the ratio ofirrigated land through building waterchannels where none existed before.Sindh Coastal Areas Development Program(SCAD) has further built upon the strategicshift towards greater integration bycomplementing infrastructure projects withinterventions in healthcare, education,Box 4.1: Strategic FrameworkWMC’s strategic framework has evolved on a basis of ‘learning by doing’ and consists of thefollowing;Placing partner organizations in the driving seat and enabling them to play a key role in subprojectidentification, project formulation and implementationAssigning social mobilization a central place in all interventions. Depending upon the complexityof the program/project, implementation mechanism varies from a single tier (CommunityOrganization) institutional framework to one encompassing a nested hierarchy of representativeinstitutions, such as a UC level ‘task force’ or a federation of numerous task forcesProviding integrated technical services and project management support to POsIntegrating science, policy and local wisdom in sub-project identification and project designEvolving and disseminating cost-effective and environmentally clean technological solutionsBuilding alliances with local, national and regional organizationsEncouraging and facilitating inter-PO coordinationlarger community organizations populated

by a greater number of poor householdssharing common interests.The integration of different types of waterrelevant interventions within larger projectsconstitutes the center’s standard approachand is manifested in all its programs. TheDrought Mitigation and PreparednessProgram (DMPP), for instance, cover largedrought affected areas with each projectspanning one to three union councils andconstituting approximately a hundred subprojectson average. These typically includedelay action/check dams for restoring waterbalance in addition to meeting thecommunity’s domestic and agriculturalrequirements, interventions for rehabilitatingcrucial aquifers, schemes aimed at moreefficient water management for irrigationand a variety of other interventions for floodprotection, land reclamation, rangelandmanagement and optimization of croppingpatterns.Water Management Center22 PPAF — Annual Report 2010

PPAF — Annual Report 2010 23Water Management Centerlivelihood support and provision of financialservices. These carefully sequencedinterventions along Sindh’s coastline areparticularly important in the backgroundof several disasters that have frequentedthe area in its recent past. Under SCAD,561 schemes have so far been initiated inthe region including protection works forreducing vulnerability to sea intrusion,improved sanitation and communicationfacilities, as well as introduction ofinnovative solutions for provisioning safedrinking water and electricity throughtapping renewable sources of energy.Owing to the area’s continued vulnerabilityto natural disasters, PPAF has systematicallyfacilitated formation of a long terminstitutional response through forgingmeaningful partnerships amongst partnerorganizations operating there. The SindhCoastal Areas Development Network(SCAN) brings ten organizationsparticipating in the program together ona single platform with a purpose ofpromoting linkages among memberorganizations through workshops,exchange visits, study tours and regularinformation sharing. The network hasgradually expanded to include additionalmembers from Sindh Irrigation and

Drainage Authority (SIDA), Sindh On-farmWater Management Project, Sindh WaterSector Improvement Program, and theWorld Wide Fund for Nature in Pakistan(WWF-Pakistan). During the year, inaddition to holding regular meetings ona wide range of issues of mutual concern,SCAN successfully organized a nationalconference on Integrated Water ResourceManagement to address climate changein collaboration with the Freshwater ActionNetwork South Asia (FANSA). Thisconference attracted participation from awide range of stakeholders includingimportant donor groups.This successful experiment with SCAN hasencouraged the center to develop similarnetworks in other program areas. Theestablishment of Pakistan DroughtManagement Network (PDMN) forinstance, brings together another 15 PPAFpartner organizations currently entrustedwith implementation of DMP projectsacross Pakistan. PDMN functions as a usefulforum for generating and sharingknowledge on current practices in droughtmitigation as well as deliberating on thepotential of a wide ranging set of possiblefield related innovations.24 PPAF — Annual Report 2010Water Management CenterWhile large integrated projects like DMPPand SCAD are essentially driven by a needfor provisioning holistic infrastructuresolutions to a large number of villageswithin a logically defined geographicalspace, the latter can sometimes be confinedwithin narrower boundaries of one or moreisolated villages or settlements. In suchcases, integrative infrastructuredevelopment could best be achievedthrough a smaller number of interventions.For instance, Integrated Water EfficientIrrigation (IWEI) projects are implementedat the village level for better managementof community water resources bycombining four to five interventionsincluding sprinkler/drip irrigation, waterchannels, water course lining, and conduits.To date, a total of 100 such projectsconstituting 243 schemes have collectivelybenefitted over 8,200 households with anoverall cost of Rs. 198.7 million, of which20 percent has been contributed bycommunities.Similarly, the center has contributed

immensely to the lives of isolated mountaincommunities in Northern Areas and Chitralregion through a series of small scaleMicrohydel Projects (MHPs) addressinghousehold cooking, heating and lightingneeds through sustainable powergeneration. These projects have benefitted8,000 households in 48 mountain villagesat a cost of over Rs. 308 million. The latterinvestments have revolutionized the lifestyleof beneficiary households that werepreviously without electricity.Sustainable power generation through cleantechnologies like microhydels has alsoallowed PPAF to access additional fundingsources by leveraging the so called carbonfinance within the framework of the KyotoProtocol. PPAF has authorized one of itsimplementing partners, AKRSP, to act asthe proponent for “CommunityDevelopment Carbon Fund-CDCF”solicitation, based on renewable energyprojects in Northern Areas and Chitral.Accordingly, a project design document-PDD has been developed, encompassingthe construction of 103 micro hydroprojects, with an aggregated capacity of15 MW. These projects are estimated toresult in the reduction of 612,342 tons ofcarbon dioxide equivalent in the first sevenyear crediting period (2009 to 2015). Basedon an elaborate validation process, theWorld Bank appointed independentvalidator (DNV) and rated the on-goingrenewable energy project as ‘satisfactory’from a technical, environmental and socialPPAF — Annual Report 2010 25Water Management Centerpoint of view. This allowed AKRSP, WorldBank and Netherlands Government to signa “Modalities of Communication (MOC)Form” as the last step before the project isregistered with the CDM Executive Boardin UNFCCC. It is expected that US$ 8.33million in carbon revenue will be generatedby the project till 2015, which is the first 7year crediting period.Simultaneously, the center works to ensureefficient implementation of environmentalsafeguards for all PPAF assisted interventions.For this purpose, an independent environmentaland social management group hasrecently been established with a view toclosely monitor PPAF sponsored interventionsfor social and environmental safeguards.Similarly, a PPAF Panel for Social and

Environmental Management (PPSEM) hasbeen constituted with representation fromall concerned units as a common platformfor deliberations on issues pertaining toenvironmental and social concerns.To date, PWMC interventions havebenefitted over 300,000 households inapproximately 4,700 communities acrossPakistan (Table 4.1). DMPP and IntegratedWater Resource Management (IWRM)projects constitute the largest share inWMC beneficiaries. IWRM projects are ahybrid of DMPP and all other WMCinterventions and cover a large number ofcommunities spread over several villages.Together, DMPP and IWRM interventionconstitute approximately 42 % of allocatedWMC funds, 50% of WMC supported (sub)projects and participating communities,and 67% of the households benefittingfrom WMC interventions.The center has strategically contributed tofinding long term solutions for efficientmanagement of water resources throughintegrated programs within appropriatelydefined spatial boundaries. Simultaneously,it has actively pursued the goal ofdeveloping requisite knowledge andlinkages for a better institutional responseto water scarcity at a national level. Thesecontributions will go a long way towardscreating a viable framework for evidencebased water focused interventionscognizant of the geographical, social andenvironmental context of delivering goodsand services at the grassroots.Table 4.1: Distribution of Projects by Allocated Funds and BeneficiariesProgram Funds Disbursed Number of Sub Coverage BeneficiariesCategory (Rs. Million) Projects Projects (Villages) HHsDMPP/IWRM 978.38 25 2,260 2,042 213,959IWEIP 198.91 108 323 108 10,072MHDP 305.44 43 43 129 9,700SCAD 808.35 1,737 1,793 1,614 77,530SGI 51.16 7 73 195 6,361Grand Total 2,342.24 1,920 4,492 4,088 317,62226 PPAF — Annual Report 2010

Health and Education (H&E) unit seeks todeliver quality health and education servicesthrough PPAF’s Social Sector DevelopmentProgram (SDPP), which incorporatesestablishment of schools and communityhealth centers for the poor in addition toadoption of underperforming H & E facilitiesin the public sector. PPAF’s social sectorinitiatives are conceptually entrenched inthe idea of holistic grassroots development,access to better health and education being

a necessary condition for progress.The unit’s health and educationinterventions are complementary andinterdependent in terms of maximizingpotential gains within each sector.Educational attainment of mothers hasbeen observed to affect the health andwellbeing of children. Similarly, a higherratio of female literacy reduces the incidenceof maternal and child mortality, earlymarriages and unwillingness to usecontraceptives and medical services.The gender differential in health andeducation indicators is markedly biased

5 –Health andEducationagainst women in all regions and thesedifferences have been observed to increasewith higher levels of poverty. PPAFinterventions in the health and educationsectors prioritize the need to bridge thisdivide. During the current financial year,approximately 55% of PPAF’s health sectorbeneficiaries and 48% of currently enrolledchildren in PPAF financed schools werefemale (Figure 5.1).Even in highly conservative areas where themobility and interaction of women isgenerally restricted, PPAF has managed toincrease female access to better healthcare.For instance, 95% beneficiaries of the 81community health centers in Baluchistanprovince were female during the currentfinancial year (Figure 5.3).During the current financial year, PPAFsupported health facilities in private andpublic sectors administered over 800vaccinations, dealt with over 500,000 casesof maternal care and provided OPD servicesto approximately 290,000 adult patientsPPAF — Annual Report 2010 27Health and EducationFigure 5.2: Gender Ratio in Beneficiaries by Sector and Typeof Intervention-Cumulative0%100%25%75%Public Sector Private Sector8,68240,60616,42417,4412,778

3,7027,5087,579MaleFemaleEducation Health50%Public Sector Private Sector50%50% 43%57% 52%48%18%82%

Figure 5.3: Health Beneficiaries by Gender and Province0%100%25%75%Balochistan NWFP9,68825,65517,07521,06515,02433,14762312,435MaleFemale50%Punjab Sindh AJK Others20,62429,05410,24014,65595%5%42%58%69%31%45%55% 59%41%27%73%

Figure 5.1: Gender Ratio in BeneficiariesEducation0%100%HealthFemaleMale20%40%60%80%46,07249,756554,694449,218

and almost 195,000 patients under theage of 18 (Table 5.1).Overall, PPAF is currently provisioningtechnical and financial support to 722schools (public sector 561; private sector161) and 303 health facilities (public sector205; private sector 98). All of the abovefacilities are situated within marginalizedcommunities with little or no prior accessto quality education and health services(Table 5.2).While continuing to support the deliveryof health and education services to poorcommunities across Pakistan, H & E unithas also contributed immensely towardsimplementing similar projects in disasterareas. With financial support from CECP,PPAF has successfully completed the

reconstruction of sixteen health andeducation facilities – two primary and threehigh schools for girls, three primary andtwo high schools for boys, two rural healthcenters and four basic health units (BHU’s)– equipped with requisite equipment andfacilities for quality service delivery. BHU’shave labour rooms, pharmacies,laboratories, facilities for safe delivery andquality OPD services, while schools areequipped with physics, chemistry, andbiology laboratories, computers, tuck shops,playgrounds and other recreation facilities.Communities have played a vital role inensuring the quality of services in all PPAFsocial sector interventions through healthand education management committees,28 PPAF — Annual Report 2010Health and EducationAdditionally, PPAF has ensured quality ofservice delivery through designing needbased capacity building sessions for healthand education facilities staff. In the healthsector, these events cover training in subjectsTable 5.1: Beneficiaries of PPAF Health Interventions (FY 2009-10)OPD (Over 18) OPD (Under 18) Maternal Care Vaccinations TotalPunjab 13,360 8,016 32,064 205 53,645Sindh 105,389 70,259 175,648 310 351,606NWFP 52,898 101,932 254,830 100 509,760Balochistan 13,777 8,266 33,065 50 55,154AJK 8,090 4,854 19,415 65 32,423FANA - - - - -FATA - - - - -Federal Territory 410 308 1,230 122 2,070Grand Total 293,923 193,635 516,252 852 1,004,662Table 5.2: Social Sector Interventions by ProvinceEducation HealthPublic Sector Private Sector Public Sector Private SectorPunjab 65 52 11 39Sindh 199 80 50 21NWFP 119 - 71 27Balochistan 154 10 71 10AJK 4 0 2 -FANA 19 12 -FATA - - - -Federal Territory 1 7 - 1Total 561 161 205 98which are mandated to identify gaps inservice delivery. These committees haveensured transparency and accountabilityin a sector that has traditionally laggedbehind in developing a persistentcommitment to customer satisfaction.During the year, 303 health committeesand 722 education committees wereformed in PPAF supported private sectorfacilities and adopted public sectorinstitutions. Keeping in view the importanceof their functions, PPAF has been committedto building health and education

committees’ capacity through concertedefforts aimed at transferring appropriateskills and knowledge for better outcomes.PPAF — Annual Report 2010 29Health and Educationlike hygiene, counseling, mother-child andreproductive health, balanced diet, familyplanning, immunization, communicableand non-communicable diseases, safemotherhood and infant care. Similarly,teachers in PPAF supported schools areregularly provided with opportunities toattend subject specific refresher courses.They are further trained in the developmentof child responsive teaching methodologies,which are complemented by capacitybuilding sessions in syllabus and classroommanagement, lessons planning,development of teaching material andphonics. In both sectors, additional trainingsessions on record keeping, planning andmanagement issues are conducted todevelop administrative skills necessary foroperational efficiency in all PPAF sponsoredsocial sector interventions.To date, H&E unit has cumulativelysanctioned disbursements of over Rs. 905.17million in the education sector through 30partner organizations and approximately Rs.577.17 million through 24 partnerorganizations in the health sector underfunding made available by the World Bank.Similarly, another Rs. 655.03 million hasbeen sanctioned under CECP funds for theeffective operationalization of reconstructedhealth and education facilities in earthquakeaffected areas.30 PPAF — Annual Report 2010

PPAF’s Human and Institutional Development(HID) unit has evolved into an apex capacitybuilding outfit with the objective of buildinghuman and institutional capacities foreffective long term poverty alleviation at anational level. The unit has been restructuredto provide technical and financial assistanceto a broad set of stakeholders including nongovernmental organizations, technicalinstitutes and a host of other service provideras well as individuals and communities.In addition to enhancing capacities foreffective resources and services mobilization,HID facilitates communities in developingsustainable frameworks for identifying andimplementing development interventions.Simultaneously, the unit strives to developefficient mechanisms for service delivery

through assisting supply side actors withincreased technical and financial support.Support to such actors is aimed atstrengthening their ability to better facilitatecommunities through provisioning relevant,cost effective and efficient services. Also, theunit places special emphasis on building

6 –Human andInstitutionalDevelopmentstrategic capacities through institutionalizingrelevant approaches, methodologies anddevelopment tools for entrenching anequitable and inclusive development processat the community level.The unit continues to focus on strengtheningPPAF’s internal learning structures. For thispurpose, HID unit has successfullyimplemented innovative ideas includingshort seminars and distinguished speakerseries. The latter provides staff of PPAF andpartner organizations with valuableopportunities to meaningfully engage andinteract with eminent speakers from diversefields and of varied expertise on a host ofrelevant issues.During the year, the ‘distinguished speakerseries’ included eminent individuals fromdifferent walks of life and professions whospoke on different relevant and interestingthemes: Mr. Sartaj Aziz (Food Security forthe Poor), Mr. Shoaib Sultan Khan(Development Experience in NorthernAreas), Mr. Shafiqual Haque ChoudhuryPPAF — Annual Report 2010 31departments, universities, regulatoryfinancial sector institutions, corporate sectorentities and the media. HID has signedMemorandum of Understanding (MOUs)with a number of renowned professionalservices providers for provisioning training,consulting services, in addition toconducting surveys and research for PPAFand its partners.During the year, HID organized academicsessions in collaboration with PSPs andother units of PPAF covering a range oftopics including Effective Communication

