Financing consumption through SMEs

Pakistan's SME policy has prioritized consumption over production, with 45.1% of business establishments in trade versus 9.8% in manufacturing. Bank lending data shows 40.6% of trade credit goes to SMEs, compared to 5.5% in manufacturing, despite manufacturing SME credit stock declining by 15.6 percentage points in five years. The focus on consumption-driven sectors hinders export growth and productivity.