Participants at the ongoing consultative workshop in Islamabad, Pakistan have identified access to finance as one of the major challenges for small and medium enterprises, SMEs in the country, and stressed the need to introduce credit guarantee schemes.
The event was organized by the United Nations Industrial Development Organisation, UNIDO in collaboration with Pakistan’s Small and Medium Enterprises Development Authority, SMEDA; the Chamber of Commerce and Industry, and the Italian Development Cooperation.
The workshop, according to a statement by UNIDO was a follow-up to the organisation’s “Feasibility study for setting up a pilot guarantee fund for the SME sector in Pakistan”.
It stated that the workshop helped share the findings of the study and receive feedback from representatives of commercial banks as well as public and private sector organisations before presenting the study to donors and the Government of Pakistan.
Speaking at the workshop, UNIDO National Project Coordinator, Mukesh Kumar Kella, said that “the main reason for a decline in lending to SMEs is the increase in non-performing loans, which makes banks hesitant when disbursing credit.
Kella informed that other countries have already established many credit guarantee funds which offer more security to banks and cover SMEs’ defaults.
CEO of SMEDA, Muhammad Alamgir Chaudhary, added that access to finance is one of the major issues SMEs face in Pakistan.
“More than 30 per cent of SMEs consult SMEDA for their financing issues. Formal lending to SMEs in Pakistan represents only 6 per cent of the total formal lending by financial institutions, compared to around 30 per cent in neighboring countries. Credit guarantees would be very helpful in facilitating SMEs’ access to finance,” he said.
Also, Additional Director of the State Bank of Pakistan, Imran Ahmadsaid: “In Pakistan, there is a clear need for schemes like our Credit Guarantee Scheme, which is why we offer our support to this project.”

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