Agri-Tech Market Has Massive Potential to Flourish in Pakistan: Chairman SECP

Agri-Tech Market Has Massive Potential to Flourish in Pakistan: Chairman SECP in 2022

Aamir Khan, Chairman of the Securities and Exchange Commission of Pakistan (SECP), stated that Pakistan’s agri-tech market has enormous potential to thrive due to regulators’ openness to fintech, high teledensity, internet penetration, and improvements in electronic payments infrastructure.

He made these remarks at the Pakistan Fintech Network and Pakistan Microfinance Network’s hybrid conference ‘Agritech: Empowering Rural Farmers.’

Khan stated that overcoming the challenges of the agriculture sector necessitates its integration with technology; however, for this to occur, domestic market players must embark on a journey toward agri-tech by understanding small farmers’ demands and assisting them in scaling up their value chain.

In terms of creating jobs, ensuring food security, and maintaining a healthy balance of payments, Pakistan’s economy is heavily reliant on agriculture. Some of the most pressing issues in the sector are a lack of access to formal credit, a lack of technological adoption, and the risks posed by climate change. According to Khan, Pakistan’s large population and vulnerability to climate change necessitate the use of innovative solutions to ensure the agri-value chain’s scalability, sustainability, and efficiency.

The SECP has made numerous improvements to the regulatory ecosystem by simplifying startup formation and improving access to finance, but it has also allowed start-ups to pitch their ideas for live testing in a controlled environment.

Khan discussed some of the recent initiatives undertaken by the SECP to expand the role of agriculture-related technology solutions, as well as how it has simplified the requirements under the Non-bank Financial Companies (NBFCs) regulatory framework to allow for greater flexibility in fintech-based business models. This has also allowed for the establishment of NBFCs specializing in agricultural credit.

He mentioned that some prospective investors had approached the SECP about establishing fintech-enabled NBFCs to provide farmers with customized loan products.

Furthermore, the SECP has implemented Collateral Management Companies Regulations to promote the concept of agricultural produce warehousing. Furthermore, it has paved the way for electronic warehouse receipts (EWR), which are transferable and tradable at future exchanges and can be pledged to financial institutions to obtain financing.

The SECP has approved parametric insurance solutions for live testing under its regulatory sandbox initiative, in addition to traditional agricultural insurance products and existing government-sponsored crop insurance schemes, Khan explained. So far, it has 61 wheat farmers in the Rahim Yar Khan district, which has 168 acres covered in the pilot phase. Parametric insurance protects the insured based on parameters such as rainfall or crop yield in a unit area gathered through technology-based solutions, and is especially appropriate for small farmers.

The event’s goal was to create a platform for stakeholders in Pakistan’s agriculture sector to share their expert opinions on the application of agricultural technology and the challenges facing agri-tech companies. Participants also discussed the opportunities and challenges of digitizing the entire value chain, improving farmer access to digital insurance, and digital crediting Pakistan.

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