World MSME Day, observed on June 27th, underscores the crucial role of Micro, Small, and Medium Enterprises (MSMEs) in the global economy, particularly in developing countries like Pakistan. It recognizes their contributions to Sustainable Development Goals (SDGs) and highlights the challenges they face, emphasizing their significance in poverty reduction, job creation, competitiveness, and productivity across industries and trade sectors.
MSMEs not only create jobs, boost income, and improve living standards but also enhance the social and economic participation of women and youth, fostering inclusive growth.
Globally, MSMEs account for 96% of all registered enterprises and over 40% of employment. In Pakistan, out of 5 million total businesses, an estimated 4.5 million are SMEs. These contribute 40% to the country’s GDP, account for 25% of exports, and employ 80% of the non-farm labor force.
Despite their significance, MSMEs in Pakistan face major challenges, especially in accessing finance. Bank lending to SMEs has dropped from 15% of private sector lending in 2008 to just 7.3% in 2023. This financing gap hampers their growth and development.
Fintech companies like easypaisa are addressing the needs of MSMEs by providing swift digital financial services essential for entrepreneurial development and economic growth. They have built a vast network of agents offering financial literacy and services, enabling MSMEs to manage their finances and enhance growth. easypaisa uses mobile wallets and digital banking to support unbanked and underbanked MSMEs, promoting financial inclusion and access to formal credit.
According to the State Bank of Pakistan’s guidelines for Digital Financial Services – Innovation Challenge Facility, the market potential of digital finance services in Pakistan is projected to surpass $36 billion by 2025. This growth is expected to contribute a 7% boost to the country’s GDP and generate employment for approximately 4 million individuals.
MSMEs are vital for creating local jobs and empowering vulnerable groups, including women, youth, and persons with disabilities, with the potential to accelerate Sustainable Development Goal (SDG) progress. The path to success for Pakistan’s MSMEs is challenging but promising. Collaborative efforts from industry players, policymakers, financial institutions, and stakeholders are essential to removing barriers and fostering a digital ecosystem.
On MSME Day 2024, the focus is on leveraging MSMEs’ resilience to promote sustainable development and eradicate poverty, advancing the 2030 Agenda and contributing to inclusive growth and shared prosperity.
The article is written by Farhan Junaid. He is a freelance writer and journalist with a keen interest in digital technology and fintech.
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