Orangi Pilot Project (OPP)

Microcredit Programme

The Orangi Charitable Trust (OCT) was established in September 1987 to expand the provision of credit to existing microenterprises. The rationale was that these microenterprises were not able to access loans from commercial banks due to loan size, collateral requirements, and various other considerations.
The objective of OCT is:

  • To provide credit for the expansion of existing microenterprises in urban communities;
  • To provide credit for agro-inputs in rural areas;
  • To strengthen the capacity of non-governmental organizations (NGOs) and community-based organizations (CBOs);
  • To support microenterprises through guidance and training;
  • To provide lines of credit to trained NGOs and CBOs.

The Orangi Charitable Trust supports peoples’ initiatives by providing credit to existing microenterprises at bank interest rates using personal guarantees (two neighbours) rather than collateral. Amounts range between PKR 2,000 and PKR 50,000, and application procedures are kept simple. Another important objective is to train NGOs and CBOs to initiate microcredit programmes in their own communities.
Programme in Orangi
Selection, disbursement, and loan recovery are done by OCT with the help of good borrowers. Loans amounting to PKR 142.41 million have been given to 4,599 borrowers in 63 professions. Effective selection procedures, recovery, and monitoring systems ensured 94 % loan repayment with mark-up.

Particulars
 Orangi Outside Orangi NGOs/CBOs
 Loan Amount PKR 84.93 million PKR 57.47 million
 No. of Borrowers 4599 2617
 Full paid borrowers Repayments (Rs.) 4015 2330
 Principal PKR 75.98 million PKR 48.48 million
 Mark-up PKR 16.56 million PKR 10.67 million
 Bad debts PKR 7.21 million 4.89 million

Replicating the Programme outside Orangi

  • Outside Orangi, NGOs and CBOs were provided training, lines of credit, and core funding support to replicate the microcredit programme;
  • Training was provided to 168 NGOs, CBOs, and local groups;
  • Lines of credit were provided to 89 CBOs - eight CBOs in Karachi, 38 in eight cities in Sindh, and 20 CBOs in 12 cities in The Punjab.
  • Eight CBOs (three in Sindh and five in The Punjab) were provided core funding.

Six CBOs have already attained financial sustainability. These are the Youth Commission for Human Rights (YCHR) in Lahore, the Organization for Participatory Development (OPD) in Gujranwala, Community Development Concern (CDC) in Sialkot, Anjuman Falaho Behbood (AFB) in Rawalpindi, Pak Social in Hyderabad, and Anjuman Naujawan in Larkana. These organizations have been running their programmes with their own funds and have become independent of donors and OCT.

Performance Indicator (The MIX)     Read More