Amir Khan

The State Bank of Pakistan (SBP) should implement effective and sustainable credit policies to revitalize the small and medium-sized enterprises (SMEs), said Zulfiqar Ahmed, Head of the media and communication wing of Rawalpindi Chamber of Commerce and Industry (RCCI), while talking to WealthPK. He emphasized the allocation of a dedicated portion of funds specifically to support the SMEs. He noted that SMEs were vital to Pakistan's economy, constituting approximately 40 percent of the GDP. Talking to WealthPK, Chairman Businessmen Panel Mian Anjum Nisar stressed the need for urgent positive action. He pointed out the importance of SMEs for sustainable economic development in Pakistan, providing employment to millions and spurring development, export diversification and work. He pointed out that despite their significance, over 5 million SMEs in Pakistan faced a significant credit gap, receiving limited financing compared to the neighbouring countries.

"The State Bank of Pakistan aims to increase the SMEs' credit share to 17% by 2023. However, achieving this target requires targeted and fixed allocations for SMEs in concessional financing schemes, particularly those aimed at export-oriented sectors," he added. While the SBP has introduced initiatives like the Export Finance Scheme offering financing as low as 3%, a substantial portion of this financing has been utilized by the large corporate industries, leaving the SMEs struggling to access funds. This disparity underscores the need for a targeted approach to support SMEs, especially amid the current economic challenges. Despite contributions to the GDP, exports, and employment, SME financing remains inadequate. Nisar urged the government to address the specific issues faced by the SMEs and encourage financial institutions to provide more support. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and BMP endorse proposed measures for SME finance promotion, including establishing a credit guarantee company to offer risk-sharing facilities for SMEs.

Collaboration among the stakeholders is crucial to achieving the SME policy objectives and supporting priority sectors. Nisar emphasized an inclusive SME policy, advocating for an early access to finance, regulatory framework development, market awareness, and capacity-building programs. The SMEs represent about 90 percent of Pakistan's businesses, contributing 35 percent to the GDP and over 30 percent to export earnings. They employ about 40 percent of the workforce across various sectors, yet face financial strains and operational challenges due to limited resources. In light of the current economic climate, addressing these challenges and providing targeted support to SMEs is paramount to ensure their sustainability and contribution to Pakistan's economic growth.

Credit: INP-WealthPk