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SME Sector Genesis, Challenges and Prospects
Abstract
The purpose of this publication is to discuss SME issues and problems, with a view to arrive at a set of recommendations to be pursued over the short to medium term. It contains six chapters in all. Chapter I introduces the concept of SME and its locus standi in our economic setting. It goes on to explore, the way growth of the sector has shaped, amidst the uneven economic history of the country. Interestingly, an uplift plan for Small Scale Industries (SSIs) was made part of the very first Five Year Plan of the country and the theme kept on echoing in subsequent Plans, but the situation on ground remained more or less dormant. Consequently, Pakistan missed the opportunity for fast track economic growth driven by a resurgent SME sector, as demonstrated by some of the East Asian economies. Chapter II fittingly gives a depiction of the current landscape of SME sector, which of course is a result of the policies pursued in the past.
The next Chapter outlines issues and constraints impeding the progress of SMEs in Pakistan, as enumerated in various research and diagnostic studies, supplemented by SMEDA’s own insight based on its experience of working with SMEs over the past decade. Three basic deficiencies pointed out here are, constrained access to formal finance and other input resources, the regulatory bind and absence of linkages and the resulting state of disarray in the sector. Chapter IV dilates on the National SME Policy 2007 and the vision of a vibrant SME sector it enshrines, followed by a depiction of other initiatives preceding the SME Policy or running parallel to it. Chapter V tries to size up the situation on the policy horizon with a view to strengthening a coordinated perspective and policy approach towards this diverse development. Chapter VI takes up an analysis of the
donors’ contribution and the inventory of output generated through that, followed by a conclusion.
... Various studies have been conducted to examine the dynamics, contributions, constraints and opportunities for SMEs of developing countries (MacGillivray & Raynard, 2006;Mead & Liedholm, 1998;Nichter & Goldmark, 2009;Tambunan, 2005). In Pakistan, SME is defined as an enterprise with employment size up to 250 employees and paid up capital of Rs. 25 million according to SME policy 2007, and nearly 90% of all private enterprises in the industrial sector are SMEs contributing over 30% to the Gross Domestic Product (GDP; Afaqi & Seth, 2007). Most of the research related to SMEs in Pakistan deals with prospects, constraints, and impediments faced by these firms (Afaqi & Seth, 2007;Bari, Cheema, & ul Haque, 2005;Burki et al., 2011;Dasanayaka & Sardana, 2010;Lall & Weiss, 2003;Seth, 2010). ...
... In Pakistan, SME is defined as an enterprise with employment size up to 250 employees and paid up capital of Rs. 25 million according to SME policy 2007, and nearly 90% of all private enterprises in the industrial sector are SMEs contributing over 30% to the Gross Domestic Product (GDP; Afaqi & Seth, 2007). Most of the research related to SMEs in Pakistan deals with prospects, constraints, and impediments faced by these firms (Afaqi & Seth, 2007;Bari, Cheema, & ul Haque, 2005;Burki et al., 2011;Dasanayaka & Sardana, 2010;Lall & Weiss, 2003;Seth, 2010). SMEs, due to limited tangible and intangible resources coupled with the business environment in country, have unique posture of prioritizing and implementing the functional strategies. ...
This article uses analytical hierarchy process (AHP) to find prioritization of functional strategies (manufacturing, marketing, human resource, and financial management) by small and medium enterprises (SMEs) operating in auto parts manufacturing sector of Pakistan. SMEs are major part of the industrial structure and have significant contribution toward generating jobs in Pakistan. These enterprises are generally family-owned businesses, and this study provides concrete insights into the mind-set of owners toward different functional strategies. The AHP implementation steps are performed using commercially available software “Expert Choice®.” Marketing strategy is considered to be the most important strategy, while manufacturing management strategy is the second most important strategy. There is little emphasis on the financial and human resource management which is a serious cause of concern. The study would help policy makers to understand the business behaviors of this sector and consequently formulate policies to enhance their performance.
