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Enterprises
WASIM AHMAD
M.Com(Pb), JAIBP, DBL(PU)
OUTLINE
Importance of SMEs
Definition of SME
Problems & Issues for SMEs
Govt. Initiatives for SME development
SME Policy
Financing To SMEs
Importance of SMEs
There are about 3.2 Million Business
Enterprises in our Country.
Enterprises employing up to 99 persons
constitute over 95 %.
SMEs employ about 78 % of the Non-Agri
labor force.
SMEs contribute over 30 % to GDP.
SMEs contribute around Rs. 140 B to
Exports.
Importance of SMEs
SMEs account for 25 % of the exports of
manufactured goods.
SMEs are sharing 35 % in manufacturing value
added.
According to the economic survey of 1998-99,
SMEs with a mere 20 per cent investment and
resource to less than 10 per cent of the total formal
credit, generated 80 per cent of the country's total
employment. Various types of loans available are
small loans for business and industry, small loans
for industrialists, lending for small and medium
industries.
Importance of SME Sector
100
90
80
70
60
50 USA
40 France
30 Pakistan
20
10
0
# of SME as Share in Share in Share in Share in Share in
Share of Employment Production Exports Investments Loans
Total # of
Enterprises
101to 250 3%
50 to 100 11%
57%
10 to 49
1to 9 28%
0% 20% 40% 60%
Sectoral Split of Business
Units
Mining & Quarrying
0.01%
Manufacturing Construction
14.37% 0.04%
Community Services
33.06%
Electricity/ Water
0.18%
Finance& Insurance
1.74%
Employment
Turnover/sales
Business environment
Access to finance
Human resource development
Support for technology up-gradation and
marketing
Recommended Definition
Recommended Definition
corruption (39%)
Sales Tax / Excise Income Tax Government Government laws Non availability of
Tax interference and Regulations finance
Constraints to Business
Expansion Figure 1
Constraints to business expansion in Pakistan
Tax
administration 46.1
Corruption 40.4
Regulatory policy
uncertainty 40.1
Electricity 39.2
20 30 40 50 60
Issues in SME
Financing
Sources of Working Capital for
SMEs
Financial Sector Contributing 7% Working Capital
Informal
other
1% Equity
8%
12%
Trade
Credit
4%
Retained
Banks/ FIs
Earnings
68% 7%
Source: Gallup Survey of 1000 Industries in 2002 covering 12 cities & 8 sectors
Sources of Investment for
SMEs
Financial Sector Contributing 8% Investment
Informal
other 2%
12% Equity
Retained
17%
Earnings
59% Trade C redit
2%
Banks/ FIs
8%
Source: Gallup Survey of 1000 Industries in 2002 covering 12 cities & 8 sectors
Loan Disbursement Pattern
80%
%age Exposure to Each Category
60%
69.9%
40%
Source: Dr. Ehsan ul Haq, Dr. Faisal Bari- LUMS; Barriers in SME Growth - 2002
Legal Structure of Business Units
in Pakistan
C orporates & Public Sector
Others 7%
8%
Proprietorship
s&
Partnership
85%
Low
Access
Access Timeliness High Low Timeliness
to loans
to loans of loans of loans
Affordability
of Loans
High High High High
India Bangladesh
Low
Access Timeliness
to loans of loans
High
High Pakistan
www.smeda.org.pk
www.smebank.org
www.sbp.org.pk
www.ibp.org.pk
http://caribbean.smetoolkit.org
www.pasme.org.pk
www.unisame.org
www.smepromotions.org