“SMEDA”

SME: (SMALL AND MEDIUM ENTERPRISES)

Small and medium enterprises (also SMEs, small and medium businesses, SMBs,
and variations thereof) are companies whose headcount or turnover falls below certain limits.

The abbreviation SME occurs commonly in the European Union and in international
organizations, such as the World Bank, the United Nations and the WTO. The term small and
medium businesses or SMBs is predominantly used in the USA.

SMEDA SME DEFINITION

Small & Medium Enterprises are defined as follows, as approved in SME Policy 2007

Employment Size Paid Up Capital

Enterprise Category Annual Sales (c)
(a) (b)
Small & Medium Enterprise Up to Rs. 25 Up to Rs. 250
 Up to 250
(SME) Million Million

The Federal Government, in line with the economic development of Pakistan may, from time to
time modify the eligibility criteria as it sees fit. All providers of services receiving funding from
the Government may define more narrow scopes for specific targeting purposes.

SME DEFINITIONS USED BY VARIOUS INSTITUTIONS IN PAKISTAN

Institution Small Medium

Total Assets of Rs. 100
SME Bank Total Assets of Rs. 20 million
million
Federal Bureau of
Less than 10 employees N/A
Statistics
Punjab Small Industries Fixed investment. up to Rs. 20 million
N/A
Corporation excluding land and building

1|Page
“SMEDA”

Punjab Industries
Fixed assets with Rs. 10 million excluding cost of land
Department
Entity engaged in handicrafts or manufacturing of consumer or producer
Sindh Industries
goods with fixed capital investment up to Rs.10 million including land
Department
& building
State Bank of Pakistan An entity , ideally not being a public limited company, which does not
(SME Prudential employee more than 250 persons ( manufacturing) and 50 persons (trade
Regulations) / services)   and also fulfills one of the following criteria:
(i) A trade / services concern with total assets at cost excluding land and
buildings up to Rs 50 million.
(ii) A manufacturing concern with total assets at cost excluding land and
building up to Rs 100 million.
(iii) Any concern (trade, services or manufacturing) with net sales not
exceeding Rs 300 million as per latest financial statements.

WHAT IS SMEDA: (The Small And Medium Enterprises Development

Authority)

Premier institution of the Govt. of Pakistan under Ministry of Industries and Production,

SMEDA was established in October 1998 to take on the challenge of developing Small &
Medium Enterprises (SMEs) in Pakistan. With a futuristic approach and professional
management structure it has focus on providing an enabling environment and business
development services to small and medium enterprises. SMEDA is not only an SME policy
advisory body for the government of Pakistan but also facilitates other stakeholders in addressing

their SME development agendas.

SMEDA VISION
2|Page
“SMEDA”

"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 OBJECTIVES

1. Formulate Policy  to encourage the growth of SMEs in the country and to advise the
Government on fiscal and monetary issues related to SMEs.
2. Facilitation of Business Development Services to SMEs.
3. Facilitate the development and strengthening of SME representative bodies
associations/chambers.
4. Set up and manage a service provider’s database including machinery and supplier for
SMEs.
5. Conducting sector studies and analysis for sector development strategies.
6. Facilitation of SMEs in securing financing.
7. Strengthening of SMEs by conducting and facilitating seminars, workshops and training
programs.
8. Donor assistances for SME development of SMEs through programs and projects.
9. Assist SMEs in getting international certifications (such as UL, CE, DIN, JIS, ASME,
KS, etc.) for their products and processes.
10. Identification of service opportunities on the basis of supply/demand gap.
11. Brief history of SMEDA
Government of Nawaz Sharif established Small and Medium Enterprises Development
Authority in late 1998 with great fanfare and pledged to provide Rs. 250 billion for Small
12. and Medium Enterprises (SMEs) in three years. But there had practically been no
investment in the small and cottage industries since the establishment of SMEDA.

3|Page
“SMEDA”

It is established to take on the challenge of developing Small & Medium Enterprises (SMEs) in
Pakistan. SMEDA is relatively a new organization with a futuristic structure and focus on
providing business development services to small and medium enterprises. SMEDA is not only
an SME policy-advisory body for the government of Pakistan but also acts as a one-stop-shop for
its SME clients.

SMEDA Structure

Under the Federal Ministry of Industries & Production, SMEDA is headed by a Chief Executive
Officer who is a public appointment; a senior federal public official from the Federal Public
Service Commission of the Government of Pakistan who directly reports to the Federal Secretary
for Industries & Production.

The Organization is divided in to four divisions on functional basis that are Central Support
Division, Policy & Planning Division, Out Reach Division, and Business & Sector Development
Service Division. Each division is headed by a General Manager directly reporting to the CEO.
The General Managers, in most cases, are also senior federal public officials from the Federal
Public Service Commission. The middle and frontline management are hired from the private
sector on two year contract basis.

The Central Support Division include support departments like Human Resource,
Administration, Account, PR & Marketing, MIS/IT, with an exception of Donor Coordination &
International Linkages department which is responsible for developing and facilitation of
International linkages and donor involvement in the country on SME development level.

Policy & Planning division is the research organ of the organization further divided into
Research wing, Planning & Development wing and Policy development wing.

SMEDA has a country wide out reach with four main regional offices each headed by a
Provincial Chief for each of the four provinces of Pakistan i.e. Punjab, Sindh, Balochistan and
North West Frontier Province these are further extended to 23 major cities of the country with a
one-man office housed in prominent Chambers of Commerce & Industry which are called

4|Page
“SMEDA”

Regional Business Coordinators. The Outreach Division also includes Industry Support Cell and
Training Services Department which is responsible for providing training services to SMEs.