Skills, Gender Mainstreaming in ProjectCycle Management, Environmental andSocial Management, Seven Habits of HighlyEffective People, Finance and Accounts forNon-Financial Managers, Presentation Skill,Training Cycle Management, ProjectManagement, Operations Management,and Essential Skills for Microfinance andSocial Mobilization.As part of its routine activities, HIDcontinued to appraise training needs andfacilitate disbursement of grant funds topartner organizations. During the reportingyear, the unit disbursed approximatelyRs. 50 million in grant funds to partnerorganizations for community and stafftraining in support of credit facilities(Figure 6.1).During the year, 112,424 communitymembers including 49,199 women weretrained with PPAF financial and technicalsupport in fields ranging from Community(Standardized Delivery of Microfinance),Mr. Fazle Hasan Abed (InnovativeApproaches to Development) Prof.Mahmood Hasan Khan (A perspective onRural Support Programmes in Pakistan).Similarly, the unit initiated a series of shortseminars with an aim to update PPAF staffon newest trends, approaches andmethodologies in the sector. During theyear, short seminars were organized on adiverse set of subjects including Livelihoodand Enterprise Development, ProcessImprovement Strategies,Disaster Preparedness and Response,Corporate Social Responsibility, World WaterDay, Motivation and Social Audit. Also, amonthly e-magazine – Know Bites – hasbeen developed to disseminate informationon a range of topics directly or indirectlyrelated to PPAF’s scope of work includingFood Security for the Poor, Livelihood inMicroenterprises Development, ProcessImprovement Strategies, DisasterPreparedness and Response, CorporateSocial Responsibility, Motivation, Coachingand Mentoring and Social Audit. Thesehave in turn impacted institutional normsby creating space for a continuous learningprocess through constructive dialogue anddebate.The unit’s objective of alleviating povertythrough changing mindsets involves aconstructive engagement with a broad setof stakeholders including partner

organizations, government agencies andHuman and Institutional DevelopmentFigure 6.1: Annual Training Grant in Support of Credit Facility01002060801201404000-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10(Rupees in million)

Figure 6.2: Annual Community Training Beneficiaries050,00010,00030,00040,00060,00070,00020,00099-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10Male FemaleFigure 6.3: Annual Staff Training Beneficiaries02,5005001,5002,0003,0001,00099-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10Male FemaleHuman and Institutional Development32 PPAF — Annual Report 2010

Management Skills and Agricultural andLivestock Management to EnterpriseDevelopment and Vocational Skills (Figure6.2). Similarly, 1,623 staff members frompartner organizations attended PPAFsupportedtraining sessions on diversesubjects including community mobilization,credit appraisal, loan portfoliomanagement, delinquency managementand interest rate setting (Figure 6.3).To date, HID has disbursed Rs. 1339 millionin cumulative training grant to partnerorganizations. These funds have collectivelybenefitted 432,766 community membersand 14651 staff of partner organizations.In addition to capacitating participatingcommunities and PO staff, the unit has putin place a regular mechanism for focusedcapacity building of enterprising individualsthrough routine internship programs. Theunit continues to run a successful internshipprogram for young graduates who receivefield attachments with POs, following anintensive one month training within HID.The IFAD-funded Young ProfessionalsScheme (YPS) provides young people frompoor rural households the opportunity tojoin PPAF’s current internship program,with an additional provision for supportinga further eight months attachment to a POon recommendation/request. Under YPS,four batches constituting 93 internees have

completed training with HID unit duringthe year, with 63 Young Professionalssuccessfully moving to complete fieldPPAF — Annual Report 2010 33Human and Institutional Developmentattachments with POs. Such assistancegreatly facilitates POs suffering from a highturnover rate resulting from industrygrowth.In areas currently suffering from heightenedmilitant activities, lack of adequateopportunities has increased the susceptibilityof unemployed youth to extremistpropaganda, while allowing non stateactors greater space and acceptance.Keeping this in view, the unit has plannedspecial programs for young men andwomen from FATA and Balochistan, to beimplemented in the next financial year.Additionally, the unit plans to initiate acapacity building program for a number ofcommunity based organizations and smallNGOs working in the region.HID unit stands at the forefront of PPAF’sefforts in provisioning quality services topoor communities, while simultaneouslyseeking to increase their capacity for optimalutilization of human and physical resources.HID initiatives have built up a critical massof skilled manpower both at the communitylevel and within service providers with thepotential to transform lives of millionsaround them.Case Study 6.1: A Stitch in TimeMomin Hussain belongs to union council Chohaan Laiti Mazari, District Dera Ghazi Khan. Afather of two, he was working on negligible wages at a tailor’s shop in lower Chotti. Hismonthly income was approximately Rs. 3000. He admits that his skills back then, were minimal.Economically challenged, limited by skills and educated till middle school, he had no solutionbut to trudge through what life had to offer.Things became rosey when women of Mazari locality formed a Village Organization (VO) inMarch 2009 in Basti Mazari, with assistance from National Rural Support Programme (NRSP),a PPAF partner, Momin Hussain also became a member in February 2010 and began participatingin meetings.One of the best and earliest advantages of this, he recalls, was that he began to save moneyon a regular basis. His family benefitted from this and it also enabled him to make somedecisions about future. When NRSP initiated a vocational skill training programme for COmembers, men and women alike, Momin was nominated by his VO friends for a tailoringcourse. They realized that he required skills that came with technical training, not only to earnmore for his family but also to achieve a sense of pride in his work.Momin was excited: the training lasted for one month in Islamabad. He found the trainersto be encouraging and responsive to participant needs. Momin and his fellow participantswere encouraged to interact in an open learning environment. They were, in fact, so involvedduring this process that they never felt tired. “We were like a family,” he states.The results of this training were phenomenal for Momin. Having professional tailoring skills,he managed to acquire a loan from some friends and set up his own tailoring shop within amonth. His villagers were more than happy. Previously, they would make a trip to the nearbylocality lower Chotti for all their tailoring needs and now, a professional tailor had set up ashop in their own village. Momin’s monthly income rose to Rs. 12,000, sufficient to meet his

household expenditure of about Rs. 5,000. He enrolled his children into a good school, repaidhis friends’ money and invested in a Rs. 2000 a month committee.His plans? The questions brought smile to his face. He wanted to have his own shop. He isalready a successful and responsible community members and he offers special discount topoor customers and proactively attempts to transfer his skills to the youth and poor.“I am grateful to NRSP and PPAF for their efforts to build skills for better economic conditionof poor and unemployed,” he concluded.34 PPAF — Annual Report 2010Human and Institutional DevelopmentPPAF — Annual Report 2010 35Human and Institutional Development

Case Study 6.2: Beautifying the LifeNasreen Altaf, 30 years old and educated till secondary level, belongs to a joint family systemof ten individuals which includes her husband and their three children. She hails from avillage and union council Pir Adil, district Dera Ghazi Khan and is currently a manager ofTehzeeb, a Community Organization.As a housewife, she feels that she had little importance at home before she joined Tehzeeb.Her husband works in Saudi Arabia as an unskilled laborer. He would send his family amonthly Rs. 7,000 to make both ends meet.“Being women, we have restrictions on our mobility,” she explains her initial inability tocontribute to the family’s economic crisis. Despite the limitations, she applied to NationalRural Support Programme’s (NRSP), a PPAF partner, beautician training courses for COmembers. Much to her delight, she was selected for training to be held in DG Khan. Shegrabbed the opportunity and is now the proud certificate holder of a two months beautyparlour training course.Upon training completion, she setup a beauty parlor at home. This was the start of somethingnew and exciting. She manages to earn Rs. 15, 00 per month and her clientele is increasingby the every passing day. Women who had to travel to the city for routine treatments nowhave the convenience of beautification closer to home. Nasreen is now a master trainer inbeautician training and girls from her locality benefit from her expertise.Today, Nasreen’s children are studying at a reputable school. She is thankful to PPAF andNRSP and enjoys newfound recognition for her work.“My whole family including my husband, father-in-law and mother-in-law are happy withmy business,” she says.36 PPAF — Annual Report 2010

Social Mobilization constitutes the core ofall PPAF interventions, conceptuallyentrenched in a belief that poormarginalized communities, given anappropriate enabling environment, possessan inherent capacity to change their livesfor the better. While minimal outsideassistance is essential to initiate such changethrough raising awareness at the grassroots,communities alone can guide and sustainthis transformation by realizing the fullscope of their latent capabilities.In essence, social mobilization aims atproviding incongruent communities withessential tools to promote sustainable jointaction, through organized forums forplanning and deliberation in the shape ofcommunity organizations. Members ofcommunity organizations, irrespective oftheir level of welfare and degree ofinteraction with the outside world, aresystematically capacitated to make informedchoices at a local level. Within thisframework, outside help assumes the role

of a facilitator by encouraging people to

7 –SocialMobilizationstrive for their common good and helpingto realize community demands throughprovisioning an appropriate mix of requisitefinancial and non financial support.The above scheme circumvents deep rootedproblems inherent in public provisioningof goods and services, which predominantlyrelies on imposing development solutionsfrom the outside. By centralizing the roleof communities in design, implementationand maintenance of projects, the latter areliberated from political biases, bureaucraticdelays and the culture of corruption thataccompanies a persistent lack ofaccountability in the public sector.Subsequently, PPAF follows an inclusivedevelopment strategy which seeks toprioritize community needs within aninclusive framework of communitymobilization. This framework is followedin all PPAF supported initiatives withappropriate adjustments to suit thepeculiarities of terrain, socio-culturalenvironment and type of intervention.PPAF — Annual Report 2010 37trained to manage their COs and actualizelinkages with service providers and localgovernments.The unit has carefully selected geographicalareas for the project from amongst districtswith lower scores on a number of welfareindicators. Additionally, since meaningfulchange through grassroots participatorydevelopment processes has been seen toaccrue more effectively from a higherconcentration of organized activity at andbeyond village levels, the rationale forincorporating a small group ofunderperforming districts becomes anecessary condition.Elite capture of community organizations,albeit rare in the history of grassrootsdevelopment, can potentially reversebenefits resulting from this approach.In order to guard against such risks, theproject has made it mandatory for 50%

membership of community organizationsto constitute of poor households. Similarly,the project requires a compulsory 40%participation of women.When realized, the goal of increased femaleparticipation in community organizationswill potentially increase their in decisionmaking at the grassroots. Additionally, theproject seeks to educate all members intheir constitutional rights as citizens. Suchsteps are intended to create increasedmomentum towards realization of aninformed citizenry with capacity to demandIn view of an overwhelming need to upscalesocial mobilization processes with greateroutreach and coverage at the grassroots,PPAF successfully launched a focused projecton social mobilization with assistance fromWorld Bank. The latter has channelized US$75 million for the purpose, while a newSocial Mobilization (SM) unit has beensuccessfully initiated with a mandate toappraise partners, allocate funds andmonitor progress against clearly laid outobjectives.The project focuses on formation of 50,000additional community organizations, withtheir subsequent organization into higherorder institutions at village and unioncouncil level. It is adequately facilitated andcapacitated to manage need baseddevelopment initiatives through atransparent, equitable, inclusive andaccountable process of communitydevelopment. Approximately one millionhouseholds (rural/semi-rural) will beorganized into community organizationsin 25 of the poorest districts of the country.The project envisions supporting these COsand enabling them to participate in PPAF’smicrofinance and community infrastructureprograms along with developing proactivelinkages with local government and ruraldevelopment programs of provincial andfederal governments and micro-financeorganizations. The project further envisionsdevelopment of a leadership cadre of250,000 women and men, adequatelySocial Mobilization38 PPAF — Annual Report 2010

their legitimate rights: rights that have ahigher probability of being denied underconditions of apathy and ignorance.During the year, SM unit organized a TOTon ‘State-Citizen Relationship in theDevelopment Context’ in addition to

conducting four training events on thissubject in different cities across Pakistan.These events were attended by staff ofeighteen partner organizations from twentyeight districts. Within the context ofcommunicating different aspects of statecitizenrelations to communities, the eventsfocused on special themes includingvulnerability, human rights, spatial planningand environment. Participants wereencouraged to devise action plans aspractical tools for disseminating knowledgeon such subjects at the grassroots.In Pakistan, the growing migration towardsurban areas, which cuts across provincialboundaries, has in some cases created apotentially explosive situation. This hasimpacted development outcomes bydiverting scarce resources towardsstrengthening security apparatus of thestate. Within this context, grassrootsdevelopment has to take into account thedeterminants of lingering cultural and racialstereotypes, and provide opportunities forincreased interaction between differentcommunities with divergent perceivedinterests.The unit is doing its part in trying to breakthe above stereotypes by organizingexposure visits for communities with specialfocus on youth in all four provinces of thecountry, as well as the Gilgit-Baltistan andAJK regions. By providing people fromdifferent cultural, linguistic and ethnicbackgrounds the opportunity to interactas citizens, the unit hopes to infuse a senseof unity, mutual respect and shared struggletowards a common destiny, especiallyamongst the youth. To date, POsparticipating in the program havesuccessfully arranged exposure visits foraround 15,000 community members todifferent parts of the country (Table 7.1).While striving to develop a critical mass oforganized communities at the grassroots,SM unit is also mindful of putting in placean effective performance monitoringTable 7.1: Exposure Visits of POs – SocialMobilizationName of PO Number of ParticipantsTarget AchievementBEEJ 1,500 1,155BRDRS 1,500 892TF 1,000 928BRSP 2,500 1,805NRSP 1,500 1,171PIDS 1,500 456AKPBS 1,000 916

SRSP-Sind 1,000 1,002BRDS 1,500 897AWAZ CDS 1,000 795FDO 1,200 957CMDO 2,000 1,742SPO 1,500 421SRSP 2,000 1,837Total 20,700 14,974Social MobilizationPPAF — Annual Report 2010 39Table 7.2: Field Activities (2009-10)No of formation Targets AchievementsCOs 21,333 40,416VOs 2,755 3,216LSOs 116 93Community Trainings 3,170 2,187Staff Trainings (Pos) 53 53Total 27,427 43,725Social MobilizationFemaleFigure 7.1: Distribution of Community/VillageOrganization by TypeCommunity Organizations0%100%Village OrganizationsMixed20%40%60%80%8118,9928563Male 6,751 26121%15%64%41%54%5%

framework to measure progress againstclear indicators. For this purpose, the unithas developed a customized ManagementInformation System (MIS) to routinely tracka comprehensive list of indicators importantto project success. Following concertedefforts to institutionalize the processthrough focused workshops with all POsat different locations, the unit hassuccessfully handed over the system toimplementing partners.During the year, the unit matched and insome instances surpassed, annual targetsagainst most indicators. For instance, atotal of 40,416 community organizationsand 3,216 village organizations wereformed during the year against an annualtarget of 21,333 community organizationsand 2,755 village organizations respectively(Table 7.2).By the end of this reporting period, the unithas successfully disbursed more than Rs.1,072 millions to 20 partner organizations.A total of 16,584 new communityorganizations have been formed to date, of

which 54% are constituted of women (Figure7.1). Additionally, a large number of thesecommunity organizations have beenfederated into village organizations: 411such village organizations have so far beenformed of which 15% had womenparticipation either completely or partially.40 PPAF — Annual Report 2010Social MobilizationLocated 25 kilometers away from busy, bustlingKarachi, a small hamlet called Goth NoorMuhammad embodied the squalor that comeswith being an unofficial dumping ground for abig city’s garbage and waste. The land here wasdonated by Raees Ghulam Rasool, who namedit after his grandfather Haji Raees NoorMuhammad. Founded over twenty years agoby residents of rural Sindh who moved to Karachiin a bid to escape poverty, this hamlet comprises70% Hindus and 30% Muslims. The strugglefor a better tomorrow unites them as one.The inhabitants earn a living by requestingKarachi Metropolitan authorities to drop garbagenearby so they can sift through it within theirhomes. Their source of income results in illnessand malnutrition: yellow fever is rampant whileinfant/maternal mortality rates are alarminglyhigh. Their only source of healthcare is a facility14 kms away. Housing approximately 110 men,women and children, the hamlet is located onthe foothill and accessed by a single side througha winding road.Approximately 5 percent of the residents ofGoth Noor Muhammad are barely literate. Theycannot send their kids to school as there is noeducational facility available nearby. They lackthe facility of potable water and store rainwaterin uncovered tanks, using this badly pollutedwater to quench their thirst, bathe, and washclothes and utensils. There is no latrine facilityin any of the ‘houses’ so that men, women andchildren use nearby fields for defecation.A walk down the winding road that leads toGoth Noor Muhammad is a depressing journey.An unbearable stench greets you. Children arefound rummaging through the garbage heapsin sight, looking for metals or such items thattheir parents can sell. Stray dogs are a commonsight, splattered with mud and enveloped inhouseflies.The residents live in very small huts made ofbamboo with roofs of dried palm leaves andsalvaged cardboard. They have built a mosque,independently: a functional one used not forshelter but worship. Some residents have ‘groceryshops’ where fruits and vegetables are sold.As the village is situated at the foot of a mudhill, heavy rains wash away their ‘houses’.Unpaved streets, no electricity: survival here isa challenge indeed. A look at some of their livestells a sad tale.

