In a recent report by the United Nations-based Better Than Cash Alliance, a promising opportunity for Pakistan’s economic growth has come to light – the digitization of its micro, small, and medium enterprises (MSMEs). Supported by the Government of Pakistan and the State Bank of Pakistan, this initiative holds the key to unleashing the untapped potential of a significant sector of the nation’s economy.
At the heart of this potential transformation lies the symbiotic relationship between small businesses and national economies. When MSMEs thrive, so does the entire nation. In Pakistan, these enterprises make up a staggering 90% of all businesses and contribute nearly half of the GDP. However, their growth has long been hindered by a reliance on cash transactions, limiting their reach and potential.
The adoption of responsible digital payments among merchants presents an exciting avenue for growth. These digital solutions have a proven track record of not only boosting economic participation among women but also aligning with the United Nations’ Sustainable Development Goals. They hold the promise of addressing some of Pakistan’s most pressing economic challenges.
Responsible digitization of payments can lead to financial inclusion, ensuring that all enterprises have access to formal financial services. It streamlines operations, cuts operational costs, and removes mobility barriers, especially for women entrepreneurs. In fact, tailoring digital payment solutions to meet the needs of female customers represents a substantial market opportunity exceeding USD $650 million nationally.
Dr. Ruth Goodwin-Groen, Managing Director of the UN-based Better Than Cash Alliance, commended the State Bank of Pakistan for its leadership in driving responsible payment digitization, particularly among women merchants. She highlighted the positive impact of digitizing merchant payments in Asia, where it has catalyzed rapid MSME growth, leading to broader economic expansion. She emphasized the urgent need to accelerate financial equality for women merchants in Pakistan.
According to the report, if Pakistan can achieve national adoption of digital payments by 2025, it has the potential to boost its GDP by an impressive 7%, generate four million jobs, and realize an additional USD 263 billion in deposits, aligning with the National Payments System Strategy.
The report also underscores the importance of active engagement from both the public and private sectors in building trust in digital payments, making them affordable for MSMEs, and incentivizing their adoption through measures like lower sales tax rates. These recommendations set the stage for a transformative journey towards a more financially inclusive and prosperous Pakistan.
In conclusion, embracing responsible digital payments for MSMEs represents a promising avenue for Pakistan’s economic development. With the right strategies and concerted efforts, the nation can look forward to a brighter future of financial inclusion, economic growth, and empowerment of its small business owners, particularly women entrepreneurs.
