SME Financing Pakistan: SMEDA Expands Credit Access

Staff Report

LAHORE – The Small and Medium Enterprises Development Authority (SMEDA) has reaffirmed its resolve to boost credit access for small and medium enterprises across the country, especially in underserved areas, to streamline their role in national economic progress, strengthening SME financing Pakistan.

SMEDA, in collaboration with the State Bank of Pakistan and provincial stakeholders, convened high-level meetings to advance SME financing initiatives in Sindh, Khyber Pakhtunkhwa (KP), Balochistan, AJ&K and Gilgit-Baltistan.

Ms Nadia Jahangir Seth, CEO SMEDA, said the objective of the series of meetings, held on the instructions of Special Assistant to Prime Minister for Industries and Production Haroon Akhtar Khan, was to seek insights from relevant institutions in all provinces and regions on SME financing landscape and help them initiate process to design exclusive programmes by drawing on a successful model implemented in Punjab.

SMEDA and State Bank Collaboration for SME Growth

Earlier, the SAPM called for a coordinated national effort to significantly enhance access to finance for small and medium enterprises (SMEs), particularly in underserved areas.

He directed SMEDA to lead efforts in building partnerships that accelerate credit access for SMEs across Balochistan, Khyber Pakhtunkhwa, Azad Jammu & Kashmir and Gilgit-Baltistan on the pattern of CM Punjab’s Asaan Karobar Finance Scheme under which a record Rs100 billion have been disbursed among entrepreneurs in less than one year.

Officials said the scheme launched through the Bank of Punjab had proved quite a success as more than 110,000 people had benefited and almost 50pc of borrowers were from low-income groups.

Punjab Asaan Karobar Finance Scheme Success Model

The CEO SMEDA said Prime Minister Shehbaz Sharif during steering committee meetings emphasized the need to provide credit access to SMEs across Pakistan.

She also highlighted SMEDA’s role in promoting access to finance as a pillar of its Business Plan and expressed resolve to expedite efforts to improve the SME finance ecosystem across Pakistan.

She said these meetings aimed to exchange ideas and enable provincial governments and financial institutions to design programmes by building on the experience of the “blended finance model” adopted by the Punjab government through the Bank of Punjab.

She assured the stakeholders that SMEDA would play a proactive role in providing an enabling business environment to SMEs by being part of this digital journey.

Challenges in SME Financing and Digital Literacy Gaps

As for on-ground support, Ms Seth said, SMEDA could help SMEs overcome demand-side challenges such as financial literacy and training and share studies on potential clusters. She said banks and financial institutions had a greater role to play and the respective provincial governments should take ownership and lead from the front.

State Bank of Pakistan officer Waleed Ashfaq Khan gave presentations on the SME financing situation in all the provinces.

He said the SME financing currently stands at Rs30.48 billion with over 9,500 borrowers in KP, Rs7.19 billion with 2,412 borrowers in Balochistan, Rs3.96 billion with 1,960 borrowers in Gilgit-Baltistan and Rs5.48 billion in AJ&K.

The participants also reviewed SME financing trends in Sindh, noting growth in outstanding loans and borrower base. They highlighted the success of the Sindh Enterprise Development Fund (SEDF), which has supported over 250 projects and 10,000 microloans with zero non-performing loans over the past 15 years.

Sindh Bank shared its focus on SME financing from 2024, reporting significant portfolio growth.

Future Roadmap for SME Credit Access in Pakistan

The participants highlighted challenges such as declining borrower numbers, geographic disparities and low digital literacy in several areas. They emphasized the need for tailored financing solutions.

Najam-us-Saqib, Additional Director SBP, said the Central Bank now offered clean lending up to Rs50 million under revised Prudential Regulations, making it convenient for borrowers to avail themselves of the financing facility. He said the SBP, in collaboration with SMEDA, would coordinate meetings of officials with BoP teams to enable them to get ideas and insights and consider replicating Punjab’s model or coming up with their own initiatives.

The meetings concluded with collective resolve to make concerted efforts by all stakeholders – entrepreneurs, business organizations or associations, banks and development finance institutions, and provincial governments – to develop programmes to enhance financing facilities for the SMEs and help them meaningfully contribute to national economic growth.

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