WITH the federal budget round the corner, the policymakers would do well to keep in mind the grave challenges being faced by small and medium-sized enterprises (SMEs) in Pakistan amid the current economic crisis.

As Lenin aptly stated in 1919, the best way to destroy the capitalist system is to destroy the currency. While many advanced countries acknowledge the importance of SMEs, we seem to be neglecting their crucial role in the national economy.

Former United States president Barack Obama once famously said small businesses were the backbone of any economy. In Pakistan, these enterprises contribute significantly to employment and gross domestic product (GDP). However, the ongoing currency crisis, dollar shortage and rampant inflation have together devastated the SMEs. This, in turn, has had a severe impact on employment rate and overall economic growth.

It is disheartening to note that despite their significance, SMEs are being systematically destroyed due to the glaring disparity in electricity pricing.

The unit price of electricity for SMEs is four times higher than that of large undertakings that enjoy the privilege of captive power plants and special treatment from the government. This unfair advantage creates a detrimental environment for SMEs and stifles their growth potential.

SMEs are pivotal in fostering economic growth, contributing around 40 per cent to the country’s GDP. These enterprises make up approximately 90pc of all registered enterprises and employ a substantial portion of the national workforce.

Yet, they find themselves at a disadvantage, struggling to survive. It is crucial to recognise the multiple roles played by SMEs.

They are instrumental in generating employment, reducing poverty, promoting local development, fostering entrepreneurship and innovation, ensuring access to basic goods and services, and facilitating skills development and capacity-building.

The solution is simple and just. The SMEs are merely asking for equitable treatment in electricity pricing. By granting SMEs the same price as the large units, the true potential of the SME sector can surface. This will provide a level playing field, and empower everyone to thrive.

Those behind the SMEs have already consumed their savings due to inflation. What they want is for their businesses to survive so that their employees may survive in these critical times.

It is only through collective efforts and a commitment to justice that we can hope to overcome the current economic crisis and build a prosperous future for Pakistan and for all the Pakistanis.

Adil Hanif
Karachi

Published in Dawn, June 8th, 2023