Lahore - Formal lending for SMEs in Pakistan is much less than the actual requirement, which is hindering rapid growth of SMEs in the country.

This was stated by Muhammad Alamgir Chaudhry, Chief Executive Officer of the Small and Medium Enterprises Development Authority (SMEDA), while addressing a consultative workshop jointly organized by UNIDO and SMEDA on “Need of a Credit Guarantee Scheme for SMEs”. The workshop was also addressed by Imran, Additional Director State Bank of Pakistan and Mukesh Kumar, Project Coordinator of UNIDO.

CEO SMEDA said currently only 6% of total formal lending by financial institutions is being made by the banks in Pakistan. Whereas, SME lending in our neighboring countries is around 30% of the total lending of their banking industry, he added and emphasized that credit guarantee would be very helpful for easy access to finance for those SMEs which face difficulty in getting loans because of strict requirement of collateral to be demanded by the banks. He assured that SMEDA would make all efforts with the support of UNIDO to take this initiative to appropriate forums to get the scheme launched at the earliest possible.

Additional Director SBP shared their experience of having one Credit Guarantee Scheme, which is being managed by SBP. He said, there is need of many such schemes in Pakistan.

However, the workshop developed a common consensus about the need of Credit Guarantee Schemes in Pakistan despite difference of opinions on the framework and structures the proposed scheme. Participants appreciated the role of UNIDO for this comprehensive study and requested UNIDO and SMEDA to take this initiative one step ahead by involving international donors to launch this fund.