SECP Unveils New Policy Framework to Boost Women’s Access to Finance in Pakistan

The Securities and Exchange Commission of Pakistan (SECP) has issued a policy framework for Women Equality in Finance Policy (WEFP) to maximize women’s access to finance in Pakistan.

The SECP has issued a policy framework, revealing that the WEFP is predominantly focused on Non-Bank Microfinance Institutions (NBMFIs). It suggested solutions for women’s empowerment by recognizing the needs and challenges faced by women entrepreneurs.

In addition, the policy aims to increase and upgrade the inclusion of women as employees at all hierarchical levels, within the NBMFI sector, for improved decision-making and governance of the microfinance market.

Access to finance emerged as one of the most significant challenges faced by NBMFIs, as the available local sources of funding remain limited, SECP said.

From 2018 to 2023, the overall gross loan portfolio (GLP) of female borrowers has grown 88 percent compared to 114 percent growth for male borrowers. The overall proportion of women’s gross loan portfolio has declined from 37 percent to 34 percent.

The outstanding portfolio of NBMFI women borrowers has grown by 30 percent compared to 196 percent growth in MFB female borrowers. The proportion of total microfinance women borrowers served by NBMFIs has declined from 65 percent to 45 percent.

The SECP said that the Women Equality in Finance Policy (WEFP) is expected to complement the gender initiatives of the financial ecosystem, such as Banking on Equality (BOE) policy of the State Bank of Pakistan (SBP) under the ambit of the National Financial Inclusion Strategy (NFIS), and the Women Entrepreneurship Policy (WEP) currently being developed by Small and Medium Enterprise Development Authority (SMEDA) under the overarching Small and Medium Enterprise Policy (SME Policy).

From 2018 to 2023, the overall number of microfinance women borrowers has grown only 17 percent to 4.3 million compared to 62 percent growth in male borrowers to 5.2 million till Dec 2023.

The SECP data further revealed that the overall proportion of microfinance women borrowers has declined from 53 percent to 45 percent. The number of NBMFI women borrowers has declined by 11 percent compared to 104 percent growth in MFB women borrowers.

The proportion of total microfinance women borrowers served by NBMFCs has declined from 76 percent to 58 percent.

The NBMFI sector in Pakistan is critical for access to finance for women, providing loans to some 2.4 million Women and a Gross Outstanding Portfolio (GLP) of Rs. 274 billion in December 2023, making them the main source of formal access to credit in the country for women.

Based on proxy calculations of the women’s market size, rough estimates indicate NBMFIs serve only 13 percent of the potential microfinance women’s market, slightly higher than MFBs with 10 percent.

The average size of the loans by MFB to women is much higher at Rs. 56,894/- as compared to Rs. 34,178/- being offered by NBMFIs. Moreover, setting forth a tangible gender gap, women’s average loan sizes amount to 67 percent and 77 percent of men’s average loan sizes in NBMFCs and MFBs, respectively.

Between 2018 and October 2023, the overall share of lending to women by MFIs in the microfinance sector (MFBs and NBMFCs combined) has moderately and slightly declined in numbers (53 percent in January 2018 to 45 percent in December 2023), and loan volume (37 percent in January 2018 to 34 percent in Dec. 2023), respectively.

In the NBMFC sector, these figures show an increase in terms of female borrowers (going from 76 percent to 80 percent) and a slight decrease in respect to lending volumes (76 percent to 73 percent) in the same timeframe (January 2018 to December 2023).

The MFI sector faces challenges of limited focus on gender-inclusive culture and values, evident through a low level of female employment at all levels – especially for leadership roles. Organizational roles demanding high customer engagement such as sales, credit, and complaints are dominated by male staff members.

The sector experiences insufficient gender-sensitive training and awareness, coupled with a pervasive missed opportunity to serve the women and women entrepreneurs’ segments in Pakistan. For NBMFIs, no specific female employment participation targets are advised. Currently, women represent 23 percent of employees and 21 percent of senior management.

A concerted effort is required to improve and increase the women’s portfolio in absolute and relative terms. The challenges being faced by the NBMFIs need to be addressed through funding, policy, and research.

Further, a special fund needs to be established that could allow for experimentation, innovation, and capacity building of institutions that serve women clients. A multi-pronged approach at an institutional, regulatory, and partner level is envisioned to derive meaningful change for women, SECP added.

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