Ahmed Khan Malik

 Small and medium enterprises (SMEs) will receive cheap financing from banks to help them grow on a sustainable footing.

The affordable bank financing has been arranged by the Sindh Enterprise Development Fund (SEDF), which has entered into accords with various banks, the latest of which is with Sindh Bank. “SME sector in the province has been complaining about the high financing costs due to high interest rates in the country. However, the Sindh government has devised a plan to help them by arranging cheap financing,” Kabool Muhammad, Director of SEDF, told WealthPK.

He said that SMEs played a key role in the national economy and couldn’t be left alone to struggle in the current high-interest environment. He said that the Sindh government was working to uplift the provincial economy by empowering SMEs. Kabool said that the arrangement with Sindh Bank aimed to integrate their resources and knowledge as both organisations sought to foster an environment conducive to the growth of SMEs, stimulate investment, and promote economic prosperity in the province.

He said that SEDF was committed to offering markup subsidies to SMEs to bolster and encourage the expansion of these essential components of the economy. He said that the initiative would make the bank financing affordable and viable for setting up small and medium businesses in Sindh, including agriculture and IT-related SMEs, which have also been marked as priority sectors at the regulatory level.

Kabool said that SEDF’s initiative of reducing the cost of financing substantially by subsidising Kibor was a landmark step by the government of Sindh for the development of SMEs. He said that this joint initiative represented a significant achievement in the quest for economic development and prosperity. The SMEs Association Sindh has lauded the development and said that it would help put the sector on a sustainable growth path.

“This will help the sector receive affordable financing, which otherwise has become out of access for the sector,” Mumtaz Hussain, the association’s secretary, told WealthPK. He said that the funds available under various SBP credit guarantee schemes for micro and small enterprises needed to be enhanced. “Non-bank financial institutions, leasing companies, crowdfunding and equity financing can play an important role in the provision of credit to startups and SMEs. Improvement in the regulatory environment for these alternate financing channels is required.”

“Pakistan’s business environment faces a complex and non-conducive tax structure, which adds burden on businesses,” he said, adding that SMEs found it difficult to comply with the existing tax system. Mumtaz pointed out that the withholding tax deduction from the registered SMEs was a challenge due to the existence of a large informal/unregistered SME sector. “It is recommended that the tax structure must be based on fairness, efficiency, convenience and certainty.”

Credit: INP-WealthPk