A CASE STUDY ON SMEDA PAKISTAN SMALL AND

A CASE STUDY ON SMEDA PAKISTAN (SMALL AND MEDIUM ENTERPRISE DEVELOPMENT AUTHORITY) PRESENTED BY ANDLEEB ABBAS PAKISTAN

BACKGROUND • Army Rule in Pakistan • A market economy and encouraged trade liberalization Investment both local and foreign hindered by • political instability • distrust between public and private sector and • a non conducive legal and economic policy environment Over 95% of businesses fall in SME category which have not developed due • • • obsolete labour laws and skills, wrong taxation system, idle trade capacity, lack of finance and credit availability and market access. The Small and Medium Enterprises Development Authority (SMEDA) was established in 1998 under the Ministry of Industries and Production in order to foster the development of SMEs in the economy.

OBJECTIVES OF SMEDA • Develop a forum of public private partnership to facilitate enabling environment for business development in the SME sector. • Formulate a policy to encourage the growth of SMEs in the country and to advise the Government on fiscal and monetary issues related to SMEs. • Identification of business opportunities on the basis of supply/demand gap. • Facilitation of SMEs in securing financing. • Facilitation for WTO and other matters related to internationalization of SMEs by conducting seminars, workshops and training programs. • Facilitation of sectoral Business Development Services to SMEs. • Facilitate the development and strengthening of SME associations/chambers, through linkages with Federal and Provincial organizations. • Development of SMEs through donor assisted programs and projects.

STRUCTURE AND PARTICIPATION • 5 Members from the public and 5 members from the private sector • CEO from the private sector and professionals from the private sector on market salaries resulting in public- private tensions • Initially SMEDA was organised into ten economic sector departments – fisheries, light engineering, gems and jewellery, textiles, marble & granite, urban transport, agriculture, IT, ceramics and surgical goods • During 2000, SMEDA was restructured into a parallel organisation with specialist departments in Finance, Technical, Business Technology and SME policy divisions, Donor liaison and sectoral analysis wings.

RESULTS AND MILESTONES • Textile vision-2050 • Engineering vision-2020 • SMEDA and JICA (Japan International Cooperation Agency) have initiated an Industry Support Program in Pakistan. • Pakistan Initiative for Strategy Development and Competitiveness-A joint SMEDA-USAID sponsored Public-Private Dialogue on Competitiveness was conducted over an eight-week period (May - July 2004) in which sessions were held with stakeholders of all important SME clusters in Pakistan. • After consultation with over a 1000 SMEs, first ever draft SME policy document developed alongwith a draft SME Act.

CHALLENGES AND LESSONS LEARNED • Public and private sector roles need to be defined very clearly to reduce power struggle. • The roles should contain a balance of power and performance as otherwise dialogue turns into a monologue. • Constitution of such structures should try to make them safe from political changes in leadership. • A balanced system of incentives both for public and private stakeholders encouraging cooperation needs to be designed to create motivation for results.