Development Finance Institution

PIDE and Al-Aman Holding (Pvt) Limited, have collaborated to conduct a series of webinar on issues surrounding the Public Sector Enterprises. This is the second webinar of the current series and will be focusing on the Development Financial Institutions. Development Financial Institutions (DFIs), are institutions that aim to provide risk capital primarily for economic development projects. DFIs were first established in the mid-20th century. They could be in various forms, such as multilateral development banks, national development banks, bilateral development banks, microfinance institutions and development financial institutions and those for specific areas i.e. house building and agriculture etc. The financing focus of DFIs could be extremely diverse as well, from one focusing on funding development of low-income areas to large-scale projects. They play a pivotal role, especially in developing countries, in boosting industrialization processes during the early stages of economic development. In Pakistan, DFIs were playing an essential part in establishing an industrial base in pre-nationalization period. In the post-nationalization era, however, the DFIs have not been able to fully exploit their potentials and their impact has remined much lower than expected. There is a great room to expand the DFI industry in Pakistan as the existing financial support available for high-risk development activities in Pakistan is on a lower level. This, hence, is also acting as a barrier to growth as well. To support development and growth in the country, it is important that government facilitate the establishment and working of DFIs as they can help create the industrialization eco-system that will eventually prove to be the driver of growth for Pakistan.