USAID SMEA Quarterly Report
USAID Small and Medium Enterprise Activity
Annual Progress Report October 1, 2018 to September 30, 2019
Submission Date: October 30, 2019
This report was produced for review and approval by the United States Agency for International Development / Pakistan (USAID/Pakistan). It was prepared by Chemonics International Inc.
JULY 2008 1
USAID SMALL AND MEDIUM ENTERPRISE ACTIVITY (SMEA)
ANNUAL PROGRESS REPORT OCTOBER 2018 – SEPTEMBER 2019
Contract No. AID-391-C-17-00003
DISCLAIMER
The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States government.
CONTENTS
Contents ...... i Acronyms ...... ii SMEA at a glance ...... 1 Executive Summary ...... 2 Key Results ...... 6 Program Updates ...... 10 Objective 1: Improved Business Enabling Environment ...... 10 Objective 2: Improved Economic Performance of Focus Enterprises ...... 21 The Challenge Fund ...... 31 Monitoring and Evaluation ...... 45 Problems and Solutions ...... 52 Best Practices ...... 55 Success Stories ...... 56 Financial Report ...... 62 Annex 1: Disaggregated Data ...... 65 Annex II: List of Deliverables Submitted to USAID ...... 77
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ACRONYMS
ACS Additional Chief Secretary AMEP Activity Monitoring and Evaluation Plan BEE Business Enabling Environment BDS Business Development Support BDSP Business Development Service Provider BOI Board of Investment CE Competitiveness Enhancement CF Challenge Fund CMMI Capability Maturity Model Integration DMA Digital Marketing and Advertising EOI Expression of Interest EPD Environment Protection Department ERP Enterprise Resource Planning FATA Federally Administered Tribal Areas FTE Full Time Employment GB Gilgit Baltistan HACCP Hazard Analysis and Critical Control Point HMIC Highfield Manager In-Charge Course ICT Information and Communications Technology ICK Idea Croron Ka ICRU Investment Climate Reform Unit ISO International Organization for Standardization KP Khyber Pakhtunkhwa LOE Level of Effort MoC Ministry of Commerce NMDs Newly Merged Districts OEM Original Equipment Manufacturer
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P&D Planning and Development PET Polyethylene Terephthalate PHMA Pakistan Hosiery Manufacturing Association PKR Pakistani Rupee PRGMEA Pakistan Readymade Garments Manufacturers Exporters Association PSI Private Sector Investment PTV Pakistan Television RFP Request for Proposals SBP State Bank of Pakistan SME Small and Medium Enterprises SMEA Small and Medium Enterprise Activity SMEDA Small and Medium Enterprise Development Authority SSIC Sindh Small Industry Corporation STO Sub Task Order STPF Strategic Trade Policy Framework TEC Technical Evaluation Committee UNDP United Nations Development Program USD United States Dollar USG United States Government USAID United States Agency for International Development WCCI Women Chambers of Commerce and Industries WLBs Women Led Businesses
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SMEA AT A GLANCE
Project Data Sheet
Reporting Office USAID Economic Growth and Agriculture Office Country Pakistan Project Name USAID Small and Medium Enterprise Activity (SMEA) Prime Managing Chemonics International Inc. Contractor Subcontractors Semiotics Consultants (Pvt.) Ltd. J.E. Austin Associates Inc. Contract Number Contract No. AID-391-C-17-00003 Total Contract Value USD 34,836,223 Key Program Dates Project’s Implementation December 1, 2016 – November 30, 2021 Period SMEA Goal To improve the competitiveness of Pakistani SMEs.
SMEA Objectives Objective 1: Improved Business Enabling Environment (BEE) and Sub-Objectives Sub-objective 1.1: Improved Government of Pakistan’s ability to develop and implement reforms of policies, laws, and regulations Sub-objective 1.2: Strengthened private sector and civil society engagement in policy-making Objective 2: Improved Economic Performance of Focus Enterprises Sub-objective 2.1: Improved economic performance in select sectors. Sub-objective 2.2: Improved technological readiness and innovation Sub-objective 2.3: Increased access to markets Sub-objective 2.4: Increased access to finance Sub-objective 2.5: Enabled women SMEs run profitable businesses
Geographic Focus: Nationwide, Pakistan
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EXECUTIVE SUMMARY
In line with USAID’s development objective to support private sector-led economic growth in Pakistan, during FY 2018-19 USAID Small and Medium Enterprise Activity (SMEA) continued to support Small and Medium Enterprises (SMEs) across the country by expanding its programmatic outreach to achieve long-term development results. The project implemented activities to support the federal and provincial governments to strengthen the business enabling environment (BEE) for SMEs, enhance their competitiveness through training and provision of business development services, and helped SMEs in turning their creative ideas into innovative solutions through its Challenge Fund (CF) grants.
This Annual Report, covering the above-mentioned period, highlights the progress and results achieved. It provides an overview of programmatic activities in six regions across SMEA’s six targeted sectors, and explores priority areas which SMEA has identified as having potential to be further strengthened during the next reporting year.
The development results of SMEA’s interventions are significant, not only in terms of increased outreach, but also with respect to the direct impact in creating new jobs, increasing sales revenues, and private sector investments (PSI). More than 1,600 SMEs have benefitted from SMEA’s assistance across the country, including 27 percent women- owned/led enterprises from different sectors. As a result, 2,630 (1,911 male and 719 women) full-time or part-time employment opportunities were created. When converting these numbers into Full Time Equivalent (FTE), per USAID requirements, SMEA helped create 862 FTE jobs. This is a significant contribution considering the current sluggish conditions prevailing in the Pakistan economy, with SMEs bearing the biggest brunt of the slowdown.
Sales and exports by partner SMEs increased significantly after receiving Business Development Services (BDS) support. SMEs receiving grant funding and BDS support recorded a 32 percent increase in the overall sales and a 25 percent increase in export sales. The value of incremental sales attributable to SMEA is USD 1.38 million, including USD 0.68 million incremental exports. This value is expected to increase significantly in the future, as data of only 62 SMEs who received BDS support was recorded and analyzed by the time of this report.
A key indicator of our success is the increase in PSI leveraged through cost-share and private investments. During this reporting period, SMEs invested USD 1.3 million as PSI in their businesses to expand and improve their production and marketing operations. This would have been much higher had Pakistan’s economic growth not slowed down during the reporting year. Increasing interest rates, a falling exchange rate of PKR, and double digit inflation resulted in decreased investments by SMEs.
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The results in this report can be attributed to the approaches introduced to bring about innovation. Introduction of new technologies and expanding to new markets and customers are another key area of success for SMEA-supported SMEs. From a total of 600 surveyed SMEs, 66 percent reported using new technologies (digital marketing, e- commerce platforms or management practices) as a result of SMEA’s assistance. Similarly, 35 percent of SMEs expanded their businesses to new markets or customers as a result of newly acquired marketing and business management skills and certifications through the project. A productivity analysis of SMEA-assisted SMEs reveals that the productivity of these SMEs increased by 8.48 percent. SMEA used increased sales per employees as a proxy indicator to assess this result. The financial worthiness of SMEA-assisted enterprises also increased significantly, as 34 percent of surveyed SMEs are now more competitive to access financial resources or investments from the formal or informal financial sector.
During the year, increased focus was given to expand SMEA’s outreach in Khyber Pakhtunkhwa (KP) and the Newly Merged Districts (NMDs) of erstwhile Federally Administered Tribal Areas (FATA). From a total of 1,291 SMEs that received BDS services, 23 percent are from KP. Similarly, from a total of 1,379 individuals trained, 290 were from KP and NMDs. A detailed analysis is provided in the key results section of this report. SMEA continues to increase its focus to expand its outreach in KP and NMDs through the three components, under the newly approved Year 3 work plan.
Despite a drastic reduction of economic activity in the country, a decrease in GDP growth rate from 5.8 percent to 3.2 percent, and an increase in unemployment, SMEA’s interventions have created a positive impact and are expected to act as a catalyst for economic revival of SMEs in the country in the coming years.
The report also highlights the key lessons learnt, best practices adopted, and challenges faced by SMEs and SMEA during the reporting year. A snapshot of component-wise progress is provided below.
Challenge Fund Through its Challenge Fund (CF), SMEA awarded 45 grants with a collective value of USD 1.5 Million. Through these grants, SMEA anticipates creating 1,500 FTE jobs, revenue generation of USD 7.5 million, direct PSI of USD 1.5 million, and exports worth USD 1.9 million, with direct benefits to more than 2,500 SMEs. As per these promising projections, the grantees will collectively generate USD 10 for every dollar allocated through the grants.
A total of 10 SME Growth Grants and 10 Innovation Grants successfully closed during this reporting period. The 20 completed CF grants created 685 FTE jobs, generated a revenue of USD 350,000, and incremental exports worth USD 43,140. These grants also generated PSI worth USD 0.6 million.
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SMEA also provided an opportunity to its existing grantees to submit a follow-on grant application for the larger Scale-up Grant during this reporting period. Following pitch sessions, risk assessments, and USAID’s approval, the project awarded Scale-up Grants to Unicorn Black, Vceela, and Darewro.
Competitiveness Enhancement During this reporting period, the CE Component posted significant increase in SME support in terms of overall numbers and geographic and sectoral coverage. The project supported 1,291 SMEs during the year, including 229 BDS support cases, while the remaining enterprises were trained in various sales revenue enhancing technical areas. Due to a surge in demand for digital marketing tools and skills, Information and Communications Technology (ICT) was the most productive sector, contributing almost half of both the training and BDS support numbers. 27 percent of the supported SMEs were women-led businesses (WLBs). To strengthen the supply side of services, SMEA contracted 13 new Business Development Service Providers (BDSPs) to provide BDS support cater to a continuously growing number of enterprises. This increase in BDSPs also helps ensure greater price competition among service providers and gives SMEs a greater degree of decision-making power while negotiating with multiple BDSPs.
Business Enabling Environment Activities
Building upon work from the previous reporting period and based on the project’s outreach efforts, SMEA worked closely with the Federal Government through the Small and Medium Enterprise Development Authority (SMEDA) to complete the revision of Pakistan’s SME Policy. SMEA presented the revised SME Policy 2019 to the second National Steering Committee Meeting, which was chaired by Mr. Abdul Razzak Dawood, Advisor to the Prime Minister on Industry, Commerce and Investment. Following a detailed presentation and deliberations on proposed framework for policy, regulatory and institutional changes, the Committee expressed its gratitude for SMEA’s work and committed to take it forward for approval and implementation by the government.
Responding to an earlier request by the Ministry of Commerce, SMEA provided recommendations for E-commerce promotion for inclusion in the Ministry’s E-commerce Policy and the Strategic Trade Policy Framework (STPF) 2019-23, specifically for encouraging the use of E-commerce platforms by SMEs. The E-commerce was approved in a recent meeting of the federal cabinet chaired by the Prime Minister.
To provide technical assistance to the State Bank of Pakistan (SBP), SMEA with the help of local and international experts began developing a framework for regulating Fintechs in Pakistan, along with a sandbox design to complement it. SMEA’s work addresses methods to catalyze and bootstrap the development of the growing but struggling Fintech ecosystem in Pakistan. It includes recommendations on new policy frameworks and is in line with evolving global best practices.
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SMEA began conducting a rapid assessment of KP’s NMDs to identify and explore prospects related to policies, regulations, and institutional reforms and to examine active economic sectors with potential for SME-led growth. SMEA’s review of KP’s Investment Policy and Legal and Regulatory Review of Minerals received official endorsement from the Planning and Development Department of KP.
