The government is ignoring Rs 350 billion Small and Medium Enterprises (SMEs) sector as the entrepreneurs are unable to get the crucial credits from the banks due to various hurdles put in their way.
Talking to Business Recorder here on Thursday former Chairman Pakistan Association of Automotive Parts and Accessories Manufacturer (PAAPAM) Nabeel Hashmi said the State Bank of Pakistan regularly allocates funds for advancing loans to the SMEs, but the small industrialist cannot take bank loans as in majority of cases they cannot provide the collaterals required to borrow the loans besides the government itself is the biggest borrower of loans from the financial institutions.
The dominant United Business Group (UBG) of the FPCCI said the government knows very well that the economy cannot excel unless SMEs are supported on policy level and given preference in provision of credit. "Uninterrupted flow of finances is important for survival and expansion of the SME sector without which economy cannot be revived, "The role of microfinance banks remains crucial to ensure unobstructed flow of financial resources to the SME sector which is engine of economic growth for the country, Abdul Rauf Alam, presidential candidate for the presidency of FPCCI said.
Speaking to the business community, he said that the current level of finance and access of SMEs to banking services remains unsatisfactory which calls for serious initiatives. SME sector represents over 90 per cent of all enterprises, employs some 75 per cent of the non-agricultural workforce and contributes hundreds of billion rupees to the GDP.
Alam said the sector that plays important role in poverty alleviation, and equitable resource distribution requires patronage by the government and commercial banks. SMEs' growth potential for employment, income generation, and poverty reduction remains mostly untapped in Pakistan. .
Questioning policies which are hindering growth of SMEs, he said that there is a serious need for the banks to study successful microfinance banks in other countries in a bid to come up with effective and implementable ideas. Authorities must take on the challenge of developing SME by providing an enabling environment, business development services and facilitate as their growth agendas. Apart from access to credit and productivity, the other areas hindering business development include labour, taxation, environment and energy, he pointed out.
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