The Urban Poverty Alleviation Programme has provided access to micro credit and savings schemes since it was established as an Action Research project by the UNDP in September 1996. The goal was to develop an indigenous model of poverty alleviation through providing financial services to poor women.
Since its inception UPAP has been testing and adopting strategies to provide the best services and to cope with the realities of implementing a complex urban credit programme. The programme began in the urban and peri-urban areas of Rawalpindi and Islamabad, with the objective of improving the quality of life of disadvantaged and low income people. When the UNDP support period was completed, UPAP was judged to be a socially and financially viable programme for urban areas and NRSP incorporated it into its regular programme. Over the years it has grown into a national programme with operations in Rawalpindi (since 1996-97), Faisalabad (since 2001-02), Karachi (since 2002-03), Multan (since 2004-05), Lahore (since 2006) and Jhang Gujranwala, Sargodha and Sialkot (since 2007-08).
In 2004 UPAP was the first microfinance institution in Pakistan to be rated by Micro Credit Rating International through the funding support of CGAP. M-CRIL (www.m-cril.com) measures credit systems, programme performance and sustainability. The UPAP was rated as Alpha minus.
The credit can only be used for contributing to family enterprises. Men in the family can also use the credit but they must be family members whose incomes contribute to the family. This strategy has saved UPAP from any major incidents of fraud or default. UPAP is audited annually by M/s A. F. Ferguson, a member firm of Price Waterhouse Coopers.
UPAP tested the idea of having individuals as clients, in the early years of the programme. These were people who operated small-scale enterprises but did not live in areas where UPAP had a settlement office. These clients required the personal guarantee of a UPAP client who had a good credit history. However, this programme was stopped when UPAP faced delinquency in the individual lending program.
UPAP’s credit disbursement and recovery methods are based on effective supervision and following up borrowers. This is done through regular monitoring and by developing a relationship of respect with the community members.
A Solidarity Group consists of three or more women with comparable social and economic situations. The groups meet weekly till the time each member receives a loan. During the weekly meetings, each group member saves an amount equivalent to the weekly recovery installment of the credit amount that she intends to borrow. The groups discontinue meetings and savings, after each member gets the credit.
Programme Monitoring is done through an MIS developed in Oracle and Programme and Financial Audit and Risk Management teams at the Operational Management Unit, Deputy Zonal, Zonal and Head Office levels. The MIS generates reports on disbursement and recovery positions on a daily and monthly basis. Monthly staff meetings and a “daily diary” are also part of UPAP’s monitoring system. These help to ensure the staff have similar understandings of methods and practices.
Credit: for the development of small enterprise such as shops, stalls or livestock.
Savings: clients are organised into groups mobilising members to save an amount equal to one quarter of their monthly installment. Once everyone in the group gets a loan, the saved amount of each member is returned to her.
Micro Insurance: Since 2008 UPAP has offered micro insurance products to protect clients and their families in the case of death of a client or spouse. The cost of the policy is 0.9% of the loan amount disbursed.
UPAP struggles to issue payment on insurance on the same day the insured person dies but often deaths are reported late, thus leading to UPAP failing in its struggle to pay on the same day. Most claims, however, are paid within one month of being reported.