There is Sunil, entering his home with sandsifting through his toes, in broken plasticchappals. He reaches down to throw to a sidea broken piece of plastic lying in the house: theremnants of a broken CD, perhaps. There is alarge pile of garbage inside his house, and hiswife and children are swiftly picking through itfor metal scraps.Sunil’s neighbor, Vikram, and his family havethe same source of income. Vikram smiles,proud that they are not beggars: he waspreviously tilling at a zamindar’s (land owner)place but chose this life instead.Pakistan Poverty Alleviation fund (PPAF) enteredinto a public-private partnership with ShellPakistan for a self-sustained and integratedCase Study 7.1: Goth Noor Muhammad – An Inspiring Development InitiativePPAF — Annual Report 2010 41Social Mobilizationdevelopment project to transform Goth NoorMuhammad’s plight into prosperity. This projectaimed at improving residents’ living conditionsthrough the provisioning of better housing,healthcare and education facilities. The programalso entails social mobilization and communityempowerment with formation of villagecommittees for men and women. The projectwas implemented by a PPAF partner: Health andNutrition Development Society (HANDS) andenvisioned integrated housing facility, greenbelts, recreational areas, schools and a healthcare facility along with the provision of electricity,paved roads.The project included housing reconstructionsupported by indigenous technology andmaterials and energy efficient techniques. Eachfamily has been allocated a plot of land. Streetswere to be paved, proper sewage and drainagesystems laid out. Rain water drainage will beutilized. Furthermore, electricity would beprovided and parks, green belts added to thedreary landscape.A dispensary has been set up to provide basichealthcare facilities to the residents wheremedicines are being provided at a nominal cost.A community healthcare system is being plannedwhere patients can be provided with emergencyhealth care. Traditional birth attendants calledDais will be provided with proper training toensure safe deliveries in order to reduce maternaland infant mortality rates.Traditional water filtration techniques wereintroduced at Ghot Noor Muhammad. Theresidents now use larger post to store water forfuture consumption. Smokeless stoves wereprovided to the women, ensuring that theycooked food without suffering from harmfulhealth effects.House members have been registered and olderresidents have been provided with ComputerizedNational Identity Cards (CNIC), assisted byNADRA (National Database and Registration

Authority).The issuance of CNIC’s to adults over 18 hasinstilled a sense of pride and belonging as legalcitizens of the state of Pakistan. This social andconstitutional empowerment of the poor is ofcore importance to the development programof PPAF, HANDS and Shell Pakistan.The residents have donated a piece of land forthe construction of a school and two teachershave been identified for training in earlychildhood development and education.Educational facilities will be available not onlyto children and adults alike, in the areas of basichealth and hygiene practices. The school willalso serve the function of a recreational spotand promote sports in the community.Goth Noor Muhammad’s residents are beingempowered through community mobilization.They have formed Community BasedOrganizations (CBOs) and meet every month todiscuss and resolve their problems independently.Their present is better than the past and thefuture will certainly be brighter and clearer thanever before.Figure 8.1: Financing AgreementsLEPRegularPrograms(Rs. 199m)LEPFloodRecovery(Rs. 257m)(Total Amount Approved: Rs. 456 million)42 PPAF — Annual Report 2010

Livelihood Enhancement and Protection(LEP) unit seeks to enhance productivity ofpoor individuals and communities throughfocused interventions aimed at developingskill sets and assets for greater incomegenerating opportunities and betterlivelihoods. In pursuit of these objectives,the unit encourages savings and internallending within organized communities,while striving to introduce efficientmechanisms for identifying and supportinginnovative micro-enterprises.LEP was inducted as an operational unitunder PPAF III during the current year andhas been set several targets includingformation and capacity building of at least2,300 community groups, impartinglivelihood trainings on 460,000 individualsand providing wage compensation andassets to 142,857 and 57,143 ultra poorhouseholds respectively.The unit’s newly inducted staff wentthrough a comprehensive orientationprocess, which included several in house

8 –LivelihoodEnhancementand Protectioncapacity building sessions aimed atintroducing them to various livelihoodapproaches and models successfullypracticed in Pakistan and elsewhere.LEP is guided in its activities by acomprehensive Implementation Manual,which clearly presents methodological andoperational synergies at various levels ofthe implementation process. The conceptualand strategic framework sets out themethodology for livelihoods enhancementin targeted areas, in addition to describingFigure 8.2: LEP Process Flow ChartAreaSelectionSituationAnalysis(CenterAnalysis)Developmentof LivelihoodInvestmentPlansSkillTrainingDevelopment / Strengthening of linkages of ultra poor groups,skilled persons, entrepreneurs with relevant departments / marketsFormationof CIGsInter-Loaning(for newand existingbusiness)from COsavingsFacilitatingaccess tosocialsafety netsFacilitatingaccess tojobs (jobplacementtraining,...TrainingforentrepreneursAsset transfer toUltra PoorContinuousCounselingandmonitoringGraduationCategorizationof PoorIntegratedVDPunderSMUltra PoorPoor

Above Poverty

PPAF — Annual Report 2010 43loans from community organizations andpossibly, commercial banks. The unit willprovide grants to support asset transfersto ultra poor and vulnerable householdsand cover investments under the proposedCommunity Livelihood Fund. This fund willconstitute a one-time grant to communityorganizations meeting standard criteria foron lending to members at interest ratessufficient to sustain the process. Theproposed mechanism is expected to buildsound financial management practices,saving and inter-loaning discipline, enablingthe poor to become credit worthy andbankable clients for commercial banks andother financial intermediaries.critical links at different tiers of thecommunity organization. The manualfurther delineates guidelines – proceduraldetails, reporting requirements, PPAF’s rolesand responsibilities, implementing partnersand community organizations – forimplementing livelihood initiatives, assettransfers, skills and vocational trainings andlivelihood investment plans.Program design requires members ofcommunity organizations to developLivelihood Investment Plans, which will bedeveloped with the assistance of and incoordination with PPAF’s implementingpartners and community organizations.These will in turn form the basis of livelihoodLivelihood Enhancement and Protection44 PPAF — Annual Report 2010Livelihood Enhancement and ProtectionEligibility for asset transfers to ultra poorand vulnerable will be ascertained throughthe national poverty score card survey andparticipatory appraisal methods, while theselection of asset transfer type will be strictlyon basis of ability, knowledge and skillsrelevant to the asset proposed to betransferred.The unit, in coordination with implementingpartners will further seek to build thecapacity of community organizations andtheir federations in key aspects ofinstitutional development includinggovernance structures and record keeping,while provisioning funds for meetingrequisite capital expenditures and operatingcosts of federations. Additionally, fundswould be made available for provisioningappropriate vocational and technical

training to community members followingrigorous needs analysis by partnerorganizations.For maximizing participation of poor andvulnerable households, this programenvisions to provide appropriate wagecompensation in the form of trainingallowance for the duration of the training.Additionally, each ultra poor trainee (eligiblefor asset transfer) will receive a tool kitrelevant to the skill/ vocation for whichhe/she has been trained. The above trainingswill be imparted chiefly through the existingnetwork of technical and vocational traininginstitutes. Simultaneously, local skilledworkers and craftsmen will be trained astrainers, providing further opportunities forskill development through apprenticeshipat the village level. While undertaking skillsenhancement, the MIS will ensure thatduplication in training and trainees doesnot take place.For the efficient implementation of theprogram, PPAF will build on its existing MISto include necessary information on eachbeneficiary including her/his photograph,localisation information and GPS readingof the house/ shelter. Such measures willimprove governance, prevent duplicationand reduce the possibility of fraud atdifferent levels. Also, bio-metric devices willbe used for identification and maintainingtransaction records and implementingpartners will be required to submit regularreports on agree formats.During the year, LEP unit appraised sevenpartner organizations for livelihoodsinterventions. Thorough field and deskappraisals were conducted for seven partnerorganizations – SERVE (DI Khan), ThardeepRural Development Programme (Tharparkar),Awami Development Organization (Layyah),Salik Development Foundation (Mardan),Human Development Foundation(Islamabad), Khawendoo Kor (Peshawar) andSOS (Kasur) – for Livelihood interventions.Four of these POs were approved forfinancing by the Board and are in the processof signing Financing Agreements.PPAF — Annual Report 2010 45PPAF’s disability project in earthquakeaffected areas was initiated with financialassistance from the World Bank andconstituted part of a larger earthquakereconstruction and rehabilitation effort.Following the project’s success, PPAF has

been encouraged to elevate its work withPeople with Disabilities (PWD) and continuesto perform in this regard.Earthquake Disability ProjectPPAF’s earthquake disability project wasunique in its structure and implementation.In addition to achieving its set targets, thedisability unit successfully managed tobroaden its scope of operations throughincorporating new interventions in projectdesign. The disability project aimed atidentifying Persons With FunctionalLimitations (PWFLs) suffering frompermanent or temporary physical/ mentallimitations and requiring either assistivedevices, home modification, or skill trainingto earn a living. For this purpose, a carpetsurvey was undertaken in 34 UCs leadingto the identification of four broad categoriesof functional limitations: Physical,Mental/Sensory, Visual, Hearing and Speech.The project was implemented through threeof PPAF’s regular partner organizations,which played a vital role in identifying PWFLs,establishing linkages with specializedorganizations and undertaking socialmobilization as well as in conducting needsassessment and follow-ups.Given the project’s nature and scope, PPAFinvolved specialized partners with knownexpertise in working with PWFLs includingHandicap International (HI), PakistanInstitute of Prosthetic and Orthotic Sciences(PIPOS), Rising Sun Institute and HamzaFoundation in implementation of projectactivities. These specialized partners wereinstrumental in building requisite capacitiesat PO level, as well as that of PWFLs andtheir families. In addition to assisting POsin identifying the target group andconducting needs assessment, theyfacilitated community organizers indevelopment of individual rehabilitationplans.

9 –DisabilityProject46 PPAF — Annual Report 2010

Project activities included a whole set ofinitiatives including medical camps,

trainings, workshops and seminars.Workshops were organized for buildingcapacity of Community RehabilitationWorkers (CRWs). Additionally, hundredsof PWFLs were enlisted in medical campsfor prospective provisioning of training andassistive devices covering a range ofaccessories including crutches, white cans,walking frames, wheel chairs and cushions,toilet seats, tripods, orthotic and prostheticdevices, glasses, hearing aids and laryngophones. Further, special arrangements weremade for referring PWFLs with generalmedical problems to different hospitals atthe local and national level. In all, 3,970PWFLs were referred to different hospitalsunder the project.PWFLs were also imparted useful skill andenterprise development trainings toenhance their employability and reducingtheir dependence on others. Additionally,seminars were arranged to raise awarenesswithin communities with an aim to bringabout a positive change in societal attitudestowards PWFLs (Table 9.1).Workshops conducted for PO Staff helpedCRWs in understanding important issuesrelevant to disability and projectimplementation. Experts from Bangladeshand India were invited to conductworkshops on CBR Model and LivelihoodOpportunities. Speech Therapists trained62 children and their parents. Similarly 52Table 9.1: Activities for the Year (Gender-wise)Activities Male Female Total EventsWorkshops (PO Staff) 33 34 13Medical Camps 3366 2980 31Awareness Raising - - 93Skill Trainings & EDT 773 971 90Attendant-ship Training 275 255 33Speech Therapy - - 4C-ARP Children/ - - 3Amputee RehabilitationSports Day for CWFLs - - 4Table 9.2: Training Activities for the YearActivity Total ParticipantsTraining on Special Needs & Inclusive Education 160 (Teachers)Training of Audiology Equipment Utilization 4Inclusion of PWFLs in COs 1,434children were guided by experts after fittingof Orthotic and Prosthetic devices. Also,recreation events were organized for CWFLsin AJK and NWFP with active involvementfrom a large number of CWFLs.The survey conducted to identify PWFLsemphasized that a predominant majorityof such people were illiterate and mostlyconfined to their homes. Keeping this inview, this project undertook the task of

training primary school teachers on afocused theme of Special Needs andInclusive Education with the view to increaseliteracy amongst PWFLs and promoteinclusive education (Table 9.2). Similarly, asurvey of local DSPs revealed the absenceof an Audiometry facility in AJK, while onlyone relevant laboratory was reported inAbbottabad. Such facilities are crucial inreducing the risk of complete hearingDisability ProjectPPAF — Annual Report 2010 47impairment. In the light of these findings,PPAF took the decision to establish twoaudiometry laboratories each in AJK andNWFP.In addition to efforts aimed at facilitatingPWFLs to participate in the educationsystem, disability project tried to mainstreamthem through participation in communityorganizations as well as encouraging themto form self help groups. The DeafAssociation, Rawalakot is one example ofa local self-help group formed by individualswith hearing limitations.The project covered approximately 24%household of 34 UCs in the earthquakeaffected areas and facilitated approximately6500 beneficiaries with assistive devicesand trainings.Nationwide Disability ProgramUnder PPAF III, the newly formed disabilityunit has assumed a national scope. Theprogram has initiated operations in 6 districtswith a focus on Persons with Disabilities(PWDs). Following a comprehensive surveyin selected districts, the unit plans to initiatea series of interventions includingindependent living trainings, homemodification and business incubation.With the aim to infuse self confidence andbelief in PWDs and assist them in leadingindependent lives, Independent livingtrainings are designed to focus on minorroutine activities where dependence onothers can be easily reduced. Similarly,activities under the business incubationcomponent will seek to encourage andsupport existing businesses run by PWFLs.These trainings will assist existing smallbusinesses in light of market demand.PWDs are generally impeded in accessinggoods and services. Not only do structuralbarriers prevent their mobility by cuttingoff easy approach to different rooms insidethe house, they regularly come across

limitations outside homes at parks,hospitals, schools and markets. The homemodification component is designed todeal with such issues by allowing engineersto find innovative engineering solutions tospecific situational problems. At the sametime, the project will engage HI to trainPPAF and POs staff in carrying out structuralmodifications that make homes and publicbuildings universally accessible.In order to mainstream PWDs as functionalmembers of society the unit, in closeDisability Project48 PPAF — Annual Report 2010

coordination with PPAF’s Credit EnterpriseDevelopment (CED) unit, has launched anew product for delivering financial servicesin three districts of Quetta, Khairpur andSwabi under IFAD funded MicrofinanceInnovative Outreach Program (MIOP). Theinitiative will provide PWDs with micro loanson same mark up as paid by non-PWDs,followed by effective business incubationand enterprise development training.The unit’s efforts to further the cause ofmainstreaming PWDs are also reflected inits emphasis on encouraging partnerorganizations to hire a percentage of theiremployees from amongst such individuals.As an incentive supporting PPAF’s policy ofmaking 2% PWD representation compulsoryamongst PO staff, the unit has selectedpartners from amongst those organizationsfulfilling this criterion.As a concerted program aimed at PWDs,disability unit directly works with the mostmarginalized segments of society with anobjective to improve their mental, emotionaland material state through carefullytargeted and well designed interventions.The unit meanwhile seeks to increaseawareness on a subject that needscontinuous reflection on an increasinglybroader scale.Case Study 9.1: Courage in the Faceof AdversityTwelve years ago, Sarfraz Hussain met a trainaccident while crossing the Lahore railwaylines. His both legs were amputated; aconsequence severe enough for a fifteenyear old school boy who was living at hisbrother’s house and searching for a job. Herecalls the incident with poignant sadness:“I don’t know how to express those horribledays and nights during that time.”Today, he is twenty seven years old: apleasant, quiet man with a trimmed beard.

