Pakistan increases access to financial services for the poor

19 March 2007

 

women in pakistan

Photo courtesy of Curt Carnemark/World Bank

The Government of Pakistan plans to increase microfinance coverage from 1 million to 3 million clients by 2010, offering millions more the opportunity to move out of poverty. They are seeking support from donors, including DFID, to help implement their financial inclusion strategy, which is being led by theexternal linkState Bank of Pakistan.

The Government have recently expanded the sector by:

  • Creating a favourable environment for the microfinance industry.
  • Licensing six microfinance banks (so far).
  • Enabling a large number of NGOs to provide microfinance services throughout the country.
  • Privatising state-owned banks.

The number of people in Pakistan accessing microfinance has increased by 85% over the last three years but there is a potential market size of 10 - 20 million.

 

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What is DFID Doing?

During a recent visit to Pakistan by Richard Boulter (Acting Head of Profession for Private Sector Development), a team of donors and financial institutions met with the Governor of the State Bank to discuss how best to support the growth of pro-poor financial services, including microfinance, support for small and medium enterprises, rural finance, and low-cost housing.

This high level engagement builds on DFID Pakistan’s existing programmes such as:

  • Access to Finance Study to assess demand for financial services in Pakistan.
  • The DFID-funded external linkPakistan Microfinance Network has lead on representing the microfinance industry.
  • Supporting access to financial services for poor women through funding theexternal linkKashf Foundation; a recent DFID review showed that Kashf has achieved a 100% expansion in outreach in the last 16 months. Kashf has 150,000 clients and aims to reach 300,000 poor people over the next 3 years.
  • Funding theexternal linksend money home website to increase and formalise remittances to Pakistan and particularly the Pakistani diaspora in the UK.

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Lessons from Bangladesh

Muhammad Yunus, Managing Director of external linkGrameen Foundation and winner of the Nobel Peace Prize, visited Pakistan this month to discuss microfinance expansion and to give practitioners and policy makers the opportunity to learn from the Bangladesh experience. Learn more about the Grameen Foundation in Bangladesh.

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