With 30 million potential micro entrepreneurs (according to the Government of Pakistan) and one of the most comprehensive and progressive legal and regulatory microfinance frameworks in the region, Pakistan is the largest microfinance market in MENA. However, the full potential of the market has not yet been realized and the sector has been able to reach out to only two million active clients as of March 2010, leaving a large demand-supply gap that must be addressed.
Keeping in line with the strategy of supporting poorest and conflict-affected and large market countries, IFC Advisory Services has worked with the Pakistan microfinance industry to help close the gap between microfinance demand and supply. To address this, IFC Advisory Services advised Pakistan’s National Rural Support Program (NRSP), the largest MFI in the country, on transforming into a regulated microfinance bank in 2009 after market analysis showed that this was the most effective way to achieve sustainable scale and product diversification in the shortest period of time.
Established in 1991, NRSP had over 430,000 active clients (as of March 2010) with 23 percent of the total microfinance market in Pakistan. It is also the only institution focused on providing agricultural loans to small-scale farmers with the second largest geographic reach in Pakistan. For these reasons, NRSP has a huge potential to continue to grow and expand outreach.
Through its engagement with NRSP, IFC helped develop a phased approach for NRSP’s transformation by providing comprehensive advice both at the operational and strategic levels. IFC Advisory Services support included:
This advisory services package was designed to ensure the sustainability and success of the transformation process and to help pave the way for the institution to raise significantly more funds from private investors, diversify its product offering, and continue to expand geographical and client outreach from 430,000 active clients to one million active clients in five years.