Ghazanfar Azzam, President & CEO Mobilink Bank is an industry expert, well-known for his knowledge and experience in commercial, consumer, retail, SME, and micro-banking. Under his leadership, Mobilink Bank has emerged as one of Pakistan's premier banks specializing in MSME services. He is a recipient of the prestigious Hubert Humphrey Fellowship by the United States Government for the year 2000-01 under the Fulbright program. The program included studies at State College, Penn State, PA in HRD & Leadership and on-the-job experience at ABN Amro Bank, North America in Chicago.    BR Research had a detailed discussion with Ghazanfar Azzam which has been reproduced for the readers:

BR Research: What is the role of Micro, Small, and Medium Enterprises (MSMEs) in Pakistan's economy, particularly in terms of employment generation, poverty alleviation, and prospects?

Ghazanfar Azzam: There is no denying that MSMEs play a substantial and multifaceted role in Pakistan's economy. According to Small & Medium Enterprise Development Authority (SMEDA) estimates, over 5 million SMEs operate nationwide and account for 40 percent of our national GDP. The sector is crucial when it comes to talent absorption and job creation. It alone facilitates nearly 78 percent of non-agricultural sector employment. The Global Entrepreneurship Monitor (GEM) Report 2020 says Pakistani MSMEs operating in textiles, handicrafts, and services have been essential in providing economic opportunities to individuals from lower income brackets, thereby fostering inclusivity and alleviating poverty at levels where they matter the most

In addition, the State Bank of Pakistan (SBP) Annual Report for the fiscal year 2021-2022 highlights the MSMEs’ ability to withstand economic challenges, adapt to evolving market dynamics, and contribute to economic diversification, positioning them as key drivers for sustainable growth and long-term prosperity. It also acknowledges Microfinance Institutions' (MFIs) support to MSMEs that truly unleashed their potential. MFIs continue to facilitate the growth of these enterprises by harnessing the power of digital innovation and tailoring banking solutions to their unique needs. 

The role of MSMEs in our economy is well-known but largely unappreciated. That is why their full potential for economic transformation is yet to be unlocked. The government, regulators, and relevant stakeholders should come together to create an enabling environment that supports MSMEs across the country. This includes streamlining regulatory frameworks, providing access to finance, improving infrastructure, facilitating skill development programs, and promoting technology adoption. 

BRR: What are the major challenges faced by MSMEs in Pakistan, including specific challenges faced by women entrepreneurs, and how do these challenges hinder their growth and full participation in entrepreneurship?

GA: Access to finance remains the biggest hindrance in the entry and growth of small businesses. The issue is multipronged. First, there are unserved areas that lack a physical bank branch and internet connectivity. Secondly, there are underserved areas, and then there are pockets within even large metropolises where people either lack awareness regarding banking products and services or choose not to avail due to sociocultural considerations. 

Lack of awareness and digital financial literacy are major obstacles to fostering digital and financial inclusion. Many entrepreneurs, particularly in rural settings, struggle to secure the necessary funding to start a business or to invest in equipment and inventory because they are not financially literate. This knowledge gap contributes to a higher risk of financial mismanagement and failure among MSMEs.

Therefore, MFIs are facing a double challenge of providing financial literacy along with the services. Mobilink Bank Limited has made a point of fostering financial literacy, particularly amongst women borrowers (under our flagship Women Inspirational Network (WIN) program) so that they can get the maximum benefit of their loans. Our initiative has spurred significant growth and economic transformation in the rural economy and we have numerous success stories to our credit. 

Unfortunately, women entrepreneurs have to brave more than just the standard issues of access and provision. They have to face inherent biases and discrimination, both overt and subtle, which put them in a disadvantageous position compared to their male counterparts. The prevailing cultural norms and expectations often prioritize traditional gender roles and discourage women from taking risks or venturing into non-traditional business domains.

Addressing these challenges requires targeted approaches that include financial inclusion initiatives, investments in digital infrastructure, and capacity-building programs to enhance financial literacy among MSMEs. Efforts from both the private and public sectors need to be made to promote gender equality and provide a congenial environment for women to be financially included. By adopting a diverse range of strategies and solutions, we can empower MSMEs, particularly women-led, to thrive and contribute to inclusive economic growth.

