SMALL AND

MEDIUM
ENTERPRISES
GROUP MEMBERS

Hamza Razzaq

John Joseph

Armaghan Khalid

Mahnoor Masood

Hamid Khan
 SMEDA
• Small and Medium Enterprises Development Authority is institution of the

Government of Pakistan under Ministry of Industries and Production. SMEDA

was established in October 1998 for encouraging and facilitating the

development and growth of small and medium enterprises in the country.

 SMEDA OBJECTIVES

• Formulate Policy to encourage the growth of SMEs in the country and

to advise the Government on monetary issues related to SMEs.

• Conducting analysis for sector development strategies.

• Strengthening of SMEs by conducting and facilitating seminars,

workshops and training programs.

And many more……..

• At present, there are more than 38 million small and medium enterprises in

Pakistan where 8 lakh are industrial units, 12 lakh service sector, 18 lakh

commercial and retail shops.

• 41% of these industrial units are in urban areas and 59% are set in rural

areas.
 CHALLENGES FACED BY SME
• Interest rates:
SME usually work on loan, when the interest rate will be high, then they have to
give more amount to banks in terms of interest, resulting in decrease of profit.

• Security for getting loan:

SMEs sector had to mortgage their factory, assets, and machinery as

security/collateral for getting credit/loans from banks, As most of the small scale
factories are on rent basis and due to non-ownership rights, such factories cannot be
mortgaged which was hurdle in getting loan from banks.
 CONT…

• State Bank of Pakistan announced separate regulations for SMEs under

which the small and medium scale enterprise can get credit from banks on
the basis of their feasibility report, their capability of repayment on cash
flow basis without mortgage. Unfortunately, the banks are still giving loans
to SMEs on 18% to 20% by keeping their asset as collateral on the old
regulations, due to which the small and medium industries in Pakistan
could not grown.
• Import tariff

Import tariff have been increased due to which the cost of raw material
and cost of production have been increased, due to which either they have
to reduce their profit margins or they have to increase the price of the final
products.
NEW POLICIES FOR SME
( 2019 )
• A uniform definition of SMEs in all organizations

• Annual sale turnover of Small Industries and Medium Industries.

• SMEs sector includes Textile Garments, fruits, vegetables, IT , surgical

goods, leather, branding , and furniture.
• Revised Interest rates and credit policies.

• The stakeholders also suggested that in order to promote SMEs, the

credit guarantee scheme should be introduced.

• NBFI and Modaraba should also be included for the financing of small
and medium enterprises.
• SMEs sector in Pakistan is providing 80% employment to the non-agriculture labor.
• 40% contribution in GDP.
• The current growth of SME
Small & medium sector 8%
Manufacturing sector 10%
Exports 10%