Small and Medium Enterprises

SME (SMALL AND MEDIUM ENTERPRISES):

As defined by State Bank of Pakistan - SME (Small and Medium Enterprise) means an
entity, ideally not a public limited company, which does not employee more than 250 persons (if
it is manufacturing concern) and 50 persons (if it is trading / service concern) and also fulfills the
following criteria of either ‘a?and ‘c?or ‘b?and ‘c? as relevant:

(a) A trading / service concern with total assets at cost excluding land and buildings up to Rs
50 million.
(b) (b) A manufacturing concern with total assets at cost excluding land and building up to
Rs 100 million.
(c) (c) Any concern (trading, service or manufacturing) with net sales not exceeding Rs 300
million as per latest financial statements.

SIGNIFICANCE OF SME’S:
SMEs are considered the engine of economic growth in both developed and developing
countries, as they: Provide low cost employment since the unit cost of persons employed is
lower for SMEs than for large-size units.

 Assist in regional and local development since SMEs accelerate rural industrialization by
linking it with the more organized urban sector.
 Help achieve fair and equitable distribution of wealth by regional dispersion of economic
activities.
 Contribute significantly to export revenues because of the low-cost labour intensive
nature of its products.
 Have a positive effect on the trade balance since SMEs generally use indigenous raw
materials.
 Assist in fostering a self-help and entrepreneurial culture by bringing together skills and
capital through various lending and skill enhancement schemes.
 Impart the resilience to withstand economic upheavals and maintain a reasonable growth
rate since being indigenous is the key to sustainability and self-sufficiency.

SME’S IN PAKISTAN:
Pakistan 's economy has amazing potential for development but sadly, we haven't been
able to derive optimal benefits despite a series of efforts launched by various policy makers at
different times. The impetus of all these endeavors was on the large scale industries and
manufacturing concerns. High rate of failures, owing to economic slumps, institutional
malpractices, political motives and damaging activities of labour unions in that sector, left the
formal lending institutions with huge infected portfolios, in addition to adverse effects on the

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Small and Medium Enterprises

entire economy e.g. insufficient and low quality production to meet the demands of local and
international markets, deficit in balance of payments and ever rising unemployment, etc. 

Pakistan 's SMEs are still unable to achieve their maximum potential and are in dire need
of ‘hand-holding' and business support services.

I think it is quiet enough introduction of SME, now I will move toward my respective topic
which is SMEDA (Small and Medium Enterprise Development Authority) and SMEDA in
Pakistan and what type of services SMEDA is providing and what functions SMEDA is
performing.

SMEDA :( SMALL AND MEDIUM ENTERPRISE DEVELOPMENT AUTHORITY)

The Small and Medium Enterprise Development Authority (SMEDA) was established with the
objective to provide fresh impetus to the economy through the launch of an aggressive SME
development strategy.
Since its inception in October 1998, SMEDA had adopted a sectoral SME development
approach. A few priority sectors were selected on the criterion of SME presence. In depth
research was conducted and comprehensive development plans were formulated after
identification of impediments and retardants. The all-encompassing sectoral development
strategy involved overhauling of the regulatory environment by taking into consideration other
important aspects including finance, marketing, technology and human resource development.
After successfully qualifying in the first phase of sector development SMEDA reorganised its
operations in January 2001 with the task of SME development at a broader scale and enhanced
outreach in terms of SMEDA’s areas of operation. Currently, SMEDA along with sectoral focus
offers a range of services to SMEs including over the counter support systems, exclusive
business development facilities, training and development and information dissemination through
a wide range of publications. SMEDA’s activities can now be classified into the three following
broad areas:
1. Creating a Conducive Environment; includes collaboration with policy makers to devise
facilitating mechanisms for SMEs by removing regulatory impediments across numerous policy
areas
2. Cluster/Sector Development; comprises formulation and implementation of projects for SME
clusters/sectors in collaboration with industry/trade associations and chambers
3. Enhancing Access to Business Development Services; development and provision of services
to meet the business management, strategic and operational requirements of SMEs

SMEDA has so far successfully formulated strategies for sectors, including fruits and vegetables,
marble and granite, gems and jewellery, marine fisheries, leather and footwear, textiles, surgical

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Small and Medium Enterprises

instruments, transport and dairy. Whereas the task of SME development at a broader scale still
requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.
Along with the sectoral focus a broad spectrum of services are now being offered to the SMEs by
SMEDA, which are driven by factors like enhanced interaction amongst the stakeholders, need
based sectoral research, over the counter support systems, exclusive business development
facilities, training and development for SMEs and information dissemination through wide range
of publications.

