Islamabad (TDI): The World Bank has approved a sum of $102 million in financing for a project that aims to enhance access to microcredit and support the resilience of Pakistan’s microfinance sector and its borrowers, especially in the face of climate-related shocks.
The financing under the ‘Resilient and Accessible Microfinance project’, was approved by the World Bank board of directors on Tuesday, the World Bank’s Resident Mission in Islamabad said in a statement.
In February, a World Bank delegation visited Pakistan to touch base on economic reforms, including the privatization agenda as a follow-up to the Country Framework Program finalized in January with indicative assistance of about $20 billion.
“Microfinance is a critical tool for supporting the livelihoods of vulnerable communities in Pakistan,” said Najy Benhassine, World Bank country director for Pakistan.
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“This project will help strengthen the resilience of the microfinance sector, especially in the face of increasing climate risks, ensuring that the sector can continue to provide necessary financial services to those who need them most, particularly in rural areas.
“This project is part of our broader commitment to promoting financial inclusion in the country and to boosting resilience to climate change, as spelled out in our new ten-year Country Partnership Framework,” he added.
According to the statement, the project will benefit approximately 1.89 million people, including over 1 million women and more than 350,000 youth, and particularly those in vulnerable and low-income rural areas.
“The project will provide smooth access to microcredit for individuals and small businesses, providing them ‘recovery loans’ to help them gain financial stability,” the statement read.
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The project will be implemented by the Ministry of Finance through the State Bank of Pakistan (SBP).
It will be first in a series of interventions to support the sector, to be designed and phased in close partnership with other global financial institutions.
Major components of the project include the establishment of a Climate Risk Fund, innovative use of agrotechnology solutions, capacity building for microfinance institutions, and the development of risk management frameworks to boost the sector’s resilience.
