Saiban

Acumen Fund just issued a press release announcing new investments in Pakistan: Jassar Farms and AMC.

We’ve talked previously about Jassar Farms in the context of our new Agriculture Portfolio. Jassar Farms is focused on producing high quality, affordable inputs to help poor farmers improve breeding of livestock and increase milk productivity.

Our latest investment in housing is Ansar Management Company (AMC), a housing development company that builds off our past work with Saiban in Pakistan to create much-needed housing for low-income consumers.  As much as houses and infrastructure, AMC is focused on building community — the company is making sure residents are invested in living there, creating ownership in the truest sense of the word.

AMC represents the evolution of a rising leader as well. The entrepreneur behind the investment is Jawad Aslam, a former Acumen Fund Fellow, who has taken his learning and commitment (he is building a home in the community for his own family) to start AMC. By investing capital (and giving him access to additional Fellows to support his work), Acumen Fund is betting on his ability to succeed.

I was in Pakistan for the first week of March, mostly spending time with the Acumen team and its close advisors. This time, unlike my last two trips, I stayed put in Karachi, where Acumen’s Pakistan office is based and did not get to Lahore (the city where the reprehensible attack on the Sri Lankan cricket team occurred on March 3rd) On two prior trips, I have visited Khuda-ki-Basti 4 (KKB-4), Acumen’s low cost housing investment near Lahore.

Although that development is still in a relatively early stage, there are 100 families living there today, a thriving primary school, a small general store and a secondary school in the works. KKB-4 is on the move. On my last trip in May I was happy to see the immense progress made in the few months since I had first visited. I could better imagine what it would be like when the housing plots were fully sold, the houses built, the shops and mosque opened—in short a real self-contained community.

On this trip, I was able to visit Khuda-ki-Basti 3 (KKB-3), a mature housing development outskirts of Karachi in which Acumen made a small investment several years back. KKB-3 (near Karachi) was the inspiration for KKB-4 (near Lahore) and are both brainchildren of Tasneem Siddiqui, the lead developer. I went with Shuaib Siddiqui (no relation), a Pakistani-American who has been working in our Karachi office for the last 18 months as a portfolio associate. Shuaib, along with Aun Rahman our Pakistan country leader, has become expert in the area of housing for the poor and is the relationship manager for our KKB-4 investment.

The drive to KKB-3 took about 45 minutes from Karachi center and when we arrived at the entrance, public buses plied the road. Other developments and commercial establishments crowded the area. Shuaib explained that, 8 years back when the development was just getting started, the area was a wasteland with virtually no roads or buildings.

We walked into the building which had originally been the sales office and now serves as a community center and management office. It was lined with photographs documenting the inception and progress of the development starting 8 years back. The original would-be buyers of land plots were required to live in temporary homes for two weeks before being accepted as buyers and members of the community. This procedure was designed to test their mettle as serious buyers and builders.

We then walked down the central artery of the development—I should say town because it is a teeming, vital town of 25,000. All of the plots have been sold and most have been built up with small single family homes. There is now a thriving secondary market in houses, as the improved land has shot up in value. Some of the poor laborers who were early buyers have sold at a substantial profit and have moved into a higher socio-economic class. Teachers and other professionals are starting to buy these houses and move in (real-estate prices in Karachi are sky-high and there is severely limited availability). And while most of the houses are very simple, a few have second and third floors and spectacular gardens.

We visited a primary school, one of 12 in the town; this one was built by The Citizens Foundation. The school was clean, open and attractive and requires a payment of a modest tuition fee. We visited briefly with the principal of the school who explained that because demand is so high, the school is run on a split session with half the students coming in the morning and half in the afternoon. Other primary schools in the town are even less expensive or free. When we visited later with the manager of the entire development, Akthar Sb, he explained that there is nearly 90% school attendance at the primary level—I had wondered aloud about this as there were many children walking about and playing during what seemed to me to be normal school hours. This was due to the split sessions, Akthar Sb explained.