SMEDA VISION
"Growth of globally competitive SME sector, through a conducive environment and support
services, serving as an engine of sustainable growth for national economy"

MISSION STATEMENT
To function as the promoter & facilitator of SME sector in Pakistan by creating a conducive and
facilitating environment as well as providing and facilitating service delivery to SMEs
for enhancing their capacities and competitiveness.

SMEDA ORGANIZATIONAL STRUCTURE:

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Small and Medium Enterprises

SMEDA OBJECTIVES
 Formulate Policy  to encourage the growth of SMEs in the country and to advise the
Government on fiscal and monetary issues related to SMEs.
 Facilitation of Business Development Services to SMEs.
 Facilitate the development and strengthening of SME representative bodies
associations/chambers.
 Set up and manage a service provider’s database including machinery and supplier for
SMEs.
 Conducting sector studies and analysis for sector development strategies.
 Facilitation of SMEs in securing financing.
 Strengthening of SMEs by conducting and facilitating seminars, workshops and training
programs.
 Donor assistances for SME development of SMEs through programs and projects.
 Assist SMEs in getting international certifications (such as UL, CE, DIN, JIS, ASME, KS,
etc.) for their products and processes.
 Identification of service opportunities on the basis of supply/demand gap.

SMEDA IN PAKISTAN:
In Paksitan SMEDA is providing too much facilities and services are too important and are very
good for the well being and prosperity of the our country. Here I will also talk about some
servies. Which are;

1. TRAINING SERVICES:

SMEDA organizes training programs, seminars, workshops and conferences of short

duration in major cities across the country for raising awareness and capacity building of SMEs.
These need based training programs are affordable, appropriate and innovative. These programs
are aimed at improving knowledge, skills and competencies in the technical, marketing, financial,
compliance, policy, regulatory, legal, commercial and other important functions. These programs
help to improve major performance indicators such as productivity, quality, competitiveness and
sustainability etc. The results include improvement in export potential, investment promotion,
business transparency, human resource development, managerial capacity building etc. These
programs help decreasing the level of SME mortality and increasing efficiency.

CASH FLOW MANAGEMENT:

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Small and Medium Enterprises

Small & Medium Enterprises Development Authority (SMEDA), in collaboration with

Industrialists Association Peshawar (IAP) jointly organizing One-Day Training Program on
“Cash Flow Management” at S.S Polypropylene Peshawar.
The program is designed to equip business community of Industrial Estate Peshawar, in the
development of skills necessary for cash flow management in an effective way. Accountants,
Finance Managers and SMEs who are willing to enhance their skills and capabilities regarding
cash flow management can attent this training programe.

This programe will start at November 04, 2010, at  S.S Polypropylene Industrial Estate
Hayatabad, Peshawar venue.

2. BUSINESS PLAN DEVELOPMENT SERVICES:

Business Plan development services is one of the key services provided by SMEDA to
enable existing as well as potential investors to make well researched and informed investment
decisions.

At SMEDA, we have access to one of the finest human resource pool available in the
country. Individual team comprising of a team leader, financial expert and technical expert is
assigned to each business plan.  SMEDA business plan development team has so far successfully
completed business plans for a diverse range of business sectors including, Textiles, Agriculture,
Information Technology, Automobiles, Light Engineering, Healthcare, Education, and many
more. 

SMEDA provides business plan development services at highly subsidized rates for
SMEs. If you are an SME entrepreneur with a new business idea or you are planning to expand
your existing business set up, you simply have to fill up a Project Brief Form available at any of
our offices.

3. FINANCIAL SERVICES:

Financial Services (FS) functions with in the Business and Sector Development Services
(B&SDS) of SMEDA. As the name implies, FS is responsible for all direct and indirect activities
that fulfill the objective of providing SMEs with improved access to business development
services.

