The International Finance Corporation, a member of the World Bank Group, has approved a $10 million loan for ASA Microfinance Bank (Pakistan) Limited to expand access to finance for women entrepreneurs and microbusinesses across the country. The four-year financing will provide additional liquidity to the microfinance bank, enabling it to increase lending to women borrowers while supporting the continued strengthening and expansion of its operations. The investment comes as Pakistan continues to face a substantial gap in access to formal financial services and financing for micro, small and medium enterprises.
The financing will give ASA Microfinance Bank additional resources to expand its lending activities and reach more women borrowers and small businesses. Women entrepreneurs and microbusiness owners often face greater difficulty in securing formal financing, limiting their ability to establish, expand or sustain their businesses. Through the new facility, the bank will have additional liquidity to support lending activities targeted at these segments and broaden access to formal financial services.
The IFC investment is supported by the International Development Association Private Sector Window Blended Finance Facility and will be processed under IFC’s MSME Finance Platform. The platform supports financial institutions that provide financing to small businesses in emerging markets. The facility is designed to strengthen the ability of financial institutions to extend financing to MSMEs, which remain an important source of economic activity and employment but frequently face difficulties obtaining credit from formal financial institutions.
Pakistan continues to have a significant financial access gap. According to the information accompanying the investment, only 27 percent of Pakistani adults have access to a bank account. At the same time, the country’s financing gap for micro, small and medium enterprises is estimated at approximately $57.8 billion, equivalent to around 20 percent of gross domestic product. The scale of the financing shortfall indicates the challenge faced by businesses that require formal credit to support working capital, investment and expansion.
The financing constraints are particularly significant for MSMEs, with around 39 percent of such businesses considered credit constrained. Women face an additional gap in accessing formal financial services. The share of women with access to a formal account is 30.4 percentage points lower than the corresponding share among men. The disparity highlights the financial access challenges faced by women and provides an important area for targeted lending and financial inclusion initiatives.
Alongside the loan, IFC will provide advisory services to ASA Microfinance Bank to strengthen its gender-disaggregated data reporting systems and practices. The advisory component is intended to help the bank develop a clearer understanding of the financial needs and borrowing patterns of women customers. Improved data can support the institution in assessing its reach among women borrowers and developing financial services that are better suited to their requirements.
The advisory support will complement the financing provided through the four-year loan by strengthening the bank’s ability to identify and respond to the financial needs of women entrepreneurs. Better gender-disaggregated reporting can also give the institution greater visibility into its lending to women and help inform future efforts aimed at expanding financial access.
The IFC investment in ASA Microfinance Bank represents a financing initiative focused on two major areas of Pakistan’s financial sector: expanding access to finance for smaller businesses and reducing the gap faced by women in formal financial services. With the $10 million facility, ASA Microfinance Bank will receive additional liquidity for lending to women borrowers and microbusinesses, while IFC’s advisory assistance will support improvements in the bank’s gender-related data practices.
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