Pakistan’s microfinance industry, which is already struggling to recover from the impacts of the first wave of the Covid-19 pandemic, could face tougher times in the next six to 12 months. AFP/File
Pakistan’s microfinance industry, which is already struggling to recover from the impacts of the first wave of the Covid-19 pandemic, could face tougher times in the next six to 12 months should the increasing virus infections lead to fresh business disturbances in the country, squeezing the repayment capacity of the small borrowers further.
The microfinance banks and institutions are already facing considerable difficulties in recovering their old loans because a majority of the borrowers are still unable to meet their repayment schedules owing to losses in their incomes. According to industry sources, the number of active borrowers has shrunk from its peak of 7.4 million in 2019 to 6.8m in 2020 because of the health crisis, which forced the government to enforce the lockdown acro
Microfinance sector recoveries stall
LAHORE:
The microfinance sector of Pakistan is currently undergoing a recovery from the dent endured during the Covid-19 lockdown. The sector, which had posted a steady growth over the past few years, recorded a decline in 2020.
The Covid-19 pandemic was the primary reason behind the downturn because business activities came to a standstill in the first couple of months following the virus outbreak in the country.
Industry experts claim that the sector is currently in hot water as a majority of borrowers have not been able to repay loans due to little or no functioning of their businesses.