The Islamabad Chamber of Commerce and Industry (ICCI) on Thursday lauded the plan of State Bank of Pakistan to extend loans of Rs 400 billion to Small and Medium Enterprises (SMEs) by 2020 through National Finance Inclusion Strategy (NFIS).
Terming it a highly positive move, the ICCI said it would enable the small and medium enterprises to innovate, upgrade, improve productivity and play more effective role in the economic development of the country.
ICCI President Atif Ikram Sheikh said that SMEs were the backbone of the country’s economy as they constituted 95 per cent of the enterprises in Pakistan, provided jobs to 80 per cent of non-agricultural labor force, contributed 40 per cent to GDP and 35 per cent to exports, therefore, it was essential that government should come up with new strategies to strengthen the SME sector in the country.
He said easy access to finance was the major challenge for SMEs which constrained their growth as the formal lending to these enterprises has come down from 17 per cent in 2008 to just six per cent in 2014.
He said Pakistan was a country of rising population and the best way to create more jobs was to facilitate the growth of SMEs as according to a World Bank study SMEs created four out of every five jobs.
He stressed that government should create a supportive regulatory environment for SMEs and provide them easy access to finance and technology that would help them in optimising their productivity.
He said the world economy was grappling with numerous challenges and many governments were increasingly looking towards SMEs as a key driver of sustained and inclusive growth.
He said if properly supported, SMEs has the potential to play more active role in achieving stronger and more inclusive growth in Pakistan. He said the government should reduce taxes and duties on alternate energy solutions for SMEs.
He said the government should also consider establishing new state-of-the-art and specialised industrial estates for SMEs to unlock their true potential for economic growth.
He urged the government should offer special incentives and tax-relief programs to promote transfer of new technologies among the SMEs.
He appreciated the SBP commitment to providing financial access to 50 per cent of the SMEs in the country through the National Finance Inclusion Strategy (NFIS) and extending loans of Rs 400 billion to these enterprises by 2020.
He hoped that this move by the SBP would go a long way in promoting SME sector and help in triggering fast economic growth in the country.
