Financial Inclusion in Pakistan Increased by 9 Percentage Points Between 2020-2022: Survey

The latest edition of the Karandaaz Financial Inclusion Survey 2022 (K-FIS) shows that financial inclusion in Pakistan increased by 9 percentage points between 2020 and 2022.

Karandaaz Pakistan hosted a webinar to share key findings of the K-FIS 2022, a nationally and provincially representative demand-side survey tracking financial inclusion in the country. The primary purpose of the survey is to track access to and demand for financial services especially digital financial services, adoption among underserved groups and to identify drivers and barriers to adoption.

The 2022 edition of the survey focuses on customers’ awareness and knowledge of key facets of interoperability in the financial services market. Interoperability allows customers of different financial services providers to interact with each other, for example by making direct payments from the mobile money account of one provider to the mobile money account or a bank account serviced by a separate and competing provider.

Dr. Shamshad Akhtar, Chairperson Karandaaz said,

The latest edition of the K-FIS shows that financial inclusion in Pakistan increased by 9 percentage points between 2020 and 2022. Prior to this edition of the survey, a similar increase in financial inclusion was achieved over 7 years. Mobile money has been a key driver of this push, with registered mobile money users having more than doubled from 9% to 19% of adult Pakistanis. The 2022 edition of the survey also covers, for the first time, sample populations from of ICT, Gilgit Baltistan (GB) and Azad Jammu & Kashmir (AJK), all of which have financial inclusion rates that are above the national average. But the findings also show significant and chronic gaps regarding the inclusion of women, rural populations and across provinces – where financial inclusion in Punjab, ICT, AJK and GB exceeds 30%, in Balochistan it does not even reach 15%, with the financial inclusion of women being as low as 5%. Inequality in the provision of financial services means, that pockets of Pakistan’s citizenry remain un-serviced. This is no longer acceptable. The K-FIS therefore, is a step in the right direction”.

Mr. Noor Ahmed, Director Agri Finance and Financial Inclusion Department, State Bank of Pakistan (SBP) in his keynote address stated that:

Over the years, there has been significant progress on financial inclusion. Key initiatives such as RAAST have been transformative in furthering the inclusion of the marginalized. Since 2007, microfinance clients have increased from 0.5 million to 8 million and account ownership has increased from 60 million to 150 million with approximately 80 million unique accounts. However, to realize the goals of the NIFS, key challenges and barriers will need to be addressed. While account ownership has expanded, there are a substantial number of inactive accounts. This indicates that accessibility and service providers need to be supplemented with awareness building, behaviour change initiatives and developing financial literacy among clients. Secondly, the gender gap is significant with 61% of women excluded from the formal financial system. This major gap needs to be addressed through gender-sensitive elements in service design. The Banking on Equality Policy has laid out several initiatives in this regard, such as credit services for female digital accounts and establishing targets for women’s account ownership. The KFIS survey is valuable and instrumental in addressing these challenges. The information on the various aspects of financial inclusion can inform service design and provision, and also facilitate market development in a manner that considers the key barriers to inclusion.”

Mahesh Mishra, Counsellor and Group Head (Economy & Trade) at the UK’s Foreign, Commonwealth & Development Office (FCDO ) said, “Access to suitable and affordable financial services is a powerful tool to help poor people work their way out of poverty. I congratulate Karandaaz on successful completion of the 2022 Financial Inclusion Survey in Pakistan. I hope K-FIS will provide data and insights the policy makers, regulators, and private sector need in supporting expansion of financial access in Pakistan.”

The webinar also included two panel discussions led by experts from the financial sector. The first panel discussion focused on bridging gaps in the financial inclusion of women and rural populations; participants in the discussion included Muhammad Aurangzeb, CEO HBL; Dr. Rashid Bajwa, CEO National Rural Support Programme (NRSP); Halima Iqbal, Founder and CEO Oraan Tech; and Inez Murray, CEO of Financial Alliance for Women (FAW).

The second panel discussion focused on interoperability and participants included Sohail Javaad, ED Digital Financial Services Group SBP; Mudassar Aqil, CEO of Telenor Microfinance Bank; Yahya Khan, Chief Digital officer of Bank Alfalah; Naureen Hyat CEO of ZoodPay Pakistan; and Dr. Russell Toth, Senior Lecturer at the University of Sydney.

Karandaaz is a Section 42 Company, supported by the UK’s FCDO and the Bill & Melinda Gates Foundation (BMGF) to improve access to finance for unserved and underserved individuals and micro, small and medium enterprises (MSMEs), by providing financing and by leveraging technology platforms.

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