March 19, 2025 (MLN) – In a major boost for Pakistan’s financial inclusion efforts, the World Bank’s Board of Directors has approved $102 million in funding for the Resilient and Accessible Microfinance (RAM) Project. This initiative aims to significantly enhance access to microcredit and strengthen the resilience of Pakistan’s microfinance sector, particularly in the face of growing climate-related challenges.
Microfinance has long been an essential tool for supporting the livelihoods of vulnerable populations in Pakistan. Recognizing its importance, Najy Benhassine, the World Bank Country Director for Pakistan, emphasized that the RAM Project will help fortify the microfinance sector against climate risks. He noted, “This project will help strengthen the resilience of the microfinance sector, particularly in the face of growing climate risks, ensuring that the sector can continue to provide essential financial services to those who need them most, especially in rural areas.”
As climate-related shocks, such as flooding and droughts, increasingly threaten the financial stability of low-income communities, this initiative aims to equip microfinance institutions (MFIs) with the necessary financial resources to continue offering crucial services to their customers. This includes not just regular microcredit but also specialized recovery loans to help individuals and small businesses regain financial stability following disasters.
The RAM Project is set to benefit approximately 1.89 million people, including over 1 million women and more than 350,000 youth. The project focuses especially on vulnerable and low-income rural communities, which are often the hardest hit by climate change and economic instability. By providing financial security and access to essential credit, the project will empower marginalized populations to better withstand economic shocks and create pathways for improved financial well-being.
“This project has been designed based on lessons learned from the devastating floods of 2022,” said Namoos Zaheer, Task Team Leader for the project. “It will enhance economic empowerment and resilience for those at the bottom of the economic pyramid, particularly women, small farmers, and families in rural areas who are more prone to climate shocks.”
The RAM Project will be implemented by the Ministry of Finance through the State Bank of Pakistan and will be rolled out in phases. This approach will ensure the project is integrated closely with other ongoing initiatives and international financial institutions working to bolster Pakistan’s resilience against climate impacts. The project’s key components include the establishment of a Climate Risk Fund, the innovative application of agrotechnology solutions, capacity building for microfinance institutions, and the development of risk management frameworks designed to enhance the sector’s resilience.
Furthermore, the project receives additional backing through a $23 million grant from the Global Shield Financing Facility (GSFF), a multi-donor trust fund hosted by the World Bank Group. The GSFF is supported by governments from Canada, Germany, Japan, Luxembourg, and the United Kingdom and aims to provide financial protection to vulnerable communities against climate-related shocks and disasters.
The World Bank’s financing is part of a broader strategy to reinforce financial stability for low-income populations in Pakistan. It aims to ensure that even in the face of natural disasters and economic challenges, microfinance institutions are equipped to continue serving the needs of the most vulnerable populations. With climate risks posing an increasing threat, this initiative is crucial for sustaining Pakistan’s efforts toward financial inclusion and resilience in the face of both economic and environmental challenges.
This project marks an important step forward in reinforcing the microfinance sector‘s ability to provide long-term support to those most in need, especially in rural Pakistan, where access to financial services remains limited. It also aligns with Pakistan’s broader climate adaptation goals, combining financial resilience with sustainable development.