SME Financing Target Mian Zahid Hussain Welcomes PM’s Rs2.2 Trillion Plan

Mian Zahid Hussain has welcomed Prime Minister Shehbaz Sharif’s directive to double financing for small and medium-sized enterprises (SMEs) from Rs1.1 trillion to Rs2.2 trillion by 2028. He said the initiative could boost industrial production, investment and employment if the government also reduces borrowing costs and simplifies access to credit.

Mian Zahid Hussain is President of the Pakistan Businessmen and Intellectuals Forum (PBIF) and All Karachi Industrial Alliance. He also chairs the National Business Group Pakistan and the FPCCI Policy Advisory Board. He made the remarks following the prime minister’s meeting with the Small and Medium Enterprises Development Authority (SMEDA) in Islamabad on October 12.

SME Financing Must Grow Faster

According to figures cited by Mian Zahid Hussain from the Ministry of Finance, SME financing rose from Rs1.114 trillion in June 2026 to Rs1.137 trillion in September. Meanwhile, the number of borrowers reached approximately 350,862.

Although financing increased by Rs23 billion in three months, he said the government must accelerate lending to meet the 2028 target. Based on the current figures and the remaining period, quarterly growth would need to rise substantially.

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He urged the government to set clear lending targets for commercial banks. In addition, he called for digital loan applications and online monitoring of banks’ quarterly performance.

Revised Targets and Wider Access Needed

The prime minister had previously set a target of Rs2 trillion in SME financing and 775,000 borrowers by June 2028, according to Mian Zahid Hussain. Following the increase to Rs2.2 trillion, he urged the Ministry of Finance and the State Bank of Pakistan to announce revised borrower targets and a clear implementation plan.

He stressed that the expansion must benefit new businesses, small industries and underserved communities. In particular, he called for better access to finance in remote districts of Balochistan.

Mian Zahid Hussain warned that simply increasing the overall lending volume would not be enough if banks continued to concentrate financing among existing borrowers. Instead, the policy should bring more small businesses into the formal credit system.

High Borrowing Costs Remain a Major Barrier

Mian Zahid Hussain identified high interest rates as a key obstacle to SME growth. He said KIBOR stood at 11.5 per cent, while banks added spreads of 5 to 6 percentage points to SME loans. As a result, annual borrowing costs could reach around 17 to 18 per cent.

He compared these costs with rates he cited for India, China and Vietnam, arguing that lower financing costs help businesses invest and expand. High borrowing costs, he said, place particular pressure on Pakistani firms operating with narrow profit margins.

To improve access, he proposed SME financing at six percentage points below KIBOR, supported by risk-sharing coverage of at least 50 per cent. He said this approach could make loans more affordable while reducing lenders’ exposure to risk.

Easier Collateral and Faster Loan Approvals

Although concessional financing schemes offer rates of 5, 7 and 9 per cent, Mian Zahid Hussain said their impact should be measured by the number of businesses reached and the amount of financing actually disbursed.

He also called for action on lengthy approval processes, complex documentation and strict collateral requirements. Banks, he said, should consider business cash flows, transaction histories and verified supply orders when assessing applications.

Furthermore, he urged the government to strengthen credit guarantee schemes. Such measures could encourage banks to lend to smaller businesses that lack substantial property or other traditional forms of collateral.

SMEDA and Business Chambers Can Support Entrepreneurs

Mian Zahid Hussain said SMEDA should prepare feasibility studies in local languages and work with the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and district chambers to help entrepreneurs develop business plans and maintain financial records.

He also called for loan tenors and repayment schedules that reflect the production cycles and cash-flow needs of different businesses.

However, he stressed that financing reforms alone would not resolve every challenge facing SMEs. High energy costs, a complicated tax system and delayed payments by large buyers also limit their growth.

He urged the government to address these issues through coordinated policy measures. In his view, affordable credit, simpler procedures and a more supportive business environment are essential to turn the Rs2.2 trillion financing target into higher production, stronger exports and more employment.