SMEA successfully completed formulation and submission of the Investment Policy Framework to the Government of Punjab and received an official sign-off on the proposed policy from the Planning and Development Department. The framework highlights key policy principles that the Government must embrace to mobilize investment in the province. The Investment Climate Reform Unit (ICRU) adopted this policy framework for furtherance of advocacy with government in order to pursue a formal approval through the Provincial Cabinet.
Similarly, SMEA’s institutional review of Sindh Small Industry Corporation (SSIC), which provided a gap analysis of SSIC’s performance and its goals, and the recommended options for restructuring the organization was accepted by the Government of Sindh.
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KEY RESULTS
New employment/Jobs created SMEA’s overarching goal is to improve the competitiveness of SMEs in targeted sectors. The key performance indicator towards the Figure 1: Breakdown of new jobs created by goal is to create new employment/job gender opportunities in partner SMEs that are receiving project assistance. Business development services provide the essential impetus for increased sales and productivity growth resulting in creation of new employment opportunities for young Pakistanis. During this reporting period, more than 2,630 (1,911 male & 719 female) new job opportunities were created, including both full time and part time employment. SMEs receiving business development services, grants or technical assistance have shown tremendous potential to create new jobs.
Figure 2: Breakdown of FTE Job Creation by After converting these jobs to FTE gender equivalent figures, 862 FTE jobs were created in SMEs receiving SMEA support. Keeping in view the potential of SMEs in ICT, Hospitality, Logistics, and Agri-business sectors, SMEA’s CF Grants specifically generated a large number of new jobs in technology- based start-ups. With the slow down of economic activity, decreasing GDP, and increasing unemployment in the country during the reporting period, SMEA’s interventions have created a positive impact and are expected to act as a catalyst for economic revival of SMEs in the country.
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Increased Women participation in Economic Growth Activities SMEA has always given Figure 3: Breakdown of Women-led SMEs by Province priority to reach out to % of Women-led SMEs women-led SMEs across Pakistan to help strengthen Sindh 20% Balochistan their businesses. The project 31% continuously aims to include more women-led businesses in the productive sphere. Punjab From the total number of 19% SMEs targeted, 27 percent of Federal enterprises are women- Khyber Capital Pakhtunkhwa Territory led/owned. SMEA planned 12% 18% interventions by engaging women chambers of commerce and industry, women trade associations, and women entrepreneur networks. The project provided these women-led SMEs with BDS support to acquire digital marketing and business planning skills and help improve their management systems. To date, 431 women-led SMEs have received SMEA’s support across the country.
Incremental Sales attributed to SMEA SMEA’s technical and financial assistance is meant to foster growth in sales/revenues of enterprises. Increase in sales is critical for the growth of SMEs and in the creation of new jobs. The project recorded an overall increase of 32.1 percent in sales while comparing the post intervention sales with baseline sales from the previous year. The value of incremental sales is USD 1.3 Million due to SMEA interventions. The healthy performance of SMEA-assisted SMEs proves the effectiveness of strategies and targeted demand-driven interventions of the project. This increase is significantly higher compared to the overall economic slowdown in the country. This is largely because the project has supported many new innovative solutions in the ICT, Hospitality, Logistics, and other sectors of women-led/owned businesses, which had smaller value of sales prior to receiving assistance and grants through SMEA. Figure 4: Value of incremental sales disaggregated by gender Given the huge variation in VALUE OF INCREMENTAL exchange rates (US dollar to SALES Pakistani rupee) and a resultant Female- $258,932 depreciation of Pakistani rupee Owned by more than 30 percent during the year, the overall performance of SMEA-assisted Male-Owned $1,040,092 SMEs is quite significant. The sales volumes have increased
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significantly in start-ups, specifically in the ICT and Hospitality sectors. Sales of SMEs in the Hospitality sector increased by 35 percent. Logistics and Packaging sector sales have increased by 48 percent, while ICT sector organizations increased their sales by 45 percent. Lastly, the percentage increase in sales revenues of women-led/owned SMEs in particular, 78 percent, has been especially outstanding. Factors such as improved technology-based marketing, acquiring international certifications and adoption of improved management practices have greatly helped these small businesses to grow.
Incremental Exports attributed to SMEA With technical and financial assistance from SMEA, beneficiary SMEs have increased their export sales by 25 Figure 5: Summary of incremental exports by sector percent. The volume of Sector-Wise Incremental Exports (% increase) export sales has increased from USD 2,446,275 to USD 3,114,402. With SMEA’s assistance, the value of incremental exports is
USD 668,128. This 42.76% increase in sales revenue of SMEs engaged in 25.32% 23.25% 25.27% exports proves the 19.55% effectiveness of SMEA’s targeting strategies, especially the support Hospitality ICT Textiles Agribusiness Overall extended to SMEs in acquiring certifications and enhancing their outreach through digital marketing. ICT SMEs grew their exports by 42.8 percent, while the Hospitality sector managed to increase visitor exports by 25.3 percent. Agri-business and Textile sector SMEs also grew significantly during the reporting period. The rupee depreciation also boosted the exports to a certain level, as SMEs in export business are more competitive to reap the benefits from the rupee-dollar parity.
Policies/Regulations/Procedures Approved with SMEA Assistance SMEA’s BEE component continued to help create a favorable business enabling environment in Pakistan by working with the federal and provincial governments in policy revision and development related to the SME sector. During this process, SMEA engaged public sector organizations, private entities, SMEs, and large businesses in the policy formulation process. Through SMEA’s technical assistance, 12 policies/regulations and administrative procedures have been adopted by the government and are in different stages of implementation. Significant policies include the National SME Policy 2019; Ministry of Industries and Production’s E-commerce Policy and the Strategic Trade Policy Framework (STPF) 2019-23; Review of KP’s Investment Policy; Legal and Regulatory Review of Minerals Sector and its subsidiary regulations; and the Investment Policies of
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Sindh and Punjab. Furthermore, SMEA reviewed these reforms in order to make them consistent with World Bank benchmarks on doing business.
Private Sector Investment by SMEs SMEA-supported Figure 6: Summary of Private Sector Investment by Sector in USD SMEs leveraged PSI of around USD 1.3 million during the reporting period. The investments made by businesses include the cost- share made by the partner SMEs to access business development services from local BDSPs, new infrastructure development costs, new equipment, hardware, and software costs. ICT and Hospitality sector SMEs made significant contributions in their businesses. SMEA expects significant increase in PSI during the coming year, as increased number of grantees who have recently started receiving interventions through SMEA (in the last quarter July – September 2019), will report their private investments in the next quarter.
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PROGRAM UPDATES
The following section of this annual report presents key SMEA programmatic activities. These activities fall under the following two SMEA objectives, as well as the Challenge Fund:
Objective 1: Improved Business Enabling Environment Objective 2: Improved Economic Performance of Focus Enterprises
OBJECTIVE 1: IMPROVED BUSINESS ENABLING ENVIRONMENT
1.1: IMPROVED GOP ABILITY TO DEVELOP AND IMPLEMENT REFORMS OF POLICIES, LAWS, AND REGULATIONS
BEE Activities with the Federal Government
Revision of Pakistan’s SME Policy
During this year, SMEA worked closely with the Federal Government and SMEDA to successfully complete the revision of Pakistan’s SME Policy. The work was based on an extensive diagnostic analysis of the existing landscape of SMEs and a continuous consultative process with SMEs, the private sector, and relevant government stakeholders. The objective of the policy is to trigger SMEA presenting the revised SME Policy 2019 to the National geographically and socially inclusive Steering Committee in Islamabad. Photo credit: SMEA private sector growth, generate countrywide employment, improve business competitiveness, and increase exports. The policy addresses core SME development issues including the policy and regulatory framework and the demand/supply market constraints restraining SME growth. It includes a revised SME definition and recommendations for a comprehensive institutional framework for implementation. Once implemented, the National SME Policy 2019 will serve as Government of Pakistan’s basic strategy for providing support to catalyze the growth of the SME sector.
The revision exercise process began with a comprehensive literature review and evidence gathering, which included quantitative data and qualitative information gathered through structured surveys and focused group discussions with more than 200 SMEs from different sectors across the country. This information helped corroborate and update information on the most binding constraints for SME growth. Consultative sessions with relevant
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provincial and federal departments and agencies, analyses of datasets, a study of the experiences of other countries, and discussions with industry leaders, relevant experts, and economists working in the area of SME development all helped inform the development of this policy. To ensure efficient coordination, SMEA and SMEDA had formed a working group, which met regularly to discuss progress and align expectations.
SMEA presented the revised policy at the second National Steering Committee Meeting on the SME Policy, which Mr. Abdul Razzak Dawood, Advisor to the Prime Minister on Industry, Commerce, and Investment chaired. The Committee appreciated SMEA’s work on the policy and expressed their gratitude to USAID for assistance in the work undertaken and committed to take it forward for approval and implementation. Mr. Dawood highlighted that the following key recommendations should be implemented by the Government on an urgent basis with support from SMEA to enhance the state of SMEs in Pakistan:
• Setting up an SME council • Reform of redundant laws through a regulatory guillotine • Inclusion of an SME quota in public procurement, henceforth reforming procurement laws • Setting up a matching grant fund for business development services • Setting up limited liability provisions to facilitate equity financing and protection of minority shareholders.
Once implemented, the National SME Policy 2019 will serve as the Government of Pakistan’s basic strategy for providing support to catalyze growth of the SME sector. Moving forward, SMEA will continue to make advocacy efforts with the Ministry of Industries and Production for the approval of the policy from the federal cabinet and its subsequent roll-out.
Assistance to the State Bank of Pakistan
One of the major focus areas for SMEA is to improve access to finance for SMEs across Pakistan. To achieve this objective, the project aims to increase and support the availability of alternate financial service providers such as Fintech companies. While the provision of financial services is dominated largely by banks in Pakistan, there is little use of accounts and non-cash payments. This presents a huge opportunity for Fintechs to develop innovations, introduce new business models, and provide services currently not provided by banks and other large financial institutions. This becomes particularly important in the case of SMEs, which are inherently financially strapped and look for alternate financial service providers other than banks. In Pakistan, there are currently identifiable issues constraining this potential, inter alia, lack of a predictable, fair, and enabling commercial environment and regulatory framework for Fintechs.
During this year, based on a SMEA proposal, SBP requested technical assistance for developing a regulatory framework for Fintechs in Pakistan and a sandbox design approach
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to complement it. SMEA initiated implementation of this activity during this reporting period by bringing on board a local and an international fintech consultant. On July 5, 2019, the project met with officials from the Payments Systems Department at SBP and discussed the existing Fintech regulatory structure and the need for drawing up a regulatory framework. Issues related to categorization of Fintechs, bottlenecks in the current regulatory environment, varied Fintech products and services’ impact on financial inclusion, access to finance for SMEs, existing interlinkages between SBP and Securities and Exchange Commission of Pakistan for creating ease of doing business, company categorization for Fintech firms, and regulatory approaches in practice worldwide were also discussed to better understand SBP’s perspective, being the prime regulator of financial matters in the country. Following a thorough review of literature on the subject and interactive meetings and discussions with industry stakeholders including regulators, banks, incubators, accelerators, and Fintechs, the consultants finalized an ‘Inception Report’ and a ‘Pakistan Fintech Eco-system Assessment’ as part of the initial deliverables. From July 22 to August 1, 2019, SMEA worked with the international consultant, Dr. Leon Perlman, to help develop a regulatory framework suitable for the Fintech eco-system in Pakistan. The team held multiple technical meetings with SBP and other market players to dig deeper into the issues and for Dr. Perlman to analyze the regulatory environment vis-à-vis international best practices. As a follow-up to these discussions, SMEA organized a ‘Fintech Workshop’ in Karachi, which was attended by public and private sector stakeholders and facilitated by Dr. Perlman. Following the successful completion of Dr. Perlman’s exploratory and brainstorming visit, he submitted his report on ‘Fintech Regulations in Pakistan’. SMEA is currently reviewing the report and once finalized, will present it to the SBP for its review and feedback. The project will follow this with the second phase of this activity during the next year, which will include a regulatory sandbox design and an implementation plan for SBP based on the proposed ‘principles and functional1’ based approach for regulating Fintechs in Pakistan.
