Massive potential exists for agritech market in country: SECP chief

ISLAMABAD: The Chairman of Securities and Exchange Commission of Pakistan (SECP) Aamir Khan said on Thursday that given the receptive attitude of regulators towards fintech, high tele-density, internet penetration, and improvements in electronic payments infrastructure, there is a massive potential for the agritech market to flourish in Pakistan.

SECP Chairman Aamir Khan was addressing a hybrid conference titled “Agritech: Empowering the Rural Farmers”, hosted by Pakistan Fintech Network and Pakistan Microfinance Network.

To overcome the challenges of the agri sector, Khan said, the marriage of the agricultural sector with technology is the need of the hour. But for that to happen, the domestic market players have to embark on a journey towards Agritech in a meaningful way, by understanding the demands of small farmers and supporting them to scale up their value chain.

Khan said that given our large population size and being one of the countries vulnerable to climate change, it necessitates use of innovative solutions to ensure scalability, sustainability, and efficiency of the Agri-value chain. Pakistan’s economy is profoundly dependent on the agricultural sector in terms of generating employment, ensuring food security and supporting a healthy balance of payment. Lack of access to formal credit and minimal use of technology, coupled with risks posed by climate change, are some of the key issues of the agriculture sector.

The SECP, on its part, has made numerous improvements in the regulatory ecosystem, not only through simplifying establishment of startups, and improving access to finance, but as I mentioned earlier, we have also opened the door for start-ups to pitch their ideas for live-testing in a controlled environment.

Highlighting some of the recent initiatives SECP has taken to expand the role of Agriculture sector related technology solutions in Pakistan, Khan said the SECP has simplified the requirements under NBFCs regulatory framework to provide flexibility for fintech based business models, and has enabled establishment of NBFCs focused on agricultural credit. He told participants that some prospective investors have already approached us for setting up Fintech enabled NBFCs, for providing customised loan products designed for farmers.

Secondly, he added, SECP has introduced Collateral Management Companies Regulations to promote the concept of warehousing of agricultural produce. It has also paved the way for electronic warehouse receipt or EWR, which is transferrable & tradable at a future exchange, and can also be pledged with financial institutions to obtain finance. Thirdly, Aamir Khan said, in addition to traditional agricultural insurance products and the existing government sponsored crop insurance schemes, the SECP, under its regulatory sandbox initiative, has also approved parametric insurance solutions for live-testing. So far, 61 farmers of wheat crop in the district of Rahim Yar khan, covering an area of 168 acres have been covered in the pilot phase. Parametric insurance provides protection to the insured based on parameters such as rainfall or crop yield in a unit area gathered through technology-based solutions, and is particularly suitable for small farmers.

The event aimed at creating a platform to bring together stakeholders from the agriculture sector in Pakistan to share their expert opinion on the application of agricultural technology and the challenges the Agri-tech companies are facing. The participants also discussed the options and challenges in digitizing the whole value chain, improving farmer access to digital insurance and digital crediting Pakistan.

Copyright Business Recorder, 2022