Finance Minister Muhammad Aurangzeb reaffirmed the government’s commitment to increasing access to financing for small and medium enterprises (SMEs) in Pakistan, setting a target to raise SME credit to 17% of private-sector lending by 2028.
Speaking at the ‘Scaling up SME Finance’ panel during the Fourth International Conference on Financing for Development (FfD4), Aurangzeb emphasised the crucial role SMEs play in Pakistan’s economy. SMEs contribute approximately 40% of GDP, 25% of exports, and employ nearly 78% of the non-agricultural workforce, he noted.
Despite their importance, SMEs continue to face challenges in accessing formal financial services, with limited credit availability. Aurangzeb outlined the government’s approach to unlocking the potential of the SME sector, which includes a roadmap aimed at aligning Pakistan with regional peers like India and Bangladesh. The State Bank of Pakistan (SBP) is working to incentivize commercial banks to increase lending to SMEs, he added.
Aurangzeb also highlighted that increased access to finance will improve SME contributions to GDP, exports, employment, and financial inclusion, particularly benefiting women and youth. The government has introduced a credit guarantee scheme under the Prime Minister’s Youth, Business, and Agriculture Loan Scheme, sharing up to 50% of credit loss risk on small business loans.
Furthermore, the government plans to revise and expand the National SME Policy (2021), focusing on sectoral growth and regulatory reforms. These include strengthening the Small and Medium Enterprises Development Authority (SMEDA), easing regulatory hurdles, reducing the reliance on no-objection certificates (NOCs), and promoting digital compliance with e-inspections.
Aurangzeb concluded by noting Pakistan’s interest in learning from global best practices to foster technology-enabled, climate-compliant SME development, stressing the government’s commitment to building a supportive financial ecosystem for inclusive and sustainable growth.
