CHALLENGES FACED BY SME’S IN GETTING CREDIT IN SINDH: A CASE STUDY OF SINDH LARKANA

Abstract

Small and Medium Sized enterprises (SMEs) are widely regarded as the nurseries of innovation, local development, employment and inclusive growth in developing countries. Yet in Pakistan, the SMEs show little to no access to formal credit market. The article aims to investigate the challenges faced by SMEs in getting credit in Sindh, with special focus on Larkana – an agri-industrial district of Sindh. Larkana is famous for producing rice, guava, horticulture and oil milling. The study synthesizes demand side, supply side and institutional constraints. With Larkana’s underdeveloped economic structure, the SMEs are seasonal and hold light asset value to put up as collateral and access the credit market. The national figure shows SMEs penetration to credit markets as low as 5-6%. This article aims to present policy implications and proposes recommendations to encourage more SMEs penetration into credit markets, enabling them to grow and bring about employment, local development and inclusive growth.