Banks urged to promote climate-resilient
agri-financing in Pakistan
Governor of the State Bank of Pakistan (SBP), Jameel Ahmad, has urged banks to
focus on advancing climate-resilient and technology-based agricultural
financing. During a recent Agricultural Credit Advisory Committee (ACAC)
meeting in Multan, the SBP reaffirmed its commitment to boosting agriculture financing
to drive sustainable growth in Pakistan’s agriculture sector.
In his keynote address, the Governor
emphasized the critical role agriculture plays in Pakistan’s economy,
contributing to food security, rural livelihoods, and integration with the
industrial and services sectors. While acknowledging the challenges faced by
the sector, such as low productivity, climate change impacts, and limited
financial inclusion, he stressed the importance of prioritizing agricultural
finance as a core business for banks.
The Governor highlighted that while
the agriculture sector saw impressive growth during FY24, the growth rate
slowed to 1.2% in Q1-FY25, compared to 8.1% in Q1-FY24. This slowdown has led
to a lower overall GDP growth of 0.9% in Q1-FY25, down from 2.3% the previous
year.
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Despite these challenges, there are
signs of a modest wheat crop, underscoring the need for greater resilience and
innovation in the sector. Thanks to joint efforts between SBP and banks,
agriculture saw a record Rs 2.216 trillion in credit disbursements during FY24,
marking a 25% increase from the previous year.
In the first half of FY25,
disbursements reached Rs 1.266 trillion, and the number of borrowers grew to
2.86 million. To better serve small farmers, particularly in underserved areas,
the Governor urged banks to expand their rural presence by opening more
branches dedicated to agri-lending and deploying additional agricultural credit
officers.
Looking forward, the Governor
encouraged banks to fully implement their Agricultural Credit Expansion Plans,
invest in human resources, and embrace digital technologies to improve services
for farmers. He also called for collaboration between banks, government
departments, fintechs, microfinance institutions, and agri-tech companies to provide
digital loan solutions and advisory services to small farmers.
Three key focus areas were outlined
to uplift the agriculture sector:
- Climate Change Resilience: Strategies are needed to mitigate climate risks and
enhance resilience through climate-smart agriculture, green financing, and
farmer training to ensure sustainable growth.
- Technology Integration: The use of geo-spatial technologies can revolutionize
agriculture by enabling precise crop monitoring, better resource
management, and minimizing production risks. Pilot projects in Pakistan
can help improve productivity and reduce resource waste.
- Livestock Sector Focus: The livestock sector, contributing 14% of GDP and 2.1%
of exports, offers significant potential for diversifying income streams
and reducing dependency on traditional crop cycles. Adoption of advanced
technologies in breeding, diet, and manure management can improve
productivity and align with Pakistan’s climate goals, including a 50%
reduction in greenhouse gas emissions by 2030.
Addressing concerns from farmers in
Balochistan, the Governor announced that SBP would lead efforts to bring
together all relevant stakeholders, including government departments, banks,
and farmers' associations, in Quetta to tackle agricultural credit challenges
in the region. Similar efforts will be extended to other provinces.
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A key discussion point at the
meeting was a session on climate-smart agriculture, where experts shared
insights on leveraging geo-spatial technologies for crop monitoring and
optimizing resource use. The session also highlighted the Climate Resilience
Fund, a World Bank initiative offering financing opportunities for microfinance
banks to support climate adaptation in agriculture.
Concluding the meeting, the Governor
reiterated that Pakistan’s agriculture sector holds vast untapped potential. He
called for collective efforts from banks, policymakers, and technology
providers to transform agriculture into a resilient, sustainable, and globally
competitive driver of economic growth.
The ACAC meeting, led by SBP,
continues to serve as an essential platform for addressing the evolving needs
of Pakistan’s agricultural sector. It was attended by key stakeholders,
including commercial and microfinance bank presidents, government officials,
and representatives from agricultural chambers and farmers’ associations.
Source: Business Recorder