On Monday, the Asian Development Bank (ADB) declared that it has granted Pakistan $155.5 million in financing. This money will be used to promote legislative changes that would increase women’s access to finance and credit women-owned micro, small, and medium-sized businesses.
The Manila-based lending organisation said in a statement that the funding consisted of a $100 million policy-based loan that backs legislative and regulatory changes aimed at enhancing women’s access to greater financial opportunities.
To allow participating financial institutions to lend to female entrepreneurs, another $50 million financial intermediation credit is proposed. A further grant of $5.5 million will fund comparable initiatives.
“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.
“With the support of ADB’s new programme, Pakistan’s current financing ecosystem will be transformed, enabling women to have better access to much-needed financing and to make significant economic contributions while improving their standard of living.”
Pakistan’s current female labour force participation rate is at 23%. At 4% of working-age women, the nation also has some of the lowest percentages of female entrepreneurship worldwide.
Although there has been progress in Pakistan’s financial inclusion, women continue to be disadvantaged due to a gender finance gap that now stands at 34%.
According to ADB Senior Financial Sector Economist Andrew McCartney, “there are many women entrepreneurs in Pakistan, but they remain unrecognised, being small and informal in nature and lacking the incentives to register their businesses officially 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 developing financial literacy training. The poorest and most vulnerable developing member nations of the ADB receive funding from the ADF.
