ISLAMABAD: Pakistan’s microfinance sector needs to revise its strategy to expand environmental risk insurance by enhancing climate risk coverage and promoting environment sustainability protection of the most vulnerable social segments from the disproportionate effects of climate change.
This was the crux of a roundtable on the ‘Role of Microfinance Institutions for Climate Risk Insurance' organised by the Sustainable Development Policy Institute (SDPI) as part of its 27th Sustainable Development Conference on Wednesday.
Speakers said with Pakistan’s increasing vulnerability to climate change, conventional funding alone was insufficient to achieve climate resilience and required more innovation and products to be added.
They also talked about the untapped potential, saying that against the potential over 40 million policy holders, there were only around 11 million.
Experts were of the view that climate risk insurance was more than just a financial safety, it was a critical tool for sustaining livelihoods and protecting futures in climate vulnerable regions.
Wazirzada Yasir, senior official at the Security and Exchange Commission of Pakistan (SECP), proposed for launching climate risk insurance products through pool by several insurance companies to enhance its outreach at reduced cost.
Instead of going parallel, Microfinance Institutions (MFIs) need to join hands to reach the untapped potential, Mr Yasir said, proposing that more tech people be included to give real data, pivotal for informed decision.
Head of Strategy Mobilink Microfinance Bank Ltd Khowla Shoaib said the bank had made several strides to bring the marginalised segments of society into financial inclusion through resolving female account owner App.
She said the bank was training women as well as launching incubation programme to enhance awareness campaign outreach.
Head of Operations PMN Ali Basharat said the microfinance risk insurance was key for financial inclusion of marginalised segments of society including women and farmers who are the most affected by climate change.
He also termed it a vulnerable market with a non-performing loan balance sheet of over Rs58 billion in Sindh alone, against Rs26 billion loans of commercial banks.
He also recommended more investment in product development and subsidising premium to expand its outreach.
Head Programme and Partnerships, IBA, Syed Bulent Sohail talked about huge potential, stressing on more investment.
He outlined key lessons for Pakistan while recommending dedicated climate risk insurance products, strengthening public-private partnership, expanding ESG and climate-focused lending and comprehensive climate adaptation programme.
Zaianab Naeem of SDPI said the rate and intensity of climate-related disasters had increased manifold, with climate change endangering economic stability.
She said it was critical to ensure adequate funding for exploring various projects related to climate actions and environment sustainability.
She said there was immense potential for linking MFIs to climate change adaptation and intervention as a way of offering a helping hand to vulnerable communities.
COO, Kashf Foundation, Mumtaz Iqbal said climate resilient strategy needed to be developed to protect the livelihoods and health of most vulnerable communities.
Director SELF India Anuradhapura Mirikar said the region was facing the same challenge from climate change.
Umer Baloch from World Bank said the role of MFIs was catalyst for financial inclusion.
He also underlined the challenges faced by the sector including resource limitation, lack of finances, clients in remote areas and regulatory issues. He also said the bank supported microfinance for financial inclusion of marginalised.
