A national initiative to tackle significant regional imbalances in financing for small and medium enterprises (SMEs) has been launched, following high-level meetings that revealed stark disparities in credit access, with regions like Balochistan and Gilgit-Baltistan lagging considerably behind.
The Small and Medium Enterprises Development Authority (SMEDA), acting on the advice of the Special Assistant to the Prime Minister, Haroon Akhtar Khan, held five key consultations on Wednesday with regional stakeholders to foster equitable growth in SME lending across Pakistan, according to an information today.
The sessions, convened by SMEDA Chief Executive Officer Ms. Nadia Jahangir Seth in collaboration with the State Bank of Pakistan (SBP), brought together representatives from Sindh Bank, the Bank of Khyber, the Pakistan Banks Association (PBA), and provincial industries departments.
Ms. Seth stated that the Ministry of Industries and Production is working diligently to advance the Prime Minister”s vision for SME development, aiming to help these businesses grow and increase their contribution to the national economy through expanded local and international trade.
She urged participants to transform the PM”s vision into a reality by increasing both the volume of SME credit and the number of beneficiaries. In this context, the SAPM has directed stakeholders to replicate the successful SME financing scheme developed by the Bank of Punjab, which has already benefited over 110,000 people, with nearly half of the borrowers from low-income groups.
An SBP official presented data highlighting the current credit landscape, which showed SME financing in Khyber Pakhtunkhwa stands at Rs30.48 billion for over 9,500 borrowers, while Balochistan has only Rs7.19 billion for 2,412 borrowers. The figures for Gilgit-Baltistan and AJand K were Rs3.96 billion (1,960 borrowers) and Rs5.48 billion, respectively.
Discussions on Sindh noted growth in outstanding loans and the borrower base, with participants highlighting the success of the Sindh Enterprise Development Fund (SEDF). Over 15 years, the SEDF has supported more than 250 projects and 10,000 microloans with a record of zero non-performing loans.
Despite some successes, participants identified overarching challenges, including a decline in the number of borrowers in certain areas, significant geographic disparities in credit distribution, and low digital literacy among potential entrepreneurs.
To ease credit access, SBP”s Additional Director, Mr. Najam-us-Saqib, noted that the central bank had introduced clean lending of up to Rs50 million under revised regulations. He added that the SBP and SMEDA would coordinate meetings for officials to gain insights from the Bank of Punjab”s model to either replicate it or develop similar initiatives.
Ms. Seth affirmed that SMEDA would support the demand side by helping SMEs overcome challenges through financial literacy programmes and training. She stressed, however, that financial institutions have a greater role and provincial governments must demonstrate ownership and lead the efforts.
The meetings, part of a series initiated last week by SAPM Haroon Akhtar Khan, concluded with a collective commitment from all stakeholders to develop programmes that enhance credit facilities for SMEs and enable their meaningful contribution to national economic growth.