BusinessWomen & Children

ADB Grants $155.5m to Boost Women’s Financial Inclusion in Pakistan

The Asian Development Bank (ADB) has approved a $155.5 million financing package for Pakistan to support policy reforms and initiatives that will help women access finance and credit more easily and effectively.

The financing package, announced on Monday, consists of three components: a $100 million policy-based loan that supports legal and regulatory reforms that will facilitate women’s access to finance; a $50 million financial intermediation loan that will enable participating financial institutions to lend to women entrepreneurs; and a $5.5 million grant that will finance related activities such as financial literacy programs and a digital platform that links women to financial services.

The financing package is part of ADB’s efforts to help Pakistan achieve inclusive, resilient and sustainable development by enhancing women’s economic opportunities and benefits. ADB Director General for Central and West Asia Yevgeniy Zhukov said that women’s financial inclusion is essential for Pakistan’s economic growth and social development.

“ADB’s new program will help transform Pakistan’s current financing ecosystem to help women to access much-needed finance and empower them to boost their livelihoods while contributing significantly to the economy,” Zhukov said in a statement.

According to ADB, Pakistan has one of the lowest rates of women’s entrepreneurship in the world, with only 4% of female working age adults owning or managing a business. Female labour force participation in Pakistan is also low, at about 23%, and women face a large gender finance gap of 34%, meaning that they have less access to formal financial services than men.

ADB Senior Financial Sector Economist Andrew McCartney said that many women entrepreneurs in Pakistan are small and informal, and lack the incentives and support to register their businesses formally or to grow them.

“Policies must recognise the importance of women entrepreneurship and create an enabling environment that increases women’s participation in the formal economy and gives them more opportunities to grow their businesses,” McCartney said.

The policy-based loan supports reforms that incorporate women’s needs into national policies, such as the State Bank of Pakistan’s Banking on Equality Policy that, among a range of measures, requires banks to establish departments dedicated to providing services to women. It also supports measures that enable women’s access to credit and credit alternatives through digital channels, provide financial training and advisory services to women, and improve the working conditions of women within the finance sector.

The financial intermediation loan is expected to benefit around two million women entrepreneurs, including about 510,000 who previously had no access to finance, through lending via participating financial institutions. The loan will help increase the availability and affordability of financial products and services for women, especially those in rural areas and low-income groups.

The grant from the Asian Development Fund (ADF) will finance activities that complement the policy and financial interventions, such as the development of financial literacy programs and a digital platform that links women to financial services. The grant will also support the monitoring and evaluation of the program’s impact and outcomes.

The financing package comes days after ADB approved $658.8 million in financing to support Pakistan’s sustainable growth and help it recover from last year’s cost-of-living crisis.

Back to top button