World Bank Approves $102M for Pakistan’s RAM Project to Boost Microfinance

ISLAMABAD: The World Bank’s Board of Directors has approved $102 million in financing for the Resilient and Accessible Microfinance (RAM) Project, aimed at expanding access to microcredit and strengthening the resilience of the microfinance sector and its borrowers, particularly against climate-related shocks.

“Microfinance is a critical tool for supporting the livelihoods of vulnerable populations in Pakistan. This project will strengthen the resilience of the microfinance sector, particularly in the face of growing climate risks, ensuring that essential financial services remain available to those who need them most, especially in rural areas,” said Najy Benhassine, World Bank Country Director for Pakistan. “This initiative aligns with our broader commitment to promoting financial inclusion in Pakistan and enhancing resilience to climate change, as outlined in our new 10-year Country Partnership Framework.”

The RAM Project is expected to benefit nearly 1.89 million people, including over 1 million women and more than 350,000 youth, primarily in low-income and rural communities. By providing financial resources to microfinance institutions (MFIs), the project ensures continued access to financial services, even amid climate-induced financial pressures. The initiative will facilitate microcredit for individuals and small businesses, offering recovery loans to help borrowers regain financial stability.

“The Resilient and Accessible Microfinance Project is designed based on lessons learned from the devastating floods of 2022 and marks a significant step toward strengthening financial inclusion in Pakistan,” said Namoos Zaheer, Task Team Leader for the Project. “It will empower women, small farmers, and rural families who are disproportionately affected by climate shocks, enhancing their economic resilience and financial stability.”

The project will be implemented by the Ministry of Finance through the State Bank of Pakistan (SBP). It is the first in a series of interventions to support the microfinance sector, designed in collaboration with international financial institutions. The project includes the establishment of a Climate Risk Fund to safeguard MFIs against climate-induced economic challenges, the innovative use of agrotechnology solutions to support farmers and small businesses, capacity-building programs for microfinance institutions to enhance risk management and financial resilience, and the development of advanced risk management frameworks to improve the sector’s long-term sustainability.

The RAM Project is co-financed by a $23 million grant from the Global Shield Financing Facility (GSFF). The GSFF is a multi-donor trust fund hosted by the World Bank Group, funded by the Governments of Canada, Germany, Japan, Luxembourg, and the United Kingdom. It supports climate-vulnerable countries by enhancing financial protection against climate shocks, disasters, and crises.