According to the State bank of Pakistan, SME refers to an entity, ideally not a public limited company, which does not employ more than 250 persons in case of manufacturing, or 50 persons if it is catering to the services sector. Across the world, SMEs are considered an engine of economic growth, both in the developed regions and the emerging economies. This is mainly due to the fact that these small and medium enterprises provide low-cost employment since they utilise indigenous home-based resources for production. The development of small and medium enterprises is of extreme importance mainly because they accelerate the rate of rural industrialisation and simultaneously work towards integration of the rural sector with the urban sector.
In the case of Pakistan, not only have SMEs provided employment to hundreds of thousands over the years, they have also served to promote the country’s cultural heritage in terms of skills and crafts. They support families and even bolster the weak export industry, reasons enough for the government to patronise them. SMEDA, along with SME bank, has been working towards facilitating craftsmen/women for the purpose of setting up their own businesses in this regard.
During a recent trip to Multan, my native hometown, I was overwhelmed by the sheer talent of our craftsmen/women who had created products that require great attention to detail and are loved by foreigners that visit Pakistan. Walking through one of the old bazaars of the city, I came across blue tile work, or kashi gari as it is known, which made me realise the richness of our culture and how we can tap into it to promote not only the industry but also our image in this fast globalising world.
Arts and crafts from Multan date back to the medieval period, and kashi work or blue pottery has earned the city international acclaim for its intricate designs and beautiful art work. This art work has survived centuries with each generation of craftsmen/women passing their skills on to the next. Such has been the universal appeal of this craft that it is also displayed at the British Museum in London, among other places. And surely, this is not the only indigenous craft that has survived generation after generation in Pakistan, but what we need to understand is the fact that such small and medium industries need to be cherished and protected. The range of ceramics is not the only industry that requires our attention, and there are many others hand-made carpet industry of Pakistan being one of them.
By tapping into the rich culture that defines us, in terms of the local skills of our talented crafts people, we can engage a vast market. According to the economic census of Pakistan 2005, 3.2 million business enterprises were functional in the economy out of which, 99 per cent of all enterprises were SME’s. The share of small and medium enterprises in industrial employment according to some estimates stand at over 75 per cent.
What the SME sector of Pakistan increasingly needs is support in terms of resources such as capital and finance, but more than that it needs support in terms of how to manage their businesses effectively, and how to sustain growth in the long term. Most significantly over time, the importance and contribution to the economy of SMEs has been enormous, which goes on to suggest that even today there remains huge untapped potential in the SME sector that can be tapped into through appropriate support and promotion. As SMEs grow over time, they require greater integration to the international export markets with capacities that are in accordance with internationally acceptable standards.
To sum it up, there is vast potential but all that is required for sustainable SME development in Pakistan is for all the concerned stakeholders to make collective effort to buttress this sector. In this regard, Business Development Services are also required to ensure the internal capacity of these enterprises are improved.
The writer is Chief Manager, SME Bank