He lives in village Bermong Khurd in UCDhamni. Bermong Khurd is far away fromthe road. After the accident, he had returnedhere wishing to continue his education butinaccessibility got in his way. The accidenthad taken away his belief in himself, in life– it took him years to recover physiologicallyand psychologically from the trauma. Helived with nine bothers and two sisters atthe time, was hospitalized for two monthsand after checking out and would return toget his wounds dressed for two more years.It took him six years to recover from theaccident. He began tailoring work: he wasnot professionally trained so he got only afew jobs and earned as little as Rs. 1000 amonth. This situation persisted for anothertwo years. Circumstances took a turn for thebetter when NRSP, a PPAF partner, workersapproached his for a training needs assessmentand found that he was inclined to enroll ina tailoring program.Disability ProjectPPAF — Annual Report 2010 49As a result, Sarfraz Hussain received training inIslamabad for one month in 2008. The programwas jointly run by NRSP and PPAF. Not only doeshe appreciate the technical expertise that itprovided him with, resulting in more clients, hementions that this training came at a time whenhe was experiencing great uncertainty andesteem issues regarding his career. “Communityrehabilitation workers counseled us to addressour issues and take action to work towardsthem,” he recalls.Within three months, Sarfraz’s was changingfor the better. He was ready to move to a cityand join a tailoring shop – and he did it in 2009.He was actively cutting, stitching and managingfor the shop’s expenses for his employer, whoeventually gave him full charge of it to open upanother in the same city.His family and community rehabilitation workerstook Sarfraz to a PPAF medical camp where hewas taught physiotherapy exercises and referredhim to an orthopedic workshop at PakistanProsthetic and Orthotic Sciences Bagh, workingin collaboration with PPAF. He went there andreceived prosthetic support. Soon after,PPAF/NRSP gave him equipment – a wheelchairand walker, to enable his movement to amaximum.Sarfraz is successfully running this business withthe help of three more employees. His family isproud of him and his mother no longer worriesconstantly about his move to the city. Theassistive devices that he received – a wheelchairand walker have enabled him to manage hisfunctional challenges well. He earns Rs 9000 amonth and sends money back home. Hisambition and confidence has grown so muchthat he wants training in embroidery now. He

has friends and his family looks forward togetting him married.Sarfraz Hussain says that for people withdisability, architectural support and physiologicalaid are very important. “We can do anything,”he asserts, happy with his life.Disability Project50 PPAF — Annual Report 2010

The Corporate Relations Management(CRM) unit was established with an aim todiversify PPAF’s funding resources bysoliciting funds from national andinternational corporate sector organizations,international trusts and foundations forpoverty focused interventions. The unit seeksto mobilize national and internationalcorporate sector entities and leverage fundsset aside for initiatives under Corporate SocialResponsibility and Corporate Philanthropyprograms. In pursuit of these objectives,CRM unit has established contacts withseveral corporate sector organizations atnational and international levels.In its capacity as the largest nationalwholesaler of development funds in theprivate sector covering 127 districts througha network of 87 grassroots organization,PPAF represents the most viable institutionalframework for undertaking grassrootsdevelopment initiatives in Pakistan. Corporatesector entities have been quick to respondto the unit’s efforts to strike partnershipsthat will benefit poor through jointlyimplementing projects at grassroot levels.

10 –CorporateRelationsManagementDuring the year, CRM unit has signed MoUsenvisioning allocations amounting toapproximately Rs. 700 million with leadingcorporate sector organizations includingEngro Corporation, Agritech Industries,Shell Pakistan, TetraPak Pakistan andShakarganj Food Products for implementinga range of interventions in various sectorsincluding health, education and ruralinfrastructure. MoUs have also been signedwith Islamabad Chamber of Commerce &Industry (ICCI), Rawalpindi Chamber Of

Commerce & Industry (RCCI), RotaryInternational Kahkashan Karachi (RI), SiteAssociation of Industry Karachi and KarachiChamber Of Commerce & Industry (KCCI).During the year, CRM unit was pivotal inlaunching a pilot School Milk Program in50 schools managed by PPAF’s partnerorganization in District Rahim Yar Khanwith the collaboration of TetraPak Pakistanand Shakarganj Foods Products. Tetra Pakcontributed packaging material at specialrates to Shakarganj Food Products Limited,which in turn supplied 200 ml packs atPPAF — Annual Report 2010 51project area has also been expanded toinclude Tharparker, Sahiwal andSheikhupura districts.PPAF has further partnered with Pak-American Fertilizer Ltd (PAFL), part ofAZGARD-9 Group to complement PPAFactivities, starting with a ‘SchoolDevelopment Program’ in district Mianwali.The program aims at improving quality ofeducation services through a varied set ofinterventions including enhancingknowledge and skills of teachers, principalsand management staff, enrichingcurriculum to promote holistic developmentof students, developing student morals andsocial wellbeing, enhancing physicallearning environment of schools, providingteaching and learning materials tosupplement teaching, strengtheningprimary sections of existing schools andensuring parents’ participation in schoolrelated decision making.To date, the following activities have beencarried out under the project:English language enhancementcourses, capacity building sessions forparent support groups, planningsessions with teachers for developingscheme of studies;Leadership and management trainingsfor school leaders, pedagogical skillsenhancement training for teachers,ECCD training for pre- primary teachers;discounted price. The process was alsoaided by other partners at various stagesincluding JDW Sugar Mills. Under theproject, 7000 school children received milkon a daily basis for six months. In additionto improving child nutrition, the projectwas observed to improve academicperformance, increase attendance andenrollment in project schools.

CRM unit is in the process of finding newpartners for project upscaling andreplicating success in other geographicalareas. For this purpose, PPAF organized aninternational conference on the School MilkProgram, which was widely attended by abroad set of stakeholders and dignitariesincluding Federal Minister for Education,diplomats and representatives ofmultinational companies and donoragencies.The conference was successful in attractingsupport from relevant stakeholders.Similarly, the unit has successfully facilitatednegotiations between PPAF and EngroFoundation resulting in a four yearpartnership for the implementation of basicinfrastructure, education, health and socialsector services in 16 selected villages ofdistricts Ghotki and Sukkur. PPAF and Engrohas since expanded their partnership toinclude further interventions in CommunityPhysical Infrastructure, Livelihood,Environment, Education, Health and SocialSector development in addition to undertakingResearch/Feasibility studies. TheCorporate Relations Management52 PPAF — Annual Report 2010

Developing webpage / intranet pageand library automation system for oneschool;Appointment of support teachers andother staff;Improvement in the physicalenvironment of schools.Under PPAF’s Adopt a Village strategy,corporate sector partners are encouragedto invest in the integrated development ofmodel villages subsuming multipleinterventions in health, education,communications, sanitation, and housingsectors. During the current financial year,PPAF has successfully partnered with Shellto implement an integrated villagedevelopment project in a village located inthe suburbs of Karachi. Shell has agreedto provide funds for developing housinginfrastructure, while PPAF will provideadditional technical and financial supportfor a series of integrated interventions inthe village.The unit has facilitated PPAF in furtherenhancing its capability to achieve its socialobjectives through forging effectivepartnerships with the corporate sector.Simultaneously, it has provided the latter

an effective framework for undertakingdevelopment interventions that arefinancially efficient and effective inimproving the socio-economic status ofpoor communities.Corporate Relations Management

Case Study 10.1: School Milk Program – Healthy Body, Healthy MindAs the school day progresses towards 11: 30 a.m. students of district Rahim Yar Khan havesomething to look forward to. Those students, that is, who are attending school regularlyand in public institutions all over this UC. Pakistan Poverty Alleviation Fund’s School Milkprogram is the sole reason behind this.In early 2010, PPAF partnered with NRSP, Tetra Pak Pakistan and Shakarganj Food ProductsLimited to supply 200 ml milk packs worth Rs. 22 million in 50 schools across Rahim YarKhan on a daily basis. In a country where estimates by United Nations Food and AgricultureOrganization (FAO) suggest that 37.5 million individuals do not have access to propernourishment and where 24% of Pakistanis are malnourished, this program had a multifaceted objective. Overall children’s health was of course the main one. The other was toencourage children to consume healthy products and in the longer run, attempt to increasetheir attendance and academic performance.Rubina Kausar, a student at one of these schools, smiles and tells us that the milk “makesus healthier.” Her fellow student, Saba Parveen, chimes in to say: “Now we drink milkwhich keeps us fresh all day long.” Another student: their senior Nasreen, explains to them:“That’s because milk energizes us with Vitamins A and D.” The atmosphere is filled witha sort of hopefulness as these young girls speak to the media crew for PPAF’s documentaryon this program. They are confident, healthy: they are Pakistan’s future.The program’s pilot phase lasted six months. It is nevertheless a pleasant surprise to hearfrom a class teacher, Saadia Kausar, that her students’ laziness and ratio of sick leave hasactually declined. Another school teacher, Munir Ahmed, says that previously his studentswould leave school earlier to have food at home.The community is equally satisfied with the program’s progress. Abdul Rauf, a communitymember, contemplates the benefits of the program for his own and other children: “What’shappened is that kids are attending school more often now. Their health has improvedand so has their interest in studying.” Another community member and a mother, KaneezBibi, agrees that her children are more motivated to get to school on time now.During the first visit to these schools, the children were weighed; their heights measuredand blood tests taken after parental consent. Six months later, the same exercise wasundertaken to indicate some positive changes in these indicators. The results are positiveenough for PPAF to scale this program to a nationwide level. The smiles of these childrenas they choose from chocolate, vanilla or strawberry flavoured milk every day are certainlyincentive enough.PPAF — Annual Report 2010 53Corporate Relations Management54 PPAF — Annual Report 2010

Evaluation, Research and Development(ERD) unit seeks to generate a constantstream of evidence based knowledge forcontinued learning and progress withinPPAF and its partner organizations. Theunit has successfully designed andimplemented an effective monitoring andevaluation framework with an aim toregularly measure and verify programoutputs against clearly set targets.Additionally, the unit is mandated toroutinely collect and disseminateinformation to all stakeholders at nationaland international levels.Reporting on the progress of all PPAFfinanced field operations and activities is

critical for efficient and timely decisionmaking within the organization. The designof unambiguous and attributable monitoringand evaluation indicators that are reliableand cost effective are fundamental to allassessment frameworks. As part of itsroutine duties, the unit collected largeamounts of technical, financial and socioeconomicdata during the year from

11 –Evaluation,Research andDevelopmentpartner organizations, third partyevaluators and in-house assessmentexercises. Following comprehensiveanalyses, the gathered information wasdisseminated through a series of ongoingand periodic reporting formats includingquarterly progress reports, annual report(),case studies, thematic reports, baselinereports and impact assessment studies. Inaddition to this, ERD compiled bi-annualprogress reports for MicrofinanceInnovation and Outreach Program (MIOP)and the Program for Increasing SustainableMicrofinance (PRISM). The unit played animportant part in the preparation andimplementation of performance indicatorsfor the IFAD funded MIOP and PRISMprojects.With a view to further streamline the processof data collection and analysis, ERD prepareda short concept paper on an integrated MISfor PPAF, which will enable various unit leveldatabases to be brought together forintegrated and consolidated reports, betterplanning and implementation andPPAF — Annual Report 2010 55transparent sharing of information withinthe organization and with partnerorganizations. Further work on the MIS isplanned for the coming year.ERD also worked closely with World Bankto develop and further refine PPAF’s MIS(Managment Information System), reviseand update quarterly progress reportingformats, enhance monitoring arrangements,and refine methodologies for evaluation

surveys. Similarly, a mission from IFADcollaborated with the unit to develop aportal for knowledge sharing.ERD is central to PPAF’s commitmenttowards the implementation of an objectiveresults based framework measuringintervention impact at the grassroots.During the year, ERD unit successfullyprepared a cohort-based impact evaluationdesign to gauge impact of developmentobjectives under PPAF III. A baseline surveyunder Cohort-I has already been conductedin the Punjab province. Additionally, PPAFIII has been selected by World Banks’sDevelopment Impact Evaluation Initiativefor technical assistance and joint conductof impact evaluation exercises.In its role as PPAF’s primary reporting section,the unit drafted numerous studies on anumber of well designed field surveysincluding baseline and impact assessmentsurvey reports: Drought Mitigation andPreparedness Projects (DMPP) in LoralaiEvaluation, Research and Development(Baluchistan), Soon Valley (Punjab), andKhipro (Sindh), Community PhysicalInfrastructure (CPI) projects in Punjab,School Milk Program and ‘MahfoozPakistan’ rural hand wash hygiene initiativeconducted in collaboration with UnileverPakistan.During the reporting period, ERD finalizedand disseminated the results of thirdimpact survey of PPAF’s microcreditbeneficiaries (Gallup III). Two disseminationworkshops were organized to share resultsof the study with partner organizations.Similarly, the unit commissioned andfinalized two Results and ImpactManagement System (RIMS) baselinesurveys for microfinance beneficiaries underthe MIOP.In addition to baseline and impactassessment survey reports for a largenumber of PPAF projects, the unitsuccessfully completed a number ofinformative, evaluative and diagnosticcase studies over the reporting period(Box 11.1).ERD also plays a key role in building capacityof partner organizations for effectivemonitoring and evaluation of programactivities. During the year, the unit held aworkshop for MIOP partners on use ofpoverty scorecard and RIMS indicators, incollaboration with Credit and Enterprise

Development (CED) unit.Responsibility for implementing the povertyscorecard was transferred to the unit atyear commencement. As a measure toascertain poverty status of households forprospective distribution of financialresources, effective implementation of thescorecard is vital for better targeting of anyfuture social safety nets programs inPakistan. The poverty score card will beadministered through credible third partiesin 12 districts. The unit has made extensivepreparations for holding a series of trainingand orientation workshops on the subject.ERD has established strong credentials forpolicy relevant research on various facetsof participatory development. It continuesto enhance PPAF’s decision makingprocedures through timely feedback in aBox 11.1: Case Studies and Reports‘Assessing the Quality of Social Mobilization’ in Litra village, District Dera Ghazi KhanDocumentation on “Village Banking” product under MIOPDocumentation of transaction among Kashf Foundation, Standard Chartered Bankand PPAF as part of PRISM, to promote provision of private sector finance for povertyalleviationEducating Pakistan’s Children: Choices, Alternatives and TradeoffsCost Effective, Quality Healthcare: Unravelling the ParadoxClient Attrition in Microfinance: Experience and PracticeWomen Weaving WickerA Decade of Accomplishment: Ten Years of PPAFCatalyst for ChangeInput to Tenth Five Year Plan, Government of PakistanRenewable Energy – BiogasRenewable Energy – Solar56 PPAF — Annual Report 2010

host of relevant areas including socialmobilization, community infrastructure,financial services for the poor, social safetynets, livelihoods and capacity building forbetter monitoring and evaluation at thegrassroots.Evaluation, Research and DevelopmentPPAF — Annual Report 2010 57Media and Communication (M&C) unitseeks to disseminate PPAF’s vision throughmulti channels and tools of communicationwith an aim of engaging national andinternational stakeholders in private andpublic sectors, as well as the public at large.Asides from accumulating support forPPAF’s larger objective of poverty alleviationin the country M&C unit’s efforts havealso simultaneously helped influence publicdebate and discourse on the efficacy ofparticipatory grassroots developmentparadigm as an effective mean for

transforming lives of the poor andmarginalized.Print and electronic media, whichconstitutes the most effective means foreducating and sensitizing public opinion,forms an important component of thisunit’s multi-faceted strategy to accessingpublic domain. For instance, the unit hassuccessfully engaged public opinionthrough a radio program – “RoshanRaahein” – that has grown in popularityover time and attracted listenership fromall over Pakistan.This program regularly broadcasts PPAF’sexperience in participatory developmentthrough transmitting stories on theorganization’s multi-sectoral interventionsfrom across Pakistan. Additionally, theprogram has routinely relayed usefulinformation on ways in which the generalpublic and aspiring organizations canaccess PPAF and its network of partnerorganizations. It has also played animportant role in educating people onhow best to organize themselves for thecommon good of their communities andbegin to participate in the process ofdevelopment.M&C facilitates core PPAF staff to representthe organization on television channels byarranging their participation in talk showsthat attract large viewership. Suchoccasional appearances have nonethelesshad an asymmetrically large impact interms of communicating PPAF’s message

12 –MediaandCommunicationcoverage and preparing support materialsfor seminars, workshops and ceremonies.Additionally, the unit has produced wellresearched documentaries about selectedPPAF interventions in various programareas including pilot projects on TargetingUltra Poor (TUP) and School Milk Projectas well as on PPAF’s work with InternallyDisplaced Persons (IDPs) and victims ofthe October 2005 earthquake.