BRR: Could you provide an overview of the initiatives, policies, and programs implemented by Mobilink Bank to support the growth and empowerment of MSMEs, including women entrepreneurs?

GA: MFIs are focused on offering accessible financial solutions tailored to the needs of MSMEs, including microloans and customized products for small enterprises, particularly women. A notable example is Mobilink Bank's flagship initiative, the Women Inspirational Network (WIN) program which has trained over 1000 women in rural areas through its collaboration with CARE International in Pakistan (CIP). Under another initiative, we have upskilled 3000 individuals, including 1500 women, in the Khyber Pakhtunkhwa district. Our exclusive offering, Bint-e-Hawwa, is also in place to facilitate women entrepreneurs and an all-female branch on Islamabad Expressway is another step to enhance inclusion for all in the financial sphere.  

Currently, 22 percent of our Gross Loan Portfolio (GLP) - expanding over PKR 11 billion is extended to 69,470 female customers, nationwide. Moreover, the Bank is facilitating 34,000+ beneficiaries in the MSME segment, comprising PKR 22 billion (41.5% of its GLP).

Continuous efforts are being made on a national level to bridge the gap in financial inclusion and promote e-commerce. These concerted endeavours by the government and MFIs strive to create a more inclusive and interconnected ecosystem, fostering opportunities for MSMEs to thrive in the ever-evolving market landscape. By leveraging the power of technology and digital platforms, MSMEs, including women, are now empowered to transcend geographical boundaries and tap into previously untapped markets. This digital transformation not only equips these enterprises with the necessary tools to expand their customer base but also allows them to forge new partnerships and nurture entrepreneurship, ultimately driving sustainable economic development.

BRR: How do women-focused programs and initiatives implemented by MFIs contribute to the empowerment of women entrepreneurs in the MSME sector? Please explain the role of financial products, digital solutions, capacity-building activities, and overcoming barriers.

GA: MFI-led initiatives have played a crucial role in empowering women entrepreneurs in the MSME sector. I would say, our initiatives have been a game changer altogether. These initiatives encompass a range of strategies, including providing financial products, digital solutions, capacity-building, and eliminating barriers, all of which collectively contribute to uplifting women-owned small businesses. We have provided financial products tailored to the specific needs of women entrepreneurs. MFIs offer loans with flexible terms and lower collateral requirements, enabling women to access capital for their businesses. This enables women to invest in their ventures, expand operations, purchase equipment, and increase production capacity. It also helps them break free from financial dependency, take charge of their businesses, and create economic opportunities for more females. 

In recent years, digital solutions have revolutionized the way MFIs reach and engage women entrepreneurs. Mobile banking platforms and digital payment systems provide convenient and secure financial transactions, reducing barriers to accessing financial services for women in remote areas. These digital solutions enable women to manage their finances more effectively. Digital platforms also facilitate financial literacy and entrepreneurship training, creating opportunities for women to enhance their skills and knowledge. One such example is Mobilink bank's in-app Learning Management System deployed in our mobile banking app- Dost.

BRR: What efforts are being made by the government of Pakistan and private institutions to enhance financial literacy among MSMEs, foster collaboration, address infrastructure deficiencies in microfinance banking and create a favourable environment for the growth and sustainability of MSMEs?

GA: The government has implemented several supportive policies and initiatives to create a favourable business climate for MSMEs. Most importantly, the regulatory frameworks have been simplified and licensing processes are streamlined. By doing so, the government improved the ease of doing business, encouraged entrepreneurship, and continues to attract investment into the MSME sector. The government is also investing in infrastructure development, i.e., expansion of the 4G network nationwide. The expansion of physical infrastructure like mobile networks means that MFIs can leverage digital banking to extend their services to previously unbanked regions, thus enhancing their outreach. The government also encourages the establishment of microfinance and digital banks/institutions to facilitate financial access. These initiatives provide easier access to micro-loans and financing options that cater specifically to the needs of MSMEs.

Financial inclusion is a top priority for the State Bank of Pakistan (SBP) and MFIs, as they channel their efforts towards this crucial area. Although significant progress has been made in recent years, further actions are required to establish a conducive ecosystem through supportive policies, infrastructure enhancement, improved financial accessibility, and collaborative platforms. In Pakistan, both the government and private institutions are committed to fostering the development and long-term viability of MSMEs.