Mr. Ali Sarfraz Hussain, CEO Karandaaz Pakistan, Mr. Qazi Azmat Isa, CEO PPAF and Dr. Parvaiz Naim, Senior Sector Coordinator, KFW signing agreement to set up Pakistan Microfinance Investment Company in the presence of Mr. Mohammad Ishaq Dar, Honorable Minister for Finance, Revenue, Economic Affairs, Statistics and Privatization and Dr. Ishrat Husain, Chairman of the Board of Directors Karandaaz and Former Governor SBP.
PPAF is providing PKR 3,000 million, DFID £15 million and KfW €7 million as initial equity contributions for this venture.
Islamabad (PR) 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 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 PML-N government to meet the needs and aspirations of the poor marginalized and disadvantaged households and 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 setting the ground for creation of a new entity to spur the next level of growth in the microfinance sector of Pakistan. I would like to congratulate the shareholders of PMIC (PPAF, DFID through Karandaaz Pakistan and the German Development Bank KfW) for achieving this important milestone in setting up PMIC”.
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.
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. The new company is expected to commence operations by July 1, 2016 after completing regulatory requirements and 50% of the loans served by PMIC will be directed to women and rural areas”
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, and ensured that Pakistan remains in the top 5 of the Economist Intelligence Unit’s global ranking for microfinance business environments”.
“We believe 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. This is good for Pakistan and it is good for the UK”.
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.”
KfW representative shared that “KfW is very happy to finally see PMIC becoming a reality. The last months have shown that we have a strong and committed team both from the shareholders and the prospective Board members in place. We are confident that PMIC will become operational during the next few months providing much needed funding to the microfinance sector and the broader strategy of financial inclusion in 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. Microfinance regulatory environment in Pakistan is rated amongst the top in the world and 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.
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.