Karachi, January 31, 2025 – The Governor of the State Bank of Pakistan (SBP), Jameel Ahmad, has called on banks to increase their rural footprint by opening more branches dedicated to agricultural financing, with the goal of boosting the country’s agriculture sector. This directive is part of the SBP’s broader efforts to address the persistent challenges faced by Pakistan’s agriculture industry and ensure its long-term growth and sustainability.
Governor Ahmad made these remarks during a pivotal meeting of the Agricultural Credit Advisory Committee (ACAC) held in Multan, where the critical role of agriculture in Pakistan’s economy was discussed. In his keynote address, the Governor highlighted the sector’s vital contributions to food security, rural employment, and its linkages to both the industrial and services sectors. Despite these contributions, he acknowledged the ongoing issues that hinder the sector’s potential, such as low productivity, climate change, and limited financial inclusion.
The Governor provided an overview of the sector’s recent performance, noting that although agriculture showed impressive growth in fiscal year 2024, the sector faced a slowdown in the first quarter of fiscal year 2025. Agricultural growth dropped to 1.2% in Q1-FY25, compared to 8.1% in the same period the previous year. This decline impacted the overall GDP growth, which slowed to 0.9% from 2.3% in Q1-FY24. Governor Ahmad attributed this dip to factors like a modest wheat crop and emphasized the need for resilience, innovation, and long-term planning to sustain growth in the agriculture sector.
On a positive note, the Governor pointed out that agricultural credit disbursement reached a record Rs 2,216 billion during FY24, marking a 25% increase from the previous year. The first half of FY25 saw Rs 1,266 billion disbursed, with the number of borrowers rising to 2.86 million. Despite these achievements, Governor Ahmad urged financial institutions to prioritize expanding their presence in rural areas, particularly in underserved regions, to enhance access for small borrowers and boost the agriculture sector’s financial inclusion.
To address these challenges, Governor Ahmad urged banks to fully implement their Agricultural Credit Expansion Plans. He emphasized the need for greater investment in technology and called for closer collaboration between financial institutions, government bodies, fintech companies, and microfinance institutions to deliver tailored digital solutions for small farmers. These efforts are intended to create a more robust ecosystem for agricultural financing, ultimately supporting the growth and sustainability of the agriculture sector.
Looking ahead, Governor Ahmad outlined three key focus areas for the future of Pakistan’s agriculture sector. First, he stressed the importance of addressing climate change by adopting climate-smart agricultural practices, which include green financing initiatives and farmer training programs. Second, he advocated for the use of modern technology, including geo-spatial tools, to optimize resource management and reduce risks in agriculture. Third, he highlighted the potential of the livestock sector, which makes a significant contribution to Pakistan’s GDP and exports, and recommended the adoption of advanced techniques in breeding, diet, and waste management to enhance its sustainability.
Governor Ahmad also addressed the specific challenges faced by farmers in Balochistan and pledged to convene a meeting with stakeholders to address agricultural credit bottlenecks in the region. During the session, the potential of geo-spatial technologies and the Climate Resilience Fund, a World Bank initiative, were discussed as tools to support microfinance institutions in adapting to climate challenges.
In his concluding remarks, Governor Ahmad emphasized that Pakistan’s agriculture sector holds immense untapped potential. He called for collective efforts to expand financial access, foster innovation, and tackle climate change to transform agriculture into a more resilient and competitive driver of economic growth. The ACAC meeting remains a crucial platform for addressing the evolving needs of the agriculture industry and ensuring its sustainable development in the future.