Low SME Financing Concerns Raised by Pakistan

Pakistan’s Finance Minister Muhammad Aurangzeb highlighted the limited access to formal financing for small and medium enterprises (SMEs) during a panel discussion at the International Business Forum in Seville, Spain, on July 2, 2025. SMEs contribute approximately 40% to Pakistan’s GDP, 25% to exports, and 78% to non-agricultural jobs, yet they receive only a small fraction of private-sector lending, hindering their growth potential.

Speaking at the “Scaling up SME Finance” session, held alongside the Fourth International Conference on Financing for Development, Aurangzeb outlined Pakistan’s goal to increase SME lending to 17% of total private-sector credit by 2028, aligning with regional benchmarks like Bangladesh and India. The government is promoting digital financing solutions and easing regulatory burdens through measures like e-inspections to support SMEs. Posts on X reflect optimism about these efforts, with some users noting the potential for technology-driven SME growth, though concerns about implementation persist and remain unverified.

Aurangzeb also emphasized aligning economic policies with climate resilience, citing a multi-billion credit guarantee facility under the Prime Minister’s Youth, Business, and Agriculture Loan Scheme to boost SME contributions to employment and exports. The minister expressed interest in adopting successful financing models from other emerging markets to enhance financial inclusion and sustainable development.

Published in SouthAsianDesk, July 3rd, 2025

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