Support for promotion of e-commerce – Ministry of Commerce
The Government of Pakistan’s Ministry of Commerce has been making concerted efforts to promote e-commerce, improve export competitiveness of domestic industry, and enhance market access for SMEs in Pakistan. During this year, the Ministry requested SMEA to develop recommendations for e-commerce promotion, particularly in the context of SME sector, for inclusion in the Ministry’s E-commerce Policy and the STPF 2019-23. SMEA, making use of its in-house technical expertise and experience with SMEs, developed a chapter on the ICT sector, focusing on recommendations for E-commerce promotion and submitted it to the Ministry.
1 The principles-based approach is risk-based and sets several principles or guidelines for entities to follow, allowing regulators (and entities) to adapt to changing market conditions and the emergence of new technologies, whilst still addressing systemic, anti-money laundering and consumer protection risks and concerns. The functional approach provides a framework for who is being regulated, placing entities in a categorization that describes their functional activity (vertical) rather than by the type of entity.
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The underlying theme in the recommendations is to cater to both domestic and cross- border e-commerce and encourage the enhancement of key enabling factors such as competitiveness, compliance to standards, policy environment, and market access. The recommendations proposed include registration of e-commerce businesses under a specialized regime, enabling linkages through supply chain financing, cross border linkages and digital credit, localization of digital infrastructure to increase access control and cost efficiency, improving delivery infrastructure through service providers, and protection of customers and sellers.
Following the submission of these recommendations, SMEA met with officials from Ministry of Commerce to discuss the Ministry’s feedback and to determine a way forward. The Ministry shared its vision of developing a comprehensive e-commerce policy for Pakistan for which it had already done some groundwork and had also engaged with stakeholders in the form of different working groups on topics related to taxation, regulations, payment infrastructure, logistics, and cross-border transactions. The Ministry found SMEA’s recommendations very relevant and useful for inclusion in the e-commerce policy draft, which the government plans to finalize in the near future.
BEE Activities in Khyber Pakhtunkhwa
Review of the Investment Policy
At the request of the Government of KP, SMEA carried out a review of KP’s Investment Policy to highlight various insufficiencies. The review suggested possible areas that could help inform revision of the policy, including the selection of strategic sectors based on economic, social, and environmental factors; design of appropriate investment incentives for investors; prioritizing policy actions; appropriate measures for investment promotion; facilitation and aftercare; need for institutional reforms; policy implementation support; and monitoring mechanism. As part of the review. SMEA also made available contours of a revised investment policy for ready reference and further working by the provincial government. Following the completion and submission of this review to the government, on October 16, 2018, SMEA held a follow-up meeting with Mr. Shahzad Bangash, Additional Chief Secretary, Planning and Development Department, to discuss the government’s feedback. SMEA received a formal acknowledgement of this work from the Government of KP on October 30, 2018.
Legal and Regulatory Review of Minerals Sector
SMEA conducted a legal and regulatory review of its minerals sector with an objective to make recommendations for improvement in the policy, regulatory, and institutional frameworks governing the sector, with a special focus on SMEs. The project undertook a holistic review of the existing policies, provision of equitable opportunities, creation of an enabling business environment for the local and international community, promotion of local and foreign direct investments, and simplification of procedures to ensuring transparency, merit and improved governance mechanism in the sector. In a letter dated
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October 30, 2018, the Government of KP acknowledged SMEA’s support and put forth a follow-on request for amending the Minerals Governance Act, 2017 and Mine Safety and Regulation Act, 2018. Based on this request, SMEA held meetings with relevant officials from the Mines and Minerals Department, Inspectorate of Mines, and Commissionerate of Mines, to discuss various lacunae in these Acts and to share international best practices for making these promotional and business friendly. The Department’s views on efficient management and marketing of minerals and increased footprint of the private sector to encourage investments were particularly gauged in these meetings. Based on the analysis and exchange of views with the government, SMEA submitted a draft report to the Department. Based on the Department’s feedback and any further technical inputs, the project will finalize this report in the next reporting period.
Continued Dialogue and Deliberations with the Tourism Department
KP’s Tourism sector has the potential to unleash significant economic gains for the province, given that concerted efforts are made to create a conducive business environment where progressive, business friendly, and private sector responsive policies and regulatory frameworks are promoted. To better understand the challenges that the Government of SMEA staff discussing support that it can provide to the Government of KP to KP has been facing in the augment KP's Tourism sector. Photo credit: SMEA Tourism sector and to identify potential areas of technical assistance, SMEA held a series of meeting with senior officials from the Department of Tourism during this year. On August 6, 2019, SMEA’s senior management met Atif Khan, Minister for Tourism, Government of KP and his team in Peshawar. The purpose of the meeting was to brief them on SMEA’s ongoing activities in the province and to discuss and finalize areas of technical assistance that the project can provide to the Government of KP’s Tourism Department and SMEs from the hospitality sector. Following a presentation by SMEA on its proposals for regulatory and institutional reforms for KP’s Tourism industry, Mr. Khan provided an overview of his vision for promoting tourism in the province, especially in NMDs. He explained that the Tourism Department was exploring opportunities to promote tourism with a focus on generating revenue and creating employment opportunities, especially for youth. He also mentioned policy and regulatory challenges that the Tourism Department currently faces and expressed keen interest in SMEA’s proposals, which included:
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• Development of a Tourism sector Investment Plan along with a legal framework. • Development of special policies and plans for key tourist areas, while identifying support and assistance packages required for SMEs in these areas. • Management of youth- and women-focused entrepreneurship programs in KP and the NMDs, with a major focus on ease of access to finance and capacity building services.
Following this meeting, on August 22, 2019, SMEA received a formal letter from the Tourism Department, requesting technical assistance from the project. The project will begin providing technical support to the Department during the next year.
Rapid Market Assessment and Identification of Opportunities in the Newly Merged Districts (NMDs)
The government’s 25th Constitutional Amendment ended the separate status of erstwhile Federally Administered Tribal Areas (FATA) and merged it with Khyber Pakhtunkhwa, resulting in NMDs. Years-long insurgency, displacements, and prolonged rehabilitation necessitate the revival of the economic activities in these areas. During this reporting period, SMEA began conducting a rapid assessment of NMDs to identify and explore prospects related to policies, regulations, and institutional reforms and to examine active economic sectors with potential for SME-led growth. The project brought on board a team of policy, institutional, and sector experts to undertake this activity under SMEA’s guidance. Starting from a comprehensive stock-taking and review of literature on erstwhile FATA, economic reforms in KP, pre and post-merger challenges for market integration, business environment and other administrative and socio-political constraints, the consultants corroborated their initial findings through one-on-one consultations with key public and private sector stakeholders. To understand and map out the prevalent business environment, status and extension of applicable laws, relevant institutional remits, rules of business and market dynamics, and other on-ground realities in these merged districts, the team met with key public and private sector stakeholders. This included meetings with SMEDA, Planning and Development Department, NMDs Secretariat, Accelerated Development Unit, Board of Investment, Finance Department, Industries Department, Tribal Area Chamber of Commerce, business community, and SMEs. SMEA will complete this assessment during the next quarter.
Based on ongoing coordination between USAID and other development partners, SMEA and USAID staff met with officials from the United Nations Development Program (UNDP) in Islamabad to discuss their ongoing activities in NMDs, to avoid duplication of efforts, and explore synergies for economic reforms in the merged areas. SMEA also participated in a workshop organized by SMEDA and UNDP to plan for initiatives that can be a part of UNDP’s FATA Economic Revitalization Program in NMDs. UNDP is implementing this program for a duration of one year (July 2019 to July 2020).
BEE Activities in Punjab
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Punjab Investment Policy Framework
At the request of the Government of Punjab, SMEA provided technical assistance to the Planning and Development (P&D) Department for developing an investment policy framework for Punjab. The Government of Punjab has prioritized investment mobilization as a key driver for economic growth in the province, expanding productive capacity and promoting job creation. Not only does the provincial government need appropriate incentives to attract domestic and foreign investors, it also needs to balance investor demands with public interest. The technical assistance from SMEA provided the provincial government with a policy framework for investment mobilization in Punjab, including legal and institutional analysis, and presented the government with a policy statement that can serve public interest. The framework specially focuses on SMEs and maps out the needs of various departments for investment promotion, facilitation, and after-care. On January 9, 2019, SMEA presented the report to Mr. Habib Ur Rehman Gilani, Chairman P&D, in the presence of representatives from the Investment Climate Reform Unit. Based on the Chairman’s feedback, SMEA made further additions to the report by identifying provincial reform items for ease of doing business and developing an implementation matrix for the government to carry forward this policy. In acknowledgement of the work done by the project, SMEA received an official letter from the P&D Department, which records and appreciates SMEA’s technical assistance.
Environmental Standards for the Leather Value Chain
Based on another request from the Government of Punjab, SMEA assisted the Environment Protection Department (EPD) to develop environmental standards for the leather sector value chain, which spans the market from animal husbandry and slaughtering to leather processing (tanning), leather goods manufacturing, and export. SMEA completed the report during this year, which includes an analysis of the entire leather value chain for the purpose of environmental performance and notes inefficiencies especially at the end of tanneries. On January 31, 2019, the project shared its findings with Dr. Zafar Nasrullah Khan, Secretary, EPD, and pointed out shortcomings both at the regulator (EPD), as well as the industry’s end, which has led to the current state of affairs. SMEA discussed various issues in environmental practices and proposed revisions in the legal framework, industry-specific relevant parameters and environmental quality standards, and implementation plans. The proposed solutions have been distributed over short-, medium- and long-term horizons. For example, in the short-term, under certain conditions, different allowable effluent discharge limits may be considered for tanneries of different sizes, with stricter enforcements/limits enacted over time. In the long-term, the study concludes that due to financial and technical constraints of tanneries’ waste treatment, relocation of all tanneries into specially designed tanneries zones is the only sustainable solution. The Secretary appreciated SMEA’s efforts in undertaking this activity and accepted the recommendations put forth.
