On Friday, the Finance Ministry introduced Pakistan’s inaugural special credit guarantee company, the National Credit Guarantee Company Limited (NCGCL), aimed at providing financial support to small and medium-sized enterprises (SMEs) in the country.
The inaugural event had attendees from the British High Commission, Association of Chartered Certified Accountants (ACCA), State Bank of Pakistan, and the Ministry of Finance.
NCGCL, a collaboration between the Ministry of Finance and Karandaaz, seeks to enhance financial accessibility through special credit guarantee facilities, with a specific focus on expanding financial reach for SMEs.
Finance Minister Dr. Shamshad highlighted the significance of this pioneering initiative. She noted that private credit for SMEs in Pakistan is currently at a mere 5.2%, down from 7.7% in the last five years. This figure is significantly lower compared to other South Asian countries, which have an average of over 17%.
Dr. Shamshad emphasized that the SME sector constitutes 90% of formally registered businesses, contributes around 40% to the GDP, and employs approximately 80% of the non-agriculture labor force. Despite this, insufficient investment in the SME sector has impeded Pakistan’s sustainable growth and development.
The launch of NCGCL is seen as a significant institutional reform to facilitate smoother capital investment paths for small businesses. Dr. Shamshad noted that well-designed and effectively implemented credit guarantee schemes can create an average financial additionality of 30 to 35% in the market, leading to economic benefits such as higher productivity, innovation, and employment generation.
The minister highlighted that NCGCL would develop various products tailored for the Pakistani market, serving over 1.5 million SMEs and a market volume exceeding PKR 3.7 trillion. She stressed that collaboration with financial institutions through NCGCL would ensure guaranteed access to credit in the market, fostering economic growth for businesses.
