A UN poverty-fighting agency and Pakistans Government has sealed a 26,5 million US dollar loan agreement in Rome that will give hundreds of thousands of people living in the Asian countrys rural areas access to innovative financial services.
The loan from the International Fund for Agricultural Development (IFAD) will help finance the 30,5 million dollar Microfinance Innovation and Outreach Programme, meant to support pilot projects that will test new microfinance products and services for Pakistans rural poor. At least 180.000 households are expected to benefit.
– This innovative programme will ensure that Pakistans rural poor will be able to access a wider range of sustainable financial services and products that respond directly to their needs, said Nigel Brett, IFADs Country Programme Manager for Pakistan. IFAD is working closely with the World Bank on the initiative.
IFAD will also work with the Pakistan Poverty Alleviation Fund to develop a variety of new microfinance products and services aimed at reducing debt, minimizing risk and generating income and assets.
These could include livestock insurance, equity partnerships, leasing arrangements, Islamic modes of financing and other innovative financing systems. Islamic financing mechanisms must adhere to a set of rules and laws collectively known as the Sharia.
Further, the development programme will strengthen local lending institutions so they can expand and improve their services throughout rural areas. And it will expand employment opportunities as young graduates gain practical experience by training as interns and then secure employment in local microfinance institutions.
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