ISLAMABAD: The government has initiated a project to garner World Bank support to implement the National Financial Inclusion Strategy (NFIS) for achieving its financial inclusion goals and moving towards universal financial access.
According to details of the project prepared by the World Bank, the International Bank for Reconstruction and Development (IBRD) will provide $80 million while the International Development Association (IDA) will support the project with a soft loan of $50m. While appraisal of the project will begin next month, the World Bank executive board is expected to approve the $130m project early next year.
Pakistan’s goal is to expand financial access to at least fifty per cent of adults, and to increase the percentage of SME loans in bank lending to 15pc by 2020. In addition, other headlines targets of the NFIS include by 2020 an increase in the percentage of adults living within 5kms of an access point, 25pc of women with a transaction account and 10pc of adults saving at a formal financial institution in the past year.
The project will help move away from subsidy programme, which can lead to distortions, to more systemic approaches in line with the NFIS.
Pakistan accounts for 5.2pc of the world’s unbanked adults and is a priority country for the World Bank. This is also reflected in the Bank’s country partnership strategy (2015-19) in which one of the target outcomes is improving financial inclusion of ‘Micro, Small and Medium Enterprises’ (MSMEs), women and youth.
In order to open up access to financial services available to women and MSMEs in Pakistan and modernise financial infrastructure, the project will direct support to the implementation of the NFIS. It will also provide a credit facility for the microfinance sector and financing support, which could be in the form of a risk sharing facility, for increased lending to SMEs.
Official sources said that the project is expected to cover MSMEs across Pakistan.