World Bank on Wednesday approved $102 million loan for Pakistan in financing for the Resilient and Accessible Microfinancing Project in Pakistan. The project aims to enhance access to microcredit and strengthen the resilience of the microfinance sector and its borrowers.
According to the World Bank, the funds will be utilised to offer loans to poor and low-income families, particularly those who are typically excluded from traditional financial services.
World Bank Country Director for Pakistan Najy Benhassine said, “Microfinance is a critical tool for supporting the livelihoods of vulnerable populations in Pakistan. 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.”
The loan is intended to improve access to financial services for Pakistan’s disadvantaged communities with nearly 1.9 million people expected to benefit from the programe, the statement said.
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“By providing financial resources to microfinance institutions, the project ensures that they can continue to provide services even during climate-induced financial pressures. The project will provide increased access to microcredit for individuals and small businesses, providing them ‘recovery loans’ to help them gain financial stability.”
The project has been designed based in lessons learned from the 2022 floods and will focus on increasing financial inclusion and resilience.
The statement added, “The Resilient and Accessible Microfinance 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.”