The low odds of poor women with small business loans emerging from poverty: Critical social policy implications for Pakistan

The government of Pakistan has been relying on the microfinance industry to reduce poverty among poor women in Pakistan. Using a theoretical framework that argues for limiting the abilities and capacity of existing microfinance services, we empirically investigate the odds of poor women remaining in poverty despite microfinance loan provision. We collected data from four provinces in Pakistan and analyzed it using multivariate logistic regression. Three-fourths of the 442 women respondents live below poverty lines and are unable to emerge from poverty due to factors such as: housing instability, food insecurity, lack of savings, insufficient loan size and high installment rates, lack of gender solidarity through group borrowing, and threats of domestic violence. Lack of health insurance and critical health problems such as infectious diseases, having suffered an injury, chronic ailments, and mental health challenges are also preventing poverty emergence. We conclude by recommending key social policy development agendas that need to be introduced by the state, in partnership with the microfinance sector, to support women borrowers and help them emerge from poverty.