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ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued a policy framework for Women Equality in Finance Policy (WEFP) to address the growing gender finance gap in the Pakistan market.

On Tuesday, the SECP issued a policy framework, revealing that the WEFP is predominantly focused on the Non-Bank Microfinance Institutions (NBMFIs).

It suggested solutions for women empowerment by recognizing the needs and challenges faced by women entrepreneurs.

SECP, ADB to host workshop on ‘Women in Finance Thought Leaders’

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.

During 2018 to 2023, the overall gross loan portfolio (GLP) of female borrowers has grown 88% compared to 114% 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% compared to 196% 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 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).

During 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 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 serving only 13% of the potential microfinance women market, slightly higher than MFBs with 10%.

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% and 77% 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% in Jan. 2018 to 45% in Dec. 2023) and loan volume (37% in Jan. 2018 to 34% in Dec. 2023), respectively.

Copyright Business Recorder, 2024

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