Dearth of reliable, readily available, and comprehensive data has been a lifelong shortcoming of government institutions in Pakistan. Though the Central Bank does publish a variety of financial data for public consumption; for researchers, this data often leaves much to be desired. This is especially true in areas such as SMEs where there already is very little understanding of the sector, sparser still reliable data on it. It is disconcerting then to note that the much-appreciated quarterly SME finance reviews that the SBP religiously published every three months was discontinued.
Instead, the SBP now publishes quarterly data tables on its newly minted portal for SMEs (see SMEPakistan.net) touted to be the “informational hub for SMEs in Pakistan”. While the portal itself is a stepping stone toward building a knowledge database for SMEs—one that is direly needed—the tables present only half the picture and touch merely the surface. Most of all, it is difficult to gain any valuable insights into the mobility and direction SME financing is headed in and provide a broad-based understanding of financial inclusion of this sector and its movement as new policies kick in.
For instance, the tables quote outstanding amounts for credit to SMEs, number of borrowers and ratios of non-performing loans. They also provide a snapshot of sector wise (manufacturing, trading, services), institution wise (public, private, specialized, foreign banks etc.) financing numbers for SMEs as well as the type of financing provided to SMEs i.e. for working capital, fixed investment or trade finance purposes. But the extent of the data stops here.
The data does not provide information on say, the distribution of borrowers by the type of institution (if not by bank) or the NPLs of each institution type during the period or the size of loans overall or that of each institution. The data also does not go into detail on which type of financing ends up in higher defaults, or which sectors result in greater NPLs, or how many borrowers did not meet their debt obligations.
There is also virtually no way of telling which manufacturing SMEs or services SMEs are getting more credit and which aren’t. In contrast, the private credit data the SBP publishes virtually every month still has some element of detail.
As an example, we know that the textile sector is getting the highest share of loans from banks lately but we don’t know which industry within SMEs is getting more traction than others.
The portal and SBP’s previous finance reviews mention a number of schemes that have been launched over the past few years but it is not possible for researchers to evaluate the performance of these schemes since there is no data on it. This includes promising schemes like the credit guarantee scheme or the refinancing schemes that are offered to SMEs. To date, the only information on the subject comes to us through external sources which are often patchy and outdated.
The question is also whether this data even exists or whether information is even collected and organized in such meticulous and detailed manner, particularly for SMEs. Credit to SMEs is merely 8 percent of all private sector loans (as at Sep 2017). Are banks even putting efforts into collating detailed data on assets that aren’t priority to them?
It is true that collecting, maintaining and updating data requires considerable human resources, and technological capabilities. But financing and credit data should be relatively easier to maintain since there is already a time-tested system to assemble information from banks. The financial soundness quarterly reports and Islamic banking bulletins are proof. The buck stops here though—leave the data mining and analysis for the publics and stakeholders—but is financial inclusion of SMEs really an agenda for policymakers? And if yes, where is the data?
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