1. Small & Medium Enterprises in Pakistan SMEDA May 10, 2005 Lahore

5. Growth of SMEs vis-à-vis Large Scale 7.2 2.6 -5.02 3.6 1990s 10.5 4.7 8.15 8.16 1980s 5.5 4.4 -2.28 4.84 1970s Capital Formation Growth % Output Growth Rate Capital Formation Growth % Output Growth Rate Small-Scale Large-Scale

8. Issues in SME Financing

9. Sources of Working Capital for SMEs Financial Sector Contributing 7% Working Capital Source: Gallup Survey of 1000 Industries in 2002 covering 12 cities & 8 sectors

10. Sources of Investment for SMEs Financial Sector Contributing 8% Investment Source: Gallup Survey of 1000 Industries in 2002 covering 12 cities & 8 sectors

11. Loan Disbursement Pattern Loan Size Rs. in ‘000 Source: State Bank of Pakistan %age Exposure to Each Category

12. Loan Disbursement Pattern Source: Dr. Ehsan ul Haq, Dr. Faisal Bari- LUMS; Barriers in SME Growth - 2002 59% 50% 64% 67% 50% All Sizes 80% 83% 75% 75% 100% 100 or more 50% 15% 75% 67% 100% 50-99 29% 0% 0% 35% 0% 11-49 0% 0% 0% 0% 0% 0-10 All Firms 21 and more 11-20 6-10 0-5 No of Employees Age of Firm (years) % age of Total Size of Firm

13. Legal Structure of Business Units in Pakistan Source: ILO SMEDA Study 2001

14. Comparative Access to Financial Sector Comparatively low financial sector access in Pakistan Source: ITC publication - SMEs and the Global Market Place India High High High Low Access to loans Timeliness of loans Affordability of Loans Bangladesh High High High Low Access to loans Timeliness of loans Affordability of Loans High Timeliness of loans Pakistan High High Low Affordability of Loans Access to loans

24. Model for SME Financing - Germany DtA Entrepreneur EIF Partners Actors Advantages/ sales factors Risk release Microloan On-lending bank „ House bank“ Refinancing + Guarantee Risk release Better access to finance Financing from one source Guarantee Information Advice Advisory Network Cost covering margin

28. SMEDA & SME Development

29. Evolutionary Phases of SMEDA Phase - 1 Dec ‘98-Dec ‘00 Textile Vision 2005 Fisheries Transport Dairy Light Engineering Information Technology Leather SES Monitoring HEXPO 2000 & beyond Leather Outlook 2010 Cool Chain Flatted Factories Fisheries Implementation Marble & Granite Gems & Jewelry Phase - 2 Jan ‘00-Dec ‘00 Boat Modification Auto Vendors Carpet Weaving Power Loom Cluster Ceramic Cluster Marble & Granite Dates & Apples Wooden Furniture Leather Garments Trade Secrets Phase - 3 Jan ‘01- May ‘03 Help Desk Launched OTC Products Business Plan Develop- Training & Development Website Launched Publications Sector Strategies and Implementation Business Dev. Services Cluster Development Sector Strategy Updates Strategic Focus - WTO Phase - 4 Oct ’03 - onwards SME Policy SME Info. Services SME Networking Group Policy and Conducive Environment Textiles Marble and Granite Ginning Cutlery Furniture Light Engineering Bangles Cluster Dairy Help Desk & RBCs Tech. Up gradation Training & Development Marketing Services Financial Services Entrepreneurship ILO Study World Bank ADB PPTA

32. SMEDA Performance 80 Pre-feasibilities under Process 9,379 SMEs facilitated through Library 97 Pre-feasibilities on Web site 120 Business Plans 159 Total Hits (25,669,736) from countries 1,433,527 Business Guide Series Downloaded 25,533 Number of SMEs trained (482 programs in +50 cities ) 14,500 Number of SMEs facilitated through helpdesks

37. %age Contribution by Dominating sectors in value addition Source: CMI (1987-88, 1995-96), SSHMI (1987-88, 1996-97) 39.00% 38.98% Total 61.32% 67.03% Total 3.26% 5.08% Structural Products 10.08% 6.18% Tobacco 4.11% 3.65% Leather Footwear 7.69% 7.15% Mineral Products 5.96% 6.18% Furniture 6.98% 8.53% Chemicals 7.65% 5.95% Jewellery Products 3.27% 7.67% Electrical Machinery 5.11% 6.96% Silk & Art Silk 15.95% 15.19% Food & Beverages 13.19% 11.16% Weaving 17.35% 22.31% Textiles 1987-88 1996-97 1987-88 1995-96 SMEs Sectors Large-Scale Manufacturing Sectors