Demand and Supply Gap of Microcredit: A Case of Akhuwat Foundation in Khanewal

Akhuwat Foundation has initiated the program of interest-free micro-credit to support the financial requirements of small farmers in various districts of Punjab. This study is designed to find out whether interest-free micro-finance is sufficient for the requirements of small farmers or whether there exists a gap between demand and supply in Khanewal district. A total of 290 small farmers were selected randomly from the list available with the office of the Akhuwat Foundation. A well-structured questionnaire was used to collect information from the farmers. The logit model was used to determine the factors affecting the demand-supply gap of interest-free micro-credit. Farm size, year of schooling, farming experience, and distance of the farm from the office of Akhuwat Foundation are important determinants affecting the demand-supply gap. Minimizing the gap between supply and demand of micro-credit would benefit the small farmers in order to improve the livelihood and welfare of the poverty-stricken community.