BEE Activities in Sindh
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Technical Assistance for Restructuring the Sindh Small Industries Corporation (SSIC)
Based on earlier meetings and a request from the Government of Sindh, SMEA conducted a diagnostic analysis of the Sindh Small Industries Corporation (SSIC), to help restructure and reform the organization to better serve the needs of micro, small, and medium enterprises. SMEA presented the provincial government with evidence-based options to reform the SSIC. The project studied SSIC’s role and structure to provide an analysis of where SSIC needs reform, suggestions for restructuring, and capacity enhancement for business process re-engineering and improved inter-government coordination and delivery mechanisms. The diagnostics also provided a gap analysis of SSIC’s performance and its goals, highlighting areas where SSIC had achieved its objectives, and the challenges it faced. Based on this evidence-based impact assessment, analysis of international best practices, and understanding of the needs of the local SMEs through relevant stakeholder consultations, the analysis proposed viable recommendations for reform to enable SSIC to promote SMEs in the province. On February 11, 2019, SMEA presented the ‘Diagnostic Study for Restructuring SSIC’ to Mr. Abdul Haleem Sheikh, Secretary, Industries Department and his team. The Secretary and SSIC management appreciated SMEA’s work and expressed that the recommendations were useful for the revival of SSIC.
Technical Assistance for Developing Sindh’s Investment Policy Framework
In a letter dated May 15, 2019, the Government of Sindh requested technical assistance from SMEA to develop an Investment Policy for the Province which could help mobilize local and foreign investments in the region, with a special focus on the SME sector. This activity entails evaluating and providing recommendations on relevant provincial policy areas SMEA staff meeting with officials from the Government of Sindh on that impact investment, the Investment Policy Framework. Photo credit: SMEA particularly investment promotion, facilitation and the business environment. It aims to identify bottlenecks to local and foreign investments in Sindh, including structural and institutional impediments. SMEA held a kick-off meeting this year with the Sindh Investment Department, to formally introduce SMEA’s team of consultants and discuss initial matters related to this activity. The Sindh Investment Department, led by Mr. Ahsan Ali Mangi, was briefed on the work being done by SMEA and how the proposed Sindh Investment Policy Framework could complement an efficient business enabling environment in Sindh. The Secretary appreciated SMEA’s initiatives, gave an overview of prevalent economic issues in Sindh, and explained how industrial development has long been a matter of concern for the Government of Sindh. Further discussion considered the government’s perspective on
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investment generation, promotion, and flight of capital from Sindh over the last few years. The participants also highlighted that in order to capitalize on the growth potential of sectors such as Agri-business and Processing, Fisheries, Hospitality, and IT, a special emphasis should be laid on creating opportunities for SMEs to integrate into the supply chain of large enterprises and incentivizing activities within the sectors while keeping the policy framework sector-agnostic. SMEA will continue to implement this activity in the next year and upon completion, will pass it on for further necessary action by the provincial government.
BEE Activities in Balochistan
During this reporting period, SMEA held a series of meetings with senior officials from the Government of Balochistan to discuss and identify priority areas where the provincial government requires technical support.
As part of these deliberations, SMEA first met with Mr. Jam Kamal, Chief Minister of Balochistan and his team in Quetta. The purpose of the meeting was to brief the Chief Minister on SMEA’s various initiatives and the technical assistance Mr. Jam Kamal, Chief Minister Balochistan (second from left) meeting with SMEA that the project has staff in Quetta, Balochistan. Photo credit: Chief Minister's Office provided to the other provinces. Mr. Kamal took a keen interest in SMEA’s work to create a conducive business environment in Pakistan and expressed that a vibrant and economically prosperous Balochistan was the government’s vision, for which the growth of SMEs was critical and the government was committed to undertaking economic reforms for easing out business constraints, with a special focus on creating employment opportunities for youth. During the meeting, the Chief Minister directed his team to identify technical needs for supporting SME growth in the province by means of policy and regulatory reforms. In follow-up discussions, the Chief Minister’s team identified the following areas for technical assistance:
• Developing an investment policy for Balochistan • Drafting a provincial tourism policy • Developing an agri–business policy
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• Creating linkages between the Balochistan Information and Technology Department and the Punjab Information and Technology Board for provincial self- sufficiency in terms of IT expertise.
As a follow-up to the meeting with the Chief Minister, SMEA’s senior management also met with other officials from the Government of Balochistan including Mr. Abdur Rahman Buzdar, Additional Chief Secretary (ACS), Planning and Development; Mr. Ismail Ibrahim, Deputy Secretary Tourism; Mir Rab Nawaz Khetran, Chief Foreign Aid; Mr. Kamber Dashti, Department of Agriculture; and Mr. Inam Ul Haq, Director General, Department of Agriculture. SMEA briefed the ACS and his team on technical assistance that the project has provided to other provinces. The ACS took keen interest in SMEA’s technical activities and achievements thus far. Mr. Buzdar spoke about investment opportunities that various sectors of the province have and the interest of South East Asian and Middle Eastern companies to invest in the province. However, the absence of an investment policy has hampered the process of materializing these and other opportunities. As a result, the Government of Balochistan requested technical assistance from SMEA to formulate the provincial Investment Policy.
The ACS also highlighted weaknesses of SMEs in Balochistan and requested support to enhance their performance and competitiveness. In follow-up meetings with the Deputy Secretary for the Tourism Department and Director General Agriculture, the officials discussed untapped tourism and agriculture resources, which require robust policies to create economic activities and generate employment opportunities. Both these departments also requested technical assistance to develop their tourism and agri- business policies. The Tourism Department requested training assistance from SMEA through SMEA’s Business Development Service Providers’ network. Under this initiative, youth from provincial districts that have tourism potential and require hospitality services will be provided training to help find gainful employment or start their own businesses during the next year.
Based on these meetings and a formal request for technical assistance from Government of Balochistan’s Planning and Development Department, SMEA will prioritize and design technical assistance during the next year.
Other BEE Engagements
Board of Investment
During this reporting period, SMEA met twice with the Board of Investment (BOI). During the first meeting, the project presented its work on business enabling environment, ease of doing business, and the support provided to develop the Punjab Investment Policy. The Chairman was excited to note that SMEA had already identified and covered analytical work on some of the core BEE related areas which were in sync with Government priorities. During the second meeting, senior staff from USAID, including Mr. Jeff Goebel, Director, Office of Economic Growth and Agriculture (EGA); Mr. Gregory Leon, Deputy
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Director EGA; and Ms. Afsheen Shakoor, Project Management Specialist (COR for SMEA) also participated. The purpose of this meeting was to further explore opportunities of partnering with BOI for BEE reforms. Mr. Sharif provided an overview about BOI's plans for setting up a dedicated independent unit to work on issues related to ease of doing business in Pakistan, especially those related to international and domestic investors looking for profitable investment opportunities in Pakistan. He informed the participants that a specific role of this unit would be to facilitate small and medium-sized investors from the Pakistani diaspora looking to invest in Pakistan. Designed around BOI’s priority sectors and with counterparts in all the related federal bodies and provincial offices of BOI, the unit will work on creating linkages between government departments and investors and between large investors and SMEs. Referring to the previous communication that his office had had with SMEA and USAID, the Chairman requested USAID to assist BOI staff to bridge the gap of expertise through the provision of local experts until the new unit becomes functional. The experts would support the BOI staff in reengineering the process of investor facilitation in line with the BOI’s vision of setting up special economic zones, knowledge portal and technology-based solutions, and promoting ease of doing business by performing desk research of existing literature to prioritize reform initiatives for BOI. In response to this request, USAID proposed to provide technical support to the BOI to review/develop an implementation plan of a one-window operation for investment facilitation. This proposal, however, still awaits response from government.
Planned BEE activities for the next year (October 2019 - September 2020)
• Advocate for the SME Policy’s announcement and roll-out. • Assist with the institutional re-design and capacity building of SMEDA. • Finalize and provide technical assistance to SBP for Fintech regulations and sandbox design. • Provide technical assistance to the Tourism Department of KP for economic reforms in the tourism sector. • Design the Access to Finance Fund for SMEs in KP as part of the technical assistance to KP Finance Department. • Develop technical interventions for KP-NMDs based on findings of the rapid assessment. • Finalize and submit the Investment Policy to the Government of Sindh. • Provide technical assistance for economic reforms in Balochistan. • Advocate and follow-up with the Government of Punjab Government to implement the Investment Policy.
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OBJECTIVE 2: IMPROVED ECONOMIC PERFORMANCE OF FOCUS ENTERPRISES
2.1: IMPROVED ECONOMIC PERFORMANCE IN SELECT SECTORS
Engaging Business Development Service Providers (BDSPs) and SMEs
During this reporting period, SMEA contracted Figure 7: Summary of services provided by suitable BDSPs to provide BDS support to BDSPs project-registered SMEs. The contracted BDSPs provide various types of support, including technical trainings, process improvement consultancies, digital marketing 13% solutions, quality and international compliance certifications, marketing, branding, product development, and sales support across the 37% Pakistan (see figure). The project also initiated 20% the recruitment of top-tier certification bodies during this reporting period to serve as BDSPs and build the capacity of SMEs from SMEA’s target sectors. Based on the project’s BDS 30% model, SMEA received more than 148 Expressions of Interest (EOIs) from potential BDSPs against multiple rounds of advertised EOIs. From a total of 111 shortlisted applicants, ICT Solutions SMEA contracted a total of 13 BDSPs during the Certifications year to offer various demanded services by SMEs at the national level. Access to Market Activities Business Advisory To expand the market outreach of the BDS support initiative, the project posted multiple newspaper advertisements and organized market awareness sessions across Pakistan to increase the number of SME registrations. SMEA organized multiple outreach and awareness sessions and trainings for SMEs and BDSPs in collaboration with sector associations, chambers of commerce and industry, government bodies, and academia in all provinces and regions to disseminate the project- related information and support. During this reporting period, the project received more
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than 651 EOIs from SMEs for Figure 8: Sector and region-wise outreach of SMEA BDS support, and to date, SMEA has awarded Sub-Task Orders (STOs) to provide 1,291 SMEs2 with services on a cost-share basis3 (see Table 1 below), out of which 27 percent are women-led businesses (see figure 24). For context, an STO is a contract between an SME and a BDSP, that is signed once they have reached an agreement for the delivery of BDS support.
During the last quarter of the reporting period, SMEA started working on improving the BDS support model by conducting an in-depth price reasonability analysis to identify and evaluate the most demanded services, relevant prices, and level of effort required from different BDSPs. Based on the analysis, the team worked on establishing a price index to facilitate SMEs in terms of cost of services, level of effort, and the service providers. This improvement in the model will help SMEA to cater to SMEs in a more standardized manner. This approach not only considers the existing pricing data but also takes into account market research. The process is expected to improve further in the future with the addition of new BDSPs through a new Request for Proposals (RFP), offering more marketable prices and a greater capacity for customization of services for SMEs.
2 Under the Competitiveness Enhancement Component, two primary forms of support are given to SMEs, Extensive business development support or hands on intensive training support through contracted BDS providers and trainings provided through short term consultants. 3 Cost-share assistance goes up-to 75 percent, depending on case to case basis. 4 The 1,451 cases include those that are ongoing and are yet not complete. To date 1,291 cases have been completed.
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Table 1: Summary of SMEs assisted by CE during the year
No. Sector SMEs supported this year 1 Hospitality 315 2 ICT 491 3 Agri-business and processing 126 4 Textile 123 5 Logistics and Packaging 6 6 Light Engineering 3 7 Other sectors 227 Total 1,291
Hospitality Sector
During this year, SMEA received a total of 196 applications from across Pakistan requesting hospitality-related BDS support, out of which 50 SMEs successfully availed of services for their respective businesses. The BDS support extended to these SMEs includes services related Jeff Goebel, Director, EGA Office/USAID with SMEA-supported entrepreneurs to business advisory, during the Pakistan Tourism Dialogue event held in Islamabad. Photo credit: accessing new market(s), SMEA digital and social media marketing, ICT enabled solutions (including enterprise resource planning solutions), web- based services, quality certifications, and building the capacities of SMEs by imparting the High Field Manager In-Charge Course – Food Safety Level 3. In terms of geographic spread, 57 percent are from KP, 28 percent from GB, nine percent from Punjab, two percent from Sindh and Islamabad, and one percent from Balochistan. SMEA’s Hospitality sector generated PSI of USD 282,011.
