KARACHI: International Finance Corporation (IFC), a member of the World Bank Group, has signed an agreement with Habib Bank Limited to help the company increase lending to farmers, boosting agricultural productivity and spurring economic growth, a press release issued on Monday said.

IFC will advise HBL as it rolls out a plan to disburse almost 25,000 new loans to farmers, who often have trouble obtaining financing. That prevents many from expanding their holdings leaving parts of the country relatively inefficient farms.

The agreement with HBL is designed to address that issue and is IFC’s first agri-finance project in the Middle East and North Africa.

“In addition to ensuring food security, agriculture plays a vital role in supporting our economy and generating employment,” said Kashif Umar Thanvi, Head of Rural Banking at HBL. “We hope that our partnership with IFC will signal the significance of developing this sector and create more growth opportunities for local farmers,” he added.

In Pakistan, the agriculture sector contributes about 21 per cent of the country’s gross domestic product and employs over 45pc of the total work force.

“Supporting agribusiness is a priority for IFC as it can be a driving force for boosting economic growth and encouraging competitiveness in low-income countries,” said Luke Haggarty, head of IFC’s Advisory Services in the Middle East and North Africa. “Extending loans to small farmers will increase their income and help them boost productivity.”

IFC and HBL are long-term partners. IFC has invested $50 million in equity in the lender since 2006, and provided a trade finance guarantee to support its clients as they accessed international markets. IFC also assisted HBL in developing a suite of financial services to help small and medium enterprises access credit.