Financial Services not only implements its own initiatives to design and implement
programs but also plays a supportive and advisory role to other departments of SMEDA.
Following are the services / programs being implemented under this paradigm:

SMEDA Accounting Package (SMAP):

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Small and Medium Enterprises

To assist the SMEs in their business accounting through software based accounting
software solution, Financial Services – B&SDS has developed and launched SMEDA
Accounting Package (SMAP). To maximize usage of this software, networks engaging service
providers for provision of training and accounting / bookkeeping services have been established.
To date, networks of service providers have been developed and made functional in six cities
across Pakistan and more are in process of finalization.

SMAP accounting software has crossed 5,000 downloads and continues to gain popularity
in the SME sector! Salient features of SMAP accounting software include:

 Inventory Control
 Financial Accounting
 Cash / Bank Management
 Receivables & Sales
 Payables & Purchases  etc
  SME Banking Products and Services

SME Banking Products and Services:

Upon analyzing queries received at SMEDA a help desk facilitate and our interaction
with sector stake holders, it has been highlited that SMEs requires easy access to finance.
Therefore creating awareness of SME specific products and services being offered by banks
among SMEs is considered an important measure by us to enhance SMEs access to finace. In an
effort to address this issue, FS adopts the following mods of reliable information dissemination:

SME Banking Products available Online:

We collect and compile information on a periodic basis from various banks abourt
products ans services designed for SMEs. This information is then assimilated as per SME
understanding and displayed on SMEDA website in a user friendly format in the form of search
data base.

Training, Seminars and SME Financing Helpdesk:

To increase SME understanding on various “finance” related issues, we conduct

awareness seminars and trainings to disseminate information on SME financial services and
products available, ways to pridge the gap between SMEs and banks, accounting and
bookkeeping issues, etc. These semonars not only increase SMEDA outreach into sector but also
highlight problems faced by SMEs while approaching banks, which are later address by SMEDA
and discussed on various forums.

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Small and Medium Enterprises

SMEDA, in collaboration wit h banks periodically conducts helpdesk for financing where
bank representatives evaluate SME loan requests andSMEDA staff handholda eligible SMEs
through loan processing and documentation.

(d) SUPPORTIVE ROLE:

Financial Analysis:

Financial analysis is an important section of the comprehensive sector studies developed

internally by SMEDA. Financial services is responsible for preparing this section; broad
parameters include:

 Performance: Historical performance of the sector in terms of its viability.

 Competitive Analysis: Various cost structures and value addition processes practiced in
the sector

 Sourcing of Finanace: Analyze finanancing modes available and best suited for the
sector

Financial Modeling:

To ascertain financial feasibility of individual SME businesss as per request of clients

approaching SMEDA, Financial services prepares extensive financial projections using
comprehensive models. These financial models are live models providing flexibility to the user to
evaluate viability of a proposed strategy under various scenarios.

External:

Financial services works very closely with financial institiutions (FIs) in designing financing
schemes for SMEs. Moreover, the department designs programs and services, in line with
SMEDA objective, to support FIs by prompting their SME friendly services to evaluate the
capacities of small and medium businesses.

(d)ADVISORY SERVICES:

Carrying the core mandate of SME development, other institutions seek recommendations
and guidence from SMEDA prior to developing SME facilities schemes. In this regard, FS
provides information related to financial conditions of the industry; prepares reports backed by
relevant historical statisticals analysis and provides necessary relavant data as needed.

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Small and Medium Enterprises

4-INFORMATION RESOURCE CENTRE (IRC)

SMEDA Information Resource Centre (IRC) has been established to cater to the information
needs of SMEs and stakeholders from both the public and private sectors. IRC maintains a
collection of more than 3400 books and CD-ROMs/DVDs besides subscribing leading
newspapers and more than 20 journals of international repute on diverse business sections and
related fields. A number of full text online journals are also available for SMEs and researchers
on different fields of knowledge. IRC collection consists of databases, directories, reports,
yearbooks, annual reports, and loose-leaf material that are available for easy retrieval through
latest library management tools. Hard format of training programs conducted by SMEDA are
also available in IRC. SMEDA IRC collection is increasing by an aggregate 10 % every year.

SMEDA-IRC serves as an information repository for entrepreneurs, research students,

academicians and other business stakeholders. IRC is information resource sharing partner with a
number of public & private organizations. It acquires information material from partner
organizations in case of non availability of specific resources.

