Articles

State of SMEs in Pakistan

In the industrial development of a country the importance of the SME sector cannot be overemphasized. SMEs constitute nearly 90% of all the enterprises in Pakistan; employ 80% of the non-agricultural labor force; and their share in the annual GDP is 40%, approximately. However, unlike large enterprises in the formal sector, a small and medium enterprise is constrained by financial and other resources. This inherent characteristic of an SME makes it imperative that there should be a mechanism through which it may get support in different functions of business including technical upgradation, marketing, financial and human resource training & development.

SMEDA is the flagship organization of Pakistan which is providing the necessary services to help SMEs overcome the weaknesses that are endogenous to their very nature. It is an autonomous body working under the umbrella of the Ministry of Industries & Production and contributes towards the growth and development of SMEs in Pakistan through:

(i) the creation of a conducive and enabling regulatory environment; 
(ii) development of industrial clusters; 
(iii) and the provision of Business Development Services to SMEs in all areas of business management.

Adhering to a clear mandate and a logical path to achieve quantitatively verifiable targets, SMEDA carries out comprehensive analyses of international trends, national policies and other macroeconomic factors affecting SMEs in Pakistan for a gradual progress towards the creation of a favorable business environment for its key clients – the SMEs of Pakistan. At the same time, we also interact with the SMEs working in industrial sectors such as Agriculture, Fisheries, Textiles, Handloom Weaving, Transport, Leather, Marble & Granite, Carpets and Light Engineering. This interaction takes place at the individual as well as collective level to provide proactive and responsive financial, technical, management and marketing services to SMEs.

At the collective level SMEDA addresses the problems and needs of SMEs in the form of an industrial cluster – a concentration of largely homogenous enterprises within a certain geographical area. SMEDA interacts with the stakeholders operating in such clusters on a regular basis and collects first hand information about their problems and needs. During this interaction, the issues are prioritized and the important problems are selected for detailed working through which the projects/programs are identified. 
SME support through cluster development program is provided on two fronts:
1. Regulations and policy level support
2. Institutional & networking support

In the policy level support, problems related to any Government department or Government policy/regulation are studied and, if found valid, are advocated with the concerned authorities. At the institutional level, SMEDA provides support to SMEs by creating networking amongst the concerned stakeholders or by directly starting development projects in the clusters. Such projects may include establishing a training institute, building a common facility centre, building a model plant with state-of-the-art technology for SMEs to emulate through reverse engineering. These projects also include upgrading technology in a particular industrial sector and starting a program-lending scheme for this purpose in collaboration with the financial institutions.

Up to now, SMEDA has been involved in cluster development projects in the areas of Boat Modification in Marine Fishery Sector, Credit for Auto Vendors, Carpet Weaving, Marble & Granite, Dates & Apples Processing, Wooden Furniture, Leather Garments, Ceramic Kilns, Cotton Ginning, and Glass Bangles Cluster. 
Some of the important cluster development projects undertaken by SMEDA are:

Textile/Apparel
1. Ginning Technology Up-Gradation
2. Program Lending For Power Looms
3. Computer Aided Design Centre (Common Facility Centre-Sialkot)
4. Designing Institute for Garments (Peshawar)
5. Accessories Sector Study
6. Development of Handloom Cluster

Horticulture/Fruits and Vegetables
7. Establishment of Cool-Chain Agriculture Export Processing Zone
8. Fruit Processing Facility (NWFP in Collaboration with EPB)
9. Assistance to Set Up Horticulture Export Board
10. Revitalization of Sunflo Cit-Russ for Citrus Cluster Development.
11. Apple Treatment Plant in Balochistan (Co-Ordination with EPB)

Fisheries
12. Program Lending Boat/Engine Modification, Gwadar District
13. Establishment Of Shrimp Farms
14. Fish Processing Facility In Gwadar (Feasibility Study)
Granite & Marble
15. Export Warehouse Marble (Azakhel NWFP)
16. Establishment of Model Quarry and Training Institute Marble
17. Joint Ventures and Technology Transfer Arrangements (NWFP)

Gems
18. Five New Gem Mines To Be Operationalized (NWFP)
19. Lapidaries Program Lending (NWFP)
20. Glass & Ceramics
21. Ceramics Kiln Up-Gradation: Common Facility Centre, Gujrat
22. Sanitary Ware & Pottery Sector Kiln Up-Gradation
23. Bangles Kiln Up-Gradation (Hyderabad)

Agriculture
24. Agri-Mall – One Stop Shop for Agriculture Inputs
25. Support Services for Agricultural Credit (SSAC)
26. Establishment of 3 Private Sector Warehousing & Trade Promotion Facilities in Afghanistan

The third area of SMEDA’s functioning is the provision of Business Development Services to SMEs. For this purpose we have set up Helpdesks in all four of our regional offices where any SME in need of SMEDA’s services can simply walk in and obtain over the counter products such as Project Briefs, Pre-feasibility Studies and Regulatory Procedures, along with advice on specific problems. SMEDA Helpdesk Services include: 

Assistance in Raising Finance. 
Financial Advice. 
Project Identification. 
Business Plan Development. 
Technical Advice. 
Marketing Advice (Branding, Labeling, Packaging, Distribution, Promotion, etc.)
Company Incorporation, Export Registration, & Regulatory Advice. 
Sales Tax, Custom Duty, Excise Duty, etc. 
Electronic Commerce Support. 
Business Matchmaking. 
Accounting & Bookkeeping Services. 
Information Services (Library, Databases, Project Briefs, Pre-feasibility Studies, Business Guidebooks).

As a part of its Business Development Services, SMEDA also provides Human Resource Training services by conducting extensive training need analysis of different SME clusters. SMEDA has so far conducted more than 230 training courses and workshops focusing on developing sector specific skills.

SMEDA, envisions to become a model of public-private partnership for better facilitation of the small & medium enterprises in Pakistan through the creation of a more equitable, transparent and conducive regulatory environment for the businessmen. SMEDA believes in synthesizing home-grown solutions to the problems of SMEs, based on global information and local wisdom achieved through cross-country analysis, experience of indigenous entrepreneurs and constraints of the government.