ISLAMABAD: The Competition Commission of Pakistan (CCP) has strongly recommended a new SME Act for the Small and Medium Enterprises (SMEs) with an effective SME banking network and new definition of the SMEs to include micro-enterprises as per global standards.
On Thursday, CCP Chairperson Rahat Kaunain Hassan shared the draft report on “Improving Economic Efficiency of SMEs” during the seminar in connection with International Women’s Day to discuss the crucial role of Small & Medium Enterprises in the economy with a special focus on contributions and challenges of women entrepreneurs.
The Report reviews the SME Policy Framework in Pakistan and based on two surveys concerning demand side constraints and supply side issues in SMEs’ growth and challenges in SME financing, offers recommendations to the Government of Pakistan and other concerned entities focusing on competition aspects, i.e., to ensure a level-playing field for SMEs to compete, which shall lead to the growth of the SME sector, as per report.
Analyst calls for developing SME sector for sustainable future
The CCP presented its draft report on “Improving Economic Efficiency of SMEs.” The report identifies access to finance as a major barrier to SMEs. A survey of 50 financial institutions was conducted in 2021 which showed that only 30 out of the 50 lend to the SME sector. Among these 30 FIs, the lending is skewed towards medium enterprises and only two were able to achieve the indicative lending targets set by SBP in the sector. SBP prepared National Financial Inclusion Strategy (NFIS) in 2015 in which the SME sector was identified as a priority sector and the target set for SME lending was 17% of private sector financing, to achieve by 2020. However, the SME lending was only 5.40% of the private sector lending in September 2022 and over the last 5 years the lending has remained between 6-7%. The report recommends that the targets need to be enhanced and aggressively followed.
The report also emphasizes the need for an SME Act, an effective SME banking network with focused SME desks, as well as redefining SMEs to include micro-enterprises with distinct thresholds as per global standards.
In her opening address, Rahat Kaunain Hassan highlighted the critical role of Small and Medium Enterprises (SMEs) in driving economic growth. She explained that the choice of SMEs as the seminar’s theme was due to their impact and estimated contribution of up to 40% of GDP in the economy and being one of the key components of CCP’s strategic vision 2020-2023.
While discussing the country’s economic challenges, she emphasised the importance of enforcing competition principles in such times of crisis as a necessity. Hassan also emphasized the need to promote women’s economic empowerment that will change the economic landscape.
The theme of the seminar was, “Women in SMEs: Challenges and way forward” and it was attended by a wide array of stakeholders including the representatives of small businesses, chambers of commerce & industry, commercial counsellors of foreign embassies in Pakistan, women-led SMEs, and regulators. Rahat Kaunain Hassan along with the senior officers including female staff members were in attendance.
All speakers were unanimous in having long-term and consistent policies for SMEs to become vibrant.
Copyright Business Recorder, 2023