SMEA organized a total of seven training sessions on ‘Hotel Management Practices for Improved Customer Satisfaction and Retention’ and three trainings on ‘Food Safety Level 1’ for 243 SMEs over the course of the year. Trainings on Hotel Management primarily targeted hotels based in Gilgit Baltistan (Kachura, Skardu, Hunza and Gilgit), and KP (Chitral, Balakot/Naran, and Kalam-Swat). Similarly, SMEA organized trainings on Food Safety Level I for food handlers from KP/NMDs including Kohat, Bannu, and Dera Ismail Khan.
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ICT Sector
During this year, SMEA Figure 9: Summary of Digital Marketing and Advertising Trainings completed two batches of trainings on Digital Marketing and Advertising Trainings Digital Marketing and Advertising (DMA) across Pakistan to help enhance the digital footprint of SMEs. The training program spanned over a SMEs duration of 40 hours and was divided into three modules. The purpose of these Module 1 Module 2 Module 3 trainings was to enable Punjab 162 42 21 Sindh SMEs to learn how to 180 48 26 Islamabad use digital channels to 90 17 12 KP increase their 34 outreach to target customers and generate more leads.
SMEA launched the DMA training program in December 2018 and received an overwhelming response. More than 1,300 SMEs registered for these trainings, out of which 446 unique SMEs were shortlisted and trained (see figure). SMEA organized twenty sessions of Modules 1, 2, and 3 in Islamabad, Lahore, Karachi, Faisalabad, Peshawar, and Swabi. In terms of geographic coverage, 39 percent of participating SMEs were from Sindh (Karachi), 34 percent from Punjab (Lahore and Faisalabad), 19 percent from Islamabad, and 8 percent from KP (Peshawar and Swabi).
SMEs that participated in all three Modules also invested in a minimum amount of USD 165 each in adspend, thereby making a total investment of USD 9,735 in their businesses through implementing advertisment campaigns which they designed during the course of the training. As a result, SMEs participating in Module 3 trainings and investing financially for digital marketing on cost-share basis are being considered as BDS support cases.
Agri-business and Processing Sector
Early on during this reporting period, through a rapid assessment, SMEA identified four areas of support for SMEs from Agri-business and Processing sector. The identified areas of support included: technical assistance with international compliance certifications, ICT
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solutions (website development and digital marketing), skill development trainings, and access to markets (both domestic and global).
SMEA received a sizeable amount of relevant EOIs from Karachi, Lahore, Peshawar, Swabi, and Malakand, with potential of exports in agri-businesses. The project held a series of meetings with the Pakistan Fruit and Vegetable Association (PFVA), which represents 90 percent of fruit and vegetable exporters and processors. As a result of this effort, SMEA facilitated 10 progressive exporters to acquire quality and food safety certifications in Karachi and Lahore. The services included ISO 22000 and HACCP certification.
The project also initiated training sessions in collaboration with SMEDA Peshawar and the ARID Agriculture University Rawalpindi to identify SMEs and impart technical knowledge related to new business and processing practices to improve their productivity and profitability. During the reporting period, the project trained 92 such SMEs on value addition in honey processing, out of which 67 percent are from KP while the remaining are from Punjab and Sindh.
Textile Sector
SMEA implemented outreach activities with various segments of the Textile sector, such as the Pakistan Hosiery Manufacturers Association (PHMA), Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), and others in Lahore, Faisalabad, and Karachi. The objective of these meetings was to build business ties with stakeholders as well as to gain their support in inducting SMEs from textile clusters. SMEA successfully received 86 EOIs from SMEs, out of which, three enterprises from Karachi were facilitated (on a cost-share basis) to obtain (ERP systems, create E-commerce websites, and international compliance certifications such as Worldwide Responsible Accredited Production (WRAP), Oeko-Tex and Supplier Ethical Data Exchange (SEDEX), and Business Social Compliance Initiative (BSCI) certifications to improve their competitiveness in the international markets by fulfilling the emerging set of global compliances in textile exports. The total value of the mentioned BDS support cases is USD 22,501, in which SMEA contributed USD 12,304, whereas the SMEs’ collective contribution was USD 10,197.
2.2: IMPROVED TECHNOLOGICAL READINESS AND INNOVATION
Hospitality Sector
During the year, SMEA extended BDS support to three Hospitality SMEs to develop ERP software and web-based services comprising of website development and administration. These services will help these enterprises to streamline their business operations, identify and engage new customers, and assist them in digitizing their businesses.
ICT Sector
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SMEA completed several BDS cases for Payment Card Industry Data Security Standard, Payment Application Data Security Standard, Capability Maturity Model Integration (CMMI), and ISO certifications along with cost share trainings via BDSPs which supported SMEs in building their capacity for both domestic and foreign markets. The overall business generated in terms of BDS support for ICT companies sums up to USD 206,562, out of which, SMEs contributed USD 114,814 as cost-share. These trainings focused on technology and business process improvements.
To date, SMEA has supported five SMEs under said sub-objective 2.2. Three of these enterprises acquired PCIDSS certifications to enhance their call center services. These trainings will result in positive revenue growth through Quick Response (QR) payment network services. One of the SMEs will also enable the sales of other ICT enterprises that are members of their payment network, FonePay, which builds the narrative for SMEA’s interventions in terms of enabling direct beneficiaries to build capacity of other SMEs in the Pakistani ecosystem. SMEA also facilitated a Fintech based in Karachi to obtain the PCIDSS certification, which will help them provide a budgeting platform to their users. SMEA assisted another SME from Islamabad to improve and standardize their business and system processes.
To extend ICT innovations offered by US technology enterprises to Pakistani SMEs, SMEA worked to expand BDS support for Microsoft and Oracle Inc. to meet local market demand. SMEA identified and contracted Maison Consulting, a BDSP for Microsoft products and services, and Inserito Pvt. Ltd. for Oracle NetSuite. The project supported a BDSP-led training on CMMI v2.0 in Islamabad and Karachi. These trainings helped an additional 23 SMEs in enhancing their skillset and technological fronts to better compete in national and international markets with increased revenues.
Agri-business and Processing Sector
During the reporting year, three Agri-business and processing SMEs (Reap Agro, SA Foods International and Zeal Foods and Beverages) obtained BDS support related to ICT solutions. The SMEs supported through the program are processors and aggregators of value-added products, juices and processed livestock products. Two of these are based in Swabi and Malakand, while the third is based in Karachi. The supported services include the acquisition of an ERP software, mobile application, and E-commerce platforms to improve the management and operations of the SMEs through digitization and technological adaptability. The total cost of aforementioned BDS support cases is USD 18,294 while SMEA contributed USD 13,704. On average, the expected impact of these services is a 10 percent increase in the overall revenue and an increase of up to three new employees in each SME.
Textile Sector
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SMEA organized two digital marketing trainings for 59 SMEs Textile SMEs in collaboration with PHMA and Federation of Pakistan Chamber of Commerce and Industries (FPCCI). Both sessions included representation from textile manufacturers, retailers, and exporters.
2.3: INCREASED ACCESS TO MARKETS
SMEA enabled SMEs to participate in Coke Food festivals held in Islamabad and Lahore, Pakistan Travel Mart in Karachi, and the Pakistan Tourism Dialogue in Islamabad. These events enabled SMEs to showcase their unique products to larger audiences and in new geographic locations. SMEA supported ICT SMEs participated in the Pakistan Tech Summit and To build the capacity of the Oslo Innovation Week in Norway. Photo credit: SMEA Pakistani ICT SMEs on compliance related regulations in Europe, SMEA supported nine Pakistani ICT SMEs, including three WLBs, to participate in the Pakistan Tech Summit and Oslo Innovation Week in Oslo, Norway on Sept 22-29, 2019. During the event, these enterprises engaged with the local ICT SME ecosystem in Oslo to help create opportunities for the export of products and services from Pakistan. The Pakistan Tech Summit, which was part of the Oslo Innovation Week, was attended by 150 plus dignitaries, expats, and relevant ICT stakeholders from around the world. Although the progress report would tabulate the final impact, SMEA anticipates that the intervention would be able to contribute at least 20-25 percent in export revenues estimated at PKR 100 million and at least 30-40 new jobs over the remaining duration of the project.
For a second year in a row, SMEA also participated in the Momentum Conference in Karachi on April 30, 2019. Momentum is one of the largest information technology
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focused conferences in Pakistan that brings together start-ups, SMEs, and large enterprises with impactful businesses that are changing the ICT ecosystem in Pakistan. Ms. JoAnne Wagner, U.S. Consul General Karachi, addressed the opening session of the two-day conference and spoke about key initiatives SMEA is implementing to augment Pakistan’s ICT sector. She emphasized how such conferences provide a conducive platform for Pakistani and U.S. firms to network and collaborate. A central feature of the conference was the participation of representatives from US-based ICT companies, which included Amazon Web Services, Facebook, Microsoft, and Google. Ms. Wagner took the opportunity to meet with these companies following her address. During the event, SMEA organized two master classes on digital marketing and data security, which were attended by SMEs and start-ups.
The project also supported nine SMEs to acquire food safety and quality certifications including ISO 9001, ISO 2200, and halal certifications. Eight of these businesses are progressive fruits and vegetable exporters from Karachi while one is based in Malakand. These certifications will help these enterprises in successfully meeting international standards and requirements to improve their access to previously untapped buyers. The total cost of the aforementioned BDS cases is USD 36,979 out of which SMEA contributed USD 20,600. The expected impact of these services a tentative increase of 10 percent in overall revenue and up to three new employees in each SME.
2.4: INCREASED ACCESS TO FINANCE
To improve access to finance for SMEs, SMEA conducted a training on ‘Improving Financial Worthiness through Taxation and Bookkeeping’ in Karachi with the support of South Karachi and East Karachi Women Chambers of Commerce and Industries (WCCI). The event provided WLBs with insights on basic accounting concepts; single/double entry bookkeeping and ledger postings; as well as capital assets, equity and liabilities. In addition to this, the entrepreneurs were also guided in terms of developing profit and loss/income statements and balance sheets, along with budgeting and variance analysis. In order to improve the participants’ abilities to access finance, discussions on various sources of finance for small businesses in Pakistan were held, supported by a session on prudential regulations governing SME financing. Finally, bankability of SMEs and the importance of
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understanding business’ internal financial strengths and weaknesses/constraints before applying for finance was also covered. The end goal was to enable women in achieving financial readiness to successfully secure access to required finances for business growth. Total participants consisted of 33 women belonging to 28 SMEs from regions such as Thatta, Umerkot, and Karachi (these numbers have been reported as part of WLBs).
2.5: WOMEN ENTREPRENEURS RUN PROFITABLE SMES
As part of SMEA’s overall strategy to facilitate growth of WLBs and enhance their self- reliance, the project built their capacity and skills along with providing them with BDS support. To date, SMEA has reached a total of 300 women-led SMEs and entrepreneurs across Pakistan, out of which 275 have been trained on various technical and business concepts, while 25 have received support through BDS. In terms of geographic coverage, 26 percent of the beneficiaries have been from KP (Abbottabad, Haripur, Charsadda, Swabi, Mardan, Nowshera, and Peshawar), 11 percent from Balochistan (Quetta), 39 percent from Punjab (Lahore, Rawalpindi, Attock, Multan, and Sialkot), and 24 percent from Sindh (Karachi, Thatta, Umerkot, and Hyderabad).
