ISLAMABAD: The government has made strategic shift in its strategies to assist infrastructural development of Small and Medium Enterprises (SMEs) in order to enhance productivety and exports of this particular sector to help reduce poverty in the country.
Currently, the Small and Medium Enterprises Development Authority (SMEDA), is implementing 28 projects under Public Sector Development Programme with a total estimated cost of Rs.2.8 billion in major SME clusters, official sources said.
The impact of these projects on over-all development and prosperity would be tremendous and will result in enhancing the standard of living, poverty alleviation and human resource development.
In addition to the implementation of a PSDP project portfolio, SMEDA in collaboration with United Nations Development Programme (UNDP) has launched `Early Recovery and Restoration of Flood Affected Communities in Pakistan' project with estimated cost Rs.256 million that is aimed at establishment and operation of Business Support Centers in 29 districts severely affected by the floods.
The aim is to provide communities support for economic development through extending small grants.
"SMEs are considered an important tool for poverty alleviation, human resource development, accelerating economic growth and employment generation," sources said.
SMEs contribute over 30% to GDP, 25% to manufacturing export earnings, 35% to manufacturing value addition and employ around 78% of non -agriculture labour force, they maintained.
The SMEs projects not only provide technical support to SMEs but also play an important role in poverty alleviation by generating direct and indirect employment in their respective areas.
The sources maintained that currently the absence of proper accounts management, business planning, missing formal management, lack of collaterals to meet banks' requirements, low level of awareness about different financing options and absence of reliable and credit worthy data were the main issues and constraints hampering the development of SMEs in the country.
On supply sides, shortage of credit evaluation, product design, marketing skills and non- innovative products, perceived to be high risk projects by banks, absence of credit scoring, cash flow based lending, program based lending, downscaling and absence of SME R&D in Banks were the other restraints effecting the growth.
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