... Coad and Tamvada (2008) pointed out sole proprietorships firms showed faster rate of growth and declining as well, compared to their counterparts while females owned enterprises failed rapidly than male's ownership. Afaqi and Nadia (2009) pointed out the failure of Pakistan in its SMEs growth than potential of generating employment opportunities regarding population size and poverty reduction targets. Demographical changes are estimated as significant factors for financial institutes and firms owners to utilize credit (Samue et al., 2012;Aysan, Disli and Schoors, 2013). ...
... In Pakistan, Government agencies like Small and Medium Enterprises Development Authority (SMEDA) have facilited set-up of PPP based sector development agencies, including Pakistan Gems and Jewelry Development Company, Pakistan Stone Development Company, Furniture Pakistan etc. to foster cross stakeholder collaboration and knowledge exchange for sustainable development of respective sectors (Afaqi & Nadia, 2009). These agencies have been established, and are being run, in partnerships with private sector, research institutes, government agencies and international development agencies. ...
The Vision 2025 Approach of the Government of Pakistan emphasizes on enhanced role of private sector in transforming the structure of Pakistan's economy from current production orientation to knowledge based economy. The manifestation of this approach incorporates increased role of Public Private Partnerships (PPP) in various spheres of the economy, especially for those echelons where resources like knowledge and increased collaboration of various stakeholders is required for effective results. Sector Development Companies in Pakistan like Pakistan Stone Development Company, Pakistan Gems and Jewelry Development Company, Furniture Pakistan etc., established under PPP mode, are good examples in this regards. While PPP model is increasingly being used in various countries of the world, concerns regarding Performance of these PPP based institutions, towards achieving the envisaged goals are also on the surge. Extant literature suggests that Key Success Factors (KSFs) for such PPP based organization must be identified, so that that their governance structure could be improved for ensuring their performance. Furthermore, it has been suggested that KSFs for PPP vary according to the context of the country, in which they are operative. The initial step in this regard, however, is to understand the dynamics of PPP and its implications of the specific context, in which they operate, for their effective performance. Accordingly, the present study explores literature to delineate various facets of PPPs and underscores the macro-environmental context of Pakistan in which specific KSFs for PPP need to be identified.
Iftikhar Ahmad, Muhammad Umair Ghani, Saba
Anwar, and Fizzah Khalid Butt states that the SME Policy of 2007 is to be replaced by a
new one that was expected in 2021 and the paper aims to assess the success and
shortcomings of the 2007 policy. The paper starts by highlighting the importance of
SMEs to the national economy and identifying the constraints they face, including difficulty in market access, financial constraints, lack of information, and various
institutional constraints
In many developing countries, customs efficiency is hampered by widespread corruption. This creates a major disincentive and obstacle to trade expansion. It also leads to disastrous consequences in terms of national security and public finance.
This OECD Development Centre Technical Paper examines the nature of customs corruption and suggests some practical paths to integrity. It is based on fact-finding studies of recent experience of customs reform in Bolivia, Pakistan and the Philippines. These studies were entrusted to experts, especially qualified, by personal, inside experience, to identify, describe and evaluate the problems and developments in each of the relevant customs services. They provide a detailed, objective and intimate account of the character of corruption practices, the forces at work for and against reform and the outcome in each of the three countries. Based on the analysis of the serious setbacks in Bolivia and Pakistan and relative success in the Philippines ...
Dans de nombreux pays en développement, l'efficacité de l'administration des douanes est mise à mal par la corruption endémique. Cette situation est un obstacle à l'expansion des échanges commerciaux. Elle a aussi des conséquences désastreuses pour la sécurité nationale et les finances publiques.
