World Bank approves $102 million to strengthen microfinance in Pakistan
- The World Bank has approved $102 million to enhance access to microcredit and strengthen the microfinance sector in Pakistan.
- The project aims to benefit approximately 1.89 million people, with a focus on vulnerable populations such as women and rural families.
- Microfinance will continue to play a vital role in supporting livelihoods and increasing resilience against climate shocks.
In Islamabad, the World Bank's board of directors approved a significant financing package of $102 million for a project aimed at enhancing access to microfinance and bolstering the resilience of Pakistan's microfinance sector. This project, named the Resilient and Accessible Microfinance (RAM) project, seeks to address the challenges posed by climate-related shocks that disproportionately impact vulnerable populations, especially women, small farmers, and rural families. The financing comes as part of a broader strategy to promote financial inclusion and support economic empowerment in the region, in alignment with the World Bank's new 10-year Country Partnership Framework. The RAM project is designed to benefit approximately 1.89 million people, including over one million women and more than 350,000 youth. This initiative recognizes that microfinance is a critical tool for supporting livelihoods in low-income rural communities, where financial services are often limited. By providing essential financial resources to microfinance institutions, the project aims to ensure that these entities can continue to operate effectively even during periods of climate-induced financial strain. Key components of the project involve establishing a Climate Risk Fund, utilizing agrotechnology solutions, building capacities within microfinance institutions, and developing robust risk management frameworks to enhance the sector's resilience. This initiative will involve collaboration with several international financial institutions, emphasizing a coordinated approach to financial services in development. The project was informed by lessons learned from the harsh realities of the devastating floods of 2022, which highlighted the need for enhanced financial protection against climate shocks. The funding is also supported by a $23 million grant from the Global Shield Financing Facility, a multi-donor trust fund dedicated to helping vulnerable countries recover and build resilience against disasters. Given that Pakistan has been a member of the World Bank since 1950 and has received significant support over the decades, this latest funding builds on decades of partnership aimed at stabilizing and growing Pakistan’s economy amidst pressing challenges posed by climate change.