Trade Finance Gap Hits MSME Exporters
Small exporters across Islamic countries are still unable to obtain affordable trade finance, Federal Minister for Commerce Jam Kamal Khan told the closing session of a ministerial meeting in Istanbul. The trade finance gap shuts micro, small and medium-sized firms out of export markets because of fragmented rules, high collateral demands, heavy transaction costs and long administrative delays.
Khan was speaking for the member states of the Organisation of Islamic Cooperation (OIC) at the 42nd ministerial meeting of the Standing Committee for Economic and Commercial Cooperation (COMCEC). The session’s priority theme was developing effective trade financing tools to increase exports in OIC member countries.
He set out five priority areas for cooperation to close the gap, and urged member states to turn the recommendations into practical steps with measurable results.
Five priorities to close the trade finance gap
The first priority is harmonised national legal, regulatory and supervisory frameworks. Khan said common rules would make cross-border transactions easier and improve access to financing for firms that trade across borders.
The second is diversification of trade financing instruments. He called for stronger export credit guarantee mechanisms and financial arrangements tailored to exporters, particularly micro, small and medium-sized enterprises (MSMEs) and technology-driven firms.
Third, he urged member states to promote Shariah-compliant trade financing. That would need institutional capacity, risk-sharing arrangements, Islamic export credit insurance and closer cooperation among Islamic financial institutions.
Fourth, he called for faster digital transformation in trade and finance. Integration of customs and banking systems, electronic trade documentation and single-window platforms could cut transaction costs and simplify cross-border trade, he said.
Fifth, he sought targeted financing facilities, credit guarantees, financial literacy programmes and market linkages for MSMEs, particularly women-led and youth-led enterprises.
Why it matters for Pakistan
The finance gap is not an abstract problem for Pakistan. The country’s trade deficit widened by 16 per cent to $14.6 billion in July-October, as imports reached $25.96 billion while exports grew far more slowly to $11.33 billion. Small exporters who cannot get affordable credit cannot take new orders, meet delivery deadlines or enter new markets, and that holds back the export growth Pakistan needs.
The pressure is visible across the economy. Pakistan’s total external debt has nearly doubled in a decade to $135.1 billion, according to the World Bank, and the government is under International Monetary Fund pressure to broaden the tax base and push through growth reforms. In that setting, trade finance that reaches small firms is one of the few levers that can lift exports without adding to public debt.
The export effort also depends on the institutions that support it. Prime Minister Shehbaz Sharif has approved a restructuring of the Trade Development Authority of Pakistan to promote exports on modern lines, which shows the government is trying to fix the support system for exporters at home while Khan presses the same case abroad.
What the session agreed
Khan said the deliberations identified intra-OIC trade, transport connectivity, sustainable tourism, agricultural productivity, food security, poverty alleviation and digital transformation as areas for collective action.
On agriculture, he sought cooperation in research, technology transfer, resilient food systems and investment in sustainable value chains to strengthen long-term food security.
He described the private sector as a central partner in investment, industrial development and employment, and encouraged closer interaction among business communities to open up trade and joint ventures.
He called on COMCEC to support member states in converting recommendations into measurable outcomes through project support, analytical work and institutional cooperation. The session’s success, he said, would be measured by implementation rather than the adoption of recommendations alone, and he urged members to pursue practical initiatives that delivered economic benefits.
Vice-President of Türkiye Cevdet Yilmaz chaired the session. Khan acknowledged the COMCEC Coordination Office and OIC institutions for arranging it, and expressed hope that the 43rd session would build on the progress achieved.
What is the trade finance gap?
The trade finance gap is the shortfall between the trade finance that firms need and the finance that banks and other lenders actually provide. Small firms are hit hardest because they lack collateral and credit histories, and because small transactions cost lenders nearly as much to process as large ones.
What did Jam Kamal propose at COMCEC?
He set out five priorities: harmonised rules across countries, more diverse financing instruments and export credit guarantees, Shariah-compliant trade finance, digital systems such as single-window platforms, and targeted facilities and training for small firms, especially women-led and youth-led enterprises.
What is COMCEC?
COMCEC is the Standing Committee for Economic and Commercial Cooperation of the Organisation of Islamic Cooperation. Its ministerial sessions bring together trade and economy ministers from OIC member states to agree on joint work in trade, finance, agriculture, tourism and transport.
Why do small exporters struggle to get finance?
Banks ask for high collateral, charge high fees on small transactions and apply lengthy procedures. Fragmented rules across countries add to the cost, and many small firms lack the credit history or formal records that lenders ask for.
