In the recent past, some tremendous changes were witnessed in the outlook of Pakistan’s status in the international markets and its demographics. According to a Mckinsey’s report on Pakistan’s entrepreneurship, Pakistan is well positioned as an emerging economy projected to be among the fastest-growing in the coming years with an annual growth rate of 6% through to 2026. Despite the economy undergoing a challenging period, and a declining currency exchange rate, the intrinsic drivers suggest tailwinds for growth thanks to the flourishing startup culture in Pakistan, which has given rise to small and medium enterprises. Small and medium sized businesses contribute to about 30% of the GDP and 25 % of manufactured goods exports. Yet, SMEs looking to secure credit from financial institutions have to face certain challenges due to onerous credit assessment requirements of banks resulting in these businesses opting for exploitative informal financial sources to feed their financing needs for growth.
SMEs are likely to get relief in access to finance and various initiatives for this have been taken by regulators, development partners, and financial sector players. Karandaaz Pakistan has also provided grants to financial sector players and technological firms to design and experiment innovative methods of calculating credit scores for those who want to avail credit from the bank but do not meet the collateral requirements as set by conventional methods.
Ammar Muzaffar
Karachi
