World Bank approves $102m for Pakistan’s Microfinance sector

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By MG News | March 19, 2025 at 11:00 AM GMT+05:00

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March 19, 2025 (MLN): The World Bank’s Board of Directors has approved $102 million in financing for the Resilient and Accessible Microfinance (RAM) Project.

The initiative aims to improve access to microcredit and strengthen the resilience of Pakistan’s microfinance sector, particularly against climate-related shocks.

"Microfinance is a critical tool for supporting the livelihoods of vulnerable populations in Pakistan," said Najy Benhassine, World Bank Country Director for 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," he added.

He further emphasized that this initiative aligns with the World Bank’s 10-year Country Partnership Framework, which focuses on promoting financial inclusion and increasing resilience to climate change.

The RAM Project is expected to benefit nearly 1.89m people, including over 1m women and more than 350,000 youth, particularly those in vulnerable and low-income rural communities, according to the press release.

By providing financial resources to microfinance institutions, the project ensures that these institutions can continue offering services even during climate-induced financial pressures.

It will also facilitate increased access to microcredit and ‘recovery loans’ for individuals and small businesses, helping them regain financial stability.

"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 for 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 project will be implemented by the Ministry of Finance through the State Bank of Pakistan and marks the first in a series of interventions to support the sector.

It will be designed and phased in close collaboration with other international financial institutions.

Key components include the establishment of a Climate Risk Fund, innovative use of agrotechnology solutions, capacity building for microfinance institutions, and risk management frameworks to enhance the sector’s resilience.

The initiative is also supported by a $23m grant from the Global Shield Financing Facility (GSFF), a multi-donor trust fund hosted by the World Bank Group.

The GSFF is financed by the Governments of Canada, Germany, Japan, Luxembourg, and the United Kingdom and aims to provide financial protection to poor and vulnerable communities against climate shocks, disasters, and crises.

This project marks a crucial step towards ensuring financial stability for low-income populations in Pakistan and reinforcing the microfinance sector’s ability to withstand economic and environmental challenges.

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