IFC expands risk-sharing partnerships to boost trade and microfinance in Pakistan

KARACHI: HBL Microfinance Bank (HBL MfB) has signed a $80 million risk-sharing agreement (RSA or the facility) with the International Finance Corporation (IFC), a member of the World Bank Group.

“This facility, which is supported by the private sector window of the Global Agriculture and Food Security Programme (GAFSP), will allow HBL MfB to share 50 per cent of the risk on its microfinance loan portfolio of up to $80 million (in PKR equivalent) with the IFC, on an unfunded basis,” the bank said in a statement on Thursday.

The collaboration between HBL MfB and the IFC will significantly enhance access to finance for smallholder farmers and microenterprises across the country, with a strong focus on women entrepreneurs.

President and CEO of HBL Microfinance Bank Amir Khan said, “By pioneering this risk-sharing facility in the microfinance sector, we are ensuring that underserved segments of the society -- especially small business owners and farmers, particularly women, have access to the capital they need to thrive.”

Regional Head of Financial Institutions Group (FIG) at IFC Momina Aijazuddin said: “Boosting access to finance, especially for smallholder farmers, small businesses and women, can be a gamechanger in Pakistan. With this in mind, IFC is excited to support this pioneering risk sharing facility which aims to de-risk HBL MfB’s on-lending activity to its microfinance clients and support critical growth opportunities in agriculture, entrepreneurship, and women’s empowerment.”

Standard Chartered Bank Pakistan and the International Finance Corporation (IFC) are looking to increase the risk-participation programme size to $400 million to boost access to trade finance, a statement said on Thursday.

The existing size of the programme is $200 million. The enhanced facility will enable SC Pakistan to continue to support short term-trade and working capital facilities for key large local corporates and exporters based in Pakistan.

A key milestone of the IFC and Standard Chartered’s global collaboration, this programme will leverage their long-standing relationship with export-based and large-scale manufacturing industries in Pakistan through the enhanced availability of trade and working capital loan facilities, including supply chain financing and sustainable finance product suites. This will enable the generation of foreign exchange inflows -- a key driver of sustainable economic growth in the country.

CEO and Head of Coverage, Standard Chartered Pakistan Rehan Shaikh said, “This collaboration with the IFC enables us to support our clients in growing their businesses and strengthening their growth potential.”

Regional Head of Industry of the IFC’s Financial Institutions Group for the Middle East, Turkiye, Central Asia, Pakistan, and Afghanistan Momina Aijazuddin said, “SMEs contribute 40 per cent to Pakistan’s GDP, and yet less than 200,000 out of an estimated 3.2 million SMEs have access to formal credit in the country. By strengthening our collaboration with Standard Chartered Pakistan and by looking into enhancing its Risk Participation Facility, we will aim to advance efforts to support SMEs and export-driven sectors with the working capital they need to grow and succeed.”