RECORDER REPORT

KARACHI: Governor State Bank of Pakistan (SBP) Tariq Bajwa stressed the need to pay special attention to accessibility of financing for certain priority sectors in order to ensure sustainable and inclusive growth in Pakistan.

Deputy Governor SBP Riaz Riazuddin while delivering speech for Governor SBP said SMEs play a significant role in economy.

The SBP Governor had to leave for Islamabad for emergency meeting who was invited to chair the opening session of seminar on “Stimulating Firm Productivity for Growth”, organized by International Growth Center (IGC) at Learning Resource Center (LRC), State Bank of Pakistan (SBP) here on Tuesday.

In Pakistan’s case, governor said effectiveness can be gauged from the fact that SMEs constitute 90 percent of the 3.2 million firms in the country, while contributing almost 30 percent of GDP, 25 percent of our exports, and provide employment for 78 percent of the non-agricultural labor force.

He said the SME sector of Pakistan has been resilient through the recent ups and downs of domestic and global economic factors. However, one aspect that has significantly hampered the growth of SMEs over the last decade is the decline in availability of credit.

In order to address the financial-access constraint to firm productivity in general and for SMEs in particular SBP held detailed consultations with all the relevant national and international stakeholders and proposed a multipronged policy for enhancing the share of SMEs in private credit from 8 percent to 17 by 2020. This SME policy was launched in December, 2017, by the honorable Prime Minister of Pakistan at this venue.

“The idea behind the recently launched policy is simply to address the main impediments to SME credit as identified through a joint consultative process. Each of the nine pillars of the SME policy is specifically designed to address particular obstacles contributing to the decline in credit being disbursed to SME sector in the country, he added.

He said nine pillars are improving regulatory framework, encouraging certain microfinance banks to cater for the SME segment, taking risk mitigation measures, simplifying banking procedures, value-chain and program based lending, capacity building, non-financial advisor services, leveraging technology and innovation challenge and simplified taxation regime. Each of these nine pillars have different measures associated with them which are continuously being monitored, evaluated and refined in order to enhance the effectiveness of the SME policy to achieve the desired results.

He implored the research fraternity to delve deeper into the intricacies of SME financing both from demand and supply perspective.

“We would also appreciate feedback on our policies and would welcome further collaboration between policy makers and research community,” he said In his remarks, Dr Ijaz Nabi, Country Director of IGC, said his organization is working on establishing linkages between top notch researchers and policy makers in Pakistan.

“There is scarcity of funds to convert the research work into its practical implementation,” he said. Nabi said ICG was seeking funds from the government to put the economic ideas operational, adding that pushing the frontiers of knowledge was the ultimate solution to boost the economy.

“For last 15 years, Pakistan has been missing from academic journals,” he said, mentioning that IGC has now initiated funding to the researchers.