Development of real life case studies isanother focus area of the unit coveringlives of individuals under various PPAFprograms. To date, the unit has successfullypublished six case studies in coordinationwith different operational units. M&C staffhas been actively following the progressof these men and women throughnumerous field visits in remote areas tocollect qualitative data as a means ofverifying impact of PPAF interventionswithin poor communities.to a broader audience. Also, such effortsare complemented by more frequentinstances of detailed news items and writeupson PPAF activities in mainstreamnational newspapers and periodicals.These measures and achievements needto be viewed in the context of a highlypoliticized public arena where politicaland security issues continue to dominatedebate on mainstream media. Creatinggreater media space for participatorygrassroots development also requireschampions from within print and electronicmedia, who are deeply sensitized to itsimportance and validity.For this purpose, the unit has been activelyengaged in arranging immersion visits forjournalists to PPAF project areas. Thesevisits have been designed to sensitizejournalists to the needs of poorcommunities through direct contact atthe grassroots. Additionally, the visits alsoserve as an opportunity to test PPAF’sperformance by allowing journalists openaccess to report from the field.M&C unit acts as PPAF’s publisher. Incoordination with PPAF’s other units, M&Cregularly publishes and disseminates awhole range of reports, case studies,brochures, manuals, flyers and fact sheetsfor stakeholder benefit. It also seeks toeffectively compliment the work of otherunits within PPAF by providing mediaMedia and Communication58 PPAF — Annual Report 2010

Box 12.1: Video DocumentariesThe Radiant TrailsThe video documents PPAF’s efforts in ameliorating the lives of the poorest of the poorunder its Social Safety Net-Targeting Ultra Poor (SSN-TUP) pilot project in coastal areas ofSindh.When Hope RekindlesThe documentary narrates the story of PPAF’s efforts to revitalize the lives of InternallyDisplaced Persons (IDPs) in seven camps across Mardan, Swabi and Peshawar followinglarge scale migrations from the upper mountains and valleys of KpK. PPAF’s timely interventionsin basic infrastructure, water, sanitation, health and education, counseling and skill

development played an important role in lessening impact of the crisis.Vitality for LifeThis video documentary is about PPAF’s pilot school milk project under which over 6,000school children were provided milk on daily basis in 50 schools for six months in DistrictRahim Yar Khan. The project has contributed to improving child nutrition as well asenrollments and attendance in project schoolsFrom Hope to RealityA story of Courage and Resilience: PPAF has successfully completed the largest private sectorrelief, reconstruction and rehabilitation operation in earthquake affected areas spanning34 union councils in 5 districts and involving reconstruction of 122,000 housing units, 660water supply and infrastructure schemes and 19 state-of-the-art health and educationfacilities. The documentary relives PPAF’s struggle to deliver under testing conditions insome of the countyr’s most remote areas.Through its diverse activities, Media andCommunication unit has played aneffective role in building long termsynergies with stakeholders in printand electronic media as a means toPPAF — Annual Report 2010 59Media and Communicationdisseminating PPAF’s vision and missionat national and international level. In itsrole as the organization’s external face, theunit has won acclaim for PPAF and its workwith poor communities in the country.60 PPAF — Annual Report 2010

Human Resource, Procurement andAdministration units provide an integratedsolution to promoting operational efficiencyin the management of PPAF’s human andphysical resources. Their role is vital insustaining a vibrant and conducive workenvironment for PPAF management andsupport staff, as well as for facilitatingroutine activities including management ofhuman resources, procurement of goodsand services, provision of logistical supportand the upgradation and maintenance offacilities.The Human Resources unit is primarilyresponsible for recruiting new staff andbuilding their capacities. HR ensures a highdegree of transparency in all staffrecruitments by strictly following standardprocedures in selecting individuals withrelevant knowledge, qualification and skillsconsistent with clearly laid out jobdescriptions through a competitive process.Also, the unit has put in place an effectiveincentive structure to optimize employeepotential. In addition to providing

13 –Human

Resources,Procurement andAdministrationemployees with numerous trainingopportunities, the unit has developed acomprehensive promotion and salaryadjustment criteria with clear performanceindicators judiciously applied at all levelsof the management hierarchy.During the year, HR unit provided PPAFstaff with a large number of trainingopportunities to facilitate their professionalgrowth, allowing them to efficiently meetjob requirements. A total of 60 supportand regular staff attended trainingsessions/courses in relevant subjectsincluding management, monitoring andevaluation, finance and accounts,development communication, andleadership skills through prestigious trainingbodies such as Lahore University ofManagement Sciences, AmigosManagement, NUST, Hamdard University,CASE, NIMS, and Pakistan Institute ofManagement Sciences.Additionally, 53 staff members were sentabroad on exposure visits, training eventsHuman Resource, Procurement and AdministrationPPAF — Annual Report 2010 61procurement practices through trainingand monitoring of techniques andprocedures.The Administration unit is central tomanaging PPAF’s daily activities andprovides crucial technical support for themaintenance of PPAF offices and physicalresources. The unit performs numerousroutine activities including maintainingtravel logs and attendance records,provisioning logistical support to staff onfield visits and managing the successfulconduct of routine meetings andconferences. During the year, Procurementunit finalized close to 1400 travelarrangements for PPAF staff including 63foreign visits, in addition to successfullyholding a large number of meetings bothinside and outside PPAF premises.PPAF’s Human Resource, Administrationand Procurement units have receivedacclaim from donor agencies and auditorsfor effective service delivery to all PPAF units

as internal clients, while partnerorganizations have benefitted from theiradvice in terms of establishing transparentprocurement and recruitment mechanisms.and conferences to various countriesincluding Bangladesh, Sri Lanka, Netherland,India, Nepal, Kenya, and Singapore. Staffmembers availed training opportunities inseveral renowned institutions including theAmsterdam Institute of Finance, SpanishImpact, Thailand International Development,IFAD, BRAC, MDF-Netherland, Asian MediaInformation and Communication andHanson wade.Procurement unit manages the acquisitionof goods and services in conformity withPPAF requirements and donor guidelines.In the procurement of services for timeboundactivities, the unit follows a clearlylaid out set of procedures including a welldesigned rating scale to obtain the besthuman and technical resources available.During the year, procurement unit acquiredthe services of 71 consulting firms andindividuals for various assignments includingtraining and capacity building, baseline andassessment studies and the Poverty ScoreCard surveys. The latter involvedenumeration of hundreds of thousands ofhouseholds spread across several districts.In addition to successfully managing theprocurement of services, the unit expedited207 cases of goods procured during thisreview period while strictly adhering to setprocedures.In addition to maintaining high standardsin procurement procedures within PPAF,the unit utilizes its expertise to guide partnerorganizations in adopting prudent62 PPAF — Annual Report 2010

Internal Audit (IA) unit assists PPAFmanagement in the achievement ofcompany objectives through ensuringcompliance with existing rules, regulationsand procedures. In its advisory role, theunit acts as an independent source ofinformation on state of administrative andfinancial efficiency within PPAF and its POs.This is achieved through timely reviewsencompassing a wide range of auditcategories including among others, thereliability of financial reporting, verificationof procured assets and adherence withstandard operating procedures pertainingto disclosure and transparency.The existence of effective systems for risk

management and internal control arenecessary conditions for steady institutionalgrowth. Within PPAF, Internal Audit unit isentrusted with the important responsibilityof ensuring compliance with laid out rulesand procedures, while simultaneouslyseeking to analyze and redress gaps throughcarefully planned reviews of all operationaland support units.

14 –InternalAuditDuring the year, comprehensive reviews ofall operational units – Credit and Enterprisedevelopment (CED), Community andPhysical Infrastructure (CPI), WaterManagement Centre (WMC), SocialMobilization (SM), Health and Education(H&E) and Human and InstitutionalDevelopment (HID) – were conducted tomeasure compliance against agreed rulesand procedures. Similarly, support units –Evaluation, Research and Development(ERD) unit and Human Resource,Procurement and Administration units –were also subjected to quarterly reviewsincorporating, among other things, ascrutiny of existing fixed assets managementsystems, documentation, as well asadherence to procedural and policystandards.The presence of provisioned physical assetswas verified for all units, while needs inprocedural and record keepingarrangements were identified andsuggestions were put forward for redressal.Since PPAF’s success is inextricably linkedInternal AuditPPAF — Annual Report 2010 63payroll, investments, petty cash, advancesand security deposits.The unit continues to act as an independentsource of information with completefreedom in the exercise of its responsibilities.While critically assessing the degree ofcompliance and transparency within PPAFand its POs, the unit has played an effectiverole in strengthening institutions foreffectively delivering the fruits ofparticipatory development to poor

communities.to the performance of its implementingpartners, the unit carefully plans an annualschedule for auditing a maximum numberof partner organizations. During the year,IA carried out reviews of 45 POs accountingfor 98% of PPAF’s portfolio. In each case,the unit focused on verifying adequacy oforganizational governance, compliancewith financing agreements and reliabilityof financial reporting, as well as confirmingthe presence of necessary risk managementsystems for effective operations at thegrassroots. In addition to conducting regularaudits of POs, the unit further providesthem with necessary support in buildingefficient risk management systems forcontinued growth.The unit reports to the audit committee ofthe Board of Directors. The committee ismandated to approve the unit’s annualplan, which is obliged to regularly presentits performance for committee review.During the year, the committee held threemeetings to review unit performanceagainst set targets. In view of theimportance of the committee’s role, itsmembership was increased to five membersin the current financial year.During the reporting period, IA unitsuccessfully submitted 35 in-house auditreports to the Chief Executive Officer,covering detailed information on variousfinancial aspects including payments,receipts and general vouching, bankaccounts and their reconciliation statements,64 PPAF — Annual Report 2010

As a custodian of public funds, PPAF isconscious of the need for prudent andappropriate financial control andmanagement. In pursuit of this objective,the Finance and Accounts (F&A) unit ismandated to execute and record all financialtransactions in a systematic and transparentmanner. In the conduct of its routinebusiness, Finance & Accounts strives tomaintain the highest standards of financialmanagement, while strictly followingstandard operating procedures laid out inPPAF’s comprehensive and highlystandardized Operational Manual.The F&A unit further ensures compliancewith regulations of the Securities andExchange Commission of Pakistan andcovenants stipulated in agreements signedwith all parties, including Government of

Pakistan (GoP) and donors, i.e., the WorldBank (WB), US Department of Agriculture(USDA), International Fund for AgriculturalDevelopment (IFAD), KfW DevelopmentBank (Germany) and the CommitteeEncouraging Corporate Philanthropy (CECP).

15 –FinanceandAccountsAs part of its responsibilities, F&A worksclosely with operational and support unitsto facilitate funding and ensure adherenceto stipulated processes. Its activities arecarried out in an automated computerizedenvironment through customized softwareadapted to PPAF requirements, while allwork processes and procedures are attunedto a comprehensive manual for financialmanagement developed specifically for theunit. Similarly, books of accounts are keptin accordance with statutory requirementsand agreements with GoP and donors.The F&A unit has implemented a systemof accounting control which is sound indesign and has effectively beenimplemented and monitored, with anongoing effort to improve it further.Accounting controls comprise of plans,procedures and records that are concernedwith safeguarding assets as well as checkingaccuracy and reliability of financial data,promoting operational efficiency andencouraging adherence to prescribedmanagerial policies. The system providesFinance and AccountsPPAF — Annual Report 2010 65related to all donor funded projects andregulatory agencies are met and checklistsare used to monitor compliance.F&A Unit uses an SQL-based financialmanagement information system. Itcomprises of integrated modules for GeneralLedger, Fixed Assets and Payroll. The systemis regularly updated and has beenfunctioning effectively for maintenance ofcomprehensive books of account. PPAF isusing a detailed chart of accounts. Sufficientdata is captured to enable all external and

internal reporting requirements to be metin a timely fashion. In addition, two standalonemodules are also in use to monitorloan and grant based operations. Thesemodules produce a number of reportsallowing analysis and monitoring of themicro-credit portfolio as well as grantinterventions. Mark-up schedules of POsare system generated ensuring accuracyand completeness.The F&A Unit consciously strives to encourageand facilitate all processes and proceduresaimed at strengthening the level ofaccountability within the organization. Alldocumentary records and transactions aresubject to strict scrutiny by independentinternal and external auditors, as well as bysupervision missions from different donors.In the conduct of its routine obligations, theunit has prioritized true presentation of factsand the timely issuing of all periodic financialstatements for management, donors andstakeholders.assurance that transactions are executedin accordance with managementauthorization and record keeping is donein a way to permit preparation of financialstatements in conformity with generallyaccepted accounting principles.F&A’s Standard Operating ProceduresManual (SOPM) documents in detail theinternal control framework and accountingpolicies and procedures. The use of workflows and an authorization matrix providefor effective segregation of duties while jobdescriptions for all approved unit positionsform part of the SOPM. The financialmanagement system has been set-up tohandle extensive reporting requirements ina flexible manner. Since PPAF’s existingportfolio consists of multi-donor fundedprojects, its Management Information Systemis equipped to handle a multitude of donorspecific reporting requirements.Transparency of financial information fordifferent stakeholders is a primeconsideration of the unit. In order to ensurethis, F & A has put in place an accurateand reliable financial and other reportingframework, effective internal controlprinciples including risk management,setting of targets, planning and monitoringof company operations and performanceunder direct and indirect supervisionthrough delegated authorities. The SOPMlists internal and external reports prepared

by the F&A unit. Mechanisms are in placeto ensure that the reporting requirements66 PPAF — Annual Report 2010

At the same time, F&A unit is particularlymindful of maintaining transparency andprompt handling of reporting requirementsat all times and at all levels. These principlesare applied for both internal reporting inthe form of monthly financial updates, andexternal reports important to stakeholdersin the form of quarterly, half yearly andnine monthly un-audited financialstatements, Management Reviews, annualaudited financial statements and theDirectors’ Report.PPAF operations for the year ended June30, 2010 were audited by its externalauditors the M/s A. F. Ferguson & Co.,Chartered Accountants. In the latter’sunqualified opinion, PPAF’s financialbusiness was being conducted inaccordance with approved accountingstandards as applicable in Pakistan andaccording to the requirements ofCompanies Ordinance 1984, whilemanagement developed financialstatements presented a true and fair viewof the company’s affairs. These opinionswere based on the inspection and reviewof company records and details of fundsreleased to partner organizations.In addition to preparing financial statementsas per statutory requirement, the unit alsoprepared separate financial statements ofa) WB and IFAD Projects for the year endedJune, 30, 2010; b) KfW Project for the halfyear ended December 31, 2009 and June30, 2010. The above financial statementswere audited by external auditors. Inconformity with best practices, quarterly,half yearly and nine monthly condensedinterim un-audited financial statementsalong with management reviews were alsoprepared.Subsequently, the annual audited financialstatements along with Directors’ Reportand donor specific audited financialstatements and interim un-audited financialstatements were submitted to the AuditCommittee of the Board for review. On therecommendations of the Committee, theBoard of Directors and General Bodyapproved these financial statements alongwith the Directors’ Report and ManagementReviews. The General Body approved theaudited financial statements of the company

for the financial year ended June 30, 2010together with Auditors’ and Directors’Reports within four months of the financialyear. Annual audited financial statementsalong with Directors’ Report, as well asquarterly and half yearly un-audited financialstatements and Management Reviews arepublished and circulated to stakeholders.These statements are also made availableon the PPAF website.Disbursements to PPAF under the WorldBank and IFAD projects were on the basisof Financial Monitoring Reports (FMRs).This report based disbursement is allowedonly to institutions with effective and strongfinancial management systems andprocedures. All FMRs and withdrawalFinance and AccountsPPAF — Annual Report 2010 67Finance and Accountsapplications related to WB and IFAD projectswere submitted within the period allowedby donors. These were reviewed by donorsand found to be eligible for reimbursementor replenishment.Similarly, all information and data submittedwere in compliance with disclosurerequirements and formats. The findings ofthe WB Supervision Mission are testimonyto robustness and efficacy of PPAF’sFinancial Management system as well asto the unit’s strict adherence to allprocedures, processes and requirements(Box 13.1). During the reporting period,F&A played a critical role in effectivelyoperationalizing World Bank financed US$250 million PPAF III project effective on July09, 2009 in a record time of one month.After the signing of this agreement as wellas opening of US$ Special bank accountfor the project. The unit was involved inreview of legal and financing agreementsfor EUR 32 million KfW (Development Bankof Germany) Project for ‘Livelihood Supportand Promotion of Small CommunityInfrastructure’. Thereafter, financingagreements were signed betweenGovernment of Pakistan, KfW and PPAF inJune 2010.F&A Unit also actively participated innegotiations for EUR 40 million ItalianGovernment project on “Poverty Reductionthrough Development Activities” to beimplemented in Balochistan, Khyber-Pakhtunkwa and Federally AdministeredTribal Areas. As a result of the combined

efforts of PPAF tax advisors and F & A , theFederal Board of Revenue renewed PPAF’sstatus as a welfare institution. Consequently,there was no tax liability for the year underreview.On the request of USAID Pakistan, M/sKPMG Taseer Hadi and Co., CharteredAccountants, carried out pre-awardassessment of PPAF in October 2009. Theyreviewed and evaluated the managerialcapacity and internal control systems ofPPAF and also visited selected PPAF PartnerOrganizations and their communities. Theyalso held meetings with World Bank teamand discussed progress of WB as well asIFAD’s MIOP and REACH projects that arebeing supervised by WB.Based on their extensive review andevaluation, M/s KPMG Taseer Hadi and Co.,68 PPAF — Annual Report 2010

