World Bank approves $102 million for Pakistan's microfinance sector to bolster climate resilience
ISLAMABAD: The World Bank has approved $102 million for a new project aimed at expanding access to microcredit and strengthening Pakistan's microfinance sector against climate-related shocks, the global lender said in a statement on Wednesday.
The Resilient and Accessible Microfinance (RAM) Project seeks to support nearly 1.89 million people in the country, including over 1 million women and 350,000 youth, primarily in rural and low-income communities.
By providing funds to microfinance institutions, the project aims to ensure continued financial services for vulnerable populations, especially in times of economic and climate-induced disruptions.
'Microfinance is a critical tool for supporting the livelihoods of vulnerable populations in Pakistan,' the statement quoted World Bank Country Director Najy Benhassine as saying. 'This project will help strengthen the resilience of the microfinance sector, particularly in the face of growing climate risks, ensuring that the sector can continue to provide essential financial services to those who need them most, especially in rural areas.'
He said the project was part of the World Bank's broader commitment to promoting financial inclusion in Pakistan and enhancing resilience to climate change, as outlined in its 10-year Country Partnership Framework.
The RAM Project will focus on expanding access to microcredit, particularly through 'recovery loans' for individuals and small businesses seeking financial stability after climate-related disasters.
'The project has been designed based on lessons learned from the devastating floods of 2022 and is a significant step to bolster financial inclusion in Pakistan,' said Namoos Zaheer, Task Team Leader for the project. 'It will enhance economic empowerment and resilience of those at the bottom of the economic pyramid, particularly women, small farmers and families in rural areas who are more prone to climate shocks.'
The initiative, to be implemented by Pakistan's Ministry of Finance through the State Bank of Pakistan, will include the establishment of a Climate Risk Fund, innovative use of agrotechnology solutions, capacity building for microfinance institutions and risk management frameworks to strengthen the sector's resilience.
Pakistan has been a World Bank member since 1950 and has received more than $48.3 billion in assistance over the years.
The bank's current portfolio in the country includes 54 projects totaling $15.7 billion.
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