The recent announcement of the permanent closure of the Small and Medium Enterprises (SME) Bank has left its members disheartened and crestfallen. The SME sector had hoped for privatisation or merger, but the government decided to close the bank instead.
Speaking to The Express Tribune, President of The Union of Small and Medium Enterprises (UNISAME) Zulfikar Thaver said, “The SME sector was heartbroken because of the final decision to close the SME Bank instead of privatising or merging it.”
Thaver also expressed disappointment that the government decided not to even run it as a specific SME bank to cater to the various requirements of the sector.
On Friday, the federal cabinet agreed to the closure of the SME Bank based on suggestions from the State Bank of Pakistan (SBP). Prime Minister Shehbaz Sharif directed the SME Bank’s management to ensure the protection of customers’ deposits throughout the winding down procedure. As a part of the initial phase, it was agreed that all bank customers would receive a total of Rs5.557 billion.
A senior official from the SME bank explained to The Express Tribune that the winding down process will take over three months.
Thaver lamented that Malaysia and Pakistan both set up the SME Bank at the same time, and while it is doing very well in Malaysia, the same did not happen in Pakistan.
Despite the potential of the SME sector, Thaver noted that “In Pakistan, micro to medium-sized entrepreneurs are not taken seriously, although this is the majority sector and considered the backbone of the economy.” He urged the government to explore the potential of the sector and facilitate it and arrange for joint ventures, technology transfer, collaboration, and partnerships with China and others earnestly seeking to join hands.
The closure of the SME Bank highlights the indecisiveness of the bureaucracy and the cabinet, according to Thaver. The UNISAME president reiterated that SME farmers have vast potential and, if facilitated, this country would have advanced rapidly.
He warned the government not to repeat the same mistakes and take the SME sector seriously to avoid bankruptcy due to undisciplined spending and wastage of time, energy, and money.
“Pakistan has become an import economy only because it lacks SME promotion and development,” said Thaver.
Published in The Express Tribune, March 19th, 2023.
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