Economy cannot excel sans vibrant SME sector
ISLAMABAD – Economy cannot excel unless Small and Medium Enterprises (SMEs) are supported on policy level and given preference in provision of credit, United Business Group (UBG) of the FPCCI said on Thursday demanding the government to support and encourage this overlooked sector.
Uninterrupted flows of finances are important for survival and expansion of the SME sector without which economy cannot be revived, the business groups said.
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 country, said Abdul Rauf Alam, presidential candidate for the presidency of FPCCI.
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.
He said that SME sector represents over 90 per cent of all enterprises, employs some 75 per cent of the non-agricultural workforce and contributes Rs 86 billion to the GDP.
Abdul Rauf Alam said that the sector that plays important role in poverty alleviation, and equitable resource distribution is being ignored by the government and commercial banks.
SMEs’ growth potential for employment, income generation, and poverty reduction remains mostly untapped in Pakistan. Only 2.5 million people are recorded as active borrowers of microfinance which is discouraging, he said.
Questioning policies which are hindering growth of SMEs, he said that there is a serious need for the small and medium 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 their growth agendas.
Apart from access to credit and productivity, the other areas hindering business development include labour, taxation, environment and energy, he observed.