Muhammad Saleem

The State Bank of Pakistan’s (SBP) concessional loan schemes can empower small and medium enterprises (SMEs) by strengthening economy and creating jobs. The President of the Faisalabad Chamber of Commerce and Industry, while speaking to WealthPk, said that SMEs play a vital role in providing employment to countless people across the country. However, most of the business owners lack access to the financing needed to expand their operations.

He said that the SBP’s concessional loan schemes have the potential to change Pakistan’s economy, as empowering the SME sector is crucial in the wake of emerging challenges. If the SBP announces loans for SMEs at interest rates lower than the market, it will surely help this sector grow and thrive. He said that the goal must be to support small businesses with affordable financing so they can expand easily and generate more employment opportunities. 

“Information technology is evolving rapidly, and current machines may not deliver the desired results in the coming years. This is the right time to upgrade machinery, and those in power must urge the SBP to offer concessional loans,” he said. “Without easy access to funds, SMEs cannot purchase new equipment, expand their businesses, or even manage basic expenses like salaries and rent,” he claimed.

Farahan Ahmed, a stitching unit owner, said that he had been serving exporters for years, helping them fetch much-needed foreign exchange. “These exporters have gained wealth through exports, and we played a major role in product manufacturing. But I am still struggling to cover my expenses and focus on expanding my business,” he said.  “I know how to expand and understand what is needed to adapt to the changing market demands. But I am unable to grow my operations due to financial constraints,” he said.

“If the SBP offers concessional loans, many SMEs like mine will be able to expand. Otherwise, I will have to keep working under the exporters, just like I am doing now,” he lamented. He said that large business owners can easily expand their business because banks offer them loans without many hurdles. But for SMEs, it's a tough and complicated process, as they are unable to meet the strict bank restrictions, he added. “SMEs need loans with lower interest rates compared to regular loans.

I would use that money to buy new sewing machines and train new workers so I can start manufacturing products for export. Without this kind of support, we cannot think about growth or prosperity,” he claimed. He said it is very clear that concessional loan schemes from the SBP can inject new life into the SME sector. “Sensing the evolving challenges, we need to equip the SMEs with modern technologies such as automation, digital trade and the use of artificial intelligence in production.”

“Believe it or not,” he said, “SMEs are playing an important role in meeting both local and international trade demands. However, their contribution is not being acknowledged, while large businesses continue to benefit from government schemes and subsidies.” He claimed that SMEs create nearly 80% of private sector jobs and contribute around 40% to the country’s GDP. Their role in boosting exports is also undeniable. “By ignoring SMEs, we ignore the real strength of our economy,” he added, stressing the need to incorporate this sector into the formal financial system.

Credit: INP-WealthPk