World Bank approves $102 million for Pakistan microfinance resilience project

The World Bank’s Board of Directors approved financing of $102 million for Pakistan’s Resilient and Accessible Microfinance (RAM) Project on Wednesday. The initiative is designed to enhance access to microcredit and bolster the resilience of the country’s microfinance sector, particularly for borrowers vulnerable to climate-related shocks.

“Microfinance is a critical tool for supporting the livelihoods of vulnerable populations in Pakistan,” said Najy Benhassine, World Bank Country Director for Pakistan. “This project will help strengthen the resilience of the microfinance sector, especially in the face of growing climate risks, ensuring that essential financial services continue in rural areas.”

Benhassine added that the RAM Project aligns with the Bank’s broader commitment to promoting financial inclusion and enhancing climate resilience under its new 10-year Country Partnership Framework.

The project is expected to benefit nearly 1.89 million people, including more than one million women and over 350,000 youth in low-income rural communities. By channeling financial resources to microfinance institutions, the RAM Project aims to provide “recovery loans” that enable individuals and small businesses to achieve greater financial stability during periods of climate-induced stress.

Namoos Zaheer, Task Team Leader for the RAM Project, emphasized that the initiative was formulated based on lessons learned from the devastating floods of 2022. “It will enhance economic empowerment and resilience for those at the bottom of the economic pyramid, particularly women, small farmers, and rural families prone to climate shocks,” he said.

Implementation of the RAM Project will be managed by Pakistan’s Ministry of Finance through the State Bank of Pakistan. The project is the first of several planned interventions to support the microfinance sector, to be developed in close collaboration with other international financial institutions.

Key elements include establishing a Climate Risk Fund, leveraging innovative agrotechnology solutions, building capacity for microfinance institutions, and developing robust risk management frameworks.

The initiative is also 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 and financed by the Governments of Canada, Germany, Japan, Luxembourg, and the United Kingdom. The GSFF aims to provide increased financial protection against climate shocks and disasters for vulnerable countries and communities.

The RAM Project represents a significant step toward ensuring that Pakistan’s microfinance sector can withstand future climate challenges while promoting broader financial inclusion across the country.