ADB approves $25 million loan to expand women's access to credit in Pakistan

August 17, 2019: The Asian Development Bank (ADB) has approved a $25 million syndicated loan to support the lending operations of Kashf Foundation, one of Pakistan’s leading microfinance service providers, to low-income households and women-led micro, small, and medium-sized enterprises (MSMEs).

The loan will help expand women’s access to finance in Pakistan and empower them economically.

“There is a need to improve access to finance in Pakistan, particularly for women in low-income communities as well as women-led enterprises. An inclusive financial sector is essential for Pakistan’s sustainable development,” said ADB Investment Specialist Tina Rohner.

“ADB’s partnership with Kashf Foundation will help address this issue and provide much-needed financial products for MSMEs led by women, which have the potential to contribute significantly to the country’s growth and development.”

Access to finance is very limited in Pakistan, with only 21.3% of adults and 7% of women over the age of 15 having a bank account in fiscal year 2017.

This situation is particularly acute for MSMEs and individual borrowers, especially women-run microenterprises, as these entities receive only about 7% of total bank credit to the private sector despite contributing around 40% to gross domestic product. MSMEs account for about 98% of all enterprises in Pakistan, employing more than 80% of the nonagricultural labor force.

ADB’s assistance comprises an A loan (to be funded by ADB) of up to $15 million and a B loan of $10 million that will be funded by commercial cofinancers including international impact investors. The assistance will expand Kashf Foundation’s lending operations and market base, giving more women and women-led MSMEs access to much-needed long-term financing to further develop their livelihoods and incomes.

Apart from microenterprise lending, the project will support Kashf Foundation’s other objectives including narrowing the financing gap in the private education sector and improving the quality of education at schools it supports.

The successful syndication of this transaction has allowed ADB to mobilize valuable investment from international impact investors into Pakistan’s microfinance sector.

APP