Islamabad Chamber of Commerce and Industry shows concern over declining financing to Small and Medium Enterprises

Islamabad, October 06, 2015 (PPI-OT):The Islamabad Chamber of Commerce and Industry has shown great concerns over the declining financing by commercial banks to Small and Medium Enterprises (SMEs) in Pakistan as reduced lending to SMEs would further weaken the economy, cause decline in exports and tax revenue collection and push up unemployment in the country.

Atif Ikram Sheikh, President, Islamabad Chamber of Commerce and Industry said that formal lending to SMEs has come down to Rs.261.75 billion during the quarter ending on 31st March 2015 as compared to Rs.287.8 billion during the previous quarter ended on 31st December 2014 showing a decline of 9 percent, which should be a cause of concern for the policymakers. He was commenting on the SBP quarterly report as of March 2015 which showed that SME financing has dwindled to 5.8 percent of the total financing as compared to 6.3 percent in the previous quarter.

He said SMEs play a vital role in GDP growth, exports and employment generation, but declining financing to these business enterprises would further dampen the efforts aimed at economic revival of the country. He stressed upon the government to focus on enhancing the share of formal lending to SMEs in total lending that would help in expanding businesses, promoting exports and creating more jobs.

Sheikh Pervez Ahmed Senior Vice President and Sheikh Abdul Waheed Vice President, Islamabad Chamber of Commerce and Industry said that access to finance was one of the major constraints for the growth of SMEs in Pakistan as more than 30 percent of SMEs normally approached SMEDA for financing issues. They said formal lending to SMEs in Pakistan was much less than the actual requirement as it was around 6 percent of the total lending whereas the share of formal lending to SMEs in our neighbouring and regional countries was around 30 percent.

They called upon the State Bank of Pakistan to introduce more credit guarantee schemes for SMEs in order to provide easy access to finance to these business entities because strict collateral requirements of banks were currently depriving SMEs of easy access to working capital, fixed investment and trade financing needs.

For more information, contact:
Khalid Chaudhry
Islamabad Chamber of Commerce and Industry (ICCI)
Chamber House, Aiwan-e-Sanat-o-Tijarat Road,
Mauve Area, G-8/1,
Islamabad, Pakistan
Tel: +9251 225 0526, 2253145, 8432676
Fax: +9251 225 2950
Email: icci@brain.net.pk
Website: www.icci.com.pk