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Economic growth

Inclusive Economic Growth through Grassroots Entrepreneurship in Pakistan

Strategic Insights

— 1 min read

Pakistan's Prime Minister, Shehbaz Sharif, has envisioned inclusive economic growth through grassroots entrepreneurship, with the Small and Medium Enterprises Development Authority (SMEDA) at the forefront of this initiative. To support access to finance, formalization, and hand-holding of micro enterprises across Pakistan, SMEDA has signed a Memorandum of Understanding (MOU) with the Akhuwat Islamic Microfinance (AIM). The collaboration is a significant step towards empowering micro, small, and medium enterprises (MSMEs), fostering economic resilience, employment, and innovation in the country.

Key Takeaways:

  • The MOU between SMEDA and AIM aims to strengthen micro-financing and capacity building by creating a robust ecosystem for bridging financial gaps and promoting inclusion of Micro Enterprises (MEs) in the formal financing landscape.
  • The Prime Minister's economic agenda prioritizes MSMEs, with a steering committee headed by Federal Secretary Industries and Production, Mr. Saif Anjum, addressing issues related to MSMEs.
  • Under the steering committee, the reorganization of SMEDA has been done to enhance its efficacy in service to SMEs.
  • SMEDA and AIM have committed to empowering MSMEs, with a robust ecosystem aimed at bridging financial gaps and promoting inclusion of MEs in the formal financing landscape.
  • The collaboration will focus on strengthening micro enterprises through targeted capacity building and streamlined regulatory processes.
  • Pakistan's microfinance sector has expanded to nearly 12 million active borrowers, supported by a gross loan portfolio of approximately PKR 644 billion, with 46% of these borrowers being women.
  • The largest financing segments in Pakistan's MSME ecosystem are trade and services (PKR 144 billion), livestock and poultry (PKR 164 billion), and agriculture (PKR 138 billion), primarily in rural and semi-urban areas.

Statistics:

  • 12 million active borrowers in Pakistan's microfinance sector.
  • A gross loan portfolio of approximately PKR 644 billion in the microfinance sector.
  • 46% of microfinance borrowers are women.
  • The largest financing segments in Pakistan's MSME ecosystem:

+ Trade and services (PKR 144 billion).

+ Livestock and poultry (PKR 164 billion).

+ Agriculture (PKR 138 billion).

Sources:

  • Small and Medium Enterprises Development Authority (SMEDA) - [Source not available online. References SMEDA's website and publications].
  • The Express Tribune - "SMEDA, Akhuwat sign MoU to strengthen micro-enterprises" (September 7, 2022)
  • Dawn - "SMEDA, AIM sign MoU to boost microfinance" (September 6, 2022)

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