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Published by The Myanmar Times
NGOs and Aid
NGOs and Aid

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Published by: The Myanmar Times on Apr 06, 2013
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• The NLD and USDP discuss the future role of NGOs• FIFA launches Asia's first football for health program• The pioneer of microfinance in Myanmar• Yangon's first animal shelter• Life on the other side of the river: Dala township• Yangon School for the Blind
Pact:Pioneering microfinance
 ACT began working inMyanmar in 1997, at atime when very ew other internationalNGOs were doing so.“Myanmar has been called anaid orphan in the past because itsper capita assistance is so low,”London-based Myanmar analyst Ashley South told IRIN in a reportearlier this year.Between 1990 and 2010, thelevel o overseas developmentassistance (ODA) hovered at aboutUS$5 per person a year, according to a 2011 Harvard University re-port, “Working Through Ambiguity:International NGOs in Myanmar.”This amounted to the lowest percapita rate in the world.“It was a big decision to comeand work in Myanmar,” saidFahmid Karim Bhuiya, chie operating ocer o Pact Global Mi-cronance Fund, an internationalnon-government organisation(INGO) which currently operates in65 countries.“The political scenario wastotally dierent back then and thecountry was under severe sanc-tions. It was a time when INGOs were uncertain about whether tocome into the country or to remainoutside and work or Myanmarrom there,” he said.Even today, only 65 INGOs oper-ate in Myanmar and the majority provide humanitarian assistance,states Harvard’s report.Between 1995 and 1997, Pactsta undertook on-the-groundresearch to determine whether it was viable to set up a micronanceprogram in a country where noneexisted.“Our mission was to work out whether it was possible to usemicronance as a tool or pov-erty alleviation [in Myanmar]. Nonancial institution oered -nancial services to the rural poor,so people were orced to borrow rom local moneylenders, whocharged extremely high interestrates,” Fahmid told
The Myanmar Times.
 Relatives and riends were theonly other alternative.Ultimately, Pact decided that it would work directly with commu-nities instead o the government.“That was our criteria or com-ing in,” Fahmid explained.Fahmid’s initial posting withPact in Myanmar was or a periodo 18 months.“That was 15 years ago,” he told
The Myanmar Times 
with a laugh. Ater deciding to press ahead,Pact signed a Memorandum o Understanding with the ministrieso health and nance and createda partnership with the UnitedNations Development Program(UNDP) and United Nations Oceor Project Services (UNOPS).Fahmid explained that UNDP isinvested with a global operationalimmunity, which enables it to work in any country in the world. Thepartnership with UNDP was key toPact being able to provide assis-tance to Myanmar people. Initially,credit and savings acilities, inaddition to group micronanceenterprises were introduced in thecentral dry zone.Fahmid said that rom theoutset, “Local authorities were very supportive and appreciative o our work.“Without gold collateral,moneylenders could charge upto 16 percent interest, which is why people relied on them only in emergency situations, such as ahealth crisis. The numbers o mon-eylenders in villages was also low.Nevertheless, many people endedup in a lot o debt,” said Fahmid. As an alternative, Pact created alow interest micronance program, with an initial interest rate o be-tween 2.5pc and 3pc.Pact continued to grow in Myan-mar and within ve years it hadattracted 200,000 borrowers.Fahmid said, “We realised how great the demand was or nancialservices among the poor and arm-ers, but ater two years [in 2002], westarted to realise that micronance was just one o the many servicesneeded, such as healthcare.”Fahmid said Pact strongly believes that income-generating activities require sound health,or arming in particular. This is alogical, though oten neglected,aspect o the link between aid anddevelopment.In 2004, around the same timethat private banking was intro-duced (though its development was slow to take o) Pact launcheda program integrating micro-nance and health.