Empowering Pakistan's SMEs through Microfinance and Strategic Partnerships

Strategic Insights -

Pakistan's micro, small, and medium enterprises (MSMEs) are the backbone of the national economy, contributing 40% to the GDP but receiving less than 6% of private sector credit. President and CEO of Mobilink Microfinance Bank Limited (MMBL), Haaris Mahmood Chaudhary, emphasized the crucial role of microfinance in empowering these enterprises, enabling nearly two-thirds of new bank accounts opened over the last five years. The industry has served approximately 10 million borrowers, with 34.8% being female, and has an outstanding portfolio of over Rs. 650 billion, with MFBs contributing 71.3% of the total.

Key Takeaways:

  • The government of Pakistan aims to extend financial schemes and development programs to microenterprises through a partnership between Mobilink Microfinance Bank Limited (MMBL) and the Small and Medium Enterprises Development Authority (SMEDA).
  • The partnership aims to provide loans and business development services to small businesses operating in rural areas, addressing the systemic gap of access to formal financing.
  • Microfinance has emerged as a crucial vehicle for financial inclusion in Pakistan, enabling nearly two-thirds of all new bank accounts opened over the last five years, with 10 million borrowers and 34.8% being female.
  • The outstanding microfinance portfolio stands at over Rs. 650 billion, with microfinance banks (MFBs) contributing 71.3% of the total.
  • The partnership marks a shift from piecemeal approaches of the past, integrating policy frameworks, financing, and training programs to address multiple barriers simultaneously.
  • SMEDA has signed similar agreements with the Pakistan Microfinance Network and Akhuwat, building a growing coalition of institutions committed to fostering inclusive and sustainable economic growth.

Statistics:

  • 40% of the GDP comes from micro, small, and medium enterprises (MSMEs).
  • Less than 6% of private sector credit is received by MSMEs.
  • 7.1 million MSMEs lack access to formal financing, with the majority in rural areas.
  • 34.8% of the microfinance lending is to female borrowers.
  • Approximately 10 million borrowers are served by the microfinance sector.
  • The outstanding microfinance portfolio stands at over Rs. 650 billion.
  • Microfinance banks (MFBs) contribute 71.3% of the total microfinance portfolio.

Sources:

  • Haaris Mahmood Chaudhary, President and CEO of Mobilink Microfinance Bank Limited (MMBL).
  • Small and Medium Enterprises Development Authority (SMEDA).
  • Pakistan Microfinance Network.
  • Akhuwat.