Thread on findings from Policy Note on "Access to Credit in Pakistan" authored & released by @KarandaazPK to answer questions around borrowing in Pakistan. @GallupPak provided the support in research and data analysis.
Access full note at: karandaaz.com.pk/wp-content/upl…
Incidence of Borrowing Among Pakistani Adults: The proportion of total borrowers varies significantly and ranges between 7% - 48%. As per recent readings, 35% of the respondents under Findex (2017) reported to have borrowings, while FII (2017) and A2F (2015)
report 15% and 17%.
In terms of provinces, A2F reports the highest borrowers in Sindh (37%) followed by Baluchistan (20%). In Punjab, only 12% of the respondents said to have borrowed (formally or informally) in the last 12 months. KP has the
lowest level of borrowing incidence (5% of households).
Majority of these respondents rely on store credit to buy grocery and household items, which is a common practice. The other two most quoted reasons were using credit to pay for emergency costs or for other future events.
karandaaz.com.pk/wp-content/upl…
Informal vs. Formal Credit Market: over 95% of borrowers were borrowing through informal channels. This is a result and cause of low penetration of formal financial services.
karandaaz.com.pk/wp-content/upl… @KarandaazPK
Majority of the borrowing respondents quoted three major reasons for using informal credit: i) convenient
location of the informal lender, ii) easier overall access and iii) an easy process to obtain money
One reason for not borrowing is lack of a credible credit history. The other two major reasons quoted by male respondents for not accessing loans are high interest rates and religious beliefs. In case of females, 23% stated that they are not even allowed to borrow. -@KarandaazPK
According to A2F, when potential borrowers were asked about key reasons behind borrowing, a
majority identified an agricultural sector related requirement. 20% needed it to buy livestock, 17% for farming goods while another 14% needed a loan to purchase farm land. -@KarandaazPK
The policy note by @KarandaazPK assisted by @GallupPak provides a number of recommendations to improve borrowing in Pakistan and encourage more formal borrowing.
These can be read in detail at: karandaaz.com.pk/wp-content/upl…
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