STATE BANK HELPS SMEs GET BETTER ACCESS TO FINANCE

Small and Medium Enterprises Development Authority (Smeda) Outreach Division General Manager Muhammad Alamgir Chaudhry has said that with the patronage of the State Bank of Pakistan, the SMEs are having better access to finance as compared to negligible access available in the past.

Addressing at the concluding session of the consultation process on credit guarantee scheme plan for SMEs meeting held on Friday at the Smeda head office, he said, the banking industry is still not comfortable to issue the adequate credits to SMEs due to high risk, which can be covered by introducing a Credit Guarantee Scheme commonly being 
practiced in plenty of the growing economies across the world.

The participants of the consultative meeting recommended submitting the plan as a major budget proposal this year to establish a Credit Guarantee Fund with at least $25 million.

Sheharyar Tahir, head External Relations Department of Smeda and Imran Ahmad of the SBP conducted the proceedings of the meeting.

The meeting was widely attended by representatives of banks, development finance institutions, private sector and the government’s business development agencies.

Chaudhry said that Smeda, taking cognizance of the need, had developed a comprehensive feasibility study for the required scheme under the aegis of the Investment Promotion Unit, jointly organised by the United Nations Development Organization (UNIDO), Smeda and the government of Italy.

A continued consultation process in collaboration with the State Bank was started last year to have the feedback from the government of Pakistan, bankers, SMEs, trade bodies and other relevant stakeholders, the concluding episode of which has been arranged at the Smeda head office, he added.

The presentations given by representatives of Smeda, State Bank of Pakistan and FINCON revealed that the formal lending of SMES in Pakistan was much less than the actual requirement.

According to the feasibility study compiled by FINCON for UNID0-SMEDA-ITALIA Investment Promotion Unit, the SMEs are being provided only six percent of the total formal lending by financial institutions, whereas the share of SMEs’ lending in neighbouring countries is around 30 percent of the total credits.

The default risk in the SME-based economies of the world has been covered by the credit guarantee schemes and there are more than 2,250 credit guarantee schemes in 100 countries of the world, he said.

Therefore, the feasibility has offered a complete mechanism for creating a full-fledged credit guarantee scheme for SMEs in Pakistan, proposing major chunk of funds from international donor agencies, such as the World Bank, USAID, DFID and Italian Development Cooperation.

As per the feasibility, the credit guarantee scheme fund should be up to $25 million and the investment in fund is expected to generate approximately 0.5 million direct jobs; followed by a GDP of Rs250 billion and an additional tax revenue up to Rs33 billion over 10 years.

The government of Pakistan may be asked to share 20 percent of the total required fund or to match the equal 
amount of fund to be generated through donor agencies and the same would be managed 
by setting up a credit guarantee fund company, which will 
work as a public limited company.

Earlier, stakeholders meetings held in Karachi, Peshawar and Islamabad have also unanimously recommended taking up the feasibility of CGS with the government of Pakistan.

Therefore, Smeda, as per the recommendation of the concluding consultative session would submit the detailed feasibility as the major proposal for the forthcoming Federal Budget 2017/18.

SMEDA CONCLUDES CONSULTATION PROCESS ON SME CREDIT GUARANTEE SCHEME

The Small and Medium Enterprises Development Authority (SMEDA) concluded the consultation process on Credit Guarantee Scheme plan for SMEs at the final consultative meeting held on January 12, 2017 at SMEDA head office with bankers and SMEs, who have recommended to submit the plan as a major budget proposal this year to establish a Credit Guarantee fund with at least US dollar 25 million.  Mr. Muhammad Alamgir Chaudhry, General Manager Outreach Divisioin of SMEDA presented address of welcome to the participants. Whereas, Mr. Sheharyar Tahir, Head External Relations Department of SMEDA and Mr. Imran Ahmad of the SBP conducted proceeding of the meeting. The meeting was widely attended by representatives of banks, Development Finance Institutions, private sector and the government’s business development agencies. The prominent participants included Mr. Rehmatullah Javed, Chairman Standing Committee of FPCCI on SMEs, Mr. Imran Ahmad from the State Bank of Pakistan, Mr. Irfan Ahmad, Vice President, NBP, Mr. Liaqat Mehmood from Askari Bank, Mr. Muhammad Shahid, Branch Manager, Pak-Bruni Investment Company, Ms. Rukhsana Bukhari, Vice President First women Bank Limited, Mr. Ali Abbass from Bank Al Habib, Mr. Sikandar Abbasi, CEO, FINCON, Mr. Raza Hafeez Shami, CEO, RM Engineering Industries, Mr. Farid Ahmad, RVP Albarqaka Bank, Mr. Naveed Ahmad, Vice President BOP, Mr. Naveed Nasir from ABL, Mr. Behram Bashir, VP, SME Bank Limited, Mr. Sultan Tiwana, Private Consultant, FINCON, Mr. Shehzad Latif, SVP, Soneri Bank Limited, Mr. Tanveer Ahmad Haral, Head Strategic Marketing, NRSP Microfinance Bank, Mr. Shehbaz Sarwar, Additional Registrar, SECP, Mr. Saleem Akhtar, Channel Manager SCBL, Mr. Sohail Siddiqui, Product Manager SME, Bank Al Falah, Ms. Aysha Aamer, Chief Manager, Bank of Khyber, Mr. Saqib Ayaz, Regional Head SME, Samba Bank and Ms. Nadia Jahangir Seth, Head Policy and Planning Department of SMEDA.

