Program to Improve Access to Financial Services for Pakistan’s Poor
Wednesday, January 3, 2007
An ADB loan package totaling US$320 million will improve access of Pakistan’s poor to wider financial services.
Pakistan has achieved growth rates averaging over 7.5% for the past three years, and reforms have led to a better and more predictable environment for public and private investment and thus to job creation and higher incomes.
This growth has cut poverty and increased prosperity. However, 24% of the population still lives below the poverty line.
?To ensure that growth is inclusive and sustainable, more reforms are needed that are backed by specific actions targeting those left behind,? says Julie Rogers, team leader for the project, officially called the Improving Access to Financial Services (Phase I) Program.
Microfinance reaches fewer than 1 million people in Pakistan, but the potential market is many times this size – about 20 million people. The Government has thus made microfinance a key theme under its Medium-Term Development Framework 2005-2010 and the broader Strategic Directions to Achieve Vision 2030.
The sector has improved but still does not touch vast numbers of people. Building a more inclusive financial sector means deepening the quality of the service and expanding the coverage, while at the same time striving for efficiency.
The ADB-backed program will address these challenges by developing a supportive legal and regulatory environment and removing bottlenecks and constraints at two strategic levels – the formal and informal intermediary networks and – clients.
Key activities will include
??? * the promotion of better technology for delivering financial services more efficiently and at lower cost
??? * expanding the range and quality of financial products and services including those for the Islamic market
??? * developing public-private partnerships
??? * stepping up reliable business and credit information and systems
??? * expanding fast, reliable and lower-cost remittance services for overseas workers
??? * capacity building for financial institutions and authorities
??? * and support for literacy (financial and basic) to improve access to finance and its utilization for sustained economic growth.
?There is a large potential demand for microfinance services among the poorest people in Pakistan, especially for savings and remittances facilities,? Ms. Rogers adds. ?Improving access will improve their opportunities for income generation, thus reducing their poverty and vulnerability.?
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