ISLAMABAD: Achieving private sector-led growth in Pakistan requires a coordinated and comprehensive effort involving the government, financial institutions and private sector players.
By focusing on expanding access to finance, promoting financial literacy and supporting entrepreneurship, Pakistan can create an ecosystem where businesses flourish, innovation thrives, and poverty diminishes.
Talking to media, Ambreen Iftikhar, Additional Secretary of Board of Investment, said that the private sector was the most important stakeholder in the economy. “Economic instability poses a serious threat to Pakistan’s private sector as it has created an unpredictable environment that makes it harder for businesses to plan their future strategies.”
She underlined that Pakistan had struggled with formidable economic challenges like high inflation, a dwindling currency and low foreign investment for quite some time, negatively impacting businesses.
“A sound financial system gives people the confidence to invest in the economy. Access to finance for the private sector has remained a perennial problem in Pakistan. Complex application procedures, high interest rates, and stringent collateral requirements are the primary factors marring the private sector’s robust involvement in the financial sector,” she added.
Ambreen Iftikhar also highlighted the challenges for smaller firms as many of them were grappling with the possibility of shutting down amidst the economic slowdown. “Those reliant on imported raw material are the most affected.”
To address these challenges, Ambreen advocated developing the policies and programmes that ease the financial burden on small and medium-sized enterprises (SMEs).
“The government and financial institutions can collaborate to streamline application procedures. Introducing user-friendly digital platforms, reducing paperwork and implementing transparent and efficient processes can expedite loan approval, encouraging more businesses to engage with the formal financial sector,” she opined.
Meanwhile, talking to media, Sajjad Ahmed Warraich, Head of the Business Development and Marketing Division at SME Bank, said the SME sector employed the highest percentage of workforce and generated 78% of non-agriculture sector employment.
He highlighted that the government had taken initiatives to support the growth and expansion of SMEs through ensuring their access to cheap and affordable finance, recognising their crucial role in poverty reduction, economic expansion and job creation in the country.
“Through strategic partnerships with both local and foreign financial institutions, the State Bank of Pakistan has enhanced financial inclusion in the country to boost knowledge, acquire technical expertise and instill regulatory and practitioner capacities, besides getting funding support for market development and fostering innovations.”
The banker said the key to achieving private sector growth in Pakistan was to increase fast-paced financial inclusion. “Structural impediments hindering the flow of finance to the private sector must be removed, including reducing the fiscal deficit to free up resources for the private sector.” –INP
