Problems Faced by SME Sector of Pakistan and Their Solutions

Abstract

In the growth and progress of any country, its small scale sector is of equal importance as of other large scale sectors because a country cannot progress in its true sense unless its small scale sectors progress. Be it a developed country like Japan and USA or a developing country like Thailand and Pakistan, they form the backbone of the economy. A dynamic and vibrant SME sector plays a key role in successful economic growth of the countries. The developmental role of SMEs has been highly recognized. They provide most of the employment opportunities for the general public of the country and as a result, they prosper in these conditions. SMEs allow a homogeneous geographic development throughout the length and breadth of a country because of the fact that the development is done at a micro level due to the initiative taken by the general public. This has a positive effect on the GDP level and the employment conditions in the country. The contribution of SMEs in GDP of Pakistan is mere 15 percent. Yet, they employ more than 60 percent of non-agricultural workforce. So there is great room for improvement. The Government of Pakistan, realizing the potential of SMEs has very rightly turned its attention toward the uplift of this sector. The formation of SMEDA (Small and Medium Enterprises Development Authority) and SME Bank are a step in right direction. Furthermore, the State Bank of Pakistan has instructed all the commercial banks to establish a SME counter in their premises. This will have a positive effect on the sector as a whole.