The World Bank has approved a $102 million package to assist Pakistan in strengthening its microfinance sector amidst climate-related challenges. The Resilient and Accessible Microfinance (RAM) project, endorsed by the World Bank's board of directors, is part of a strategic effort to continue providing essential financial services in rural areas, especially as climate risks increase.
This project will be implemented by Pakistan's Ministry of Finance through the State Bank of Pakistan, marking the first of several planned interventions to support the microfinance sector. Key components include establishing a Climate Risk Fund, adopting agrotechnology solutions, building capacity for microfinance institutions, and developing risk management frameworks.
Additionally, the project is co-financed by a $23 million grant from the Global Shield Financing Facility, a multi-donor trust funded by various governments, including Canada and the United Kingdom. This facility aims to provide increased financial protection against climate shocks and other crises.
The RAM project is set to benefit nearly 1.89 million people, focusing particularly on over 1 million women and 350,000 youth in low-income rural areas. By providing financial resources to microfinance institutions, the project ensures that these institutions can "continue to provide services even during climate-induced financial pressures."
Furthermore, the project will offer increased access to microcredit, furnishing individuals and small businesses with 'recovery loans' to help them regain financial stability. The initiative is part of World Bank's broader commitment to financial inclusion and resilience to climate change in Pakistan.
Since becoming a World Bank member in 1950, Pakistan has received a total of $48.3 billion in assistance. In February, a World Bank delegation visited Pakistan to engage with local officials on economic reforms, including privatisation efforts, as a follow-up to the Country Framework Programme finalised in January. This programme anticipates about $20 billion in indicative assistance. The latest project reflects the ongoing collaboration between Pakistan and international financial institutions to support economic stability and resilience.