Islamabad, Pakistan, June 14, 2002—The
International Finance Corporation, the private sector lending arm of the
World Bank Group, will make an equity investment of about US$2.7 million
(Pakistan Rupees 160 million equivalent) for a 24 percent stake in Pakistan’s
first private sector-licensed microfinance institution, The First MicroFinanceBank
Ltd (FMFBL).
The microfinance sector in Pakistan is underdeveloped and dominated by
public sector entities. IFC's investment, alongside that of reputable
domestic and international investors, is designed to demonstrate that microfinance
institutions can be financially sustainable. The principal sponsors
of the project are the Aga Khan Fund for Economic Development (AKFED) and
the Aga Khan Rural Support Programme (AKRSP).
AKFED is the economic development arm of the Aga Khan Development Network
(AKDN), a group of private, non-denominational development agencies seeking
to improve opportunities and living conditions in specific regions of the
developing world, especially Africa and Asia. Active in the fields
of industry, financial services, tourism development, and infrastructure
in 15 countries across South and Central Asia and Sub-Saharan Africa, AKFED
operates as a network of affiliates with more than 90 separate project
companies employing over 15,000 people and controlling assets in excess
of $1 billion.
AKRSP—a non-profit organization established in 1982—has operated a successful
integrated development scheme across six northern Pakistan districts generating
savings of more than $7 million and providing small loans to more than
20,000 people, while seeking to maintain an equitable gender balance amongst
borrowers.
FMFBL has established its head office in Islamabad where it has opened
its first branch. Additional branches are planned throughout
the country, including in major cities such as Rawalpindi, Karachi, and
Peshawar. Over the course of the first two years, FMFBL will absorb
the clientele of AKRSP’s microfinance program.
Technical assistance funding for the project is drawn from the SME Capacity
Building Facility, a $7.1 million initiative to support innovative efforts
in the field of micro enterprises and SMEs that IFC launched last year.
The facility supports up to 40 percent of the costs of pilot projects
that are unique and replicable and involve close partnership with outside
institutions.
IFC’s Country Manager for Pakistan, Mr. Farid Dossani commented,
“Making credit available to small and micro businesses is crucial to economic
growth in developing countries. This initiative will provide basic
financial services to underserved rural and urban people by helping to
mobilize savings and improve access to credit.”
Mr. Sultan Allana, AKFED’s representative on FMFBL’s board and FMFBL
Chairman said, “We are committed to providing assistance in addressing
issues relating to poverty alleviation in Pakistan and view this initiative
as a first step towards institutionalizing our approach in this underdeveloped
sector. Based on the experiences gained through AKRSP’s credit and
savings program which has been in operation since 1982 and AKFED’s involvement
with several microfinance projects around the world, we hope to establish
a sustainable and high impact institution in Pakistan in the coming years.”
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956 through the close of the last fiscal year on June 30, 2001, IFC
committed more than $31 billion of its own funds and arranged $20 billion
in syndications for 2,636 companies in 140 developing countries. IFC’s
committed portfolio at the end of FY01 was $14.3 billion.
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