The World Bank’s Board of Directors approved $102 million in funding for Pakistan’s Resilient and Accessible Microfinance (RAM) Project on Wednesday.
The project aimed to improve access to microcredit and strengthen the microfinance sector against climate-related financial shocks.
This initiative will provide loans to low-income families, particularly those excluded from conventional financial services, benefiting nearly 1.9 million people.
The RAM Project will provide financial resources to microfinance institutions, ensuring they continue supporting borrowers even in times of economic strain caused by climate events.
A major aspect of the project includes offering “recovery loans” to individuals and small businesses to help them rebuild their financial stability.
The initiative is shaped by insights gained from the 2022 floods, with a focus on financial inclusion and resilience for women, small farmers, and rural communities vulnerable to climate risks.
According to Namoos Zaheer, the project task team leader, “It will enhance economic empowerment and resilience of those at the bottom of the economic pyramid.”
The Ministry of Finance through the State Bank of Pakistan will implement these projects, which will be the first in a series of initiatives aimed at supporting the microfinance sector.
The project will be phased in close partnership with other international financial institutions.
Key elements 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.
Additionally, the project is supported by a $23 million grant from the Global Shield Financing Facility (GSFF), a multi-donor trust fund under the World Bank Group.
The GSFF is funded by the governments of Canada, Germany, Japan, Luxembourg, and the United Kingdom.