However, the statistics for attendance at the secondary level drop off significantly, as many children in their early teens are expected to contribute to the family coffers. Given that school attendance is mandatory only until age 10, overcoming this attitude and getting parents to understand the value of secondary education is a long slow battle.

We visited a vocational school for older children and young adults, a clinic for women and children (which sold condoms on a prominently posted price list), a vet shop (mostly focused on goat care), a Catholic church, a vegetable farm, several small textile manufactures. We saw stores selling a vast variety of goods. We saw but did not visit several mosques. There are no banks are within KKB-3, but some can be found just outside in other developments which have sprung up close by.

In short an entire ecosystem has been formed out of empty land near a densely packed city with desperate housing shortage and an enormous population of poor residents. Those who have been able to make the leap now live in a community which provides access to their basic needs: clean water, power, sewage treatment, local government, education, health services and employment opportunities (1/3 of the residents of KKB-3 work within the town). Seeing possibility realized gave me hope and vision for our work at KKB-4, and a real sense of excitement for its future.

With Pakistan often among the top headlines on The New York Times front page (and usually not in a flattering way) – we are heartened to see the most recent issue [Dec – Jan 2009] of Blue Chip Magazine, a leading business magazine in Pakistan, carry a cover story on our very own Jacqueline Novogratz and the investments Acumen Fund has made in Pakistan.

Our most recent intra-office debates revolve around the question of how to support and encourage social entrepreneurship - let alone find the solid business ideas that are providing services at the BoP - so we at Acumen Fund are excited to see positive news of on-the-ground initiatives and social businesses that often operate in the most challenging environments and landscapes. The story really is around social entrepreneurs like Roshaneh Zafar, Tasneem Siddiqui, and Dr. Sono Khangharani who “have seen possibilities where other people see hopelessness.”

Also featured in the same issue of Blue Chip is Roshaneh Zafar , President of Kashf Foundation, who recently launched Kashf Microfinance Bank Limited (KMBL) in October 2008. KMBL is an investment of Kashf Holdings Private Limited, the parent holding company in which Acumen Fund has also invested.

In the five months since operations were launched, Kashf Microfinance Bank has set up 18 branches and is serving 20,000 microfinance clients. But with the microfinance industry facing a challenging period in Pakistan due to the macroeconomic environment and political instability, the innovation of the original group lending methodology is now facing a setback. There is a need to innovate in microfinance services beyond the group lending methodology commonly used by microfinance institutions in Pakistan.

With the launch of the new Kashf Microfinance Bank, Kashf has begun individual lending and savings mobilization and now provides savings products to women from low-income communities. Roshaneh discusses the pioneering work Kashf has been doing at the BoP and Acumen is proud to support Kashf and the microfinance sector in Pakistan.

We all want to be able to say, “This is the house my father owns.” This dream is floating all over the world. Pitrus Saab, early resident of Khuda Ki Basti 3.

I recently visited Khuda Ki Basti 3, a low-income housing development 2 hours away from the city centre of Karachi. I first learned of Khuda Ki Basti (”God’s Settlement”) and the incremental development model when I met Tasneem Siddiqui of Saiban during a research project in 2005. I was ushered in an office by Mr. Siddiqui’s assistant (his only staff at the time) where he sat at his desk, shrouded by mountains of papers and books. Though he was extremely busy and seemingly understaffed, he made himself available to speak to me. Mr. Siddiqui is the sort of person who inspires people. Not because he is a great story teller with heart warming anecdotes that leave you with a good feeling. No, he is inspiring because he takes a no-nonsense approach to a problem that is colossal and overwhelming both in its scale and by its nature.

Without a piece of land on which you can raise your family, sleep at night and call your home, it is difficult to find the stability you need in your life to propel yourself forward. No one should be denied the opportunity to attain this stability and prosperity. Almost all people understand this. However there are very few people who will roll up their sleeves and try to get something done about it. This is especially true in an environment like Pakistan where public officials are a part of the problem, not solution. (Pakistan was ranked 134th out of 180 countries by Transparency International’s 2008 Corruption Perceptions Index - which is not a good ranking.)

