Share this story!            

$2m grant from Japan-financed fund: ADB micro-finance project for poor

Staff Report

ISLAMABAD: A two million dollars grant from the Asian Development Bank’s Japan Fund for Poverty Reduction (JFPR), financed by the government of Japan, will test ways to expand the micro-finance outreach and services to the poor in Pakistan.

According to an announcement made on Tuesday, the project will develop innovative savings products, complete with policies and procedures that will be disseminated to all micro-finance banks. The First Micro-finance Bank (FMFB) will test the new products in northern districts of the country, while the Kashf Foundation, after obtaining a licence to be a micro-finance bank, will test them in Lahore, benefiting around 2,000 clients.

To lower the transaction costs and improve the poor people’s access to the financial services, mobile banking and mobile phone-based technology will be explored as delivery channels. The FMFB will pilot these in the NWFP, the Northern Areas, and the lower Sindh, to reach about 15,000 people. All micro-finance banks are eligible to submit their proposals to develop such innovative delivery channels.

Another micro-finance institution will be selected to pilot a system for targeting the poorest, where safety nets are provided in the form of food stamps and skills training are provided, along with access to savings and credit.

The project will also support financial literacy training for at least 1,000 people, with a special focus on women. It aims to increase the knowledge, skills, and attitudes necessary for the poor to manage their household finances.

The project complements the Improving Access to Financial Services Program, approved in December 2006 with a $320 million loan from ADB. The government will contribute $100,000 equivalent toward the project’s total estimated cost of $2.85 million, while $750,000 will be supported by grantees. The Ministry of Finance is the executing agency for the project, which will be carried out over about three years.

Home | Business

Share this story!