World Bank approves $102 million for microfinance project

In a bid to improve and foster resilience in Pakistan’s microcredit schemes, the World Bank (WB) has authorised Islamabad to receive $102 million in financing. As per credible reports, the international lender has approved the loan to insulate the microfinance sector from climate shocks.

The WB’s delegation to Islamabad revealed in a news release that the aforementioned financing would fall under the umbrella of the Resilient and Accessible Microfinance (RAM) project. This spells great news for cash-strapped Pakistan as these funds may allow the country to equip itself to face its chronic climate issues.

A team from the WB recently went over possible reforms that could help revitalise Pakistan’s economy. According to reports, the WB team outlined possible venues for privatisation along with the willingness to extend financial assistance to approximately $20 billion.

The WB’s country director for Pakistan, Najy Benhassine, claimed that microfinance was a key financial instrument that could help economically vulnerable households in the country. As per reports, he outlined the need for microfinance in Pakistan’s rural areas, highlighting how the provision of such services could boost the sector’s resilience.

There is merit to this claim as expanding the user base would allow for more individuals to rely on the microfinance sector – effectively entrenching itself in the economy as a vital service. Najy announced how the RAM project was just part of the wider 10-year Country Partnership Framework (CPF).

If the project is implemented as per the roadmap laid out by the WB, approximately 1.89 million Pakistanis will benefit from improved microfinance coverage. As per reports, 1 million of the 1.89 million Pakistanis will be women – particularly those residing in rural areas with low income.

Moreover, the WB’s project could also benefit approximately 350,000 young people who are in financially vulnerable positions. Reports claim that coverage will improve as, under the project, microfinance entities are subject to receive financial assistance along with aid to guarantee that these entities do not fail when severe climate emergencies result in financial issues.

The project could significantly assist small businesses in areas struck by calamities, and ‘recovery loans’ are to be issued to stabilise businesses struck by a disaster. Moreover, small farmers may also be eligible to receive financial assistance under the program.

According to reports, the framework was developed in light of the widespread destruction of the floods that caught the country off-guard in 2022.