Islamabad, January 16, 2025 – Finance Minister Senator Muhammad Aurangzeb chaired a high-level meeting with the leadership of the Pakistan Microfinance Investment Company (PMIC) today to address challenges and explore opportunities in the microfinance sector, a key driver of financial inclusion in Pakistan.
Established in 2016 under the National Financial Inclusion Strategy (NFIS), PMIC operates as a wholesale microfinance apex organization. During the meeting, the PMIC team presented a comprehensive overview of the microfinance landscape in Pakistan, emphasizing the country’s lagging position in financial inclusion compared to regional counterparts such as Bangladesh, India, and the Philippines.
With a potential microcredit market of 41 million, only 7.4 million clients are currently served, highlighting a significant gap in outreach.
The discussion also delved into the roles of Microfinance Institutions (MFIs) and Microfinance Banks (MFBs). The PMIC team noted that while MFBs primarily focus on gold-backed loans and nano-finance, MFIs target underserved rural communities, particularly women, through broader outreach initiatives.
Key Challenges Identified
The meeting outlined several critical hurdles impacting financial inclusion in Pakistan:
- Dual Regulatory Framework: Separate regulations for MFIs and MFBs complicate the microfinance ecosystem.
- Limited Access to Funding: Substantial liquidity is required to scale outreach, yet funding remains a persistent challenge.
- Insufficient Institutional Capacity: The limited number of active entities restricts the sector’s growth.
- Low NFIS Target Ownership: Proactive oversight is needed to achieve the ambitious goals of the NFIS 2024-28.
Proposed Solutions and Government Support
The Finance Minister appreciated the detailed insights and urged PMIC to propose innovative funding mechanisms, including equity endowment funds and targeted government allocations, to enhance the sector’s capacity and outreach. He reiterated the government’s commitment to making financial inclusion a cornerstone of sustainable economic development.
“The government is dedicated to accelerating financial inclusion, especially for rural and underserved populations. We must address these challenges with realistic and practical solutions to align with NFIS goals,” stated Senator Aurangzeb.
The meeting concluded with a shared resolve to strengthen collaboration between stakeholders to enhance access to financial services and promote economic development across Pakistan.
Participants
The PMIC delegation was led by Naveed A. Khan, Chairman PMIC, and included Yasir Ashfaque, CEO PMIC; Waqas ul Hassan, CEO Karandaaz Pakistan; and Saqib Siddique, Head of Portfolio & Sector Development, PMIC.