Cooperative Microfinance: A New Option for Government & Development Organizations

The present study has been conducted to investigate the impact of Cooperative Microfinance Program (CMFP i-e Islamic Relief-Pakistan] on the standard of life of poor marginalized masses. Secondary, time series, ranging from 2002-2008 about the Disbursement of funds, number of beneficiaries [gender wise], financing methods have been taken from the reports of Islamic Relief. Numbers of beneficiaries, the volume of disbursement, recovery rate from disbursement, profitability and viability have been used as a proxy of well being of the poor masses and successful performance of IMFO respectively. Augmented Dickey Fuller (ADF) test [with and without trend] for checking the Stationary of data set has been used. The efficiency and performance of financial programs has been evaluated by using various financial ratios i-e Return on assets (ROA), Net return Margin (NRM) and Beneficiaries to Employee Ratio (BER). On the basis of RoA, NRM and OCL the financial performance of Islamic Relief Pakistan is much better than the conventionally largest NGO namely National Rural Support Program (NRSP). BER is used to measure the efficiency of the employees in reaching the beneficiaries. In this respect the performance of both of the organizations are approximately same. The study reveals that average total number of clients per year is 340 which increase with annual growth more than 250 %. Annual average disbursement (through Murabah’ah** Transactions) is Rs. 5,367,913 with an annual growth more than 690%. Findings of the study suggest that there is a great potential and greater chance of growth for Cooperative microfinance programs over here in Pakistan. Based upon the findings of the study the government should initiate a comprehensive Cooperative microfinance program to alleviate the absolute level of poverty and to improve the standard of life of extremely marginalized groups of the society.