PPAF, Karandaaz Pakistan and KfW Sign Agreement to Set Up Pakistan Microfinance Investment Company
Launching Ceremony of Pakistan Microfinance Investment Company
The Pakistan Poverty Alleviation Fund (PPAF), Karandaaz Pakistan (funded by UK’s Department for International Development) and Germany’s Kreditanstalt für Wiederaufbau (KfW) today signed off on the Shareholders’ Agreement for the establishment of Pakistan Microfinance Investment Company (PMIC) at a ceremony attended by the Honourable Finance Minister, Senator Ishaq Dar. The signing of the Shareholders’ Agreement is a crucial step towards creation of PMIC.
The establishment of PMIC, a private sector Investment Finance Company, was identified as one of the key milestones in the National Financial Inclusion Strategy (NFIS) launched by the Honourable Finance Minister in May 2015.
The Finance Minister said,
It is the goal of the government to meet the needs and aspirations of the poor and marginalized and disadvantaged households. The National Financial Inclusion Strategy (NFIS) launched by our government in May 2015 is targeted towards helping the poor segments of the society through financial inclusion. Today is indeed a momentous occasion for us, when we are establishing a new entity to spur the microfinance sector in Pakistan to the next level of growth. I would like to congratulate the shareholders of PMIC (PPAF, DFID through Karandaaz Pakistan and the German Development Bank KfW) and the UK and German governments for achieving this important milestone.
The objective of the Company is to provide much needed liquidity to microfinance providers serving the poor and micro and small enterprises in Pakistan. It is estimated that PMIC financing could support nearly 300,000 new job opportunities every year.
CEO, Karandaaz Pakistan, Mr. Ali Sarfraz Hussain said,
This is truly transformational for the microfinance sector in Pakistan and I am glad that Karandaaz Pakistan is a partner in this initiative. PMIC will help the sector to reach millions of underserved men and women in the coming years and would contribute to job creation and improving access to finance for micro and small businesses in the country.
Speaking at the occasion Deputy Head of DFID Pakistan, Judith Herbertson, said,
I am extremely pleased that the UK is associated with PMIC through Karandaaz Pakistan. This builds on our long-standing support to the financial inclusion agenda in Pakistan which has worked with the State Bank of Pakistan to leverage over £100 million to the microfinance sector, supported over 2 million people to gain access to microcredit. We believe that PMIC will help the microfinance sector reach the huge numbers of people in Pakistan who do not have access to microfinance services and contribute to job creation and growth of micro and small businesses in the country.
The new company will be set up as a Non-Bank Finance Company (NBFC) and will be led by a highly competent professional board. PPAF is providing PKR 3,000 million, DFID £15 million and KfW €7 million as initial equity contributions for this venture. The new company is expected to commence operations by July 1, 2016 after completing regulatory requirements.
Qazi Azmat Isa, CEO PPAF said,
This is a watershed moment for the microfinance sector as the PMIC will build upon the foundations we laid fifteen years ago by providing responsible financial services to the millions of poor and financially excluded individuals of Pakistan.
PPAF has been the sector developer for microfinance in Pakistan by providing revolving funds to Microfinance Institutions and building capacity of organizations to become more effective and efficient. Currently approximately three million individuals in Pakistan are accessing microfinance services out of the estimated potential market of 20.5 million and the sector expansion is constrained due to limited financing. The microfinance regulatory environment in Pakistan is rated amongst the top in the world and the PMIC will provide much need liquidity to the microfinance sector to reach out to 10 million clients by 2020, a target set by the industry to improve financial inclusion in the country.