Press Release: U.S. Government and Khushhali Microfinance Bank sign $25 Million Commitment to Empower Women and Micro and Small Businesses in Pakistan
The United States government, through the U.S. International Development Finance Corporation (DFC) and the U.S. Agency for International Development (USAID), launched a new partnership with Pakistan’s leading financial institution Khushhali Microfinance Bank Ltd. (KMBL) to support micro, small and medium sized enterprises (MSMEs) and women-led businesses in Pakistan.
The partnership will enable the MSMEs to access finance with enhanced credit history and collateral accommodations. This project is made possible by an investment guarantee of up to $25 million provided by DFC in collaboration with USAID/Pakistan to KMBL.
The launch event brought together DFC’s Chief Climate Officer Jake Levine, USAID/Pakistan’s Acting Mission Director Michael Rossman, KMBL President Ghalib Nishtar, and other senior U.S. government and KMBL representatives.
DFC has provided KMBL with a $10 million, 50 percent loan portfolio guarantee to mobilize commercial loans to 2X-qualified MSMEs that are majority-owned, operated or staffed by Pakistani women across the country. DFC’s 2X Women’s Initiative has catalyzed more than $13.5 billion of gender smart investment in projects that are owned by women, led by women, or provide a product or service that empowers women.
DFC also provided a $15 million, 50 percent loan portfolio guarantee to KMBL that will help mobilize commercial loans, specifically to MSMEs operating in Khyber Pakhtunkhwa Province and its Newly Merged Districts (NMDs).
USAID Acting Mission Director Michael Rossman said, “U.S. government initiatives, such as these loan guarantee facilities, are playing a key role in unlocking private financing for small and medium businesses and women entrepreneurs and advancing the U.S. government’s long-term commitment to helping Pakistan secure a more prosperous future.”
“Today’s signing underscores DFC’s commitment to supporting the resilience of small businesses that improve lives and enable inclusive growth and employment,’ said DFC Chief Climate Officer Jake Levine. “This support will help small businesses in Pakistan adapt to the impacts of the climate crisis by providing financing to support businesses in regions impacted by the recent floods as well as those that increase access to new mitigation technologies.”
KMBL President Ghalib Nishtar expressed his gratitude to the DFC for placing its trust in KMBL’s high standards and said “These loan portfolio guaranties will build-capacity and create more opportunities for KMBL to empower micro and small businesses, especially those owned by female-entrepreneurs, to contribute in the socio-economic uplift of the country.”
Research data shows MSMEs contribute to more than 30 percent of Pakistan’s Gross Domestic Product and generate 80 percent of the country’s non-agricultural employment, but only represent 6.3 percent of all private sector lending. Women-led MSMEs make up approximately 8 percent of all MSMEs in Pakistan, yet they face a finance-gap of $3.5 billion. Loan guarantee mechanisms enable financial partners to transfer certain risks that they would otherwise be unable to easily absorb or manage on their own thereby helping to mobilize resources to assist underserved populations and regions.
Photo courtesy of U.S. Embassy Islamabad.
Source: U.S. International Development Finance Corporation (link opens in a new window)