Asian Development Bank (ADB) is considering providing $320 million for Improving Access to Financial Services Programme (IAFSP) in Pakistan to provide significant benefits and will have positive impacts on the poor.
According to a project study report of Julie Rogers, Principal Financial Sector Specialist of ADB, the reduction of poverty is of the highest priority for the Government of Pakistan.
Despite the high level of economic growth averaging over 7.5 percent for the past three years, 24 percent of the population, or 36 million people, continue to live below the poverty line. Further sustained economic growth requires a financial sector that is stronger and more effective in mobilising savings and allocating these to productive use.
Building an inclusive financial sector means broadening the outreach and deepening the service, while at the same time striving for efficiency and ensuring sustainability. Although the sector has made good progress, the small outreached achieved in contrast to the vast numbers of unbanked has shown that new measures are needed in Pakistan to improve access to financial services.
Project report revealed that the goal of the proposed IAFSP is to assist the Government to reduce poverty, build an inclusive financial sector, and promote sustainable economic growth utilising modern technologies and applications to lower cost of delivery of financial services and to improve efficiencies.
The programme will contribute to this goal by achieving its objective of ensuring access to sustainable institutional financial services for a majority of poor and low-income households and their micro enterprises at competitive prices.
The programme will support the government to improve performance and efficiencies of the financial sector; promote diversification and innovation in product and services delivery; and increase outreach in rural and remote areas. The programme will support the government's core reforms to increase access and accelerated growth nation-wide, including programmes for literacy.
ADB sources hoped that this programme will provide significant benefits and will have positive impacts on the poor.
THESE INCLUDES:
(i) a deeper financial sector that fosters broad-based, economic growth, reduces poverty and contributes to macroeconomic stability;
(ii) development of a sustainable market-oriented microfinance sector with greater outreach to the poor in rural and remote areas;
(iii) a developed regulatory and supervisory framework that promotes innovation and product diversification, private sector participation and lower cost, sustainable financial services;
(iv) improved credit information and land registration system to provide essential information for access to credit;
(v) improved capacities and efficiencies of financial service providers for new technologies and applications, including mobile money transfer and VSAT technologies to improve access to financial services in rural and remote areas; and
(vi) increased literacy (financial and basic) improving access of the poor to financial services.
The goals of the programme are reflected in the Government's Medium-Term Development Framework 2005-2010 and Strategic Directions to Achieve Vision 2030.
The government will also actively assist and support ongoing programme monitoring and evaluation by facilitating consultations with related agencies and other key stakeholders as appropriate.
In accordance with the simplified Disbursement Procedures and Related Requirements for Programme Loans, procurement of goods and services produced in and originating from ADB's member countries will be made with due consideration to economy and efficiency in accordance with standard Pakistan public sector procedures and normal private sector commercial practices acceptable to ADB.