Small and Medium Enterprises (SMEs) offer a huge opportunity for commercial banks to expand their secure lendings, as the recovery rate from SMEs is the highest in the industry. Addressing 6th SME conference organised by Shamrock Communications here on Wednesday, Director of Smeda Sultan Tiwana said that in the most developing countries, the ratio of SMEs' non-performing loans has been as low as 2 to 7 percent.
"Even in Pakistan, targeted financing facilities launched for CNG rickshaw owners and gems and jewellery makers gave excellent results with almost zero percent default ratios", he added. During the presentation sessions, Kalimur Rahman, CEO, JS Bank Ltd said that in Pakistan, only 7 percent of the SME's have availed bank financing facilities. Thus, these services are highly under-utilised in this critical sector. He also emphasised the need for a specialised SME Bank as well as trained SME bankers catering to the exclusive needs of the sector.
Javed Iqbal, Project Manager, Business Edge, IFC-World Bank Group elaborated on the Financial-Inclusion Programme and Management Training Initiatives being run by IFC all over the country. Chairperson of the first session, former federal minister Barrister Shahida Jamil said, "The real ailment of SME's in Pakistan is the deteriorating culture of taxation, which encourages SMEs to avoid documentation of their business performance. This issue needs to be addressed with a reformed ethical approach towards entrepreneurship".
Syed Samar Hasnain, Director SME at SBP presented the sustainable initiatives and enabling regulatory environment created by the SBP for SMEs promotion and gave a global perspective with various examples of SME support, performance and growth in developing countries. SBP absorbs 40 percent of the default risks faced by commercial banks in case of new SME ventures.
Mian Abrar Ahmed, President, KCCI analysed the difficulties of businessmen in Karachi and other major cities, among which, law and order situation is the most critical. He also suggested the establishment of an exclusive bank for SMEs in which all commercial banks should be equal shareholders.
Ahmed Chinoy, Chairman, Citizens' Police Liaison Committee (CPLC) gave a briefing on a deterrent Programme to support the business community in Karachi, saying that the law and order crisis in Karachi can only be met by collaborative efforts by the political forces, bureaucratic establishment, law-enforcement agencies and the common citizens. He said that extortion and kidnappings have risen to be the biggest challenges for the social and commercial communities in Karachi. CPLC's call center is attending and addressing over 6,000 complaints every day. It also maintains a vast data base of car-theft cases, FIRs and Jailed prisoners.
Saquib Mohyuddin, CEO, Business Support Fund delivered the keynote address, urging empowerment, structural reforms, good-governance and HR training for SMEs, which can help reinvigorate the national economy rapidly. He suggested that it should be mandatory for MNC's in Pakistan to outsource a portion of their work to the local SMEs. Menin Rodrigues, CEO of Shamrock Communications appreciated the healthy response and participation in this annual conference, from all spheres of the SME sector, along with its leadership and support institutions.
Other prominent speakers who participated in the panel discussion towards the end of the 6th SME Conference included Advisor to KCCI, Ateeq-ur-Rehman; representative of Chartered Institute of Logistics and Transport, Nasir Jamil; Director of Pakistan Institute of Management, Abid Hussain; President of Unisame, Zulfiqar Thaver; Chairman, Leasing Association of Pakistan, Teizoon Kisat; and the Country Representative, International Multi Model Transport, Captain Raffat Zaheer. These forums stressed on the need for deploying a new and evolved breed of bankers who have a totally developmental mindset towards SME's, rather than following a commercial thought process of traditional bankers.
In addition, more than 200 delegates representing Private Enterprises, Government Ministries, State Bank, Commercial Banks, Trade Associations, FPCCI, CPLC, academia and the media attended the day-long proceedings, which comprised two insightful sessions and an interactive panel discussion. The theme of the conference was 'Engaging SMEs to stabilise the economy" and it focused on two critical developmental areas, namely; "Ailments restricting SME Growth Acceleration" and "Cost Controls, Impediments, Market Forces and Challenges.