The project organized a Figure 10: Geographic spread of WLBs trained total of 15 trainings on Business Growth and WLBs Supported Through Trainings Planning, Accounting and Sales, and Improving KP Punjab Sindh Balochistan Financial Worthiness, 106 with the first being the 76 most demanded topic 59 across all provinces. 34 SMEA collaborated with 11 women chambers of commerce and industry SMEs to train more than 280 women entrepreneurs (see figure 4). These trainings were kept short, mostly spanning over a duration of one to two days, considering gender sensitivities and local cultural norms. This not only incentivized participation of larger groups of women but also increased their involvement in sessions, as it enabled them to commit to the complete activity rather than missing part of the training due to personal obligations.
For BDS support, SMEA received a total of 158 EOIs, against which the largest chunk of services acquired by SMEs consisted of digital marketing and social media management, followed by ICT solutions such as website development and ERP software deployment. The third most popular service was availed in the form of business advisory for access to new domestic and international markets. The total value of the contracts signed with these 25 WLBs has been USD 71,269, out of which USD 23,023 was contributed by the SMEs in terms of PSI. Twelve of these cases were successfully completed, as all requested services were availed by the enterprises.
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Results between WLBs and male-led enterprise differ as a consequence of two aspects. The first being the general nature of WLBs in Pakistan due to which SMEA made sub- objective 2.5 sector-agnostic. This has allowed the project to engage a variety of enterprises, inclusive of home-based businesses and individual entrepreneurs. Secondly, due to capacity issues and lack of Women entrepreneurs from Attock following the completion of SMEA's opportunities for women, the Business Management training: Photo credit: SMEA project eased its eligibility criteria to maximize outreach and ensure that a fair chance was offered to all types of WLBs. Therefore, while there are some exceptions, most of the women enterprises supported have been micro or small businesses, with low baselines in terms of annual turnover and employees.
Planned CE activities for the next year (October 2019 - September 2020)
• Recruit Training Service Providers (TSP) and BDSPs through multiple rounds of RFPs. • Carry out Training of Professionals (cross-sector initiative for BDSPs and SMEs). • Plan and execute workshops aimed at capacity building of BDSPs. • Hold SME exhibitions aimed at increasing market share and showcasing businesses. • Provide BDS support to 238 SMEs across Pakistan. • Provide general and technical trainings to 550 SMEs and WLBs from across Pakistan. • Provide small equipment, tools or machinery to SMEs based on the needs identified from the sub-sectors. • Participate in events and expos such as Momentum 2020, Coke Food Festival, and Pakistan Travel Mart. • Target international marketing and outreach opportunities for SMEs via domestic and international trade fairs (subject to USAID approvals). • Hold meetings/consultative sessions with SMEs in KP and Punjab regions. • Carry our Acceleration/Entrepreneurship Bootcamps for youth and women entrepreneurs. • Engage contractor to analyze formal financial services needs of SMEs and build their capacity to access these services.
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THE CHALLENGE FUND During this year, SMEA awarded a total of 45 Innovation and SME Growth Grants (20 grants under Round 1 and 25 under Round 2). Table 2 provides a summary of the total number of CF grants awarded and the associated obligated and disbursed amounts. Based on these CF-supported grant activities, SMEA anticipates the creation of 550 direct and 550 indirect jobs, revenue generation of USD 7.5 million, private sector investment of USD 1.5 million, and exports worth USD 1.9 million, with direct benefits to more than 2,500 SMEs.
Table 2: Summary of obligated and disbursed grant amounts
Type of grant Total no. Total Total Spend rate Awarded obligation disbursement (as of US $ US $ 09/30/19) (as of 09/30/19) SME Growth 24 853,704 402,887 49 % Grants Innovation Grants 21 707,535 296,867 44 %
SME Growth Grants
Round 1
On October 22, 2018, SMEA organized a technical evaluation committee (TEC) meeting for Round 1 SME Growth Grants in Islamabad to review and evaluate 20 eligible SME Growth Grant applications. The TEC evaluated these applications and following pre- award risk assessments for top rated applicants and USAID’s approval, SMEA awarded SME Growth Grants to the following six grantees:
Affordable.pk is a woman-led start-up, which has created an online marketplace for Pakistani garments and fashion accessories. Through the grant, it redesigned its web portal, so it can compete with successful global online shopping portals and in turn, strengthen exports of Pakistani brands and handicrafts.
AzCorp Entertainment (Pvt.) Ltd is a social enterprise platform that develops comic books featuring popular Pakistani heroes through thought-provoking stories, which are aimed to prompt dialogue, instill critical thinking, evoke social consciousness, and
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compel positive local action. Through the grant, AzCorp diversified its market outreach by developing of a mobile application called ‘Geeks Republic’ for iOS and Android operating systems.
Downtown Bistro was initially a small Peshawar-based restaurant owned by a young business graduate from South Waziristan Agency, KP. Through the grant, Downtown Bistro expanded its operations by opening a new branch in Islamabad, offering takeaway and delivery of food. The grantee also incorporated improved technological integration by introducing an effective point of sales system that has enabled it to identify its customers and ensure incentive-based retention through a customer loyalty program.
Assan Ticket is a technology-based startup run by two young entrepreneurs from Gilgit Baltistan (GB) who developed a prototype for an online ticket reservation solution for domestic road travel to and from GB. Through the grant, Assan Ticket has developed an automated bus e-ticketing service integrated with multiple payment gateways/systems for Android and web-based applications. This service saves travelers the inconvenience of having to physically check with 40 plus bus and taxi operators servicing the region, none of which have online schedules or ticket reservation facilities. In order to facilitate customers with limited or no internet access, they have also developed a dedicated call center in GB.
Darewro Delivery Services was launched by five young university graduates from Khyber Pakhtunkhwa and the NMDs and is an ICT-enabled motorbike delivery service in Peshawar. Through the grant, Darewro has developed a Management Information System and an Android and iOS mobile application for orders and tracking functions. This has equipped Darewro to expand its delivery services across Peshawar and its adjoining areas, which enables users to get products delivered to their doorstep 24 hours a day. The SMEA grant has supported Darewro to overcome operational challenges that it had been facing with running manual systems.
Sehat Kahani (Community Innovation Hub Pvt. Ltd.) is a women-led, tele-health enterprise that enables doctors to provide primary healthcare services through virtual technology. Through the grant, Sehat Kahani has empowered the value chain of women’s healthcare providers to deliver much-needed healthcare services to rural and urban slum populations across Pakistan through innovative ICT solutions. Sehat Kahani does this by
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establishing sustainable tele-medical clinics (e-hubs) in low income areas at a significant lower cost as compared to traditional medical clinics. Through the integration of a clinical module in its e-health hubs, Sehat Kahani is able to record, analyze, and interpret patient data in a more efficient manner, as well as ensuring complete data security to increase credibility and strengthen the e-health hub model.
Round 2
On October 28, 2018, SMEA advertised a Round 2 RFA for SME Growth Grants in the combined editions of The News, DAWN, and Jang newspapers. The advertisement was also posted on USAID’s social media, including Facebook pages of U.S. Consulates in Pakistan. In response to the advertisement, the project received 650 applications, out of which, 214 met the basic eligibility criteria. The remaining applications were either ineligible, duplicate submissions, or received after the deadline.
SMEA organized 28 pre-application orientation sessions for potential Round 2 SME Growth Grant applicants in Karachi, Lahore, Islamabad, Peshawar, and Quetta. Attended by a total of 834 potential applicants (including 180 women), the orientation sessions provided an opportunity for the participants to learn more about the CF grant application and award process and ask any questions that they may have had regarding the application, funding, and grant process.
On December 19-21, 2018, the TEC5 met to review and evaluate 214 eligible SME Growth Grant applications. The members evaluated the grant applications based on a merit review criterion listed in the RFA. Following TEC meetings, SMEA validated the TEC scores and judges’ comments on the 214 applications evaluated. Based on the TEC results, the top 44 short-listed applicants were invited to make oral presentations on their grant proposals in Lahore (Jan 16, 2019), Karachi (Jan 17, 2019), and Islamabad (Jan 18, 2019). During these presentations, potential SME Growth Grantees pitched their ideas to a panel of USAID and SMEA judges for final selection. Based on these presentations, 16 applicants were approved for due diligence and possible award by the committee members.
SMEA conducted pre-award risk assessments for these shortlisted grant applicants based in Punjab, Gilgit Baltistan, Islamabad, Khyber Pakhtunkhwa, and Sindh. The project’s technical team visited the applicant’s offices to review their organizational capacity to manage the grant award based on SMEA’s approved grants manual Subsequently, SMEA carried out budget negotiations with the top-ranked applicants and submitted the approval packages to USAID for approval. Following USAID’s approval for 15 applicants, the project awarded the following 15 Round 2 SME Growth Grants. One grantee (HAC Agri), however, asked for their grant to be terminated due to devaluation of the Pakistani Rupee against the US Dollar.
5 The TEC had three members; two core judges and one sector expert for each target sector.
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ASL ACE Star Logistic Pvt Ltd is a recognized third-party logistics and transportation company that provides logistics and warehousing solutions to corporate clients in Pakistan and aspires to provide value-added services through its warehousing facilities by expanding its current warehouse site in HITE Hub Baluchistan to establish a temperature-controlled warehousing facility. The grantee is using grant funds to setup a dedicated power supply through the purchase of a high capacity electric power transformer, partial contribution in pallets, and the installation of two refrigerated containers (reefers) on mini trucks.
Greeno Corporation (Pvt Ltd) is recognized as Pakistan’s premium fresh juice company, which will procure and install an international standard Agri-product washing and processing unit through the grant. By installing the washing and processing equipment with a capacity of 10,000 kg per day, not only will it give the company the necessary equipment to obtain relevant certifications from international authorities but will also enable it to keep up the value chain requirements for further expansion. This will enable the grantee to expand its market share and provide processed fruits and vegetable to the local and international markets.
Zabiha Halal Meat Industries Private Limited was formed by a passionate veterinary doctor who has extensive experience with developing small and medium-scale red meat and poultry processing units. Through the grant, Zabiha Halal will procure state of the art Modified Atmospheric Packaging (MAP) technology for fresh meat packing. Packaging meat through the MAP machine will not only extend the shelf life of fresh meat to seven days but will also enable the production line to cater for customized market requirements (portion sizes, labeling, etc.) ensuring cost effectiveness and efficiency.
Fabricon Pvt Ltd is a light engineering company established that aims to provide local modern engineering solutions. Through the grant, Fabricon will procure modern machines and new technology to upgrade its production line of mini elevators. This will include a high-speed lathe and computer numerical control machine, hydraulic brake press system, paint work unit, and ICT supplies for an electronic laboratory to be used for the design and production of mini-elevators.
AJR Metal Fabricators Pvt Ltd is an auto-parts manufacturing facility to meet the ever-increasing demand of quality parts and components for the automotive industry. Through the grant, the grantee plans to upgrade its production line for motorbike parts by automating its systems. This will contribute to an improvement in the quality and quantity of production.
