ISLAMABAD:
The World Bank’s board of directors has approved $102 million in funding for the Resilient and Accessible Microfinance (RAM) project, aimed at improving access to microcredit and bolstering the resilience of Pakistan’s microfinance sector and its borrowers, particularly against climate-related challenges.
“Microfinance plays a vital role in supporting the livelihoods of vulnerable populations in Pakistan. This initiative will strengthen the microfinance sector’s ability to withstand growing climate risks, ensuring it can continue to deliver essential financial services, especially in rural areas,” said Najy Benhassine, World Bank Country Director for Pakistan, in a statement.
The RAM project is part of the World Bank’s broader commitment to advancing financial inclusion and climate resilience in Pakistan, as outlined in its new 10-year Country Partnership Framework.
The project is expected to benefit approximately 1.89 million people, including over one million women and more than 350,000 youth, with a focus on low-income rural communities. By providing financial support to microfinance institutions, the initiative ensures they can sustain operations even during climate-induced economic pressures.
RAM will expand access to microcredit for individuals and small businesses, offering “recovery loans” to help them regain financial stability.
“The Resilient and Accessible Microfinance project draws lessons from the devastating floods of 2022 and represents a significant step toward enhancing financial inclusion in Pakistan,” said Namoos Zaheer, Task Team Leader for the project.
“It aims to empower and strengthen the resilience of those at the bottom of the economic ladder, particularly women, small farmers, and rural families, who are most vulnerable to climate shocks,” she added.
The project will be implemented by Pakistan’s Ministry of Finance through the State Bank of Pakistan. It marks the first in a series of planned interventions to support the microfinance sector, designed in collaboration with other international financial institutions.
Key components of the project include the creation of a Climate Risk Fund, the adoption of innovative agricultural technology solutions, capacity building for microfinance institutions, and the development of risk management frameworks to enhance sector resilience.
The initiative is co-financed by a $23 million grant from the Global Shield Financing Facility (GSFF), a multi-donor trust fund managed by the World Bank Group and supported by the governments of Canada, Germany, Japan, Luxembourg, and the United Kingdom. The GSFF aims to provide financial protection to vulnerable countries and populations against climate shocks, disasters, and crises.
This announcement follows a recent meeting between Pakistan’s Federal Minister for Finance, Muhammad Aurangzeb, and a World Bank team to discuss the National Growth and Fiscal Programme under the 10-year Country Partnership Framework, which includes $20 billion in commitments.
According to a press release from the Ministry of Finance, the framework prioritizes key development areas such as health, education, climate resilience, and sustainable growth. Senior officials from the Ministry of Finance and the Federal Board of Revenue attended the meeting.
The discussions focused on the World Bank’s support for economic reforms, with the bank presenting its ongoing work on the National Growth and Fiscal Programme. This includes strategies for inclusive and sustainable growth, revenue mobilization, improved expenditure quality, and efficient service delivery.
A central goal of these reforms is to create a favorable environment for private investment while ensuring public resources are effectively allocated for inclusive development. The World Bank also shared insights from its analysis of policy proposals gathered during pre-budget consultations with various trade bodies and chambers.