Ce Document technique du Centre de Développement de l'OCDE analyse la nature de la corruption dans les douanes et propose quelques solutions concrètes pour améliorer l'intégrité. Il s'appuie sur l'examen des récentes réformes de l'administration des douanes engagées en Bolivie, au Pakistan et aux Philippines. Ces études de terrain ont été confiées à des spécialistes de la question, particulièrement qualifiés de par leur expérience personnelle, " de l'intérieur ", pour identifier, décrire et évaluer les problèmes inhérents au service des douanes considéré, et leur évolution. Ces études rendent compte en détails et en profondeur, des pratiques de corruption, des rapports de forces hostiles ou ...
The purpose of the present paper has been to quantify and discuss the implications of implicit taxes in Pakistan's agriculture. The methodology of the paper consisted of defining the import and export parity prices of major agricultural commodities grown in Pakistan, by comparing them with domestic procurement prices. Although the analysis covered only four commodities, implicit tax rates in some of the years from 1970-71 to 1989-90 were as high as 75 percent for certain commodities. It was only in the case of IRRI rice and sugarcane that domestic prices were above the world levels in some years of the period under consideration. When shown as a percentage of the value-added by agriculture, the taxes on these four commodities, net of the total budgetary subsidies on agricultural inputs, varied from 1.9 percent to 14.9 percent. These tax rates in agriculture compared favourably with the overall tax rates in Pakistan's economy for most of the years. Judged in the light of the relative taxable capacities of agriculture and Pakistan's economy as a whole, implicit taxes were much higher in agriculture than in the other sectors of the economy.
Political economy models of growth and public service provision stress the incentives of the elite under high inequality to under-invest in the human capital of the majority. Other political economy models stress that ethnic divisions will lead to low public goods provision. This paper examines Pakistan as a case study of these two propositions. Pakistan has had respectable per capita growth over 1950-99, intensive involvement by donors and international agencies ($58 billion in foreign aid), and has a well- educated and high-achieving elite and Diaspora. Yet Pakistan systematically underperforms on most social and political indicators -- education, health, sanitation, fertility, gender equality, corruption, political instability and violence, and democracy -- for its level of income. It systematically under-performs on improvements in these indicators for its rate of GDP per capita growth over time. I call this pattern "growth without development." Large inequalities exist between men and women, between urban and rural areas, and between regions. The donor- and government-supported Social Action Program that sought to address these lags in the last 8 years has failed. This follows a long history of failed government and aid programs to address social lags. While foreign aid and government programs may have contributed to overall economic growth, they were an egregious failure at promoting social and institutional development under the circumstances of elite domination and ethnic division.
Environment Component, Diagnostic Phase, Preparing the Small and Medium Enterprise Development Program TAN°. 3538-PAK, GFA Management GmbH
- Viqar A Khan
- Nigel Draper
Khan, Viqar A., and Nigel Draper (2003): Environment Component,
Diagnostic Phase, Preparing the Small and Medium Enterprise
Development Program TAN°. 3538-PAK, GFA Management GmbH.
Business Registration and Licensing, Preparing the Small and Medium Enterprise Development Program TA N°. 3538-PAK, GFA Management GmbH
- Christoph D Weinmann
Weinmann, Christoph D. (2003): Business Registration and Licensing,
Preparing the Small and Medium Enterprise Development Program
TA N°. 3538-PAK, GFA Management GmbH.
Labor Protection and Labor Inspection, Preparing the Small and Medium Enterprise Development Program TAN°. 3538-PAK, GFA Management GmbH
- Robert Heron
Heron, Robert (2003): Labor Protection and Labor Inspection,
Preparing the Small and Medium Enterprise Development Program
TAN°. 3538-PAK, GFA Management GmbH.
Non-Financial SME Support in Pakistan -Diagnosis and Strategy Outline, Preparing the Small and Medium Enterprise Development Program TAN°. 3538-PAK, GFA Management GmbH
- Bruce Harris
- Carmen Langner
- Frank Niemann
Harris, Bruce, Carmen Langner, and Frank Niemann (2002): Non-Financial SME Support in Pakistan -Diagnosis and Strategy Outline,
Preparing the Small and Medium Enterprise Development Program
TAN°. 3538-PAK, GFA Management GmbH.