Business & Sector Development Service Division works to extend various consultancy services
such as Financial, Legal, Technical & Innovation, and Sector development. This division also
houses the E-Services that SMEDA provides and the Industrial Information Network

Achievements

SMEDA has so far successfully formulated strategies for sectors including, dairy & livestock,
marble and granite, gems and jewellery, marine fisheries, leather and footwear, textiles, surgical
instruments, and transport. Over the period Government of Pakistan has incorporated separate
agencies to take on the preliminary work done by SMEDA in various sectors. A number of
independent sectoral development bodies have been created through SMEDA initiatives.
Consequently, Pakistan Horticulture Development and Export Board (PHDEB), Pakistan Dairy
Development Company (PDDC),Pakistan Stone Development Company (PASDEC), Pakistan
Gems & Jewellery Development Company (PGJDC), Technical Upgradation & Skills
Development Company (TUSDEC) has already started their operations. 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 business development services are also offered
to the SMEs by SMEDA. These services include identification of viable business opportunities
for potential investors. In order to facilitate these investors, SMEDA provides business guidance
through its help desk services as well as development of project specific documents. These
documents consist of information required to make well-researched investment decisions. Pre-
feasibility studies and business plan development are some of the services provided to enhance
the capacity of individual SMEs to exploit viable business opportunities in a better way.

According to Economic Census of Pakistan, 2005 by Federal Bureau of Statistics, there are
70,658 women owned businesses operating across Pakistan. This represents 3% of total
enterprises in Pakistan. It is estimated that most of the women owned businesses fall within the
category of SMEs. The level of women participating in enterprise development currently is

5|Page
“SMEDA”

around 16%, reason being availability of their limited resources topped by lack of confidence to
invest in infrastructural facilities. In order to bridge this gap, Government of Pakistan has given
SMEDA the task of setting of first Women Business Incubation Center (WBIC) which was
successfully established. This center is addressing the Women specific business development
needs along with providing then secure space to nurture their business. Hence, it would not only
provide physical facility but also impart business management training to existing and new
entrepreneurs.

In realization of the dire need of a common vision for SMEs to be the real engine of economic
growth, Prime Minister of Pakistan assigned SMEDA, the uphill task to devise the first ever
SME Policy of Pakistan. In order to achieve the objective, wide scale consultation has been
undertaken to elicit views of the ultimate beneficiaries, i.e. SMEs. The participation of
stakeholders has been therefore, the cornerstone of the policy development process. Federal
Cabinet, in its meeting on January 17, 2007 has approved the SME Policy. The Prime Minister,
while approving the Policy stated that it marked advent of a new era of development with the
long over due recognition of SMEs as a distinct entity and provides the framework & direction
for SME development in Pakistan.

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
in this regard. These initiatives include 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.

Foreseeing the emerging importance of web interface as a tool to provide information excess and
capacity building to business sector in Pakistan, Ministry of Industries & Production has joined
hands with Ministry of Information Technology and Telecommunication to launch first ever
Business to Business (B2B) and information portal in Pakistan; the Industrial Information
Network (IIN).

6|Page
“SMEDA”

SME Sector in Pakistan 3.2 million business units in PakistanOver 99% business units employ
less than 99 persons.Generate 78% of non-agri sector employment
Direct Contribution to GDP over 30% Generate 25% of Manufacturing Export Earnings
Contribute 35% in Manufacturing Value addition.International Linkages & Collaboration
SMEDA also aggressively works to develop international linkages with other countries &
international donor agencies. SMEDA strives to develop SME Development ties on bilateral and
multilateral basis with countries around the globe. SMEDA has working relations with over 50
countries which includes share of information and experiences, business match making for
investment and joint venture opportunities, support & encouragement of trade fairs Out of these
over 50 countries, SMEDA has signed Memorandum of Understanding with 9 countries with its
counterpart agencies, these include China, Poland, Turkey, Morocco, Tunisia, Algeria,
Mauritius, Kuwait, and Uzbekistan. SMEDA oversees efforts
SMEDA has also developed strong working ties with a number of international donor agencies
who are involved in the economic development of Pakistan. This collaboration generally
includes financial and technical assistance to the SME sector of Pakistan. These agencies include
JICA, UNIDO, UNDP, World Bank, Asian Development Bank, USAID, SES, GTZ etc.
SMEDA in collaboration with JICA (Japan International Cooperation Agency) has initiated an
Industry Support Program in Pakistan.

The present government's emphasis on development of small and medium scale enterprises in the
private sector is being duly appreciated by the donor countries. Japan, European Union, Italian
government and Asian Development Bank have shown keen interest in the various projects
identified by Small and Medium Enterprises Development Authority (SMEDA) of Pakistan.

Our FindingsRecently, in Pakistan hundreds of businesses have been closed due to shortage of
Electricity, water, Sui gas (natural gas), or due to law and order situation (like assassination of
Ex-Prime Minister of Pakistan Benazir Bhutto in Rawalpindi).
every day million of assets are being transferred to Gulf countries by existing business
community, in such a scenario no SME can prevail and grow with reasonable level of certainty.
recommendationMoreover, economically, this policy is viable but not focused for some
excellence sectors in future, like a widely acclaimed adopted one village, one product model for
microfinance and SMEs, this policy shall be focused on some specific businesses and product

7|Page
“SMEDA”

lines, instead of forming a mass of unplanned and less cost-effective SMEs, in today world of
globalization and specialization

REFERENCES:

1. www.slideshare.net/abdullahnayyab/smeda-3462512

8|Page
“SMEDA”

2. http://www.smeda.org.pk/main.php?id=2
3. http://en.wikipedia.org/wiki/Pakistan_Small_and_Medium_Enterprise_Development_Aut
hority

9|Page