SME financing improves amid low default
KARACHI: The small and medium enterprises (SMEs) have shown significant improvement over the last two years in utilisation of bank loans with the default ratio in the sector being less than one per cent.
However, the financial institutions need to generously finance SMEs that contribute most to the GDP and are the biggest source of job opportunities in the country.
This was said by Samar Hasnain executive director of SMEs State Bank of Pakistan while addressing 8th Pakistan SME Forum 2014 here on Tuesday.
He stated that SME financing is safe and gives good returns because the default ratio of this sector the world over is the lowest.
The chief executive officer of Small and Medium Enterprises Development Authority (Smeda) Muhammad Alamgir Chaudhry spoke on the role SMEs in the economy.
He said that Smeda is committed to providing conducive, regulatory and technological environment for the SMEs.
The authority regularly conducts extensive research to strategically develop clusters of SME, he added.
“Since SMEs provide 90pc jobs to workforce, the government has launched numerous facilitation programs to encourage investment, productivity and competitiveness in the sector,” he said.
In the inaugural session, president Union of Small and Medium Enterprises (Unisame) and director Smeda Zulfikar Thaver said the SME sector needs credit guarantee, SME export house and marking support, incentive schemes and technological support.
He said there should be separate Export Promotion Bureau, Engineering Development Board and Ombudsman for the SME sector.
E-commerce specialist from UK, Salman Merchant deliberated on increasingly critical role of e-commerce, which promises highly productive and low-cost advantages for the SME entrepreneurs.
He further said that if Pakistan succeeds to establish a credible online brand for its SME products it can accelerate the growth of SMEs tremendously. However, he stressed upon the need for creating fool-proof cyber security mechanism for online business ventures.
Majyd Aziz former president Karachi Chamber of Commerce and Industry (KCCI) said that banks need to change their policy regarding provision of loans to SMEs which are not in a position to offer collateral.
He suggested that banks should consider giving out loans to SMEs against movable assets.
Published in Dawn, August 20th, 2014