KARACHI – The Islamabad Women’s Chamber of Commerce and Industry (IWCCI) on Thursday said Small and Medium Enterprise (SME) sector should be promoted to ensure rapid economic development.
The SME sector has a 30 percent share in GDP, a 25 percent share in exports of goods and 80 percent share in non-agricultural jobs but it is facing many problems with the financing on the top of the list, it said.
Many governments and the State Bank have tried their best to promote the SME sector but the initiatives remained unsuccessful due to lack of interest by the commercial banks, said Farida Rashid, President IWCCI.
Commercial banks are focused on lending to the government, corporate sector and consumer finance which is crowding out the small businesses and women entrepreneurs, said added.
She said that commercial banks have not supported SMEs during the last 70 years, therefore, the authorities should not waste their time on them and allow the microfinance Industry to play their role in the national development.
Farida Rashid said that SMEs share in private sector credit is below 5.5 percent which should be enhanced through microfinance for which this sector should be positively incentivized.
Taxes on microfinance banks should be reduced, and regulations should be eased so that the volume of microfinance should be increased from the current Rs250 billion which is insufficient, she demanded.
Similarly, she said, microfinance banks have only 3500 branches in the country which should be increased so that small businesses can thrive which will also increase revenue and employment.
She noted that private sector credit has seen a fall of Rs138 billion during the last six months and the ratio of defaults has increased while the SME defaults have remained the same making a perfect case for increased lending.
Speaking at the occasion, Samina Fazil, founder president IWCCI said that economics like Japan, Taiwan, Hong Kong, and South Korea has witnessed development by promoting SMEs thus we should also increase the role of microfinance banks as their loans are cheap and rapidly processed.
