UN-Report-MSMEs-Digitization-Driving-Inclusive-Growth-in-Pakistan

UN Report MSMEs Digitization Driving Inclusive Growth in Pakistan

Business

A big opportunity for Pakistan resides in ushering its micro, small and medium enterprises (MSMEs) into the digital age, as revealed in a new report by the UN based Better Than Cash Alliance, in support of its member, the Government of Pakistan, and the State Bank of Pakistan. The fates of small businesses and national economies are intertwined. If one thrives, so does the other.

The Significance of MSMEs in Pakistan

Pakistan’s MSMEs account for 90% of enterprise in the country and nearly half of GDP. Their growth remains perpetually hamstrung by a dependence on cash. This tether to cash means that transactions – and horizons – are inevitably limited.

Digital Payments: A Pathway to Growth

The adoption of responsible digital payments for merchants, with their proven ability to boost women’s economic participation and deliver the UN’s Sustainable Development Goals, represents a tremendous pocket of potential growth. Digital payments can be a pathway to solve some of the major economic challenges the country faces.

Benefits of Responsible Digital Payments

Digitizing responsibly boosts financial inclusion and future-proofs enterprises, ensures equitable access to formal financial services, improves workflows, reduces operational costs, and mitigates against mobility constraints, especially for women entrepreneurs. Designing digital payments, based on female customer needs, represents a market opportunity of over USD $ 650 million nationally.

Commendation for State Bank of Pakistan’s Leadership

“We commend the State Bank of Pakistan for its bold leadership in driving responsible payment digitization for merchants, especially women merchants. Across Asia, digitizing merchant payments has led to rapid MSME growth and, as businesses grow, so do economies. We agree – now is the time to accelerate financial equality for women merchants in Pakistan, and look forward to our continued partnership,” said Dr. Ruth Goodwin-Groen, Managing Director of the UN-based Better Than Cash Alliance.

The Economic Impact of Digital Payments

The report indicates that the national adoption of digital payments by 2025 in Pakistan can boost GDP by 7 percent, generate four million jobs and realize an additional USD 263 billion in deposits, as defined by the National Payments System Strategy.

Recommendations for Accelerating Digital Payments

The report also advises active engagement by all key public and private sector actors to work towards building trust in digital payments, make them affordable for MSMEs, incentivize adoption through measures like lower sales rate tax, alongside other key recommendations.

Also read this: https://www.skipper.pk/2023/09/28/mobilink-bank-and-un-women-partner-for-womens-financial-inclusion/

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