KARACHI, Sept 4: Banks continue to refuse export financing to software exporters on the plea that such financing could be done only through venture capital — and this industry is non-existent in Pakistan.

Software developers have approached Information Technology and Telecommunications Minister Awais Leghari to come to their rescue — and move the State Bank to ensure that banks enforce its guidelines issued in June 2000 on the subject of export financing for computer software.

The State Bank issued a circular on June 5, 2000, instructing banks to consider export order or L/C as a collateral for bank borrowing by software exporters under export finance scheme. “But till to date this facility has not been extended to any software exporter,” complains a Karachi-based software developer in a letter written to Mr Leghari. He says that when this was brought to the notice of SBP officials they advised the software exporters to ask their banks to give in writing that they were not going to give export finance to them. Obviously, the banks do not give such things in writing. The software developer has asked the minister to ensure implementation of the SBP circular.

But bankers say financing to software exporters is feasible only if it is made through a venture capital fund that mitigates the risks involved in such financing. They say that in India also software exporters are getting bank finances through venture capital funds.

Former president of Pakistan Software Houses Association Hamza Matin said software exporters had long been persuading the government to facilitate setting up of venture capital. “But the government will have to come forward and invest in this industry that could be best run in public and private sector partnership,” he said when reached by Dawn over telephone.

He said the government had committed in its IT policy of 2000 to spending Rs800m on the development of venture capital but the promise is yet to materialize.