Govt urged to promote microfinance

By Asad Cheema

ISLAMABAD: The Islamabad Women’s Chamber of Commerce and Industry (IWCCI) on Friday said Small and Medium Enterprise (SME) sector should be promoted to ensure rapid economic development. The SME sector has a 30 percent share in GDP, 25 percent share in exports of goods and 80 percent share in non-agricultural jobs but it is facing many problems with financing on the top of the list, it said. Many governments and the State Bank has tried their best to promote the SME sector but the initiatives remained unsuccessful due to lack of interest by the commercial banks, said Farida Rashid, President IWCCI. Commercial banks are focused on lending to the government, corporate sector and consumer finance which is crowding out the small businesses and women entrepreneurs, said added.
She said that commercial banks have not supported SMEs during the last 70 years, therefore, the authorities should not waste their time on them and allow microfinance Industry to play their role in the national development. Farida Rashid said that SMEs share in private sector credit is below 5.5 percent which should be enhanced through microfinance for which this sector should be positively incentivised.
Taxes on microfinance banks should be reduced, and regulations should be eased so that the volume of microfinance should be increased from the current Rs250 billion which is insufficient, she demanded. Similarly, she said, microfinance banks have only 3500 branches in the country which should be increased so that small business can thrive which will also increase revenue and employment.