Chartered Accountants, concluded thatPPAF capacities and procedures fully satisfyminimum requirements and are sufficientfor USAID/Pakistan’s purposes. Overallassessment of PPAF was Low Risk. Theassessment of legal and finance relatedfunction was as follows:- Legal status and regulatory complianceLow Risk (exceeds the minimum requirements)- Sustainability and fundingLow Risk (exceeds the minimum requirements)- Accounting and financeLow Risk (exceeds the minimum requirements)- Audit ArrangementsLow Risk (fully satisfy minimum requirements)- Financial statementsLow Risk (exceeds the minimum requirements)During the reporting year, the unit continuedto actively participate in monitoring offinancial flows to POs, ensuring completeadherence to all legal covenants and alsoensured swift receipt of audited financialstatements from all POs within six monthsof financial year close, in addition tosubmission of management letters issuedby their respective external auditors. Thesewere subsequently reviewed and necessaryactions were taken accordingly. Not onlyhas the above steps infused financialdiscipline within POs, the unit’s consistentemphasis on the submission of periodicstatements of expenditures and all necessarydocuments in support of grant relatedexpenditure has further prompted POs tomaintain proper financial and operationalrecords.Simultaneously, it continued to conduct

regular field visits to review financialmanagement systems of POs and suggestimprovements wherever weaknesses andconstraints were observed. Realizing theimportance of its contributions in thedevelopment of POs, the unit plans tocontinue efforts in strengthening the latter’ssystems and procedures, with particularfocus on small and medium organizations.During the year, the head of F & A Unitcontinued to fulfill his responsibilities asCompany Secretary by ensuring fullcompliance with mandatory secretarialresponsibilities as envisaged by theCompanies Ordinance, 1984. Additionally,PPAF complies with the best practices asset out in the code of corporate governance.Adequate records evidencing statutorymeetings and other formal requirementswere thoroughly maintained, while reportsto the Securities and Exchange Commissionof Pakistan were submitted well in time.F&A unit remains fully committed tointernational best practices in managementof its affairs and responsibilities as isreflected in all its activities, systems, andprocedures. While resolutely committed tocontinually build on its strengths, the unitwill strive for further innovations tostrengthen its financial management andFinance and Accounts

Box 15.1: Findings of the World Bank Supervision Mission“The financial reporting requirements are promptly and satisfactorily fulfilled. Both theFinance & Accounts Unit (F&A) and Internal Audit Department (IAD) are adequately staffed.The IAD is successfully executing a comprehensive work plan. Audit Committee is meetingregularly. The PO monitoring system is functional. The mission randomly reviewed supportingdocumentation for withdrawal applications and found the same in order. Financial reportingrequirements are promptly and satisfactorily fulfilled, while quarterly FMRs and annualaudited financial statements are submitted to the Bank well within the due dates. TheDesignated Accounts under all the operations are running smoothly and replenishmentapplications are being submitted on regular basis. The financial Management rating forWorld Bank and IFAD funded projects being implemented by PPAF remains satisfactory andthe overall risk rating Low”.PPAF — Annual Report 2010 69Finance and Accountsprocedural efficiency in the next financialyear. Thus far, it has achieved its resultsthanks to its well-coordinated operationalstructure and clearly defined spheres ofresponsibility, equitably distributed amongsta qualified and dedicated staff. The latterhave successfully maintained high standardsin the effective management of funds andtimely dissemination of information: withthe aid of their aggregate competence andskills, F & A Unit looks forward to achievingsimilar standards of professional excellence

in the future.70 PPAF — Annual Report 2010

The Board of Directors of Pakistan PovertyAlleviation Fund (PPAF) is pleased to presentthe tenth Annual Report along with auditedfinancial statements of the Company forthe year ended June 30, 2010.The year 2009-10 was yet another year ofsustained progress as the Company madesteady advancement in pursuit of itsobjectives of poverty alleviation. Despitenational challenges of growth anddevelopment, Company’s performancewitnessed positive trends with resultsconsolidating a strong financial position.PPAF interventions continued to make aqualitative difference in the lives of poorpeople across Pakistan. The needs of thepoor were served by following an integratedapproach focusing on social mobilizationfollowed by credit, infrastructure, health,education, and skill development. Thisapproach helped in addressing the manyfacets of poverty and worked towardsreducing vulnerability, especially for women.In addition, it also contributed significantlyin rebuilding lives, fostering resilience and

16 –Directors’Reportrestoring assets of those poor who hadsuffered from natural disasters. In areas ofPPAF sponsored interventions, the poorhave started reaping benefits of self-relianceand community driven development. Theyare experiencing increased opportunitiesfor income generation, reduced dependenceon external support and enhanced qualityof life.Over the last decade, PPAF has emerged asthe largest initiative in the country forwholesaling development support to civilsociety organizations and is the lead agencyfor poverty reduction and grass rootdevelopment. As an apex, it has positioneditself as a professional and credibleinstitution with a strong and efficientcorporate culture. The partner organizationsperceive PPAF as a catalyst which has ledto exponential growth in the microfinance

sector, enabled a more integrated approachto rural development and allowed a longtermperspective to social mobilization andcommunity empowerment. PPAF hastransformed them from a charity drivenPPAF CoverageAfghanistanIran IndiaArabian Sea

ChinaDirector’s ReportPPAF — Annual Report 2010 71These linkages allow PPAF to effectivelyleverage its own resources and pursueconvergence of programs at the communityand household level.By the end of June 2010, PPAF funding hadbeen disbursed in urban and rural areas of127 districts of the country (to about200,000 community organizations / groups)through 87 partner organizations of which12 were focusing exclusively on women.On cumulative basis, PPAF financed3,600,000 microcredit loans, of which1,700,000 were to women. 21,000infrastructure projects were initiated and445,000 staff and community memberswere trained. In earthquake affected areas,PPAF provided financing to 122,000households to build earthquake resistanthomes and, in addition, provided trainingto over 108,000 individuals in seismicconstruction and related skills.organization, dependent on donorfinancing, to the one with clear businessplans for becoming sustainabledevelopment partners. PPAF is thus helpingto demonstrate how the double bottomline can be achieved for sustained povertyreduction effort. It has effectively enhancedretail capacity in the country where thepoor have had very limited access toresources and has raised the standards ofcivil society sector to higher levelseffectiveness in terms of social responsibility,financial discipline and institutionalmanagement.PPAF uses its interventions as an opportunityto respond to government programs andnational priorities. This includes workingwith the internally displaced people resultingfrom the security operations in the borderareas, strategic engagement withGovernment of Pakistan at various levels.PPAF is also engaged with Government inthe national policy and institutionalframework. It is a lead advisor to theMinistry of Finance in terms of the national

microfinance strategy and has also workedpro-actively with the State Bank of Pakistanin drafting the Microfinance Ordinance andPrudential Regulations for MicrofinanceBanks. In addition, it is member of SpecialCommittee/Task force of PlanningCommission, partner of EarthquakeReconstruction and Rehabilitation Authorityand Member of Poverty Reduction StrategyPaper.(74%)MC(14%)CPI(3%)H&E(2%)SM(7%)HIDFigure 16.1: Share of Funds Disbursed –Core Operations(56%)Punjab(5%)Northern Areas/AJK(7%)KhyberPakhtunkhwa(6%)Balochistan(26%)SindhFigure 16.2: Provincial Distribution of Funds –Core Operations72 PPAF — Annual Report 2010

PPAF financial and non-financial servicesare estimated to have, on a cumulativebasis, benefited (directly or indirectly) over23 million individuals from its creditprogramme and over 13 million individualsfrom infrastructure, health and educationinterventions, across the country. Thebenefits of PPAF interventions have beenobserved to be well distributed across allregions of the country.Operational and FinancialOverviewDuring the year under review, the Companyexhibited impressive growth. Theoperational results achieved during the yearallowed the Company to maintain strongfinancial position which is a key to itssustainability. PPAF maintained steadyprogress in all aspects of its operations.Total disbursements for core operationsduring the year were Rs 13,398 million ascompared to Rs. 9,083 million in FY 2009,indicating an increase of 48%.Disbursements of loan (microcredit andenterprise development facilities) were Rs9,048 million as compared to Rs 6,949

million; water and infrastructure were Rs1,800 million as compared to Rs 979million; capacity building were Rs 463million against Rs 370 million; socialmobilization were Rs 999 million as againstRs 712 million, and education and healthwere Rs 1,088 million as against Rs 73million during the preceding year [Fig.16.2].Director’s ReportTable 16.1: Disbursements – Core OperationsRs. million %2010 2009 VarianceCredit and Enterprise 9,048 6,949 + 30Water and Infrastructure 1,800 979 + 84Capacity Building 463 370 + 25Social Mobilization 999 712 + 40Health and Education 1,088 73 + 1,390Total 13,398 9,083 + 48During the year disbursement for relief,rehabilitation and reconstruction operationsin earthquake affected areas was Rs 448million as against Rs 5,671 million in thepreceding year.By the end of FY 2010, cumulativedisbursements for core operations stoodat Rs 56,442 million. Credit and enterprisedevelopment, the largest component ofPPAF, accounted for 74% of cumulativedisbursements followed by communityphysical infrastructure (14%); capacitybuilding assistance (7%); health & education(3%); and social mobilization grants had ashare of 2% [Fig.16.3]. In addition,cumulative disbursements for relief,rehabilitation and reconstruction activitieswere Rs 19,364 million.PPAF resources and funds have beendeployed equitably across urban/ruralsettlements, provinces, regions and areas.About 56% of the resources have beendeployed in Punjab; 26% in Sindh; 7% inKyber Pakhtunkhwa; 6% Balochistan; and5% in Northern Areas/AJK (Fig.6.3).In line with the Subsidiary FinancingAgreement executed between Governmentof Pakistan and PPAF in respect of WorldBank financed First Project, the repaymentof principal loan amount has commencedwith effect from November 15, 2007.During the year under review, Rs 109.617million was repaid to the Government ofPakistan.PPAF — Annual Report 2010 73Having utilized the World Bank fundsallocated for microcredit component undersecond project, PPAF is now meeting itsobligations through its own reserves built

up from repayments received from partnerorganizations. As of June 30, 2010, PPAFhad disbursed Rs 29,320 million as loanfrom these resources.Total assets of the Company on June 30,2010 stood at Rs 23,629 million againstRs 18,509 million as at June 30, 2009.Amount of loans receivable from partnerorganizations as on June 30, 2010 wereRs 11,202 million as against Rs 9,696 millionas at June 30, 2009. PPAF continued tomaintain 100% recovery rate in respect ofits lending operations. In order to mitigateand mange risk as well as provide sufficientcapital adequacy, with effect from July 01,2009, an amount equivalent to 20% oftotal loan receivable from partnerorganizations are being held in investments.35% of the surplus funds of the Company,in excess of these investments, are beingheld for lending activities (micro credit andenterprise development facility) and thebalance 65% are held in investments, theincome of which would be used for grantbased health, education, infrastructure,emergency and any other activity that fallswithin the overall strategic purview of PPAFobjectives.The trend of consistent growth in incomecontinued this year also. Total incomeDirector’s ReportServiceCharges onMCProfit onInvest/BankAccountAmortizationof GrantsOthers

Figure 16.3: Total Income (Rs. in million)01000200600400FY 2009FY 2010Income onReserve744 72316193365620013090 1800

74 PPAF — Annual Report 2010

generated during the year increased by23% to Rs 2,061 million from Rs 1,669million in FY 2009. The service charges(profit) on loan to partner organizationsincreased by 29% due to high volume ofamount of credit outstanding andintroduction of market based rates for large

partner organizations. Overall income oninvestments and saving accounts increasedby 13% due to increase in level ofinvestments and reserve. This includes netincome of Rs 161 million that wasgenerated on investments specific to grantbased activities. During the year, capacitybuilding grant increased by 55% due tothe availability of financing fromGovernment of Pakistan and donor agenciesfor PPAF operational support [Fig.16.5].In order to support enhanced operationalactivities, general and administrativeexpenses for the year increased by 31%.However, the ratio of general andadministrative expenses to total incomewas 17% (2009: 16%). The main increaseswere in salaries/benefits and travelexpenses. The salaries, wages and otherbenefits increased due to annualincrements to existing employees toprovide relief against higher cost of livingand recognition of their work performance;as well as hiring of additional staff formanaging expansion in core operationsand new activities under different projects.Local travel expense increased due toextensive appraisal and monitoring visitsDirector’s ReportTable 16.4: Financial Results(Rs. million)2010 2009Service charges on loans 934 745Amortization of deferred grant 309 200Income on invetments/saving accounts 656 732Income on grant fund 161 -Other income 1 1Total income 2,061 1,669General and administrative expenses 358 274Seminar, workshops and trainings 47 10Consultancy charges 176 38Loan loss provision 76 236Financial charges 75 81Total expenditure 732 639Surplus for the year 1,329 1,030in view of high cumulative disbursementsand enhanced activities. Seminar,workshops and training expenses of Rs 47million included Rs 2.31 million spent onthe workshop to launch World Bank PPAFIII project and Rs 15.84 million incurredon the event to mark ten years of PPAFoperations. Total consultancy charges ofRs 176 million included Rs 118 million inrespect of poverty scorecard survey thathas been made mandatory by the donorsfor subsequent disbursement of funds for

operational activities.The general loan loss provision was madeat 5% of the gross outstanding balancesof loans to partner organizations. Inaddition, specific provision for loan losseswas also made against loans which wereconsidered doubtful.The financial charges include commitmentand service charges on long term loan andbank charges. Net surplus of Rs 1,329million improved by 29% as compared to2009 (Rs 1,030 million).PPAF commemorated ten years of itsoperations in August 2009. The Chief Gueston the occasion, Mr. Shaukat Tarin, Ministerof Finance, Revenue, Economic Affairs andStatistics, lauded the role of PPAF in povertyalleviation and paid rich tributes to its work.The Chairman and Members of PPAFGeneral Body and Board of Directors aswell as delegates from multilateral,bilateral and private institutions; partnerorganizations; and representatives fromleading civil society organizations, corporateand public sectors attended the events. Thehigh points of the ceremony were a culturalexhibition and a thought provokingtheatrical performance by representativesof community organizations highlightingthe dynamics of poverty and social change.The event was followed by the workshopto launch the third PPAF Project. Mr.Humayun Aziz Kurd, Minister for Livestockand Dairy Development inaugurated theworkshop. The project involves total WorldBank funding of US$ 250 million (loan US$33 million and grant US$ 217 million) overa period of five years. The objective of theproposed project is to empower the poorwith increased incomes, improvedproductive capacity and access to servicesto achieve sustainable livelihood.Sectoral and Programme OverviewPPAF is the largest provider of financial andtechnical assistance to the private sectordevelopment organizations all over Pakistan.Its core activities include debt financing formicrocredit/enterprise development andgrant financing for small scale infrastructure,water, health, education, training and socialmobilization as well as for human andinstitutional capacity building for deliveryof services. Apart from these core activities,PPAF works with communities sufferingfrom natural calamities and disasters such

