World Bank Approves $102m Loan for Pakistan’s Microfinance Sector

The loan will benefit nearly 1.9 million people, including low-income communities.

Wed Mar 19 2025
icon-facebook icon-twitter icon-whatsapp

ISLAMABAD: The World Bank has approved a $102 million loan for a new project aimed at expanding access to microcredit and strengthening Pakistan’s microfinance sector against climate-related shocks.

The global lender in a statement on Wednesday said the Resilient and Accessible Microfinance (RAM) Project is expected to benefit nearly 1.9 million people especially those in vulnerable and low-income rural communities.

“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” said Najy Benhassine, World Bank Country Director for Pakistan.

“This project is part of our broader commitment to promoting financial inclusion in Pakistan and to increasing resilience to climate change, as spelt out in our new 10-year Country Partnership Framework,” he said.

The World Bank said the funds will be utilised to offer loans to poor and low-income families, particularly those who are typically excluded from traditional financial services.

The RAM Project will provide financial resources to microfinance institutions, enabling them to continue offering services even under climate-induced financial pressures.

A key component of the project will be offering “recovery loans” to individuals and small businesses, helping them regain financial stability.

The project is designed based on insights gained from the 2022 floods, with a focus on enhancing financial inclusion and resilience, especially for women, small-scale farmers, and rural families who are most vulnerable to climate-related disruptions.

According to Namoos Zaheer, Task Team Leader for the project, “It will enhance economic empowerment and resilience of those at the bottom of the economic pyramid.”

The Ministry of Finance, in collaboration with the State Bank of Pakistan, will lead the implementation of the project, marking the first in a series of initiatives designed to support the sector.

It will be rolled out in phases, in close partnership with other international financial institutions.

Key elements of the RAM Project include the creation of a Climate Risk Fund, the adoption of agrotechnology solutions, capacity building for microfinance institutions, and the development of risk management frameworks to enhance the sector’s resilience.

The project is co-financed by a $23 million grant from the Global Shield Financing Facility (GSFF), a multi-donor trust fund hosted by the World Bank Group. The GSFF is funded by the governments of Canada, Germany, Japan, Luxembourg, and the United Kingdom.

icon-facebook icon-twitter icon-whatsapp