Farooq Storage and Oil Mills specializes in extraction of oil from cotton seed that is used in the production of unprocessed oil for cooking oil mills. The residue left over from this process forms oil cakes that are consumed by livestock in dairy farms. The grantee plans to automate its production line for oil extraction by procuring and installing motorized oil expellers and a conveyer belt system that will enable its production facility to automate the input of raw material for processing and delivery of oil and oil cakes for cattle feed. The automation will not only increase the production capacity from 50 tons
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to 150 tons a day but will also decrease the overheads and cost of production. This will lead to an increase in revenues and efficiency.
Balitex Pvt Ltd produces knitted garments including collegiate clothing, special finished graphic tees, dyed auto striper polos, and fully embellished hoodies. Through the grant, Balitex will setup its own garment printing and embroidery units by purchasing state-of- the-art printing and embroidery machines that can comply with international standards. The grantee will also train its labor to use these specialized machines, which will improve production efficiency and increase revenues.
Bola Gema Pakistan is an ISO 9000 and 14000 compliant manufacturer and exporter of sports balls and sportswear and seeks to increase its market share in the sportwear segment by establishing its own printing setup. Through the grant, Bola Gema will procure a printing machine setup, including a sublimation printer, print transfer press, and table printing setup. The in-house printing capabilities will increase work efficiency through consistent quality, reduction in wastages, reduction in delivery delays, and will reduce cost of doing business. This will enable the grantee to capture a larger share in the export market with existing and new clients.
Jessie’s Café is a fast food restaurant that runs two outlets in Islamabad and Lahore. Through the grant, the grantee is developing a dynamic point of sales software, an integrated inventory management system, and a web portal that will connect both of its outlets. To streamline the order-taking process, the grantee also plans to procure tablets for waiters and screens for its kitchens, which would support coordination with the kitchen, improve efficiency, and provide better control and oversight for the management to improve and sustain its efficiency and quality.
Electroline is a manufacturer and supplier of electrical cable trays that are used in electric wiring of buildings. Through the grant, Electroline plans to upgrade its production line capacity that will be equipped with fully automatic machines that will not only increase its production ability but will also enable the business to expand its market share in local markets and gulf countries. This upgradation will decrease the cost of production through savings in power consumption and labor.
Mountain Story Pvt Ltd is a women-led private limited company that owns and operates the ‘Mountain Story Resort’ in Alaibad, Hunza, Gilgit Baltistan (GB). The resort provides a unique alternative to traditional hotels in GB, providing eco-friendly, culturally aligned, and self-sustainable enterprise model that can easily be replicated in other areas of GB. Mountain Story utilized local artisans to build culturally inspired structures amidst fruit orchards, without cutting any fruit trees. Their concept has a minimal carbon footprint and utilizes clean energy sources through solar power. Food served at Mountain Story is organic and is inspired by local culinary traditions. Through the grant, Mountain Story is opening up two new outposts that will cater to local and international tourists and help improve Pakistan’s tourism sector.
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R.K. Gears Pvt Ltd manufactures auto gears for international auto manufacturers such as Suzuki, New Holland, and Massey Fergusons Tractors. Through the grant, they plan to add a modern and efficient gear turning center machine to their production line. The new machine will not only improve the accuracy, efficiency, and production capacity for Original Equipment Manufacturers (OEMs) but will also enable R. K. Gears to cater to the aftermarket demand, which has not been possible with their existing production capacity. This will also support the enterprise to explore export markets for its products and add new export value additions to its product range.
Sun Importers and Exporters recycle Polyethylene terephthalate (PET) bottles into PET flakes, used primarily to produce regenerated polyester staple fiber for cotton blended ring and compact yarns used in the textile industry. Through the grant, Sun Importers and Exporters will procure an automated color sorter machine for its production value chain to enhance its quality of production and improve its process efficiency. With this machine, they will be able to supply the sorted/value-added product both at locally and globally.
Kohinoor International is an Agri-business SME that has established a seed processing facility and has its own seed analysis laboratory, However, to keep up with the increasing international quality thresholds, the organization plans to upgrade both its seed processing facility and seed analysis laboratory with state-of-art machines that include a de-stoner, seed germinator, and an electromagnetic cylinder for its seed analysis lab. The upgraded equipment will increase Kohinoor’s efficiency and quality of processing seeds for export markets. It will also help overcome their growth challenges and to be compliant with the international competitive quality levels.
Round 3
On September 22, 2019, SMEA advertised a Round 3 RFA for SME Growth Grants in national newspapers and social media. Against the advertisement, the project received 2,200 queries and enrolled 700 individuals to attend SMEA’s pre-application orientation sessions in Islamabad, Lahore, Karachi, Peshawar, and Quetta to be held during the next reporting period.
Innovation (Solve the Challenge) Grants
Round 1
During this reporting period, following the completion of pre-award risk assessments and USAID’s approval, SMEA awarded Innovation Grants to the following ten grantees:
Bykea Technologies: SMEA awarded Bykea an Innovation Grant to launch its ‘Dastarkhwan’ initiative, which delivers quality food at economical prices to office workers through Bykea’s existing logistics network of approximately 25,000 bike riders in Karachi, Lahore, and Rawalpindi. Through the SMEA grant, Bykea made technological upgradations
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that allow Bykea riders to pick and drop multiple deliveries in a certain vicinity. Furthermore, it has included integration of an e-wallet and load board facility that serve as a task-based food delivery jobs portal for free-lancers. Dastarkhwan has also developed a digital catalogue to enable cloud kitchens run by SMEs/entrepreneurs, primarily home- based women chefs.
Khoj - Find My Adventure: Khoj - Find My Adventure is a one- stop platform for tourists looking to explore Pakistan. It provides online bookings for a wide variety of standardized tourism experiences and offers customized tours. Through the SMEA grant, Find My Adventure developed and launched an innovative Guide Network that helps build the capacity of local travel guides in popular Pakistani tourist destinations. Local guides are trained on tourism best practices, first aid, and usage of the Find My Adventure App. The enterprise is bridging the information gap and improving customer experience in Pakistan’s tourism sector. The app also helps guides explore remote learning methodologies, enabling them to access to new and efficient practices. It also provides customers and guides an equal opportunity to grade their experiences, helping create profiles that would enhance awareness on both sides of the supply-demand curve.
Step Robotics: Step Robotics provides an ICT-enabled platform to help resolve issues faced by Pakistan’s solar energy industry. It has developed a joint platform for all stakeholders (both in public and private sector) to resolve the solar industry’s challenges including solar shading and site analysis, solar proposals and reports, automation of solar net metering applications/meter installations, and most importantly, an online marketplace for solar equipment providers and banks to finance products. Through SMEA’s grant, Step Robotics has developed an app and a sales management portal that connects solar installers to a comprehensive marketplace with equipment manufacturers and a variety of leasing options to choose from. This allows field staff to propose financing options and the right equipment.
Unikrew Solution: Unikrew is a Fintech start-up that has developed an application to help overcome the physical barrier that limits financial inclusion of entrepreneurs. Through the SMEA grant, Unikrew has developed a cognitive authentication suite for commercial banking apps that helps to virtually authenticate an individual’s identity through computerized national identity card numbers, and facial and fingerprint
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recognition. This allows banks to bring on board customers without having them to come into a bank in person. Banks can integrate the technology into their existing mobile platforms through a software development kit that Unikrew provides. This app enables entrepreneurs, especially women in remote areas, to open and access bank accounts from the convenience of their homes.
Vceela: Vceela has developed a village-to-world marketing model that allows artisans from smaller cities and villages in Pakistan to connect with global markets, without the need to have digital skills. This innovative idea disrupts the traditional middleman business model, allowing artisans to directly sell and market their products to consumers. This helps increase their profits and provides products to consumers at a reduced price. Through SMEA’s grant, Vceela has integrated a payment solution into their platform and developed an online web-portal that serves as a reliable directory of artisans and a complete repository for data. Vceela has also organized trainings for artisans on ICT skills, e-commerce, packaging, quality assurance, and logistics.
Franchise Services: Franchise Services is an innovative online marketplace for franchises that bridges the gap between potential entrepreneurs and brands. It provides an effective marketplace for existing franchises to expand their businesses, promote the development of new SMEs, and the growth of businesses through the purchase of franchises through guided assistance. It also provides technical assistance to new businesses to help transform their business models into a franchise model. The grant helped Franchise Services to design and develop a dynamic online market place for franchising services powered with an effective management information system.
PriceOye: Through the SMEA grant, PriceOye established designated retail touch points within select villages in rural areas of Pakistan. Their dynamic and innovative shopping intelligence engine helps consumers make online purchases at the best possible prices from trusted stores, saving them time and money, as well as providing them local delivery for their purchases. This initiative has created income generation opportunities for existing and aspiring entrepreneurs by enabling them to become retailers/distributors within their rural communities, as well as support SMEs to expand their reach into rural communities through e-commerce.
Asanii Handyman Services: Asanii Handyman Services provides standardized maintenance services to retail outlets. Through SMEA’s grant support, Asanii Handyman Services has developed a technology platform through which it can manage bookings and deliver maintenance services. This innovation has helped bridge the gap between commercial clients and unemployed professional skilled workers. As an outcome of the successful grant implementation, Asanii Handyman Services is now providing a one-stop solution for maintenance services, including electrical, plumbing, air conditioning, and carpentry services to clients through an e- ticket-based system on a flexible retainer model. Asanii has engaged skilled workers for maintenance work, conforming with the standardized quality and consistent efficiency. The grant implementation has also enabled Asanii to establish a partnership with technical training institutes in Karachi for sourcing
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skilled workers. They also provide its workers with essential training on first aid, personal protection gear, and a pool of essential tools required for basic maintenance work.
Waste Busters: Waster Busters - Trash Masti is a joint venture that designed an innovative, low-cost, ICT-driven, and self-sustainable mechanism to encourage household recycling and improve basic waste management services by allowing households to schedule pick-ups and receive payments for their household recyclables. Through the grant, they have upgraded their website, developed an Android-based app to track vehicles and orders, and improved their business systems to support the company’s growth. The mobile application would not only generate secure income for people/households collecting the recyclables but will also help in reducing the amount of recyclable waste material disposed of. Waste Busters - Trash Masti are continuously expanding their social media coverage to strengthen their outreach on recycling. The costs of these services are covered through the sale of recyclable items. This helps them generate income from waste.
Rasai Technologies: Rasai is a logistics optimization company that has developed an innovative tourist-centric app for Android and iOS users. Rasai’s mobile application integrates with nearby businesses/attractions and help locals find affordable mobility options, including real-time shuttle services, public transit routes, and car-pooling options. The system allows travelers to find and reserve seating on their selected transport options and helps fleet operators to function more efficiently by planning out routes based on demand. The grant has helped Rasai Technologies develop a user-friendly application, allowing users to not only locate alternative tourist spots, but also select and book the mobility options for getting to such spots.
Round 2
On December 9, 2018, SMEA advertised an RFA for Round 2 Innovation Grants in the combined editions of The News, Dawn, and Jang newspapers. In response to the advertisements, the project received more than 1,350 applications.
To provide guidance and mentorship to potential Innovation Grant applicants, the project organized a series of co-creation workshop in Islamabad, Karachi, and Lahore. During the workshops, SMEA’s technical team, mentors, facilitators, and sector specialists oriented the participants on pre-identified challenges that were part of the Innovation Grants solicitation and answered questions related to the challenges and the application process. The workshops were also geared towards stimulating creative thinking and helping participants find innovative solutions for identified challenges. Furthermore, SMEA also organized information sessions in Karachi, Lahore, Faisalabad, and Islamabad for potential applicants.
