SMEs constitute about 90 percent of the 3.2 million enterprises in the country, employing approximately 78 percent of the non-agriculture labor and contributed towards our country's GDP is 30 percent, in addition to the 25 percent share in country's export earnings but the picture turns worsened when one notes that only 5 percent of the 3.2 million SMEs have access to finance, he said in his reaction on the reports that banking sector has started planning to focus on consumer financing.
ICCI President said that SMEs have to rely on their credits to start a business ventures and go for up gradation of technology, productivity and to expand existing businesses. He said that banks should provide soft credits to SMEs and initiate special schemes as SMEs are considered back bone of any economy.
He observed that the overall consumer financing plunged by Rs50 billion, or 17 per cent, during FY10, thus SPB should take measures to stop this trend and come up with concrete policies to support SMEs and industries rather than letting the banks to focus on consumer financing .
He said that Consumer financing would burden the economy and society by creating negative saving-investment gap. He said by promoting SMEs through lending credit we can knock down barriers to economic activity as Pakistan lags way behind other competitive economies where SMEs are being supported by financial institutions at large, he maintained.
Mahfooz Elahi said that the domestic industrial sector is on the decline and sharp reduction in the export growth is due to many interconnected reasons; energy crisis, high rate of markup, high cost of production and inflation, high rates of utility bills are hampering industrial development. He emphasized that SBP should prepare a bailout package to support industrial sector and small scale enterprises to survive.
ICCI President said that a well established international practice of cash flow based lending to SMEs needs to be followed in Pakistan.
He said that this sector should be given support to make it as an effective tool for economic development and banks should not show reluctance in lending to SMEs and industries. He said that banks should also ease out its strict conditions for financing.