Risks to Microfinance in Pakistan: Findings from a Risk Assessment Survey - 2014

This report provides information for microfinance providers, policy makers, and funders in Pakistan about the threats faced by the sector, their relative severity, and the ability of service providers in dealing with the risks. It updates the risks highlighted in a similar report published in 2011 in the face of a changing business and macroeconomic environment, as well as keeping in mind the new initiatives and developments in the sector. The report also examines why risk management is crucial for MFIs and discusses possible risk mitigation strategies. Key findings in the report include:

• Macroeconomic trends continue to be the chief concern for stakeholders within and outside Pakistan;
• Increasing threat from competition has outranked macroeconomic trends as the fastest-rising threat;
• Inappropriate regulations and competition which were not found to be major risks in the previous survey but are now perceived to be among the top ten most severe risks;
• Stakeholders also identified the risk of too little funding as one of the fastest rising threats;
• Top three risks in terms of lowest ability to cope are all external and include two risks that are rated as most severe and rising for the sector.