Following the State Bank of Pakistan’s (SBP) launch of its policy for promotion of SME finance, the All Pakistan Business Forum (APBF) has urged commercial banks to improve access for the sector that contributes around 40% to the country’s GDP.
“It is unfortunate that banks are always reluctant to finance small and medium enterprises, as their financing continued to show negative growth despite record reduction in policy rates by the central bank,” said APBF President Ibrahim Qureshi.
He said that a small section of public sector and Islamic banks and few DFIs are active in extending funds to the SME sector. Despite significantly contributing to the GDP, exports and employment generation, the financing percentage of SMEs remains pathetic in the overall financing to customers of various levels, Qureshi lamented.
He urged the government that the SME policy should focus on addressing specific issues faced by the SME sector and help in curtailing reluctance of financial institutions to provide financing to SMEs. The APBF chief suggested that all the stakeholders collaborate in order to meet the objectives of the SME policy and support the priority sectors.
Qureshi also emphasized the importance of SMEs for the growth and development of the economy. He called for early and speedy access to finance for SMEs, including creation of enabling regulatory framework, market development, awareness creation and capacity building programmes for banks and SMEs and introduction of SME financing targets for banks and DFIs.
“A separate and comprehensive policy for the SME sector was the need of the day to promote contribution of SME sector for inclusive growth.”
For this purpose, a thorough consultative process should be adopted wherein all relevant stakeholders including banks, DFIs, microfinance banks, chambers, trade associations, SMEDA, multilateral institutions, SMEs, federal and provincial government departments should be consulted to discuss various bottlenecks impeding growth of SME finance, suggesting policy interventions in different areas.