Role of Small and Medium Enterprises in the Development of Pakistan
ROLE OF SME'S IN THE ECONOMIC DEVELOPEMENT OF PAKISTAN
SMEs are considered the engine of economic growth in both developed and developing countries, as they generate more employment opportunities with relatively small investment than large-scale firms do. SME provide low cost/ investment employment because the unit cost of persons employed is lower for SMEs than for large-size units; and they are more labor intensive than large-scale enterprises, since labor uses either manual, or semi automatic, and seldom uses automatic processes of production.
According to the ESP (2009), the SME sector hasemerged as a lifeline of Pakistan’s economy constituting nearly 99.06 percent of all economic establishments,out of which 53 percent of the establishments belong to Wholesale and Retail Trade, and Restaurant andHotel sectors, 20 percent are part of manufacturing sector and 22 percent fall in the Community, Social, and Personnel Services sector.
According to very latest statistics provided y SBP (2010a), 90% of the total SME loan portfolio isconcentrated in Punjab and Sindh, 64.22% in Punjab and 25.93% in Sindh, while only 10% share is taken byKhyber Pakhtunkhwa, Balochistan, Gligit Baltistan, and Azad Jammu and Kashmir. The SBP report uncoversan overall decline in SME financing was observed, which fell 20%.
The SME sector contributes 60% of GDP and over 70% of total employment in low-income countries (LIC); while they contribute over 95% of total employment and about 70% of GDP in middle-income countries Surprisingly, more than 90% industrial units in the country are small SMEs. 84% of the SMEs have annual revenue of less than Rs0.5 million (DFR 2008). Total Numbers of Economic Establishments | 3 .2 million | Total Numbers of SMEs | 99 % of all enterprises | (Along with Agriculture) Contribution in Employment | 90 % | Total % of Non-Agricultural Workforce (emp. in SMEs) | 78 % | Average No. of Employees in 99% of SMEs | 1-10 persons | Share in Export Earning
SMEs are considered the engine of economic growth in both developed and developing countries, as they generate more employment opportunities with relatively small investment than large-scale firms do. SME provide low cost/ investment employment because the unit cost of persons employed is lower for SMEs than for large-size units; and they are more labor intensive than large-scale enterprises, since labor uses either manual, or semi automatic, and seldom uses automatic processes of production.
According to the ESP (2009), the SME sector hasemerged as a lifeline of Pakistan’s economy constituting nearly 99.06 percent of all economic establishments,out of which 53 percent of the establishments belong to Wholesale and Retail Trade, and Restaurant andHotel sectors, 20 percent are part of manufacturing sector and 22 percent fall in the Community, Social, and Personnel Services sector.
According to very latest statistics provided y SBP (2010a), 90% of the total SME loan portfolio isconcentrated in Punjab and Sindh, 64.22% in Punjab and 25.93% in Sindh, while only 10% share is taken byKhyber Pakhtunkhwa, Balochistan, Gligit Baltistan, and Azad Jammu and Kashmir. The SBP report uncoversan overall decline in SME financing was observed, which fell 20%.
The SME sector contributes 60% of GDP and over 70% of total employment in low-income countries (LIC); while they contribute over 95% of total employment and about 70% of GDP in middle-income countries Surprisingly, more than 90% industrial units in the country are small SMEs. 84% of the SMEs have annual revenue of less than Rs0.5 million (DFR 2008). Total Numbers of Economic Establishments | 3 .2 million | Total Numbers of SMEs | 99 % of all enterprises | (Along with Agriculture) Contribution in Employment | 90 % | Total % of Non-Agricultural Workforce (emp. in SMEs) | 78 % | Average No. of Employees in 99% of SMEs | 1-10 persons | Share in Export Earning