SMEDA IRC offers:-

 Library Catalogue
 Conducive environment for reading and research
 Free of cost reference services
 Online Public Access Catalogue (available on intranet)
 Proactive information dissemination services
 Facility of photocopies, print outs on subsidized charges
 Free web surfing

IRC services for SMEs:-

 provision of list of importers, exporters and traders

 provision of pre-feasibility studies and regulatory procedures
 provision of information regarding custom tariffs for imports & exports
 know-how guides for new business start-ups
 provision of articles from various journals and newspapers subscribed by SMEDA IRC.
 provision of the contact details of business establishments in selected field
 provision of statistical data on various sectors of the economy
 provision of up-to-date trade related statistics
 availability of SMEDA publications
 customized information to SMEs

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Small and Medium Enterprises

IRC regularly subscribes:-

 PC-TAS (SITC & HS) CD-ROM database developed by International Trade Centre
provides five years’ trade statistics globally
 CBI Market Surveys (in CD-ROM) CBI stands for Centre for the Promotion of Imports
from the developing countries IRC regularly subscribes surveys, conducted by CBI, of
European Union markets.
 International Directory of Importers by Interdata, USA (both in hard & soft form) This
directory provides an up-to-date contact detail of importers globally.
 Jamal’s Yellow Pages of Pakistan (both in hard & soft form) Contains information
regarding contact details of business, industry, embassies, banks etc. in Pakistan

5-POLICY AND PLANNING

Role of Policy & Planning Department

Policy & Planning Division of SMEDA has dual focus internal & external. It plays a key
role in devising and coordinating policies, action plans and strategies for SMEDA operations. On
the other hand it has a mandate to carry out research, communicate with stakeholders and
advocate policies with different tiers of the government with an ultimate objective of creating a
conductive business environment for SMEs in Pakistan. P&P is the hub of policy and regulatory
research that provides SME specific policy input to all tiers of government, government agencies
and institutions, SME associations, industrial clusters and individual entrepreneurs.

Functional Brief

Provision of SME – specific inputs in the macroeconomic and sectoral policies

 SME Policy Development & Implementation

 Federal Budget, Fiscal and Trade Policy

Generating strategic ideas and their development into projects

 Hassle Free Business Environment (series of SME business support gala's)

 Women Business Incubation Center
 Development of Women Entrepreneurship in Pakistan.

Execution of Research Projects

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Small and Medium Enterprises

 Second Investment Climate Survey (ICS-II) with the World Bank, Washington D.C
 SME Baseline Survey

Liaison with the different tires of government

 Coordination with the Federal, Provincial and Local Governments

 Emergency Assignments

Information Dissemination

 Quarterly Newsletters
 SMEDA Library – Cyberary

Networking with the relevant organizations to fill in information and resource gaps

 Strategic linkages with national and international organizations

SMEDA is also working on many projects for the prosperity of SME’s in our country. I will also
demonstrate here some of these projects. These are;

WOMEN BUSINESS INCUBATION CENTER:

Women Business Incubation Center (WBIC) is an initiative of SMEDA being funded by

Government of Pakistan to provide ‘hands-on support’ to Women Entrepreneurs (WEs) in an
exclusive female oriented environment. It is the first of its kind center in Pakistan wherein,
Offices, Exhibition/Display facility and Business Development Services (including training
programs) are being offered to Women Entrepreneurs (WEs) under one roof. The entire effort is
focused at encouraging new business start-ups and support to existing businesses including the
right environment for nurturing women owned and managed businesses to an extent that these
become sustainable; more specifically, in start-up period (first five years) when they are most
vulnerable. WBIC is a supportive entrepreneurial community designed to help grow small
businesses. The center is established for providing assistance to home-based businesses or those
in earlier stages of development.

SERVICES OFFERED AT WBIC

1. Office Space (fill application form & send us today)

2. Product display /exhibition Hall (fill application form & send us today)

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Small and Medium Enterprises

3. Access to professional services of experts and consultants in areas such as legal,

marketing, finance, accounting, product development and others as requested by WBIC
clients. (fill application form & send us today)
4. Business to Business linkup and business match-making desk to be set up with the help of
SMEDA. (fill application form & send us today)
5. Seminars and workshops/ Training courses given their need assessment. (fill application
form & help us in designing programs for you)
The Business Incubator is expected to serve over 1000 women operating small businesses
in diverse manufacturing, service industries and/or dealing in non-traditional products in
three years. WBIC has been operationalized since February 2007.

