The World Bank has approved a $102 million package to help Pakistan strengthen its microfinance sector, which faces increasing challenges due to climate-related risks. The funding will be used for the Resilient and Accessible Microfinance (RAM) project, a strategic initiative to ensure that essential financial services continue to be available in rural areas as climate threats grow.
The RAM project, which has been endorsed by the World Bank’s board of directors, will be implemented by Pakistan’s Ministry of Finance through the State Bank of Pakistan. It is the first in a series of efforts aimed at supporting the country’s microfinance sector. Key features of the project include the establishment of a Climate Risk Fund, the introduction of agrotechnology solutions, the development of capacity-building programs for microfinance institutions, and the creation of risk management frameworks.
In addition to the World Bank’s contribution, the project is also co-financed by a $23 million grant from the Global Shield Financing Facility, which is backed by several donor governments, including Canada and the United Kingdom. This facility is designed to offer increased financial protection against climate-related shocks and other crises.
The RAM project is expected to benefit nearly 1.89 million people, with a special focus on over 1 million women and 350,000 young people in low-income rural areas. The funding will enable microfinance institutions to continue providing crucial services even during times of financial pressure caused by climate events. It will also enhance access to microcredit, offering ‘recovery loans’ to individuals and small businesses to help them regain financial stability.
This initiative is part of the World Bank’s broader efforts to promote financial inclusion and climate resilience in Pakistan. Since joining the World Bank in 1950, Pakistan has received a total of $48.3 billion in financial assistance. In February, a World Bank delegation visited Pakistan to discuss economic reforms, including privatization, following the completion of the Country Framework Programme in January, which outlines about $20 billion in potential assistance.
The RAM project is the latest step in Pakistan’s ongoing partnership with international financial institutions to promote economic stability and resilience in the face of climate challenges.
