ISLAMABAD, July 3: State Bank Governor Dr Shamshad Akhtar has said that economic policies should focus on poverty alleviation in rural areas.

Inaugurating the Pakistan Poverty Alleviation Fund’s flagship project, “Programme for Increasing Sustainable Microfinance”, here on Thursday, she said it was time to channel micro-credit into rural areas, adding that the PPAF had helped in the development of infrastructure for poverty alleviation.

Ya Tian, country programme manager of the International Fund for Agricultural Development (IFAD), and Kamal Hyat, chief executive officer of the PPAF, were present on the occasion.

Dr Akhtar said that before 2000 there were only a few retailers and now the venture had been made possible not because of the number of microfinance institutions but due to PPAF’s intervention across the country. She said the role of the central bank would be to facilitate the growth of microfinance institutions.

She said microfinance was in a great demand in rural areas and the institutions should reach the poor in these areas. “Go to rural areas where micro-credit is in high demand. We need to have three million microfinance clients by the end of 2009,” she added.

Kamal Hyat said the PPAF had been following a “holistic approach for service delivery and poverty alleviation”. He said his organisation would seek guidance from the central bank to build synergies for providing technical assistance to PPAF partner organisations.

Ya Tian said IFAD recognised microfinance as an important tool for poverty alleviation and PPAF’s efforts in this respect were unparalleled.

The $45 million programme, supported by IFAD, is in direct response to the current environment which focussed on microfinance organisations that were approaching financial sustainability and were positioned to substantially expand their operations.

The anticipated outcome of the programme will enable microfinance institutions to diversify their sources of funding by accessing funding from commercial sources. It will also help them to operate as financially sound and sustainable organisations and will further expand microfinance outreach to rural areas.

The core programme component seeks to develop a set of credit enhancement mechanisms targeted at sustainable institutions and microfinance banks to become attractive potential clients for banks and commercial financial markets. It will enable the most dynamic institutions to access commercial financing to achieve their growth potential and expand to rural areas.