Prime Minister Shehbaz Sharif orders immediate formation of a new board for the small and medium enterprises authority (Smeda) to address delays and enhance operational efficiency

On Friday, Prime Minister Shehbaz Sharif expressed his dissatisfaction with the ongoing delays and inefficiencies at the Small and Medium Enterprises Authority (Smeda), directing immediate action to overhaul its structure. Chairing a crucial meeting, the Prime Minister ordered the formation of a new board for Smeda, emphasizing the urgent need to strengthen the institution’s functioning.

Prime Minister Sharif underscored the critical role that small and medium enterprises (SMEs) play in Pakistan’s economic framework. He highlighted that SMEs are integral to the country’s economic stability, contributing significantly to both the Gross Domestic Product (GDP) and export revenues. His directives aim to ensure that Smeda is better equipped to support and enhance the SME sector.

The meeting revealed that a substantial development fund of Rs30 billion had been allocated to Smeda for the next six years. Despite this, the SME sector currently receives Rs491 billion in bank credit, a figure that Sharif wants increased to Rs800 billion to better support the sector’s needs.

Prime Minister Sharif’s dissatisfaction with the non-functioning of the Smeda board led to immediate steps to rectify the situation. He instructed that the board be constituted without delay and emphasized the inclusion of private sector professionals in Smeda’s steering committee. This committee will be chaired by the Prime Minister himself, reflecting his commitment to driving reform and efficiency within the institution.

Additionally, Sharif emphasized the promotion of sub-contracting in industries and called for efforts to integrate these industries into the global supply chain. This approach is intended to boost the competitiveness of Pakistani SMEs on the international stage.

Attendees of the meeting included Deputy Prime Minister and Foreign Minister Ishaq Dar, Minister for Economic Affairs Ahad Khan Cheema, Minister for Industries and Production Rana Tanveer Hussain, and PM’s coordinator Rana Ihsaan Afzal, among other key officials. Their presence underscored the high level of attention the government is giving to revitalizing Smeda and enhancing support for the SME sector.

The Prime Minister’s push for immediate reforms reflects a broader strategy to invigorate Pakistan’s economic engine by leveraging the potential of SMEs, which currently comprise 5.2 million enterprises, contributing 40% of the country’s GDP and 31% of exports.

Analysis:

Political Perspective: Prime Minister Shehbaz Sharif’s actions signal a significant shift in how the government views and supports the SME sector. By prioritizing the overhaul of Smeda, Sharif demonstrates a commitment to economic reform and stability. The formation of a new board and steering committee highlights a strategic effort to improve governance and operational efficiency within key economic institutions. This move could enhance Sharif’s political capital by showcasing effective leadership and responsiveness to critical economic issues.

Social Perspective: The focus on revitalizing Smeda underscores the government’s recognition of the vital role SMEs play in everyday life. As SMEs form the backbone of local economies, this initiative could positively impact communities by fostering job creation and economic opportunities. The inclusion of private sector experts in the steering committee might bring fresh perspectives and innovative solutions to challenges faced by SMEs, potentially benefiting local businesses and their employees.

Racial Perspective: While the initiative does not directly address racial issues, it indirectly affects diverse communities within Pakistan. SMEs often represent a wide range of ethnic and regional groups, and supporting these businesses can contribute to economic inclusivity and reduced disparities across different communities. By enhancing SME support, the government may help to address economic inequalities that affect various racial and ethnic groups within the country.

Gender Perspective: The reform of Smeda has potential implications for gender equality in the SME sector. Women entrepreneurs, who often face unique challenges in accessing resources and support, might benefit from a more effective and inclusive SME support system. The involvement of private sector professionals in the steering committee could also lead to policies that better address the needs of female business owners and promote gender parity in the economic landscape.

Economic Perspective: Economically, the Prime Minister’s directives aim to boost the SME sector’s contribution to the national economy. Increasing bank credit from Rs491 billion to Rs800 billion could provide necessary capital for growth and expansion. The focus on integrating SMEs into the global supply chain reflects a strategic move to enhance Pakistan’s export capabilities and competitiveness. By addressing inefficiencies within Smeda and promoting industrial sub-contracting, the government seeks to strengthen the overall economic framework and stimulate growth in a key sector.