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President of the Pakistan Businessmen and Intellectuals Forum (PBIF) and All Karachi Industrial Alliance, Chairman of the National Business Group Pakistan, Chairman of the FPCCI Policy Advisory Board, and former Provincial IT Minister, Mian Zahid Hussain, has welcomed Prime Minister Mian Muhammad Shehbaz Sharif’s directive to increase financing for small and medium-sized enterprises from Rs1.1 trillion to Rs2.2 trillion by 2028. The Prime Minister issued the directives while chairing a meeting with the Small and Medium Enterprises Development Authority (SMEDA) in Islamabad on October 12, 2026. Mian Zahid Hussain said the initiative could stimulate industrial production, investment and employment, but achieving the target would require lower credit rates, banking reforms and easier collateral for SMEs.
Mian Zahid Hussain said that, according to the Ministry of Finance, SME financing increased from Rs1.114 trillion in June 2026 to Rs1.137 trillion in September, while the number of borrowers reached approximately 350,862. The increase of Rs23 billion over three months represents positive progress however, achieving the target by 2028 would require an average quarterly increase of approximately Rs118 billion, more than five times the current pace. He urged the government to assign clear targets to commercial banks and ensure digital processing of applications and online monitoring of their quarterly performance.
Mian Zahid Hussain said that prior to the recent meeting, the Prime Minister chaired a meeting in July 2026 and set targets of increasing SME financing to Rs2 trillion and the number of borrowers to 775,000 by June 2028. Following the increase in the financing target to Rs2.2 trillion, the Ministry of Finance and the State Bank of Pakistan should jointly announce revised targets and an implementation plan. He said that approximately 350,000 small and medium-sized businesses currently obtain bank financing, while the earlier borrower target requires the inclusion of more than 400,000 additional businesses. He added that increased financing must reach new enterprises, small industries and underserved areas, particularly businesses in the remote districts of Balochistan, rather than remaining concentrated among existing borrowers.
Mian Zahid Hussain said that comparatively high markup rates on SME financing were a major obstacle to business growth. He stated that the KIBOR currently stood at 11.5 percent, while banks charged an additional spread of 5 to 6 percent on SME business loans, pushing annual borrowing rates to around 17 to 18 percent. He said other countries maintained lower financing costs to enable SMEs to expand, citing rates of 4.5 percent in India, 3 percent in China and 4.5 percent in Vietnam. Such expensive financing in Pakistan makes expansion difficult for businesses operating on narrow profit margins. He urged the government to provide SME financing at six percent below KIBOR, supported by risk-sharing coverage of at least 50 percent, so that small businesses could benefit meaningfully from the initiative.
Mian Zahid Hussain said that concessional schemes offering financing at 5, 7 and 9 percent were available, but their effectiveness must be assessed through the number of businesses served and the financing actually disbursed. Delays in loan approvals, complicated documentation and stringent collateral requirements must be addressed to broaden access. Banks should expand lending based on business cash flows, transaction records and verified supply orders, while the government should strengthen credit guarantee schemes to contain lenders’ financial risks.
Mian Zahid Hussain said SMEDA should provide feasibility studies in local languages and work with the FPCCI and district chambers of commerce to help SME entrepreneurs prepare business plans and maintain financial records. Loan tenors and repayment schedules should reflect businesses’ production requirements. He added that expensive energy, a complicated tax system and delayed payments by large buyers also constrained small business growth. The government must address these issues through coordinated policy measures so that increased financing translates into industrial development, higher exports and additional employment.
