Enhancing Supply Chain Financing (SCF) Accessibility for SME’s in Pakistan’s Production Industry

Abstract

This research study investigates why Pakistan's Small and Medium Enterprises (SMEs) employ Supply Chain Finance (SCF) less than their US-based counterparts and how that gap may be bridged. The aim is to identify the reasons for this disparity and create a useable, Pakistan-centric SCF model that can improve the local SMEs' financial stability and day-to-day business. To obtain a clear picture, the research employs a combination of approaches, an in-depth analysis of current academic literature and industry reports, together with quantitative examination of the comparison of financial information on Pakistani SMEs to their U.S. counterparts. The results present an evident imbalance. SCF tools are generously applied and highly comprehensible in the U.S., owing to improved access to funding, sophisticated digital infrastructure, and conducive government policies. Conversely, Pakistani SMEs are confronted with constrained financing, low SCF awareness, outdated technology, and an underdeveloped regulatory framework. To overcome this, this study suggests an SCF model based on collaboration, technology, and adapted to Pakistan's requirements. The model unites banks, fintech companies, large corporate buyers, and SMEs and operates within a platform backed by government incentives and enhanced regulation. Although drawing on successful SCF models employed in advanced markets, the model is modified to suit local conditions making it feasible, cost-effective, and scalable. Closing the SCF gap would thus meaningfully improve the financial resilience and growth prospects of Pakistani SMEs. This, in turn, would make meaningfully input towards the country's overall economic development. The study concludes with practical policy recommendations for policymakers, business owners, and financial institutions to make this vision a reality.