PAKISTAN’S ambition to achieve sustainable export-led growth will remain incomplete unless the country’s small and medium enterprises are given the confidence and financial protection to compete in international markets. For many Pakistani SMEs, the problem is not a lack of products, entrepreneurial talent or foreign demand. The greater challenge is the fear that an overseas buyer may fail to pay after goods have been produced, shipped and delivered. This is precisely where export credit insurance can become a game changer. The recently established Rs.3 billion SME Risk Pool by the Export Development Fund (EDF) and Export-Import Bank of Pakistan (Pak-EXIM) deserves much greater public and business-sector attention. The initiative has been designed to expand access to export credit insurance for SMEs and protect them against non-payment risks. Premier Shehbaz Sharif has welcomed the initiative as an important measure for expanding SME exports and has appreciated EDF reforms aimed at strengthening export-led growth.
Pak-EXIM’s trade credit insurance is designed precisely to address this dilemma. Under its existing Trade Credit Insurance framework, Pak-EXIM provides protection against commercial risks such as buyer insolvency, protracted default and contract-related non-payment, while political-risk coverage can address circumstances such as war, civil disturbance, transfer restrictions and related events. Its published policies can cover insured export receivables up to 85 percent for specified commercial risks and up to 95 percent for specified political risks.
For SMEs, this protection can change the economics of exporting. An exporter with insured receivables can negotiate more confidently with overseas customers, offer competitive payment terms and pursue markets that might otherwise appear too risky. Insured receivables can strengthen the exporter’s position when seeking working-capital finance from commercial banks. Pak-EXIM states that financial institutions can lend up to 90 percent of the value of insured invoices under its credit-insurance arrangements. This is why the EDF-Pak-EXIM initiative should be viewed not simply as an insurance program but as part of a broader export-financing ecosystem. The proposed risk-sharing arrangement brings together government institutions, Pak-EXIM, commercial banks, development finance institutions and exporters.
For fiscal year 2026-27, the Export Finance Scheme envelope has been increased from Rs.1 trillion to Rs.1.5 trillion, with Rs.300 billion specifically earmarked for SME exporters, agri-SMEs and new borrowers. An Rs.350 billion Long Term Export Growth Financing Facility has also been introduced to support investment in plant, machinery, modernization and sustainable production. These are significant steps. However, government performance should ultimately be measured not by the size of announced funds but by how many Pakistani businesses actually use them and how much additional export revenue they generate. That is why the proposed promotional campaign is equally important. The message should reach exporters in Sialkot, Faisalabad, Gujranwala, Karachi, Lahore, Peshawar, Multan, Quetta and other commercial centers. Chambers of commerce, trade associations, banks, TDAP, provincial departments, universities, business incubators and digital platforms should become partners in explaining the scheme.
A particularly important message should be that export insurance is not a substitute for responsible business practices. Exporters must conduct due diligence on foreign buyers, comply with policy conditions and maintain proper documentation. Pakistan’s government also deserves credit for moving toward a more coordinated export-support architecture. The real test is implementation. Pakistan has struggled with a gap between policy formulation and awareness at the grassroots level. If an SME exporter does not know that an insurance facility exists, the facility is effectively inaccessible. The Rs.3 billion SME Risk Pool provides an opportunity to close that gap. It should be accompanied by a sustained national communication strategy rather than a one-time publicity campaign. Success should be measured through the number of SMEs insured, new exporters entering international markets, additional export orders facilitated, bank financing unlocked and claims settled efficiently.
Pakistan cannot become a durable export economy by relying only on a handful of large corporations and traditional export sectors. The country needs thousands of competitive SMEs capable of selling software, engineering goods, sports products, surgical instruments, textiles, food, agricultural products, pharmaceuticals and other value-added goods to global consumers. Export credit insurance can give these businesses something extremely valuable: confidence. The EDF-Pak-EXIM SME Risk Pool is a potentially important instrument of national economic policy. Export credit insurance can give these businesses something extremely valuable confidence. The EDF-Pak-EXIM SME Risk Pool is therefore a potentially important instrument of national economic policy. The government has taken a positive step by creating the financial architecture; now it must ensure that the business community understands it.
—The writer is editor, political analyst & author of several books based in Islamabad.
