US, Khushhali bank to empower women, micro and small businesses

• The US government launched a new partnership with Khushhali Microfinance Bank Limited (KMBL) to support micro.
• The partnership will enable MSMEs to access finance with enhanced credit history and collateral accommodations.
• Women-led micro and small and medium enterprises (MSMEs) account for 8 percent of the private sector lending in Pakistan.

ISLAMABAD: The US government launched a new partnership with Khushhali Microfinance Bank Limited (KMBL) to support micro, small and medium-sized enterprises (MSMEs) and women-led businesses in Pakistan, a statement said.

The partnership through the US International Development Finance Corporation (DFC) and the US Agency for International Development (USAID) with Pakistan’s leading financial institution KMBL, will enable the MSMEs to access finance with enhanced credit history and collateral accommodations.

This project is made possible by an investment guarantee of up to $25 million provided by DFC in collaboration with the USAID Pakistan to KMBL.

USAID Acting Mission Director Michael Rossman said that the US government initiatives, such as these loan guarantee facilities, are playing a key role in unlocking private financing for small and medium businesses and women entrepreneurs and advancing the US government’s long-term commitment to helping Pakistan secure a more prosperous future.

DFC Chief Climate Officer Jake Levine said that the signing underscores DFC’s commitment to supporting the resilience of small businesses that improve lives and enable inclusive growth and employment.

“This support will help small businesses in Pakistan adapt to the impacts of the climate crisis by providing financing to support businesses in regions impacted by the recent floods as well as those that increase access to new mitigation technologies,” he added.

KMBL President Ghalib Nishtar expressed his gratitude to the DFC for placing its trust in KMBL’s high standards.

“These loan portfolio guarantees will build-capacity and create more opportunities for KMBL to empower micro and small businesses, especially those owned by female entrepreneurs, to contribute to the socio-economic uplift of the country,” he added.

The launch event brought together other senior US government and KMBL representatives.

DFC has provided KMBL with a $10 million, 50 percent loan portfolio guarantee to mobilize commercial loans to 2X-qualified MSMEs that are majority-owned, operated or staffed by Pakistani women across the country.

DFC’s 2X Global Women’s Initiative has catalyzed more than $13.5 billion of gender-smart investment in projects that are owned by women, led by women, or provide a product or service that empowers women.

DFC also provided a $15 million, 50 percent loan portfolio guarantee to KMBL that will help mobilize commercial loans, specifically to MSMEs operating in Khyber Pakhtunkhwa and its Newly Merged Districts (NMDs).

Research data shows that the MSMEs contribute to more than 30 percent of Pakistan’s gross domestic product (GDP) and generate 80 percent of the country’s non-agricultural employment, but only represent 6.3 percent of all private sector lending.

The women-led MSMEs make up approximately 8 percent of all MSMEs in Pakistan, yet they face a finance gap of $3.5 billion.

Loan guarantee mechanisms enable financial partners to transfer certain risks that they would otherwise be unable to easily absorb or manage on their own thereby helping to mobilize resources to assist underserved populations and regions.

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