News Analysis |
The Norwegian telecom giant, Telenor Group has signed an agreement with Ant Financial Service Group, an affiliate of Chinese e-commerce giant Alibaba, whereby the latter will invest $184.5 million for a 45% stake in Telenor Microfinance Bank, a subsidiary of Telenor group. The purpose of this investment is to further the development of Telenor Microfinance Bank’s mobile payment and digital financial services in Pakistan.
The strategic partnership agreement was reached after a Memorandum of Understanding was signed between the two parties on Tuesday at the Prime Minister Secretariat. A number of senior government officials, management of Telenor and Ant Financial as well Prime Minister Shahid Khaqan Abbasi was present at the signing.
The Prime Minister of Pakistan emphasized that the partnership between Telenor Group and Ant Financials is a manifestation of government policies that are favorable to foreign investment in Pakistan. According to Abbasi the collaboration between the two would help people access financial services more easily through digital payment methods.
Brekke has also said that there are nearly 100 million people in Pakistan who don’t have a bank account. The partnership between Ant Financial and Telenor Group will ensure that they receive services in the form of drawing salaries and pensions, payments of bills and access to micro-finance.
Microfinance is a type of banking service that is provided to the unemployed or low-income individuals or groups of individuals who don’t have access to finance otherwise. Sometimes, the term ‘Microcredit’ may also be used. The credit amount may range anywhere from $100 to $25,000. Additional services, including bank accounts and micro-insurance products may also be included with microfinance services.
The history of microfinance can be traced back to the 19th century. American political philosopher and theorist Lysander Spooner wrote about the benefits of smaller amounts of credit to farmers and small-business owners as a way of getting people out of poverty. It was proved that financial services can be provided with a guarantee of returns on investment. In the modern age, microfinance gained traction first in Bangladesh in the 1970s and then in Latin America as well. Today, the World Bank estimates that nearly 16 million people worldwide are being served by over 700 microfinance institutions. And 2005 was celebrated by the UN as the International Year of Microcredit 2005.
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In Pakistan, there are a number of microfinance banks and institutions. In addition to that, the PMN or Pakistan Microfinance Network of organizations engaged in microfinance to improve outreach sustainability of microfinance services in the country, According to a report by the Pakistan Microfinance Network, in 2016, there were 4.2 million active borrowers that included 2.3 women borrowers as well. The Gross Loan Portfolio has increased from PKR 33.1 billion in 2012, PKR 61.1 billion in 2014 to PKR 132 billion in 2016. It is without a doubt that there is a lot of potential for growth in the microfinance industry in Pakistan.
Telenor Microfinance Bank, or TMB, offers Easy paisa, Pakistan’s first mobile financial services platform. Telenor acquired 51% of the then Tameer Microfinance Bank (Pvt.) in 2008. And Easypaisa was launched in 2009. According to the state bank of Pakistan, it has since developed as the largest branchless banking service in Pakistan, in terms of agent network, transaction value and active accounts.
The Norwegian telecom giant, Telenor Group has signed an agreement with Ant Financial Service Group, an affiliate of Chinese e-commerce giant Alibaba, whereby the latter will invest $184.5 million for a 45% stake in Telenor Microfinance Bank, a subsidiary of Telenor group.
Easy paisa shops serve over 22 million users on a monthly basis in Pakistan. Telenor Group has 176 million subscribers across 12 markets worldwide. Telenor Pakistan boasts 40 million subscribers in Pakistan and has invested over $3.5 billion in Pakistan since launching operations in 2005. “Partnering with a world leading payment provider like Ant Financial will strengthen Telenor Microfinance Bank’s future payment platform and set new standards in the digital banking business in Pakistan,” Sigv Brekke, CEO of Telenor Group said.
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Ant Financial was founded in 2014 and is dedicated to building a technology driven open ecosystem. It is an online payment services provider that enables individuals and businesses to execute e-commerce transactions in a secure manner. It operates on Alipay, the world’s largest mobile and online payments platform. Ant Financial’s consumer lending has reached over 600 billion Yuan or $95 billion. “Ant Financial is pleased to be in this strategic partnership with Telenor Group. Alipay’s technologies make us uniquely placed to achieve our mission of bringing the world equal opportunities,” Eric Jing, CEO of Ant Financial said.
Brekke has also said that there are nearly 100 million people in Pakistan who don’t have a bank account. The partnership between Ant Financial and Telenor Group will ensure that they receive services in the form of drawing salaries and pensions, payments of bills and access to micro-finance.