The World Bank has approved $102 million in financing for the ‘Resilient and Accessible Microfinance (RAM) Project’ to enhance access to microcredit and strengthen Pakistan’s microfinance sector. The initiative aims to support borrowers, particularly in rural areas, against economic and climate-related shocks.
The announcement came from the World Bank’s Resident Mission in Islamabad, following the approval by the World Bank’s board of directors. This initiative follows a recent visit by a World Bank delegation to Pakistan, which focused on economic reforms and the country’s privatisation agenda as part of the Country Framework Programme (CPF) finalized in January, with indicative assistance of around $20 billion.
Empowering Vulnerable Populations
“Microfinance is essential for supporting the livelihoods of vulnerable communities in Pakistan,” said Najy Benhassine, World Bank Country Director for Pakistan. “This project will strengthen the sector’s resilience, ensuring continued financial access for those in need, especially in rural areas affected by climate risks.”
The RAM project is designed to benefit approximately 1.89 million people, including over 1 million women and 350,000 youth. By injecting financial resources into microfinance institutions, the initiative will ensure that these institutions remain operational even in times of economic distress caused by climate-induced financial pressures.
Key Benefits and Implementation
Through increased access to microcredit, individuals and small businesses will be able to secure ‘recovery loans,’ allowing them to regain financial stability. The project takes into account lessons learned from the 2022 floods, with a strong emphasis on economic empowerment and resilience-building among marginalized communities, particularly small farmers and women.
“This initiative is a crucial step in strengthening financial inclusion in Pakistan,” stated Namoos Zaheer, task team leader for the project. “By focusing on those at the bottom of the economic pyramid, we aim to build a robust financial safety net, especially for rural families prone to climate shocks.”
The Ministry of Finance, in collaboration with the State Bank of Pakistan, will oversee the implementation of the project. The RAM project is the first in a series of planned interventions aimed at fortifying Pakistan’s microfinance sector, with additional support anticipated from other international financial institutions.
Strategic Components of the Project
Key features of the RAM project include:
Establishment of a Climate Risk Fund to mitigate financial shocks caused by climate-related disasters.
Integration of agrotechnology solutions to support small-scale farmers and rural entrepreneurs.
Capacity building for microfinance institutions to improve risk management and operational resilience.
Development of risk management frameworks to enhance the sustainability of the sector.
The initiative is co-financed by a $23 million grant from the Global Shield Financing Facility (GSFF), a multi-donor trust fund hosted by the World Bank Group. The GSFF is funded by the governments of Canada, Germany, Japan, Luxembourg, and the United Kingdom, supporting financial protection for vulnerable populations against climate shocks and economic crises.
Pakistan’s Longstanding Partnership with the World Bank
As a member of the World Bank since 1950, Pakistan has received a total of $48.3 billion in assistance. The Bank’s engagement in Pakistan is guided by a Country Partnership Strategy that prioritizes four key areas: energy, private sector development, financial inclusion, and service delivery.
Currently, the World Bank, through its International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and Multilateral Investment Guarantee Agency (MIGA), manages 106 projects in Pakistan, with a total commitment of $17 billion.
The RAM project represents a crucial step towards financial inclusion, economic resilience, and climate risk mitigation, ensuring that Pakistan’s microfinance sector continues to serve those who need it most.
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