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December 13, 2022

Memorandum of Understanding Signed for Provisioning of Finance to Women Informal Entrepreneurs in Pakistan

PhotoMr. Tsuyoshi Hara while speaking at the event

December 13, 2022, Islamabad: Japan International Cooperation Agency (JICA) signed a Memorandum of Understanding (MoU) with HBL Microfinance Bank (HBL MfB) and Pakistan Microfinance Network (PMN) with the broader objective of recognising Women Informal Entrepreneurs (WIEs) as a viable independent business segment.

HBL Microfinance Bank, key JICA counterpart and co-signatory of the MoU, is committed to accumulating knowledge on WIE's Financial Inclusion (FI) potential through the project's pilot phase launched earlier. In addition to customisation of products, HBL MfB will act as a catalyst of change among microfinance banks and will support policy dialogue with regulators on reforms, policy actions, and coordination.

In his keynote address, Mr. Amir Masood Khan, C.E.O. & President - HBL MfB, emphasised on the importance of this project and the impact it can potentially have on financial and digital inclusion in the country by saying: "As the leaders of the microfinance sector in Pakistan, we at HBL MfB are proud to be leading this project with JICA, aimed towards the financial inclusion of WIEs. With nearly half the adult population consisting of females, the potential of empowering them to operate their small businesses is immense. Providing women entrepreneurs with necessary digital and financial resources will empower them to lead a better quality of life. Under our pilot project with JICA, we have trained 150 WIEs on financial literacy. The evaluations based on these sessions demonstrate that a lot of work remains to be done in this regard, therefore, the MoU being extended to PMN is a welcome step. All relevant players must step in to achieve long-lasting positive results in this regard within stipulated timelines."

Speaking on the occasion, Mr. Tsuyoshi Hara, Senior Representative of JICA Pakistan and HBL MfB Board of Director's Member, highlighted the importance of financial inclusion of WIEs as a "missing FI opportunity" for the banking sector in Pakistan. Mr. Hara also highlighted that the lack of access to financial services, exacerbated by COVID-19 & customized products & services remains the main obstacle of growth for WIEs and the women-led enterprises belonging to the informal economic sector.

PMN will provide research, advocacy, and policy dialogue operational support under the JICA action research pilot project "Data Collection Survey on Financial Inclusion of Home-based Worker's Enterprises through Business booster Loan and Trainings (FBLT)". The FBLT project is designed primarily to bridge the knowledge gaps on the supply-side (FIs) through segment research and enhanced value proposition; and the demand side (WIEs) through capacity building initiatives. The project aims to (i) enhance WIE's access to formal credit; (ii) offer an opportunity for FIs to service a new segment and grow their business; and (iii) leverage access-to-finance as an incentive for WIE's transition from informal to formal economy.

To operationalize the MOU, PMN has also signed a contract with HNP (HomeNet Pakistan), which is JICA's FBLT implementing partner organization and also a co-signatory to the MOU. HNP, which also has more than 50,000 WIEs in its national and provincial networks, is committed to the smooth project execution and to sustain the project outcomes through its future sector wide engagements with government and private sector partnerships. The knowledge accumulated by HNP through the pilot will be compiled in the form of a handbook and utilized by HNP during the post project implementation period.

Pakistan Microfinance Network is working to improve Pakistan's microfinance sector. The FBLT project is conceptually embedded in Financial Inclusion Support Framework (FISF), which is a World Bank Group initiative launched in April 2013. FISF aims to help catalyze private sector financing, knowledge and innovation to spur usage of financial products - payments, savings, insurance, credit - by unbanked or underbanked low-income individuals and MSMEs.

According to the UNWOMEN, there are approximately 12 million home-based workers/ micro entrepreneurs working in the informal economic sector in Pakistan, a majority of whom are women and lack access to formal financial services. There is an opportunity to use formal financial service providers to catalyze the growth of these home based micro entrepreneurs in Pakistan.

Considering this situation, the project aims to collaborate on bridging the financial inclusion gap by bringing WIEs to the attention of regulators, policy makers, and other relevant stakeholders. For this purpose, PMN will:

  1. Influence policy making for financial inclusion of WIEs
  2. Create linkages with regulators, government ministries and relevant organizations, along with national and global financial inclusion forums.
  3. Improve financing access to WIEs

This project will further contribute to the improvement of the standard of living of women in Pakistan. Moreover, this project will lead to the achievement of SDGs Goal 5 (Gender Equality), Goal 8 (Decent Work and Economic Growth) and Goal 10 (Reduce Inequalities).

Details for the project are provided below:

Country The Islamic Republic of Pakistan
Project Title Data Collection survey on Financial Inclusion of Home based Worker's Enterprises through Business booster Loan and Trainings (FBLT)
Project Duration 1 June 2022-31 March 2025
Lead Counterpart Organization HBL MfB
Project Implementing Partner Organization HomeNet Pakistan
Policy Advocacy & stakeholder's engagement Lead organization Pakistan Microfinance Network


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