SME SECTOR REMAINS IN DOLDRUMS, URGES SAPM TO ACCELERATE
The Union of Small and Medium Enterprises (UNISAME) invited the attention of Haroon Akhtar the special assistant to the prime minister (SAPM) Shehbaz Sharif to the half hearted approach of the government towards uplift of the under privileged sector and urged him to expedite implementation of his plans to stimulate and invigorate the SME promotion and development stake holders.
President UNISAME Zulfikar Thaver reiterated that the SME sector in Pakistan is not progressing well due to a combination of structural, financial, infrastructural, and policy-related challenges.
Key reasons include:
Financial constraints : SMEs get only 6-7% of private sector credit at high interest rates, making formal financing inaccessible and expensive. Many depend on informal credit, limiting their ability to invest and grow competitively.
Government policies and environment: There is a lack of an adequately enabling business environment. Government policies have been inconsistent, with weak coordination and limited political will to reform the SME sector effectively. Tax incentives offered historically lacked complementary infrastructure development.
High operational costs: SMEs face high input costs, power shortages, and infrastructure deficiencies including transportation, storage, and utilities, raising costs and reducing competitiveness.
Lack of skilled labor and entrepreneurial capacity:
SMEs struggle with a shortage of skilled workers and lack of entrepreneurial capabilities and networks crucial for innovation and market competitiveness.
Market challenges:
Pakistani SMEs have low productivity and poor capacity to enter and compete in international markets due to technological backwardness and difficulty adapting to consumer preferences abroad
Economic environment and mindset: Many potential entrepreneurs prefer speculative investments (like real estate or commodities) over productive SME ventures due to perceived risks and lack of incentives, demonstrating a rent-seeking mentality and risk aversion
Limited government support and incentives/Initiatives like the Business Support Fund or SME-specific credit schemes remain pilot and limited in reach, not addressing the financing and operational needs at scale
In summary, the SME sector in Pakistan remains underdeveloped due to financial barriers, inadequate supportive policies, infrastructural weaknesses, skill shortages, and a risk-averse business culture. These factors create a challenging environment for SMEs to survive and thrive, resulting in low growth and competitiveness of this vital majority sector
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10:28 A
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Posted in: Press Releases, SME PROMOTION