ADB approves $25mln in loan

ISLAMABAD: The Asian Development Bank (ADB) has approved a $25 million syndicated loan to support the lending operations of Kashf Foundation, one of Pakistan’s leading microfinance service providers, to low-income households and women-led micro, small, and medium-sized enterprises (MSMEs).

The loan would help expand women’s access to finance in Pakistan and empower them economically.

“There is a need to improve access to finance in Pakistan, particularly for women in low-income communities as well as women-led enterprises. An inclusive financial sector is essential for Pakistan’s sustainable development,” ADB Investment Specialist Tina Rohner said. “ADB’s partnership with Kashf Foundation will help address this issue and provide much-needed financial products for MSMEs led by women, which have the potential to contribute significantly to the country’s growth and development.”

Access to finance remains limited in Pakistan, with only 21.3 percent of adults and 7.0 percent of women over the age of 15 having a bank account in fiscal year 2017.

This situation was particularly acute for MSMEs and individual borrowers, especially women-run microenterprises, as these entities receive only about 7.0 percent of total bank credit to the private sector despite contributing around 40 percent to GDP.

MSMEs account for about 98 percent of all enterprises in Pakistan, employing more than 80 percent of the non-agricultural labour force.

ADB’s assistance comprises an A loan (to be funded by ADB) of up to $15 million and a B loan of $10 million that will be funded by commercial co financers including international impact investors. The assistance will expand Kashf Foundation’s lending operations and market base, giving more women and women-led MSMEs access to much-needed long-term financing to further develop their livelihoods and incomes.