My report recognized that, without government cooperation, there is no method of scaling any successful models in housing. However, it also acknowledged the reality – that public sector solutions are usually public relations rhetoric within a larger political game. As a result, government-initiated projects do not often reflect the reality of the issues. For example, as has been documented by Saiban extensively, the age-old government approach of creating elaborate “sites and services” schemes in Pakistan ends up inflating the cost and price of housing far beyond the reach of base of the pyramid, and yet we continue to hear of initiatives based on this model.

In his inauguration speech at the National Assembly on 29th March 2008, Prime Minister Yusuf Raza Gilani announced his coalition government’s agenda, including a plan to build one million homes annually targeted towards the lower income sector. Such grandiose plans that are removed from the reality of the current and historical housing reality are not uncommon - especially when they come during times of crises (in this case both economic and political).

Tasneem Siddiqui is known internationally for his work in low-income housing - he has been the recipient of the Aga Khan Award for Architecture, The Ramon Magsaysay Award for Government Service and nominated for several others. What is somewhat disheartening is that even today, despite his reputation and the successes (KKB has been replicated in three areas of Karachi and currently in the process of development in Lahore) of the incremental development model, government cooperation (in the form of subsidized land) remains the biggest bottleneck to solving the housing and squatter settlement crisis in Pakistan.

Though consultation with Mr. Siddiqui and Saiban is often part of protocol during various government-led initiatives, they have still not been able to get their model officially adopted. A Saiban employee told me that while officials praise Saiban’s efforts and achievements in the field during meetings and conferences, off-the-record discourses usually involve an official asking very plainly “Meray liye faida kahan hai?” (“Where is the benefit for me?”). It is easy to see how anyone with good intentions might be discouraged. But as the perseverance of Mr. Siddiqui, his colleagues at Saiban and of the residents of Khuda Ki Basti 3 demonstrated, determined ideals will get you long way.

In my next blog post, I’ll talk about how two of the earliest residents of KKB 3 and its very model taught me the meaning of patient capital. For now I’ll end on a note that nags at the back of my mind whenever I think of the achievements of Mr. Siddiqui in such an onerous environment. How much is the success of a movement dependent on its figure head? We at Acumen Fund like to talk about the sustainability of our advocacy for social change, but when it comes down to the nitty gritty, how do you go about succession planning for revolutionaries – especially when it is their reputation and clout that opens doors in such a dramatically politicized environment like Pakistan?

Editor’s note: This post was written by Batool Hassan, with assistance from Aun Rahman

On Thursday, August 21, Acumen Fund Pakistan hosted a half day roundtable discussion on “Innovations in Low Income Housing: Local Challenges and Global Lessons.”

The roundtable convened a small group of 20 key stakeholders representing different areas within the housing development and housing finance sectors. Attendees discussed key challenges and issues facing low-income housing development in Pakistan. The roundtable also highlighted successful models locally and globally, key challenges to scale, and what steps are necessary at the private and public sector levels to facilitate on the ground movement in the affordable housing space.

The group included:
- Representatives from the State Bank of Pakistan
- Representatives from Sindh and Punjab government housing agencies
- Stakeholders from private banks and microfinance organizations
- Affordable housing developers, urban planners and architects

The event itself was an energizing and aspirational experience for the Acumen Fund Pakistan team – we have rarely before seen such a dedicated, informed, engaged, and impassioned group of individuals who sincerely have a stake in the low-income housing space in this country. The depth of knowledge and level of commitment to catalyze change in the sector was unparalleled.

In this day and time, with so much attention on housing for the poor, we came out of the meeting with an awareness and an understanding that we have a real chance to solve some substantial problems that are global in scale but with innovative local initiatives, we can genuinely tackle.

Within the two overarching themes of Housing Finance and Housing Development, there were some key emerging ideas, possibilities and learnings that were tangible take aways.