ISLAMABAD/KARACHI: Shaukat Tarin, Federal Minister for Finance and Revenue, has said that Pakistan is going for bottom-up approach as the trickle-down approach has not yielded results in the last 72 years.
Tarin said the government will use commercial banks to retail credit to microfinance institutions such as Akhuwat, to provide low rate loans to five to six million households to start their own businesses and these small businesses will lead the growth engine.
The finance minister was virtually addressing the launch ceremony of InfraZamin Pakistan Limited, first of its kind facility providing local currency guarantee solutions for infrastructure finance. Tarin said that Pakistan’s debt market is improving in terms of depth, breadth, and liquidity. He said that Pakistan’s GDP growth rate for current financial year, closing on June 30, will be four percent.
The growth is coming from real estate, agriculture exports and the housing sector, which were the focus areas of Prime Minister Imran Khan.
Tarin said that Pakistan needs to grow its economy further, because it has a huge youth bulge to give at least 1.5 to two million jobs every year.
So, Pakistan will target growth, which will be inclusive and sustainable. According to him, “microfinance lending will be our main tool.”
Every household in urban area will be given a loan of Rs0.5 million for three years on subsidised rates to start their own small businesses. In rural area, he added, every grower family will be given Rs 150,000 per crop.
Aamir Khan, chairman Securities and Exchange Commission of Pakistan (SECP) said the SECP expects to address three specific objectives, i.e., increasing the contribution of local players towards funding infrastructure projects and deepening of institutional investor base; developing local debt capital market; and supporting infrastructure developments through PPP structures.
He hoped that InfraZamin Pakistan would play a pivotal role in ushering in greater private sector participation in sectors such as affordable housing, renewable energy, education, and healthcare.
Dr Shamshad Akhtar, chairperson Karandaaz Pakistan, said, "As lead sponsors, we are delighted to partner with InfraCo Asia and GuarantCo in setting up this, first of its kind, innovative structure and look forward InfraZamin leveraging its capital and competence for the development of sustainable infrastructure to enhance country’s competitiveness and national connectivity. We are confident that InfraZamin will help the private sector play its due role in this regard and add to the sophistication of Pakistan’s financial architecture; all leading towards economic growth, jobs creation, and poverty reduction. We count on fostering public-private partnership in infrastructure development."
InfraZamin Pakistan Limited, first-of-its-kind facility providing local currency guarantee solutions for infrastructure finance marked commencement of its operations in Pakistan at an event held at a hotel here.
The event was hosted by Allard Nooy, Chairman InfraZamin and CEO InfraCo Asia; Dr Shamshad Akhtar, Chairperson Karandaaz Pakistan; and Maheen Rahman, CEO InfraZamin.
Maheen Rahman, CEO InfraZamin, said “We are convinced of Pakistan’s viability as an infrastructure development destination. InfraZamin is not a magic pill that aims to fix infrastructure-related issues. It is founded on the firm principles that market failures need to be addressed via market-based solutions that make commercial and economic sense for all stakeholders.”
Philippe Valahu, CEO Private Infrastructure Development Group (PIDG), said: “GuarantCo and InfraCo Asia are delighted to be on this journey with Karandaaz and InfraZamin. We firmly believe in InfraZamin’s catalytic potential and see the positive influence it is set to create on long-term local currency financing in Pakistan.”
Emily Bushby, CEO GuarantCo, said, “The GuarantCo team is very proud to support InfraZamin Pakistan, working closely with Karandaaz, PIDG, and InfraCo Asia. The contingent capital that we will be providing increases the volume of guarantees that InfraZamin will be able to provide and, with a strong management team now in place, we are confident that the company will be a complete game-changer for Pakistan’s project finance and debt capital market development.”
Allard Nooy, Chairman InfraZamin, and CEO InfraCo Asia said, “PIDG companies including InfraCo Asia and GuarantCo have witnessed first-hand the catalytic impact of funds that are applied in ways that encourage market growth and private sector participation. As a first-of-its-kind credit enhancement facility in Pakistan, InfraZamin will create a long-lasting impact on the way in which sustainable infrastructure is financed and implemented in Pakistan.”
Mike Nithavrianakis, UK’s Deputy High Commissioner in Karachi and Director for Trade said, “The UK is proud to support the establishment of InfraZamin, the first specialized credit enhancement facility for infrastructure finance in Pakistan. InfraZamin will enable financing in sectors with chronic underinvestment including renewable energy, digital/social infrastructure, water and sanitation. I am excited about the impact InfraZamin is set to have and confident that this investment in infrastructure financing will create jobs, reduce poverty, enhance innovation and boost long-term economic growth in Pakistan.”
InfraZamin’s initial sectors of focus will include renewable energy, water, and sanitation, digital infrastructure, and social infrastructure such as low-cost housing, education and healthcare, where there is still chronic underinvestment. The company has been on a swift path to success starting with its license granted on February 19 this year, getting a AAA credit rating from PACRA and gaining registration of its Contingent Capital Facility from GuarantCo in June 2021. With a strong management team in place, InfraZamin is looking forward to building a healthy business pipeline of infrastructure deals, and serving as the catalyst for sustainable development in Pakistan.
InfraZamin Pakistan is a commercial credit enhancement facility, developed by GuarantCo, which seeks to crowd-in funding from the local market for sustainable and socially responsible infrastructure projects in Pakistan. Development impact, trust, and additionality form the core of InfraZamin’s business values. The facility is an initiative of the Private Infrastructure Development Group (PIDG). InfraZamin’s sponsors include PIDG group companies InfraCo Asia Investments and GuarantCo, in partnership with Karandaaz Pakistan.
Copyright Business Recorder, 2021
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