Mr. Muhammad Alamgir Chaudhry, in his address of welcome, acknowledged that strong patronage from State Bank of Pakistan, the SMEs were having better access to finance as compared to negligible access available in the past. However, the banking industry is still not comfortable to issue the adequate credits to SMEs due to high risk, which can be covered by introducing a Credit Guarantee Scheme commonly being practiced in plenty of the growing economies in the World, he said and informed that SMEDA, taking cognizance of the need had developed a comprehensive feasibility study for the required scheme under aegis of the Investment Promotion Unit, jointly organized by the United Nations Development Organization (UNIDO), SMEDA and Government of Italy. A continued consultation process in collaboration with the State Bank of Pakistan was started last year to have the feedback from government of Pakistan, bankers, SMEs, trade bodies and other relevant stakeholders, the concluding episode of which has been arranged at head office of SMEDA, he added.

The presentations given by SMEDA, State Bank of Pakistan and FINCON revealed that the formal lending of SMES in Pakistan was much less than the actual requirement. According to the feasibility study compiled by FINCON for UNID0-SMEDA-ITALIA Investment Promotion Unit, the SMEs were being provided only 6% of the total formal lending by financial institutions, whereas the share of SMEs’ lending in our neighboring countries is around 30% of the total credits. The default risk in the SME-based economies of the world have been covered by the Credit Guarantee Schemes and there are more than 2, 250 credit guarantee schemes (CGS) in 100 countries of the world. Therefore, the feasibility has offered a complete mechanism for creating a full-fledge Credit Guarantee scheme for SMEs in Pakistan, proposing major chunk of funds from international donor agencies, World Bank, USAID, DFID and Italian Development Cooperation. As per the feasibility, Credit Guarantee Scheme fund should be up to USD 25 million and the investment in fund is expected to generate approximately 0.5 million direct jobs followed by a  GDP of Rs. 250 Billion and an additional tax revenues up to Rs. 33 billion over ten years. The government of Pakistan may be asked to share 20 % of the total required fund or to match the equal amount of fund as to be generated through donor agencies and the fund would be managed by setting up a Credit Guarantee Fund Company to be working as a Public Limited Company.

It is notable that stakeholders meetings earlier held in Karachi, Peshawar and Islamabad have also unanimously recommended to take up the feasibility of CGS with government of Pakistan. Therefore, SMEDA, as per recommendation of the concluding consultative session held today would submit the detailed feasibility as the major proposal for the forthcoming Federal Budget 2017-18.

AWARENESS SEMINAR ON ENTREPRENEURSHIP AS A CAREER OPTION

Entrepreneurship is the real way forward to reposition economy of Pakistan for reducing poverty and increasing jobs in SME sector. It was observed by the business experts while speaking at one-day awareness seminar on “Entrepreneurship as a Career Option” organized by the Small and Medium Enterprises Development Authority (SMEDA) in collaboration with COMSATS. The speakers included Mr. Javed Afzal, Deputy General Manager Outreach Division, SMEDA, Mr. Ghulam Husain, Manager COMSATS and Mr. Abu Bakar, CEO Engineering Hut, who shared his success story with the participants.

Mr. Javed Afzal, Deputy General Manager Outreach, SMEDA while speaking to the audience said that SMEDA had a network of regional offices in the major cities of Pakistan, involved in providing business counseling and other business development services to the young people aspiring for setting up their new small businesses. He also briefed the students about the various development projects of SMEDA that have been established by the funding by the Government of Pakistan for the development and promotion of the related business sectors in the country. He emphasized upon the participants to pursue entrepreneurship as career option and also avail the business development services from various initiatives of SMEDA and other relevant business support organizations in the country.

