SME Research (2)


To identify the top 3 - 5 financial challenges faced by SMEs in Pakistan.

Early Findings

  • There are about 3.3 million small and medium enterprises operating in Pakistan. Pakistani SMEs operate mostly in the non-agricultural sectors of the economy. About 78 percent of the non-agricultural labor force is employed by SMEs operating in the country, according to a recent article by Daily Times.
  • The lack of sustainable policies around financial inclusion has cut out the majority of SMEs in the country. According to a recent report by the IMF, only 5 percent of Pakistani SMEs have a line of credit with formal financial institutions, the lowest in the Middle East and Central Asia region.
  • SMEs in Pakistan typically have little or no record of their financial transactions, or assets to serve as collateral — making it harder for commercial institutions to value their risks and progress. In addition, commercial banks in Pakistan do not believe the cost and effort required to properly value SMEs would justify the return and typically shy away from providing loans less than Rs10 million — a sum value out of reach for most SMEs.
  • In a recent study of the Pakistani SME space, small businesses in the country are also challenged by their inability to embrace new technology, causing low productivity and poor performance.

Proposed next steps:

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