Please tell us about yourself, your past achievements and present role at Karandaaz Pakistan.

I am currently leading Karandaaz Pakistan as its CEO. I have an MBA from INSEAD and BS in Electrical Engineering from UT Austin.

During my professional journey, I have been associated with private, public and not-for-profit sectors. Earlier, I was advising private sector firms while working in senior strategy and operational roles in Asia, Europe and US. I also developed new strategies in the wake of mobile number portability for a major mobile operator in Pakistan. While working in senior policy positions, I focused on building conducive business environments, developing skilled workforce and adopting technology use for the government.

Only 13pc of Pakistani adults have a formal bank account, but at the same time, Pakistan is leading the way in South Asia in digital finance and branchless banking with 6pc of adults having mobile accounts. Is Karandaaz leveraging that unique scenario?

Fostering financial inclusion is the primary goal of Karandaaz Pakistan’s long term ambition in the country. Pakistani market depicts great potential for branchless banking. According to World Bank’s statistics, over 27.5 percent of Pakistanis have cited distance as a barrier in accessing banking services. Mobile banking services have the potential to overcome these physical barriers to bring unbanked populations into the fold of formal financial services and products. Karandaaz Digital focuses on providing access to digital financial services in Pakistan by working across the ecosystem with all major stakeholders. We are heavily focused towards payments digitisation and are working with NBP for G2P and P2G payments digitisation; with Bank Alfalah for developing a digital bank strategy and value chain payments digitisation; and with Punjab Agri Department and Pakistan Post. Moreover, we are working with Jazzcash to improve their digital infrastructure to enable greater services dispensation in mobile banking sector.

Less than 5pc of Pakistani women are included in the formal financial sector compared to South Asia’s average of 37pc. What has Karandaaz done on that front?

Extending financial inclusion to marginalised segments, including women is our prime focus area. Enhancing the role of women in Pakistan’s technology and financial sector is something that we are particularly passionate about. Due preference is given towards financing and extending technical support to initiatives focusing on women empowerment as well as those led by women. Recently, Karandaaz partnered with LUMS to host Startup Weekend Lahore, and conducted targeted advocacy and marketing campaign to encourage women entrepreneurs to participate in this competition. As a result, a women-led startup, ‘Home Grown’, clinched third position and is now being incubated at LUMS Center for Entrepreneurship.

The financing needs of MSMEs are unmet by the formal financial sector with only 7pc of credit available for MSMEs in the country. Has Karandaaz taken any steps to improve the situation?

Karandaaz Pakistan has been working to improve the situation by providing access to finance to micro, small and medium enterprises. Through the generous support of our primary donor, United Kingdom Department for International Development (UKAid), we have invested 15 million pounds in Pakistan Microfinance Investment Company (PMIC), securing a 37.5 percent stake in the publicly funded, privately managed, commercial development finance institution dedicated to accelerate the development of microfinance in Pakistan.

Second, we are working on a supply-chain finance pilot. In this model, we have a financial institution, a corporate, and the vendors/distributors to the corporate. The corporate gives visibility to their distributors and the financial institutions are better able to extend credit to the vendors. We have contributed 10 million US dollars each so far to set up risk participation agreements with Meezan Bank and Orix Leasing Pakistan and the NBFI has levered it up by a factor of three or four. The third area is where we provide growth capital by taking up equity stake in SMEs. We look at an investment time horizon of five to six years and look at ticket size of $1 to $2 million, which is suitable for an SME.

The Government of Pakistan’s National Financial Inclusion Strategy aims to expand financial access to at least 50pc of adults, and to increase the percentage of SME loans by 2020. Are Karandaaz’s financial inclusion goals convergent with those of the Government?

Karandaaz Pakistan is working in line with the Government of Pakistan’s vision 2020 for greater financial inclusion. We are working to provide access to finance to micro, small and medium business as well as extend financial services to the unbanked populations of the country.

Most of the unbanked Pakistani adults cite distance to a financial institution as a barrier to opening a financial account. How, in the absence of physical financial infrastructure, can Karandaaz’s financial inclusion goals materialise?

Yes, about 27.5 percent of the unbanked individuals have cited distance as a barrier in accessing financial services. Digital financial services can fill the void created by absence of physical financial infrastructure. In order to overcome the physical barrier, we can take the bank to the masses through digital financial services. We are expediting our digital and financial inclusion goals to bank the unbanked population at their doorsteps.

Please walk us through Karandaaz’s partnerships.

Karandaaz Pakistan has forged multiple partnerships to expedite progress on achieving its goals. We have struck two risk participation agreements with Meezan Bank Ltd and Orix Leasing Pakistan Ltd of $50 million and $40 million, respectively. We have also joined forces with Pakistan Poverty Alleviation Fund, and KfW to establish Pakistan Microfinance Investment Company which will provide credit to MSMEs.

In order to extend digital financial services, we signed a grant agreement worth Rs5 trillion annually with National Bank of Pakistan for developing a strategy for digitising the bank’s government-to-person (G2P) and P2G payments. The settlement will induce efficiency; transparency and cost save for the government, beside proving instrumental in banking the unbanked populations in Pakistan.

What are the key areas Karandaaz will be focusing on in the coming years, and to what objectives?

Our main objective is Financial Inclusion. This is the main theme that we focus on. Keeping this in mind, last year we started a program called “Innovation Challenge Fund”. The second round of it will be held this year and the focus this time will be on women entrepreneurship.

We will be targeting established small businesses or startups that are owned by females. Initially we planned to target only those small businesses that had 100% female ownership but the pool was very restricted. Hence we have decided target any small business or startup that had a substantial ownership share of females.