Financing Make in Pakistan

The “Make in Pakistan” thrust of the Pakistan Business Council (PBC) recognizes the role of capital in the revival and growth of industry. The objectives of Make in Pakistan are to create jobs, generate value‐ added exports and encourage import substitution. The desired result will be a balanced current account enabling Pakistan to regain its financial sovereignty.

In continuation of the Pakistan Business Council’s advocacy of “Make in Pakistan”, the Pakistan Business Council held a conference on March 9th in Karachi to address the provision of adequate financing for industry.

Cash in circulation in Pakistan is amongst the highest in South Asia, as is the unbanked and under‐ banked segments of the population. What is available in the banking sector, the government competes with the private sector for it effectively crowding out the private sector. The SME sector suffers the most from being deprived of bank credit. Our stock market lacks depth. Fiscal policy has neither encouraged capital accumulation, nor for that matter: consolidation, investment or stock exchange listings. The SME platform on the PSX is not utilized. Start‐ups are forced to reach out to Silicon Valley for equity funding. The intermediaries who finance small farmers, exploit their position. Subsidized export funds are not available to SME’s that provide outsourcing services to exporters. Long term debt for capital investment, hitherto provided by DFIs such as PIDC, Bankers Equity, IDBP, PICIC etc., is constrained. This is particularly true of foreign currency credit for imported plant and equipment. The country has prematurely de‐industrialized, lost share of world exports and is suffering from recurring cycles of external account crises.

Provision of finance is vital to the revival and growth of industry. This will require addressing both the supply and demand sides. The purpose of the conference was to identify the best means of doing so.

Leading professionals from the financial industry presented some thought provoking presentations in their respective fields concerning major impediments as well as opportunities. Significant themes including agri-finance, SME financing, venture capital, the start-up eco-system were covered. The Honourable Federal Finance Minister also attended the conference where he listened to the presentations, and took part in the panel discussion on how to address the challenges and the way forward.