Hernando De Soto, a Peruvian economist, at the invitation of President Gen Peervez Musharraf, delivered a lecture on Monday on ways of providing cheaper finance to Pakistan’s small- and medium-sized enterprises (SMEs). The audience included cabinet members, economists, and civil and military bureaucrats.
Finance Minister Shaukat Aziz said that the government wanted to provide credit to the common man. Mr De Soto said a major cause of slow progress in developing countries was that people lacked documentary proof of their ownership of properties, lands and businesses, which could be used as a guarantee when applying for credit from financial institutions. He said the economy could not grow until such assets were given a legal status.
Mr De Soto believes that if businesses operating in the informal sector were assured of fair play and better costs of business, it would gradually transform into the formal sector, which would eliminate corruption.
