The Union of Small and Medium Enterprises (UNISAME) has appealed to Haroon Akhtar, special assistant to Prime Minister Shehbaz Sharif, to address the government’s alleged inadequate approach towards the SME sector.

UNISAME urged swift action to implement plans designed to revitalize and bolster SME stakeholders. President of UNISAME, Zulfikar Thaver, emphasized the sector”s struggles due to numerous obstacles, including structural, financial, infrastructural, and policy-related issues.

One of the key issues is financial constraints. SMEs receive a meager 6-7% of private sector credit, often at exorbitant interest rates. This makes formal financing difficult and costly, forcing many to rely on informal credit, which restricts investment and growth.

Government policies and the overall business environment also contribute to the problem. Inconsistent policies, coupled with weak coordination and limited political will for effective reform, have hampered the sector”s progress. Past tax incentives lacked accompanying infrastructure development.

High operational expenses, including input costs, power shortages, and inadequate transportation, storage, and utilities, further burden SMEs, reducing competitiveness.

A shortage of skilled workers and entrepreneurial expertise hinders innovation and market competitiveness. Pakistani SMEs face low productivity and struggle to compete internationally due to technological limitations and difficulty adapting to global consumer demands.

The economic environment also plays a role. Many potential entrepreneurs favor speculative investments over productive SME ventures due to perceived risks and a lack of incentives.

Existing government support and initiatives, such as the Business Support Fund and SME-specific credit programs, remain limited in scope and fail to adequately address the financing and operational needs of the sector.

In conclusion, Pakistan’s SME sector remains underdeveloped due to financial hurdles, inadequate policies, infrastructural deficiencies, skill gaps, and a risk-averse business environment. These challenges create a difficult landscape for SMEs to flourish, resulting in stunted growth and reduced competitiveness for this crucial sector.