The young successful businessmen Mr. Abu Bakar, while describing his success story on the journey towards entrepreneurship, said that despite so many problems, Pakistan was the best place for business. Therefore, the educated youth should opt the entrepreneurship as a career to play an active role in economic development of their Country and the nation. He said that business graduates having specialization in various disciplines business management can easily develop themselves as successful entrepreneurs. He said that youth may also avail of SMEDA services and guidance in establishing the small businesses in various fields of SME sector.

Earlier, Mr. Ghulam Hussain, Manager COMSATS in his opening address, highlighted the objectives of the seminar and underlined the importance of youth towards education and development of their skills in pursuance of entrepreneurship. He said that the country was faced with the challenges like unemployment and if youth entrepreneurship gets promoted and the opportunities are tapped by youth for adding value to wide range of products, then it can help to relieve the pressure on job market. He appreciated the role of SMEDA for holding such awareness seminars for the guidance of university students.

This is notable that realizing the growth potential of youth entrepreneurship in the country, Small and Medium Enterprises Development Authority (SMEDA) has launched a proactive move for developing and promoting entrepreneurship particularly among the educated youth for raising awareness and building capacity of the graduating students for business start ups.

SMEDA Invites Proposals for Federal Budget 2017-18

SMEDA, in its efforts to support SME development in the country, conducts a round of consultation with different stakeholders including SMEs, Chambers of Commerce & Industry and Trade Associations for obtaining views/inputs related to the SME Sector for developing recommendations for consideration of the government while formulating the Federal Budget. SMEDA has initiated an exercise to solicit recommendations for Federal Budget 2017-18.

Kindly send your recommendations and proposals for the Federal Budget FY 2017-18 by Tuesday, 31st January 2017, through email at This email address is being protected from spambots. You need JavaScript enabled to view it.or at following address:

 

Maryam Anas

Assistant Manager

Policy & Planning Division

SMEDA, 5th Floor, Aiwan-e-Iqbal Complex

Egerton Road,

Lahore

SMEDA COMPLETES 16 COMMON FACILITY CENTERS UNDER PSDP

The Small and Medium Enterprises Development Authority (SMEDA) has successfully completed 16 Common Facility Centers under Public Sector Development Program across the country with a total investment of Rs.1.5 billion. According to a recent report compiled by SMEDA on PSDP projects, a set of further 4 projects with a cost of over Rs. 443 million, raising the total portfolio to about Rs.2 billion, would be completed in near future.

Currently, out of the 16 completed projects  seven belong to Punjab that include Agro-food Processing Facility Multan, Gujranwala Business Center, Revival of Cutlery Institute Wazirabad, Women Business Incubation Center, Sports Industries Development Center, Sialkot, SME Subcontracting Exchange, Gujranwala and Foundry Service Center, Lahore. The four projects completed in Sindh are; Glass Products Design and Manufacturing Center Hyderabad, Red Chilies Processing Center Kunri, Revival of Hyderabad Leather Footwear Center and Women Business Incubation Center, Karachi. Similarly, the four projects have been set up in KPK, which include Chromite Beneficiation Plant Khanozai, Washing and Pressing Unit, Matta Mughal Khel, CFTC for Light Engineering Cluster, Mardan and Women Business Development Center, Peshawar. The one project established in Quetta is “the Women Business Incubation Center Quetta.

Three, out of the total four projects reported to be under execution, belong to Swat; Establishment of CFC for Silk Cluster at Mingora, establishment of CFC for Honey Processing and Packaging, Mingora and Women Business Development Center, Mingora. A project named as Sialkot Business and Commerce Center is also under completion in Sialkot.

Giving reasons for SMEDA’s entrance into Public Sector Development Program, Mr. Sher Ayyub, CEO SMEDA informed that SMEDA, through interaction with stakeholders of SME sectors, had identified certain potential clusters of SMEs, which were unable to tap export market despite surplus production, just due to unavailability of the modern technology. For instance the Mango growing cluster of Multan was wasting tons of the mangoes every year for having no pulp plant, Football production of Sialkot was loosing world market due to unavailability of the mechanized football manufacturing technology and Kunri’s abundant production of Chilies were being contaminated for having no mechanical dehydration facility, he said adding that in fact, such technologies were not affordable to the SMEs due to heavy cost. Therefore, SMEDA, with the support of federal Ministry of Industries and Production, came forward and accomplished the hard task by establishing 16 units for the 16 export oriented clusters of SMEs across the country. CEO SMEDA observed that by this way, SMEDA had not only saved thousands of the working and enterprising families going jobless, but also given a boost to the national exports. He acknowledged that the big and costly project like Agro food Processing Facility Multan, Gujranwala Business Center, Sports Industries Development Center, Sialkot and Foundry Service Center Lahore could not be completed without strong patronage of the federal Ministry of Industries and Production that helped arrange funding from PSDP.

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