PPAF — Annual Report 2010 75Finance and Accounts76 PPAF — Annual Report 2010Directors’ Reportas earthquakes, droughts, cyclones andfloods and also responds to special needsof various groups of poor. There is anincreased emphasis to ensure that livelihoodservices are designed to cater to the needsof sub-groups of poor through integratedapproaches to infrastructure, social servicesand credit provision.As an apex organization, the role of PPAFis to act as a wholesale intermediary andsector developer, while its partnerorganizations undertake implementationof projects at the retail level. PPAF adoptsa participatory development model with aholistic approach using social mobilization,skill development and capital accumulationas guiding principles.The model is community based and involvesformation of groups at the grass roots. Itfocuses on social organization, createsawareness and builds capacity. Under themodel, communities organize themselvesfor establishing new groups and also toconsolidate existing ones. The approach isdemand driven based on projects identifiedby the communities.Responsibility for operations andmaintenance also falls on these groups.PPAF selects partner organizations that havedemonstrated commitment to communitydriven development. Potential partnerorganizations are required to undergo arigorous selection process with both deskand field appraisals. Compliance withimplementation plans and adherence tocontractual obligations is mandatory.Partner organizations that meet PPAF’seligibility criteria have well establishedoutreach programs and track records ofpoverty reduction.One of the key challenges facing any povertyalleviation effort is the provision of financialservices to poor households at the lowerend of the poverty scale. In Pakistan, thechallenge is met by PPAF which providesfinancial services at the grassroots/retaillevels and invests in and capacitates civilsociety organizations to develop intoeffective providers of microfinance servicesin the country.These efforts have been so successful thatPakistan is now internationally recognized

as the emerging market for microfinanceranked in the top quartile globally and hassustained healthy rates of growth andoutreach. Repayments have been strongand portfolio quality has remained high.As the largest source of microfinance inthe country, PPAF has been instrumental indriving the sector in Pakistan with a currentmarket share of almost 40%. Its partnerorganizations account for bulk of thecurrent retail outreach in the sector.PPAF has helped in building physical,financial and human capital. It continuesto develop and implement innovativestrategies to enable sustainable delivery offinancial resources at the grassroots. AmongPPAF — Annual Report 2010 77Directors’ Reporthundred infrastructure sub-projects onthe average. Similarly, the Sindh CoastalAreas Development program takes thisintegrated approach one step forward bycomplementing infrastructure interventionswith appropriately sequenced interventionsin healthcare, education, livelihood supportand conditional cash transfers followed byprovision of financial services.Additionally, Integrated Water EfficientIrrigation projects are implemented at thevillage level for better management ofcommunity water resources by combiningthree sequential interventions includingsprinkler/drip irrigation, water channels,water course lining, and conduits. Thepoorest segments living in isolated tractsand backward rural areas are the mainbeneficiaries of PPAF’s infrastructureinterventions.PPAF pursues an inclusive developmentstrategy prioritizing community needswithin an inclusive framework of communitymobilization under which it seeks tomainstream the poor, vulnerable and themarginalized into the overall developmentprocess, sensitivity to suit the peculiaritiesof socio-cultural environment, terrain andtype of intervention.Through effective social mobilization at thegrassroots level, poor people have founda strong voice in affairs that directly concernthem. Programs for special target groupsthe strategies are offering attractive termsto commercial sector entities for long terminvestments in the sector, promotinginnovative models of outreach and deliveryof financial services to the poor, building

capacities of promising new partners, andpreparing current partners to excel in anincreasingly competitive market.The water and infrastructure interventionshave proven to be one of the mostproductive investments providing higheconomic returns. Interventions in sanitationand drinking water supply andcommunications sectors have improved thequality of life especially in the isolated ruralcommunities.PPAF is now progressively moving towardsa more holistic approach based on thesimultaneous development of logicallyinterlinked schemes in the same projectarea so as to address the many facets ofpoverty. The new initiatives are aimed atintegrated development; dissemination oflow cost, appropriate, innovative andemerging technologies such as micro/minihydroprojects, windmills and solar projects;and toward reducing poverty in droughtareas through focus on mitigation andpreparedness projects.For instance, the drought mitigation andpreparedness program covers large droughtaffected/water deficient areas with eachproject spanning over one to three unioncouncils and comprising approximately a78 PPAF — Annual Report 2010Directors’ Reportof the vulnerable, destitute and disabledhave rekindled hopes and recuperated lostenergies that cannot be captured effectivelyby neatly crafted quantitative measurealone. Similarly, the degree ofempowerment associated with greaterdecision making power at the householdlevel for female clientele of PPAF loanscannot be captured merely throughquantitative measures alone. Socialmobilization has helped create peace andharmony among communities by promotinginclusion, equity, and accountability. Theseachievements have long term implicationsfor meaningful change in the livingstandards at the grassroots.PPAF continues to invest substantially inbuilding capacities for sustainable servicedelivery through focused programs forparticipating communities and theirorganizations. These efforts are designedto remove supply and demand sideconstraints emanating from a lack ofadequate human and institutionalabsorption capacity at the grassroots. In

addition to providing funds for meetingrecurring and non recurring costs of deliveryof civil society organizations, financialallocations are made for building humancapital of participating communities andstaff of partner organizations.Appropriately identified quality training tostaff and beneficiary communities isprovided covering a diverse set ofinterdisciplinary modules and formats.PPAF’s social sector developmentinterventions (health and education) arepart of an integrated and holistic povertyfocused strategy for affecting meaningfulchange at the grassroots, which haveexpanded manifold over the last few years.While new facilities continue to beestablished in relatively less developed ruralareas, many underperforming institutionshave been revitalized in terms of staff andfacilities following their adoption from thepublic sector.PPAF supported interventions prioritize strictquality control, long term sustainability anddurable linkages with communities. Qualityof service delivery is ensured through regulartraining, provision of modern technologiesand a rigorous monitoring and feedbackframework. The latter involves substantialcommunity input through health andeducation management committees, whichare mandated to function in a supervisoryrole and hold the administration of theseinstitutions accountable to standards ofservice delivery.Under PPAF III, a new component onsustainable livelihoods has been includedto recognize the importance of relief andjob creation in the current scenario. Theapproach under this component involvesgroup level savings and internal lending;formation of Common Interest Groups thatare supported by partner organizations toengage in a wider range of opportunities,through development of their existingPPAF — Annual Report 2010 79Directors’ Reportlivelihood activities and assets; value chainanalysis to identify inefficiencies andknowledge gaps; and the provision oftechnical knowledge that can enhance theiraccess and participation in local markets.The component also funds asset transfersto the poorest as well as grants tocommunity organization and membercommon interest groups for livelihood

specific activities. PPAF will use objectivemeasures to target those poor and ultrapoor that need assistance in increasingtheir incomes and productivity.PPAF successfully completed its operationsin the earthquake affected areas withdistinction and a level of professionalismacknowledged by all stakeholders. Thesuccess has reinforced PPAF’s stature as anefficient institution of emergency responsefor disadvantaged and isolatedcommunities.Although PPAF and its partners had priorexperience of working in areas hit by naturalcalamities like droughts and floods, theirhuman resources and institutional capacitieshad never been tested as seriously as in theaftermath of the October 2005 earthquake.Never before had civil society organizationsaccomplished a project so complex in scopein extremely difficult terrain and within avery tight timeframe. It turned out to be aunique learning experience, capacitatinggrassroots organizations and field staff withinvaluable human and institutional skills indealing with adverse circumstances.In order to ensure that all PPAF supportedinterventions take place in a socially inclusiveand environmental friendly manner, PPAFhas in place an environmental and socialmanagement framework. A fully dedicatedgroup of professionals is responsible forregular dissemination of the frameworkamong all its partner organizations. Thegroup is also responsible for ensuringcompliance with stringent social andenvironmental safeguards by all partnerorganizations through regular monitoringand periodic environmental and socialaudits. Task of the group is facilitated by aspecifically constituted PPAF Panel on Socialand Environmental Management.PPAF is developing linkages with privateand corporate sector with the aim to workjointly for establishing social sectorpartnerships to fighting poverty in thecountry. By involving business and corporatesectors, PPAF plans to further increase itscountry wide activities through bilateralrelationships. This would enable the poorto access, and benefit from wider privatesector markets and opportunities for valueaddition.PPAF in collaboration with Tetra Pak,Shakarganj Foods and National RuralSupport Programme executed a pilot

‘School Milk Program’ under which some6,000 poor school children were beingprovided milk on daily basis in more than40 schools of district Rahimyar Khan80 PPAF — Annual Report 2010Directors’ Report(Punjab). The idea being to make milkavailable to school children free of cost ona daily basis with the aim of improvingtheir mental and physical growth, enhanceschool enrollment and attendance as wellas educational performance.PPAF and Engro Foundation formed analliance to complement each other’sefforts/activities and jointly fund a Rs. 250million project for provision of water, basicinfrastructure, education, health and socialsector services as identified by localstakeholders in districts Ghotki and Sukkurof Sindh province over a four year periodcommencing January 2010.Risk Management PoliciesThe Company uses a structured approachin identifying, assessing and controllingrisks to support better decision making foreffective and efficient use of resources. TheCompany has exposure to the followingrisks:Credit riskCredit risk represents the accounting lossthat would be recognized at the reportingdate if counter parties fail to perform ascontracted. The Company’s credit risk isprimarily attributable to loans to partnerorganizations; investments and bankbalances. Credit risk on loans is controlledthrough extensive credit appraisals ofpartner organizations, assessing theircreditworthiness, requiring compulsorysavings from borrowers and creating lienon the assets of partner organizations.The credit risk on investments and bankbalances is limited because the counterparties are banks/financial institutions withhigh credit ratings; and Government ofPakistan.Currency riskCurrency risk is the risk that the value of afinancial instrument will fluctuate due tochanges in foreign exchange rates. It arisesmainly where receivables and payables existdue to transactions with foreign buyersand suppliers. The Company is not exposedto currency risk as there are no foreigncurrency assets and liabilities except forfinancial assets of US$ 3,878.

Interest / mark-up rate riskThe interest/mark-up rate risk is the riskthat the value of the financial instrumentwill fluctuate due to changes in the marketinterest/mark-up rates. The Company is notexposed to this risk as all its interest bearingfinancial assets and liabilities are at fixedinterest/mark-up rates.Liquidity riskPrudent liquidity risk management impliesmaintaining sufficient cash and marketablesecurities to ensure availability ofadequate amount of funding to meet thecommitments. The Company maintainsflexibility in funding and follows an effectivecash management and planning policy toensure availability of adequate funds toPPAF — Annual Report 2010 81Directors’ Reportmeet its financial commitments in time.Moreover, the Company’s financial positionis satisfactory and it does not have anyliquidity problems.Fair value of financial instrumentsThe carrying value of all financial assetsand liabilities reflected in the financialstatements approximate their fair valuesexcept for investments and loansreceivable/payable which are stated at costor amortized cost.Treasury ManagementThe Company follows a pro-active approachof managing its cash and liquidity wherebycash inflows and outflows are projectedon regular basis. Repayments of all longterm and short term loans due in 2010and/or onwards have been accounted for.Working capital requirements have beenplanned to be financed through internalcash generations. Excess cash is investedand the investment portfolio of theCompany is fairly diversified. Investment ofsurplus funds are made after thoroughfinancial evaluation. At present, theCompany sees no immediate pressure onits short term and long term financingneeds. There are sufficient reserves withthe banks to meet any contingency inliquidity.Reporting and DisclosureTransparency of information for stakeholdersis a prime consideration. This meansaccuracy and reliability of financial andother reporting framework, effective internalcontrol principles including risk management,

planning and monitoring of Companyoperations and performance under directand indirect supervision through delegatedauthorities.The Management places high priority ontrue and fair presentation and timelyissuance of periodic financial and nonfinancialinformation to regulatoryauthorities, donors and other stakeholdersof the Company. In addition to preparingfinancial statements in line with statutoryrequirements, the Company also preparesseparate financial statements for differentdonors’ projects which are duly audited byits external auditors.The annual audited financial statementsalongwith Directors’ Report as well asquarterly and half yearly un-audited financialstatements alongwith Management Reviewsare published and circulated to stakeholders.These statements are also made availableon the Company website.Board of DirectorsStructure of the BoardThe present Board comprises of elevenMembers including the Chairman and theChief Executive/Managing Director of theCompany with distinct responsibilities. TheChief Executive/Managing Director is theonly Executive Member on the Board whileall other Members including the Chairmanrepresent the non-executive directorship of82 PPAF — Annual Report 2010Directors’ Reportthe Company. Of eleven Board Members,three were nominated by the Government;seven elected by the General Body; and theChief Executive/Managing Directorappointed by the Board.Responsibilities of the BoardThe Board acknowledges the significanceof efficient discharge of duties imposed bycorporate law and stands firmly committedin its objective to add value through effectiveparticipation and contribution towardsachievement of Company's objectives. TheBoard further recognizes its responsibilitiesfor protection and efficient utilization ofCompany resources for business objectivesand compliance with laws and regulationsat all levels. A formal schedule ofresponsibilities has been specifically ordainedfor the Board by virtue of provisions of theArticles of Association of the Company, theCompanies Ordinance 1984, the Code ofCorporate Governance and other applicable

regulations.The Board has devised formal policiesrelated to operational policies andprocedures, procurement of goods andservices; loan loss provisioning; loans andadvances; investment of funds; delegationof financial powers; human resourcemanagement including performanceevaluation of Management etc.As part of its duties, the Board reviews andapproves operational policies andprocedures; projects of different donorsand sponsors; minutes of Board Committeemeetings, financial assistance for partnerorganizations; quarterly progress; annualwork plans, targets and budgets; un-auditedfinancial statements along withManagement Reviews; audited financialstatements along with Directors’ andAuditors’ Reports.Meetings of the BoardThe Board held five meetings during theyear. The minutes of meetings wereappropriately recorded and circulated withinten days thereof.The quorum for meetings stipulated by theArticles of Association provides for fourDirectors. The Directors did not have anyinterest in contracts involving the Company.The Chief Financial Officer/CompanySecretary attended the meetings of theBoard in the capacity of non directorwithout voting entitlements as required bythe Code of Corporate Governance.Appointment of Directors:All Members of the Board, exceptGovernment nominees, are appointed fora term of three years on completion ofwhich they are eligible for re-election underthe Articles of Association of the Companythrough a formal election process. However,no Member of the Board of Directors shallserve for more than two consecutive termsof three years each. Consent to act asDirector is obtained from each Directorprior to election. They are not involved inPPAF — Annual Report 2010 83Directors’ Reportexternal audit or have had no relationshipwith the external auditors of the Company.The Members do not share any relationshipother than that of fellow colleagues on theBoard. Election of Directors was held onDecember 7, 2009 and seven Directorswere elected unopposed, for a term ofthree years.

