Lahore, July 26, 2013 (PPI-OT): Small and Medium Enterprises Development Authority (SMEDA) has been inducted as a member of the Technical Committee of Credit Guarantee (TCCG). The TCCG was constituted by the State Bank of Pakistan (SBP) for implementation and monitoring of the Credit Guarantee Scheme for Small and Rural Enterprises. The Scheme was launched by SBP with the assistance of Department for International Development (DFID), U.K and Government of Pakistan.
Access to finance is categorized as the foremost impediment to SME growth and development. The State Bank of Pakistan, as a regulator of the financial market has played an active role in encouraging SME’s access to finance. However, credit to the SME sector has been declining sharply over the past few years. According to SBP statistics, SMEs’ share in total credit off take during December 2011 to 2012 decreased from 8.3% to 6.8%. During the same period, the total number of SME borrowers decreased by 21.3%.
Banks/ Development Finance Institution (DFIs) are generally reluctant to extend credit to Small and Medium Enterprises (SMEs) and agriculture sector as they perceive lending to these sectors riskier than other sectors. Credit Guarantee Schemes are programs that ensure partial repayment of delinquent loans in order to motivate banks to lend to borrowers which normally do not have access to credit from the formal sector.
SMEDA has recently launched a Five Year SME Development Plan (2013-2018). One of the components of the Plan involves development of key SME sectors. In this regard, extensive value chain analysis has been carried out for thirteen (13) SME sectors, identifying game changers that can transform the entire dynamics of the sector and accrue benefits across the entire spectrum of the value chain.
“Access to Finance” in this regard, features as one of the key components of the SME Development Plan wherein establishing an SME Financing Arm within SMEDA is envisaged to help support the proposed interventions for the SMEs sector.
It is hoped that SMEDA’s extensive experience of working with SMEs across Pakistan would greatly help the TCCG in refining and realigning its initiatives for enhanced access to formal finance for realizing a dynamic and growing SME sector in Pakistan.
For more information, contact:
Liaqat Ali Gohar
DGM (Admin. and PR)
Small and Medium Enterprise Development Authority (SMEDA)
6th floor, LDA Plaza, Egerton Road, Lahore
Fax: (042) 6304926