The World Bank (WB) has approved a package of $223 million to help millions of Pakistanis, especially women and the poor, to get access to financial services and to improve living conditions in parts of Karachi.The World Bank (WB) has approved a package of $223 million to help millions of Pakistanis, especially women and the poor, to get access to financial services and to improve living conditions in parts of Karachi.
The Financial Inclusion and Infrastructure Project will provide $137 million to help millions of Pakistanis, especially women and the poor who do not have bank accounts and cannot get loans, to have access to these and other financial services.
The project would improve access to financial and banking services for 50 percent of all adults, half of them women, throughout Pakistan by 2020. It will also boost private sector credits to small and medium businesses to 15 percent from 7 percent in 2015.
Background
In 2015, the Pakistan government launched the National Financial Inclusion Strategy (NFIS) with a vision to allow individuals and firms access to a range of quality payments, savings, credit and insurance services which meet their needs with dignity and fairness.
In the last 25 years, Pakistan’s financial sector has gone from one dominated by underperforming state-owned banks to a modern and sound financial sector dominated by private banks. The banking sector accounts for 75 per cent of financial sector assets, with the balance in the National Savings Scheme (16.5pc); insurance companies (5pc); non-bank financial institutions (4.0pc); and microfinance institutions (0.5pc).
The $86 million Karachi Neighborhood Improvement Project would benefit almost one million residents, business owners and commuters by improving living conditions in the Saddar, Korangi and Malir areas of Karachi. It will help improve the safety, accessibility, and attractiveness of public spaces in Karachi, such as streets, parks, city squares and pedestrian areas.
Both credits are financed by the International Development Association, the World Bank's fund for the poor, with a maturity of 25 years, including a grace period of 5 years.
According to a World Bank report, a dual-track approach has been proposed in light of the depth and scale of the city’s challenges in terms of policy reforms, governance and infrastructure needs, which will require a longer time to design and agree on institutional reform measures.
Pakistan Financial Inclusion and Infrastructure Project
Total: $137 million
IDA Credit: $37 million equivalent
IDA Scale Up Facility: $99.7 million
Terms: Maturity = 25 years; Grace = 5 years
Project ID: P159428
Project description: This project will contribute to increasing access and usage of digital payments and other financial services for households and businesses in Pakistan.