March 21, 2012
Mr. Masakazu Ichikawa, Vice-President, JICA (left) and Mr. Akbar Ali Pesnani, Chairman, The First MicroFinanceBank shaked hands after signing ceremony.
Today, the Japan International Cooperation Agency (JICA) signed a subscription agreement with the First Microfinance Bank Limited- Pakistan (FMFB-P), one of the largest microfinance banks in Pakistan for microfinance project in Pakistan. JICA and FMFB-P also signed a shareholders agreement with Aga Khan Agency for Microfinance (AKAM), Aga Khan Rural Support Programme (AKRSP) and International Financial Corporation (IFC). The project will be supported through Private Sector Investment Finance (PSIF) which was restarted in March 2011. After completion of appraisal of the project under pilot approach based on the New Growth Strategy 2011 (approved by Cabinet decision on January 25, 2011), the investment agreements have come to be signed.
In this project, JICA supports FMFB-P's microfinance operations in Pakistan through PSIF. JICA provides equity investment in FMFB-P in order to assist its business expansion. AKRSP, AKAM and IFC also participate in the project as shareholders of FMFB-P. AKRSP and AKAM are group institutions of Aga Khan Development Network (AKDN). AKDN has been conducting projects in more than 30 countries in order for the poor to improve their living standards with spurring their self-reliant efforts; AKAM is a microfinance institution which has operation in 13 countries and provides approximately US 200 million dollars of microcredit loans to support the self-reliance of the poor; AKRSP conducts rural development programs aiming at poverty alleviation. In addition, JICA and AKDN signed a Memorandum of Understanding in March 8, 2012 to enhance the partnership in economic / social development field. Therefore JICA intends to encourage closer cooperation with AKDN in the future.
56 percent of adult population in Pakistan does not have any access to finance, 32 percent relies on financial services provided by illegal money lenders and deposit opportunities are also significantly limited. Under this circumstance, there is an increasing demand for microfinance to improve access to finance. In order to meet the demand, FMFB-P has been expanding its microfinance service provision in these years and FMFB-P has recently provided the service to around 170 thousand people at 147 branches. Consequently, FMFB-P has grown to the third largest microfinance bank (in amount of the total asset) in the country and FMFB-P is planning to keep expanding its service provision in the future. Hence, it is expected that the project will contribute to promoting the access to finance in Pakistan and more broadly, as well as promoting job creation and the poor's self-reliance through FMFB-P`s operation in Pakistan.