Abstract
This paper evaluates the functioning of the Orangi Pilot Project, a credit institution set up to invest in small scale enterprises in a large slum in Karachi. Despite severe poverty and street violence, the project extended loans to 4382 businesses between 1987 and 1996. Of these, 58% were closed at the time of the study, with 94% having fully repaid the loan within the time agreed. The paper examines the reasons for this high success rate and concludes that the institute had developed efficient and robust lending procedures which were innovative, disciplined and streamlined. Case studies of typical investments are presented to illustrate both the nature of the investee businesses and the role of the loan officers and field personnel.
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