INDUSTRY SUPPORT PROGRAM:

SMEDA initiated an Industry Support Program in 2003 for technical support of different
industrial sectors in Pakistan. SMEDA has collaborated with different international organizations
like Japan International Cooperation Agency (JICA) and Gesellschaft für Technische
Zusammenarbeit (GTZ). These organizations provide foreign experts to enhance the capabilities
and operational techniques of local industry in different ways. For the success of these
development initiatives an Industry Support Cell (ISC) at SMEDA has been established. The
main objective of establishing this cell is the capacity building of SMEDA staff and to ensure the
continuity of different initiatives. ISC consists of professionals who work closely with foreign
experts for the development and up gradation of local industry.

SME CLUSTER DEVELOPMENT:

Clusters are geographical concentration of enterprises which produce and sell a range of related
or complementary products and are, thus,
faced with common challenges and
opportunities. Cluster development is
basically supporting and strengthening the
clusters by creating networking among the
stakeholders to reduce the cost of doing
business, bringing them on a single
platform for more voice among policy
makers, create new business opportunities,
reducing risk of doing business and
capacity building of the enterprises.

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Small and Medium Enterprises

Cluster development has also proved its contributing in employment generation and poverty
reduction worldwide.  

SME Clusters in Pakistan have huge potential and critical to SME growth. SMEDA has always
been fully cognizant of the significance of Cluster Development and has taken several initiatives.
These initiatives includes Technological Up-gradation, establishment of Common Facility
Centers(CFCs) , access to Formal Finance for SME clusters, Marketing support, Improving HR
skills and Awareness on International Certification & Regulations.

Worldwide, one of the most widely used practices to support industrial clusters is provision of
Common Facility Centers (CFC). The establishment of CFCs is an integral part of SMEDA’s
Cluster Development activities. So far SMEDA has been able to establish following CFCs with
Chambers of commerce and industry and industry/trade associations:

 Computer Pattern Designing in Sialkot

This CFC has facilitated 300 SMEs to get their patterns developed, 122  participants
trained & 28 are under training and 95 employments generated.
 Light Engineering Sector in Gujranwala
 The center has provided testing services to 206 SMEs 130 students have  completed Auto
Cad training.
 Artificial Insemination Training Center in Burj Attari
 More than 1100 technicians have been trained and 900 self employments  generated
under this program.

Credit is life line for any running business including SMEs and realizing the potential in SME
sector and its importance, SMEDA has successfully launched following financing schemes in
Punjab:

 Power Loom Up-gradation, Faisalabad (Rs.226 million to 150 entrepreneurs)

 Support Services for Agri Credit (SSAC) (Rs.77.45 million to 252 farmers)
 Lending Scheme for Cutlery Manufacturers, Wazirabad (Rs.5 million to 10 SMEs)

The proposals for following CFCs were prepared and submitted to Govt. of Punjab. The Planning
& Development Department-Punjab has approved these CFCs and allocated Rs.100 million for
the year 2005-2006. The construction of buildings ad procurement of machinery and equipment
are under process.

 Auto Parts Design & Inspection Center, Lahore

 Electrical Fittings Industry Support Center, Sargodha
 Wooden Furniture Support Center, Chiniot

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Small and Medium Enterprises

 Composite Material Based, Sialkot

Besides above program SMEDA is also working in cluster profiling, marketing support to cluster
stakeholders and training to skills enhancement for SMEs as well as rural clusters. 

SMEDA in collaboration with PSIC and UNIDO has started “Cluster Development Program
for SMEs in Punjab”. The objective of this program is to help in developing seven different
SME clusters of Punjab. The Diagnostic Study of these seven clusters has been completed. In the
next year action plan would be implemented. Besides these clusters, SMEDA is also working
exclusively with UNIDO in four clusters i.e. Sports Wear Sialkot, Auto Part Lahore, PVC Pipes
& Plastic Products Lahore and Marble & Granite Rawalpindi/Islamabad.

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