The World Bank approved $102 million for the Resilient and Accessible Microfinance (RAM) Project, designed to improve access to microcredit and bolster the resilience of the microfinance sector and its borrowers, especially against climate-related disruptions, in Pakistan.
Microfinance serves as an essential instrument for enhancing the livelihoods of at-risk individuals in Pakistan. Najy Benhassine, World Bank Country Director for Pakistan, stated, “This project will enhance the resilience of the microfinance sector, particularly against escalating climate risks, thereby ensuring the sector’s capacity to deliver vital financial services to those most in need, especially in rural regions.”
The country director stated, “This project aligns with our overarching commitment to advancing financial inclusion in Pakistan and enhancing resilience to climate change, as outlined in our new 10-year Country Partnership Framework.”
The RAM Project is anticipated to assist about 1.89 million individuals, comprising over 1 million women and more than 350,000 youth, particularly within vulnerable and low-income rural communities, as stated in a news release from the World Bank.
The project supplies financial resources to microfinance institutions, enabling them to maintain services under climate-induced financial strains. The project will enhance access to microcredit for individuals and small enterprises by offering ‘recovery loans’ to facilitate their financial stability.
“The Resilient and Accessible Microfinance Project has been formulated based on insights gained from the catastrophic floods of 2022 and represents a crucial advancement in enhancing financial inclusion in Pakistan,” stated Namoos Zaheer, Task Team Leader for the Project. “It will augment economic empowerment and resilience for individuals at the base of the economic pyramid, especially women, small-scale farmers, and rural families who are more susceptible to climate disruptions.”
The Ministry of Finance will execute the project via the State Bank of Pakistan. This will be the initial intervention in a series aimed at supporting the sector, developed and implemented in close collaboration with other international financial institutions.
The project’s key components comprise the creation of a Climate Risk Fund, the innovative application of agrotechnological solutions, the enhancement of microfinance institutions’ capacities, and the formulation of risk management frameworks to bolster the sector’s resilience.
The initiative is partially funded by a $23 million grant from the Global Shield Financing Facility (GSFF). The GSFF is a multi-donor trust fund administered by the World Bank Group and funded by the governments of Canada, Germany, Japan, Luxembourg, and the United Kingdom.
