$155.5 million in financing has been approved by the Asian Development Bank (ADB) for Pakistan in order to assist policy reforms that aim to increase women’s access to credit and loans for micro, small, and medium-sized businesses run by Women.
This comes just a few days after the Asian Development Bank (ADB) authorized $658.8 million in funding to assist Pakistan’s sustainable growth and aid in its recovery from the cost-of-living issue experienced last year.
The Manila-based lender said in a statement on Monday that the most recent funding consists of three loans: a $50 million Financial intermediation loan that will allow participating financial institutions to lend to women entrepreneurs; a $100 million policy-based loan that supports legal and regulatory reforms that will help women better access finance; and a $5.5 million grant that will finance related activities.
“If women do not have equal economic opportunities and benefits, inclusive, resilient, and sustainable development cannot be achieved,” stated Yevgeniy Zhukov, director general of the ADB for Central and West Asia.
“Pakistan’s current financing ecosystem will be transformed by the ADB’s new program, enabling women to access much-needed financing and improve their standard of living while making significant economic contributions.”
According to the ADB, Pakistan now has one of the lowest rates of female entrepreneurship in the world, with only 4% of working-age adults in the country having entrepreneurial intentions. The country’s female labor force participation rate is roughly 23%.
It also stated that although financial inclusion in Pakistan has been rising, women are still being left behind, with the gender finance gap standing at 34% at the moment.
According to ADB Senior Financial Sector Economist Andrew McCartney, “there are many women entrepreneurs in Pakistan, but they remain unrecognized due to their small and informal nature and lack of incentives to register their businesses formally or to grow.”
“Policies need to acknowledge the value of women in entrepreneurship and establish supportive environments that help women participate more actively in the formal economy and provide them with greater opportunities to expand their businesses.”
The policy-based loan encourages changes to national policies that take into account the requirements of women. One such example is the State Bank of Pakistan’s Banking on Equality Policy, which among other things mandates that banks set up divisions devoted to serving women.
It backs policies that give women access to digital channels for credit and credit alternatives, give them financial advice and training, and enhance their working conditions in the banking industry.
Through lending via participating financial institutions, the Financial Intermediation Loan is anticipated to assist over two million women entrepreneurs, including roughly 510,000 who did not have access to financing previously.
The Asian Development Fund (ADF) award will support initiatives like creating a digital platform that connects women to financial services and financial literacy classes.
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