Change of Directors:The Board places on record its appreciationfor the valuable contributions made by theoutgoing Directors, Mr. Mueen Afzal, Mr.Aijaz Ahmed Qureshi, Syed Ayub Qutuband Dr. Fareeha Zafar, towards progress ofthe Company. The Board also welcomesthe new Directors, Mr. Shahid Ahmad, Dr.Nuzhat Ahmad, Dr. Rajab Ali Memon, Dr.Aisha Ghaus Pasha and Mr. Asif Qadir. Welook forward to working in partnershipwith them to benefit from their vision andvalued experience which we are confidentwill go a long way in the future growthand prosperity of the Company.Board CommitteesThe Board places paramount importanceon good governance that has always beenviewed as the fundamental principle inenhancing the timeliness, accuracy,comprehensiveness and transparency offinancial and non financial information. Inorder to follow best practices, the Boardin January 2007, endorsed the code ofcorporate governance of listing regulationsby constituting Audit and BoardCompensation committees.Board Audit CommitteeThe Committee comprises five non-executivemembers of the Board. The Chairman is anindependent non-executive Director. Thehead of Internal Audit Unit acts as Secretary.The composition of the Committee changedafter the election of Directors in December2009. The terms of reference of the AuditCommittee have been drawn up by theBoard in conformity with the code ofcorporate governance and the Board actsin accordance with the recommendationsof the Committee on matters forming partof Committee responsibilities.The Committee assists the Board inoverseeing Company’s financial control,with particular emphasis on integrity ofinternal controls and financial reporting;qualification and independence ofCompany’s external auditors; andperformance of Company’s internal andexternal auditors.During the year, three meetings of theCommittee were held. The Committeereviewed system of internal controls, internalaudit reports, risk management and auditprocess besides recommending for Board’sapproval, annual work plan of internal

audit; appointment of external auditors;annual work plans and budgets for differentdonors’ projects; annual budget of theCompany; policy for loan losses and writeoff;un-audited condensed interim financialstatements along with ManagementReview; audited financial statements along84 PPAF — Annual Report 2010Directors’ Reportwith Auditors’ and Directors’ Reports ofthe company; and project specific auditedfinancial statements as per the requirementsof the donors.The Committee held separate meetingswith the Chief Financial Officer and theExternal Auditors to discuss issues ofconcern. Minutes of meetings were drawnup expeditiously and circulated for theinformation and consideration of the Boardin the immediately succeeding Boardmeeting.Board Compsnsation CommitteeThe Committee comprises five members ofthe Board including the Chairman who isappointed by the Board from the nonexecutiveDirectors. The Head of HumanResource Unit acts as Secretary. Thecomposition of the Committee changedafter the election of Directors in December2009.The terms of reference of the HumanResource Committee have been approvedby the Board. The Committee assists theBoard in overseeing the Company’s humanresource policies and framework, withparticular emphasis on ensuring fair andtransparent compensation policy; ensurecontinuous development and skillenhancement of employees. During theyear under review, the Committee heldthree meetings. The Committee reviewedand recommended for Board’s approval,employees benefit plans; good performanceawards; annual increment for theemployees; regularization of services ofsenior executives; promotion to seniormanagement positions; revised organogramkeeping in view expansion in operations;and revised vehicle maintenance policy.The Chief Executive/Managing Directorand other management employees wereinvited to attend meetings for discussionand suggestions. Minutes of meetings weredrawn up expeditiously and circulatedfor the information and consideration ofthe Board in the immediately succeeding

Board meeting.Roles and Responsibilities of theChairman and Chief ExecutiveThe roles of the Chairman and the ChiefExecutive/Managing Director are segregatedand they have distinct responsibilities.Chairman has responsibilities and powersvested in him by law and the Articles ofAssociation of the Company, as well asduties assigned to him by the Board. Inparticular, the Chairman coordinates theactivities of the Directors and variouscommittees of the Board, and presides overthe meetings of the Board and General Body.The Company Management is supervisedby the Chief Executive/Managing Directorwho is responsible for the operations ofthe Company and conduct of its business,in accordance with the powers vested inhim by law, the Articles of Association ofthe Company and authorities delegated tohim through a General Power of AttorneyPPAF — Annual Report 2010 85Directors’ Reportrecords, authorization, recording andaccurate processing of transactions,compliance with statutory and otherregulations and timely preparation of reliablefinancial and non-financial information forcirculation to the stakeholders.Future OutlookGoing forward, PPAF plans to assign pivotalrole to mobilization and capacity buildingof communities of least developed areas,laying the foundation for future expansionof poverty reduction activities. Many ofthese will go on to take microfinance loansor productive and social infrastructure fromthe PPAF, through the existing partnerorganization network, while others willfederate into local institutions of the poor.Based on needs of the target group,interventions will be made as integrated aspossible, responding to identified prioritiesand the participatory spirit of the programwill be maintained and social mobilisationwill remain the primary activity. Theinterventions will be based on needsassessment as a continuous and participatoryprocess. This need assessment will be fedto the PPAF system so that, as much aspossible, an integrated approach todevelopment is adhered to by bringinginfrastructure, health and education, skillsdevelopment and other such complimentary

interventions to the livelihood grants. Thisintegrated approach will facilitateimprovement and sustainability inlivelihoods interventions.and Board resolutions from time to time.The Chief Executive/Managing Directorrecommends policy and strategic directionand annual business plans for Boardapproval and is responsible for exercisingthe overall control, discretion, administrationand supervision for sound and efficientmanagement and conduct of the businessof the Company. The Board sets financial,non-financial goals and objectives for theCompany in line with the short, mediumand long term plans of PPAF and hasdelegated appropriate authority to theManagement to implement strategicobjectives of the Company.ManagementThe Company Management comprisesheads of various functions who operateunder the powers and limits delegated bythe Chief Executive/Managing Director andthe Board for ensuring seamless operationsand achieving objectives under strategiesadopted by the Board.The Management ensures execution ofbusiness operations including adherenceto cardinal principles, appraising andmonitoring of partner organizations,recommending financing for partnerorganizations, preparation of annualbudgets/work plans and monitoringprogress thereof. Management is alsoresponsible for implementation of internalcontrol including segregation of duties,financial and accounting controls foraccuracy and completeness of accounting86 PPAF — Annual Report 2010Directors’ ReportThe legal and financing agreements forEUR 32 million KfW (Development Bank ofGermany) Project for “Livelihood Supportand Promotion of Small CommunityInfrastructure” were executed betweenGovernment of Pakistan, KfW and PPAF inJune 2010. The four year project will beimplemented in poor communities in thedistricts of Haripur, Swabi and Buner inKyber-Pakhtunkhwa province. The purposeof the Project are (a) increased access toand sustainable utilization of social andeconomic infrastructure by the populationof the project region, (b) increasedemployment and income opportunities, for

the poor, (c) strengthening local civil societyand enhanced participation of thepopulation in the decision making at thelocal level. This is to contribute to theimprovement of the general livingconditions and quality of life of the poorpopulation in the project region.The Italian Government Mission appraisedPPAF for EUR 40 million project on “PovertyReduction through Development Activities”to be implemented in Balochistan, Khyber-Pakhtunkwa and Federally AdministeredTribal Areas. The objective of the project isthe provision of a social and productiveinfrastructure and establishment of aneffective and sustainable social safety nets.The legal and financing agreements to beexecuted between GoP, Italian Governmentand PPAF are in the process of finalization.PPAF envisages funding from USAIDPakistan for carrying out poverty reductioninterventions that fall within its strategicframework. USAID Pakistan has showninterest to become partner of PPAF and asa pre-requisite for awarding contract, itengaged a leading firm of CharteredAccountants to carry out assessment ofPPAF. The assessment concluded that PPAFcapacities and procedures fully satisfyminimum requirements and are sufficientfor USAID/Pakistan’s purposes. Overallassessment of PPAF was Low Risk. Sincethen USAID Pakistan and PPAF have heldseries of meetings and dialogues to explorethe areas of collaboration.AuditorsThe present auditors of the Company,Messer’s A. F. Ferguson and Company,Chartered Accountants, have completedtheir assignment for the financial year endedJune 30, 2010 and shall retire at theconclusion of 14th Annual General Meeting.Being eligible, they offered themselves forre-appointment. The Audit Committeeconsidered and recommended theirreappointment for the financial year endingJune 30, 2011 and the Board also endorsedthe recommendations of the AuditCommittee.ConclusionAs a model of public private partnership,PPAF has been able to bring private sectorefficiencies, corporate sector rigor, planningand managerial skills in support of publicpolicy and the development sector. PPAF is

PPAF — Annual Report 2010 87Directors’ Reportfocused on delivery of resources and servicesat the household level aimed at the poorand excluded. Today PPAF is one of thelargest sources of pro-poor spendingoutside the Federal Budget and Public SectorDevelopment Program. Several features ofits design have ensured effectiveness of thePPAF. Major among these was creation ofa credible institution which enjoys supportof all stakeholders and is a role model foran effective delivery mechanism at the grassroot level. With the passage of time theidentity of the organization has mergedwith dreams of the poor.Of equal importance have been successfultransition of civil society organizations, whoin partnership with the PPAF, are now majorplayers on the development scene. A grantdriven outlook has been replaced by aprofessional approach leading to anunprecedented increase in outreach andunderstanding of the fundamentals ofsustainable development. Additionally, aclimate which permitted a free and opendebate has led to a strong relationship oftrust with partner organizations and theircommunities. This in turn has paved theway for looking at development as a sharedexperience rather than diktat from the top.AcknowledgementThe success seen over the years is productof the Board’s vision and commitmenttowards poverty alleviation. I would like tothank my fellow Directors for theircontribution, assistance and commitmentthroughout the year. Their consistent effortand guidance in directing the Company’saffairs contributed significantly in achievinghealthy operational and financial results.The Board is grateful for the trust and faithreposed by the Members of the GeneralBody. Their support gives confidence andencouragement in achieving the targetsand strategies formulated by the Board.The Board would also like to commend thepartner organizations and theircommunities for excellent performance andownership of the programs that madepossible to overcome the most difficult ofchallenges.The growth of PPAF has been the result ofsustained support received from allstakeholders. The Government of Pakistanranks foremost for its exemplary facilitation

and support, equally important was therole of the donor agencies, particularly theWorld Bank for its clear conceptualframework and result based monitoringmissions.We take this opportunity to express ourdeep gratitude to Government of Pakistanand our donor agencies – World Bank,International Fund for AgriculturalDevelopment; U.S. Department ofAgriculture; KfW Development Bank(Germany); Committee EncouragingCorporate Philanthropy (USA); and U.S.Agency for International Development, forreposing their faith in our abilities to servethe poor in these challenging times andalso express resolve that their confidencewill be rewarded in the years to come.We are proud of our employees whoindividually and collectively, through a wellcoordinated effort, contributed to thesuccess and achievement of excellenceduring the year. We are confident of ouremployees’ abilities and hard work to attainambitious corporate objectives.PPAF will no doubt continue to be adynamic and agile institution fully alignedwith the changing dynamics of povertyalleviation. We will endeavor to ensure thatthis growth momentum is sustained andexpanded in the years ahead.Hussain DawoodChairmanIslamabadAugust 03, 201088 PPAF — Annual Report 2010Directors’ Report2010 2009 2008 2007 2006Outreach - Numbers (Cumulative)Partner Organizations 87 77 74 70 68Districts 127 124 117 111 108Villages 56,985 51,280 31,752 27,578 23,354Loans ('000) 3,600 3,000 2,300 1,513 947Water & Infrastructure Projects 21,000 18,500 17,000 14,900 11,700Disbursements - Rs. in millionTotal disbursements 13,846 13,066 16,697 15,806 6,246Microcredit/enterprise development loans 9,048 6,949 9,075 6,228 3,705Grants - Core Operations 4,350 2,134 1,951 1,654 1,372Grants - Earthquake Rehabilitation & Reconstruction 448 3,983 5,671 7,924 1,169Balance Sheet - Rs. in millionTotal assets 23,629 18,509 18,923 18,702 13,201Micro credit/enterprise development loans receivable 10,572 9,141 7,982 5,642 3,996Investments in Pakistan Investment Bonds 1,000 1,000 1,000 1,000 800Short term investments-specific to projects 600 530 1,050 1,050 -Short term investments- specific to grant fund 1,763 - - - -Short term investments 4,058 5,225 5,442 6,712 6,296Equity and reserves 6,114 4,785 3,755 2,817 1,788Long term loans 12,246 11,031 10,770 10,777 10,513Operational Results - Rs. in millionTotal income 2,061 1,669 1,314 1,255 763

General and admin expenses 358 274 218 161 98Surplus before provisions for loan loss 1,404 1,266 947 965 572Surplus after provisions for loan loss 1,329 1,030 802 914 501Financial Ratios - PercentageSurplus after provision for loan loss / total income 64% 62% 61% 73% 66%Return on equity 22% 22% 21% 32% 28%Return on assets 6% 6% 4% 5% 4%Repayment rate (microcredit & enterprise development loans) 100% 100% 100% 100% 100%General and admin expenses / total disbursements 2.59% 2.10% 1.31% 1.02% 1.57%General and admin expenses / total income 17% 16% 17% 13% 13%Debt/equity 67:33 70:30 74:26 8:22 85:15

Current ratio 4:1 6:1 4:1 3:1 13:1

Financial HighlightsPPAF — Annual Report 2010 8990 PPAF — Annual Report 2010

PAKISTAN POVERTY ALLEVIATION FUNDFINANCIAL STATEMENTSFOR THE YEAR ENDEDJUNE 30, 2010PPAF — Annual Report 2010 9192 PPAF — Annual Report 2010Balance Sheetas at June 30, 2010PPAF — Annual Report 2010 93Income and Expenditure AccountFor the year ended June 30, 201094 PPAF — Annual Report 2010Cash Flow StatementFor the year ended June 30, 2010PPAF — Annual Report 2010 95Statement of Changes in Fund and ReservesFor the year ended June 30, 201096 PPAF — Annual Report 2010Notes to and Forming Part of the Financial StatementsFor the year ended June 30, 2010PPAF — Annual Report 2010 9798 PPAF — Annual Report 2010

PPAF — Annual Report 2010 99100 PPAF — Annual Report 2010

PPAF — Annual Report 2010 101102 PPAF — Annual Report 2010

PPAF — Annual Report 2010 103104 PPAF — Annual Report 2010

PPAF — Annual Report 2010 105106 PPAF — Annual Report 2010

PPAF — Annual Report 2010 107108 PPAF — Annual Report 2010

PPAF — Annual Report 2010 109110 PPAF — Annual Report 2010

PPAF — Annual Report 2010 111112 PPAF — Annual Report 2010

PPAF — Annual Report 2010 113114 PPAF — Annual Report 2010

PPAF — Annual Report 2010 115116 PPAF — Annual Report 2010

PPAF — Annual Report 2010 117118 PPAF — Annual Report 2010

PPAF — Annual Report 2010 119120 PPAF — Annual Report 2010

PPAF — Annual Report 2010 121122 PPAF — Annual Report 2010

PPAF invites applications for internship under Young Professional Scheme (YPS)

Young Professional Scheme (YPS) is supporting young professionals wishing to work in PPAF partner organizations under Microfinance Innovation and Outreach Programme (MIOP). Its main

objective is to build capacity to provide sound financial services to rural clients. This scheme will help young graduates to understand microfinance operations which are an active part of

NGOs.

Eligibility Criteria

•  Citizen of Pakistan including State of Azad Jammu and Kashmir preferably from rural areas

•  Having Masters degree in Finance, Economics, Business Administration or Commerce

•  Having interest in rural finance and banking with the poor

•  Having potential to work in remote areas of Pakistan for five months

•  Should not be more than 35 years of age

Reasonable stipend will be offered during internship. Female candidates are strongly encouraged to apply. Accommodation allowance would be provided to non-resident female candidates.

CVs along with covering letter must be submitted to the following address latest by April 22, 2010. Envelopes must be marked as YPS Internship Programme. Applications of candidates still

completing their education will not be entertained.

PPAF has the right to accept/reject any application without assigning any reason. Only short listed candidates will be contacted.

General Manager-Human & Institutional Development

Pakistan Poverty Alleviation Fund

House # 17-A, Street # 18, F-7/2, Islamabad

www.ppaf.org.pk

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96 PartnerOrganizationsacross the country 4.3 millionmicrocredit loans with a 100% recovery rate and a market share of almost 43% of the microfinance sector PPAF Water Management Center established with state of the art Geographical Information System (GIS) facilities Financingdeployed in128 districts,and more than85,000 villages/rurals and urban settlements Over 11, 300 skill development and managerial training events for 449,800 individuals. Dedicated responsibility for 34 union councils for rehabilitation and reconstruction in earthquake affected areas

A grassroots network of over 257,000CommunityOrganizations & groups Almost 24,200 health, education, water and infrastructureprojects completed. Housing grants and training in seismic constructions to over 100,000 individuals' households 29.2 million impacted by credit and 14.2 million by infrastructure, health and education

*Cumulative January, 2011

(Figures rounded off)

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