The World Bank’s Board of Directors approved $102 million in financing for Pakistan’s Resilient and Accessible Microfinance (RAM) Project on Wednesday.
The project aims to improve access to microcredit and bolster the resilience of the microfinance sector, particularly for borrowers who face challenges due to climate-related shocks.
According to the World Bank, 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 loan is intended to improve access to financial services for Pakistan’s disadvantaged communities, with nearly 1.9 million people expected to benefit from the programme, the WB statement read.
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 has been designed based on lessons learned from the 2022 floods and will focus on increasing financial inclusion and resilience, particularly for women, small farmers, and rural families who are highly vulnerable to climate-related shocks.
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 project will be implemented by the Ministry of Finance through the State Bank of Pakistan and will be the first in a series of initiatives aimed at supporting the sector. It will be phased in close partnership with other international financial institutions.
Key components of the RAM Project include the establishment of a Climate Risk Fund, the use of agrotechnology solutions, capacity building for microfinance institutions, and the development of risk management frameworks to strengthen 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.