“It was unique and grew very quickly,” he said.In November 2011, the MyanmarMicronance Institution Law waspassed: a development Pact wel-comed because it authorises mi-cronance services, which meansthat the international immunity accorded to UNDP is no longer anecessity or Pact and other organi-sations to operate. The law requiresa maximum interest rate o 2pc ormicronance repayments.The interest generated romPact’s 485,000 active borrowers isused or operational and delivery costs and as Fahmid explained,“The surplus we have is ploughedback into the programs. We madea conscious decision to be non-prot, so there is no need to pay dividends to shareholders. How-ever we undertake micronanceservices like a proessional bank – we are a social business so ouroperations are highly ecient andproessional. Usually, prots wouldgo to shareholders, but as a socialbusiness, it goes back to serving more people.” And unlike many large micro-nance institutions, some o whichhave attracted controversy orimposing high interest rates thatresult in people taking out loansrom multiple sources to repay theoriginal loan, Pact has created asaety net or its borrowers.Fahmid said, “You can't expect100pc success in business. Cattlecan die; crops can ail; a re canburn down a shop; a storm canruin a whole plantation. In thesesorts o circumstances, Pact pro-vides a lump sum compensation.”“I an investment is lost, we writeit o and provide a new loan. Ourclients really appreciate being pro-tected rom all sorts o uncertain-ties; they don’t need to be urtherburdened by debt. It shows we careabout them.” When Cyclone Nargis struck Myanmar in 2008, 50,000 o Pact’sborrowers lost everything they owned.Fahmid said, “People were notin a position to repay their loansbecause they were surviving onood aid and grants. Pact aced atremendous cash shortage at thetime because we wrote-o loansamounting to $2.75 million. Thissituation could happen again, which is why we are building areserve und with a target o $3 mil-lion that can be used or compen-sation and loan write-os.”Pact suspended its micro-nance activities or 10 monthspost-Nargis and instead provided
“You can't expect 100 percent success in business. Cattlecan die; crops can fail; a fire can burn down a shop; a stormcan ruin a whole plantation. In these sorts of circumstances,Pact provides a lump sum compensation.”
a special report
My lwn, J Mudd
shwgu th, Ymn phu th, chy thn,My lwn, Nw sy phw W,J Mudd, shw Y sw Myn
Cover photo:
Kung H
Kung H, Bh, Kung H lnn
Layout & Design:
tun Mn s, tn Zw Hwy, K pxy,
For enquiries and feedback:
NGOs& Aid
By Jessica Mudditt
Loan disbursement rom Pact in Shan state.
Photo courtesy of Pact
humanitarian assistance, which was coordinated by the UN.Fahmid explained that the decisionto suspend micronance activities was made to uphold Pact’s integrity by avoiding any conusion about whether the interest rom micro-nance loans was going towards aidgrants. When
The Myanmar Times 
 asked why 97pc o Pact’s loanrecipients are women, Fahmidreplied, “This is by design.”He said the decision to givepreerence to emale borrowers was based on several months o loan tracking – which sometimesinvolved searching or male bor-rowers at ootball matches and thelike.“We ound that women aremuch more ecient when it comesto amily nancial management. Women are also a lot more respon-sible and disciplined with loanrepayments. Their priorities arestrongly amily orientated.”Nevertheless Pact oers loansto men i a household has noemale members over the age o 18. All borrowers must display a willingness to undertake economicactivities.Fahmid believes the number o both local and international NGOsin Myanmar has been increasing since elections were held in 2010.Pact’s biggest operational chal-lenges in Myanmar are lack o inrastructure, such as transport,communication services and elec-tricity shortages.However Fahmid said, “It’smuch easier to work in Myanmarthan it was 10 years ago. I’d liketo say how much I appreciate thechanges.”Nevertheless he said that theamount o NGO activity is “certain-ly not on the same level as Cam-bodia or Bangladesh, or example.People are still unsure about therole an NGO can play in Myanmar.”Fahmid’s biggest concern is themany people in remote areas whoremain unserved.“I hope that in the uture, whennew INGOs enter Myanmar, they  will not prioritise operational easebut the need or assistance,” hesaid.Pact already has 2200 local sta and plans to open another 30micronance branches. It will alsoincrease the number o townshipsit operates in rom 25 to 50 withinthree years.Fahmid said, “Some peoplemight say this is aggressive growth,but we believe we can achieve itbecause we have a huge sta base,a lot o local knowledge and thepublic has strong trust in us.” When asked whether the timeis right or other INGOS to enterMyanmar, Fahmid said withouthesitating, “I think they shouldcome immediately.
Microfnance borrowers engaged in traditional hat making business in Pindaya township, Southern Shan state.
Photo courtesy of Pact

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