Pakistan: Can Microfinance Survive COVID?

Source: Business Recorder

Even before coronavirus came, Pakistan’s microfinance sector was sniffling. Amid macroeconomic stabilization, repayment capacity of borrowers, and in turn, industry profitability of over three dozen microfinance providers was constrained due to high inflation and low growth. And long-term issues festered, such as sector under-capitalization, low coverage, and lack of broad-based economic growth.

But this crisis is different than an economic dip and it is likely to disrupt microfinance’s growth trajectory. As per the latest quarterly data Pakistan Microfinance Network (PMN), which is the national body of microfinance providers, the number of active borrowers stood at 7.3 million as of March 2020, up 3 percent over March 2019. The gross loan portfolio stood at PKR 309 billion, 7 percent year-on-year.