Based on the initial screening of applications, 112 were considered eligible based on meeting the basic eligibility criteria and their relevancy to the challenges, which included 10 applications from KP. Following the technical evaluation for these 112 eligible
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applications, 30 top ranked applicants were invited to participate in Build a Business Workshops held in Islamabad and Karachi. The purpose of these workshops was to assist the potential grantees to further develop business concepts and improve their business plans. Facilitated by SMEA mentors, the workshops were highly experiential and designed to facilitate the enterprises through key steps required to build a viable business model. The SMEs were provided guidance on visual thinking, designing solutions, building a core team and strategic partners, bootstrapping products for grantee investments, and technology validity. Senior officials from USAID participated in the Islamabad workshop and met with the SMEs.
On April 2 and 4, 2019, SMEA organized two one-day pitch training sessions in Lahore and Karachi respectively. Attended by a total of 28 participants (including six women) from 16 short-listed SMEs from the second round of Innovation Grants, the participants were trained on the latest techniques of effective business pitch delivery. The potential grantees participated in various inter-personal group activities and made practice pitches, before delivering their final grant pitches to the TEC on April 18-19, 2019 in Islamabad.
On May 30, 2019, USAID approved 12 Round 2 Innovation grants. From these, one grantee, Enmass Bio Pro terminated its grant due to its internal operational issues.
Round 2 Innovation grantees continue to implement their respective projects and are progressing well with their planned activities. The following is a brief summary on the 11 Innovation Grants:
Closet is a woman-led enterprise that is Pakistan’s first online fashion rental marketplace. It provides women a safe space to rent out their outfits to earn money while sitting at home. Through the grant, Closet will rent an inventory management facility, procure ICT supplies, and necessary technological upgradations for its web portal and development of mobile application for Android and iOS users.
PALS Outdoor Limited is a Karachi-based eco-friendly adventure tourism company that is developing alternative tourist destinations along Pakistan’s costal belt. PALS Outdoor have identified a scenic spot located on the Damb shore in Balochistan. Through the grant, it plans to develop the area into an eco-friendly adventure tourism spot, with temporary structures using large and comfortable tents. They will use non-motorized equipment like kayaks to enable tourists to explore the mangrove forests and organize boat rides into the open ocean for snorkeling along the reefs.
Fresh to Go supplies cut vegetables and fruits by using external facilities. Through the grant, the grantee will develop its own facility with latest cutting and packaging machines and temperature-controlled storage facilities to deliver pre-cut and packaged vegetables/fruits based on client requirements and specification. The grant will also be used to develop a web-portal along with mobile applications for Android and iOS users.
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Shah Alam Dairies is a Peshawar-based dairy farm that was selling raw milk to its customers using manual packaging. Through the grant, the grantee will improve the quality of milk by procuring a modern milk batch pasteurization unit, yogurt cup filling machine and will also upgrade its packaging line. Through pasteurization, harmful bacteria will be killed, and the shelf life of milk and milk products will be increased, which will lead to a reduction in losses and an increase in their customer base.
Horizon Fashion is a garment manufacturer that exports finished garments to international clients (brands) in the US and Europe. The grantee plans to establish a state- of-the-art design studio which will enable it and other SMEs to produce sample articles and production guidelines based on buyers’ design specifications. The design studio will provide a platform for the export-oriented SMEs to deliver quality designs, win international orders, and strengthen the standing of Pakistani-made garments in highly competitive markets. Through the grant, Horizon Fashion will purchase computerized and automatic cutting, stitching, and printing machines and a licensed design software.
Farmers Cheese Making is an SME that produces pure cream cheese in Pakistan. Through the grant, to offer an alternative to imported cream cheese in the Pakistani market, Farmers Cheese will procure and install a new cream cheese production machine, chillers, and a mobile cold storage facility.
Techlets is a data science software house that develops proprietary solutions and provides consultancy services. It delivers impactful tech solutions by incorporating data science principles to help brands, influencers, and companies boost revenues, save costs, and build/expand their presence in the digital ecosystem. Through the grant, Techlets is developing a software solution for influencer match-making. The software will enable influencer matchmaking in Pakistan at a much lower cost with a greater focus, which will result in a much higher impact for SMEs.
Kevlaar is an Agri-business processing company that provides packaging of pre-cut fruits and vegetables. Through the grant, Kevlaar is procuring a vacuum packaging machine and a walk-in chiller facility for pre-cut fruits and vegetables. This new equipment will facilitate an increase in the shelf life of vegetables and fruits and help meet international food standards required by clients.
Mega Green manufactures auto parts and plans to become a leading auto-part manufacturer in Pakistan. Mega Green is setting up a state-of-the-art Technical Service Center for prototyping and testing its products. Through the grant, Mega Green will procure a 3D scanner and lathe machine.
The Cookery Lahore is purpose-built culinary studio based in Lahore that provides a complete hands-on cooking experience for enrolled members to instill in them the confidence required to manage their kitchens. Through the grant, by leveraging the talents of a wide range of un-organized, home-based, women-led bakers, The Cookery is developing an online bakery. This dynamic marketplace will connect local women bakers
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and caterers to a wider audience through various social media channels. The Cookery Lahore would also support these home-based bakers as the marketplace regulator, as well as facilitator of a co-working cooking facility.
Hadron Solar (Pvt.) Ltd focuses on providing solutions that reduce energy costs with little upfront costs. It offers energy efficient solutions to a wide range of customers in the domestic, agricultural, and commercial sectors. Hadron Solar has designed a conversion kit solution, that fits old air conditioners with adjustable power operations to allow up to 60 percent in power saving. It also eliminates power surge drawn by motor loads at the onset and during load transitions. Through the grant, the grantee is procuring machines to upgrade its production capacity and is also developing upgrading its app.
Scale-up Grants
During this reporting period, SMEA’s SME Growth and Innovation grantees were provided with an opportunity to submit a follow-on grant application for the larger Scale-up Challenge Fund Grant. On July 10, 2019, the project organized final pitch sessions for these Scale-up Grant applicants in Islamabad. A total of eight SMEs pitched their ideas during the pitch sessions.
Subsequently, on August 6-9, 2019, the CF team carried out risk assessments for three top-ranked applicants for Scale-up Grants in Lahore, Islamabad, and Peshawar. During the assessment, the team carried out a detailed review of systems in place for these grantees. Following the completion of these assessments, SMEA developed and submitted grant approval packages to USAID for final approval. On September 30, 2019, USAID approved three Scale-up Grants for Unicorn Black, Vceela, and Darewro. SMEA will sign these grant agreements early in the next reporting period.
Grant Closeouts
On September 30, 2019, SMEA organized a Grant Closeout Ceremony in Islamabad to celebrate the successes of 20 Round 1 Challenge Fund grant recipients (see table 3) who completed USAID's new Mission Director Julie Koenen with Round 1 grantee during the Closeout the grant Ceremony. Photo credit: SMEA implementation. Julie Koenen, USAID’s new Mission Director for Pakistan, Qazi Zaheer Ahmad, Senior
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Joint Secretary, Ministry of Industries and Production, Dr. Shahzad Khan Bangash, Additional Chief Secretary, Government of KP, and other guests attended the ceremony. During the event, SMEA also organized a panel discussion in which grant recipients discussed their innovations and successes. The event received extensive print, electronic, and social media coverage across Pakistan.
Table 3: Round 1 completed grants
SME Growth Grants Innovation Grants Unicorn Black Bykea Technologies EDKASA Step Robotics Down Town Bistro Ms Khoj Lahore New Media Labs Vceela Affordable.pk Price Oye Transconomy Unikrew Assan Ticket Franchise.pk Az Corp Entertainment Pvt Ltd Asanii Darewaro Waste Busters Community Innovation Hub – Sehat Kahani Rasai Technologies
Idea Croron Ka TV Show
During this year, SMEA continued its collaboration with NEO TV for participation in seasons three and four of Idea Croron Ka (ICK), which is Pakistan’s premier technology start-up reality TV show (similar to the famous US Shark Tank show). During these two seasons, the following eight SMEA grantees participated in four shows and pitched their business models to a panel of judges, which included officials from USAID and the U.S. Afsheen Shakoor, Project Management Specialist, USAID Consulate in Lahore: (center) presenting a grant award to Mountain Story during the recording og ICK. Photo credit: NEO TV • Downtown Bistro • EDKASA • Transconomy • Lahore New Media Labs • PALS Outdoor • Mountain Story • Closet • Farmers Cheese
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Recordings of these seasons can be viewed on Facebook.
Pakistan Television Morning Show
On September 27, 2019, Pakistan Television (PTV) featured SMEA exclusively on their live morning show ‘World this Morning’. The discussion revolved around SMEA’s various initiatives, with a specific focus on the success and impact of the Challenge Fund. Guests included Afsheen Shakoor, Project Management Specialist, USAID; Farrukh Khan, Chief of Party SMEA; Dr. Sara Saeed, CEO; Sehat Kahani (SMEA’s SME Growth Grantee); and Zillay Mariam, CEO, Waste Busters – Trash Masti (SMEA’s Innovation Grantee). The recording on the show can be viewed on YouTube. Participants of SMEA exclusive PTV morning show at the USAID Radio Show studio. Photo credit: SMEA
On April 2, 2019, two of SMEA’s Challenge Fund grantees (EDKASA and Affordable.pk) along with the project’s CF Specialist participated in the recording of USAID’s radio show ‘Hum, Aap, Aur Behtar Zindagi.’ During the show, the grantees spoke about the impact that CF grants has made towards the expansion of their business, including the brand recognition received and increase in their sales revenues. The show aired on FM 101 on Thursday, April 4, 2019 at 11 am.
Planned CF activities for the next year (October 2019 - September 2020)
• Solicitation of Round 3 Innovation Grants • Pre-application orientation workshops for potential Round 3 SME Growth Grant applicants. • Co-Creation Workshops for Round 3 Innovation Grants. • Technical evaluations of Round 3 SME Growth and Innovation Grants. • Build-a-Business Workshop for Round 3 Innovation Grants. • Pitch Sessions for Round 3 SME Growth and Innovation Grants. • Pre-award risk assessments for Round 3 SME Growth and Innovation Grants. • Award of Round 3 SME Growth and Innovation Grants
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MONITORING AND EVALUATION
During this reporting period, SMEA’s Monitoring and Evaluation (M&E) team provided continuous support to program teams and collected baseline and quarterly progress data from partner SMEs receiving CF grants and BDS services through BDSPs.
SMEA initially submitted a revised Activity Monitoring and Evaluation Plan (AMEP) document to USAID for approval in June 2019. Changes were proposed to improve the precise statements, definitions of indicators, frequency of reporting, and unit of measures to align these with USAID’s new Strategic Results Framework and Country Development Cooperation Strategy (CDCS). SMEA also rationalized its yearly targets to conform with the project contract. Similarly, key data limitations were updated based on the experience and challenges faced in data collection from small-sized and remote SMEs.
As this is SMEA’s first year of reporting against key indicators, baselines were set for more than 100 SMEs who started interventions during the year. Likewise, progress data were collected from 62 SMEs and 4 BDSPs who successfully completed the intervention with SMEA during the year. M&E ensured 100 percent data verification during the desk reviews and 15 percent of SMEs were physically visited to verify the reported data, along with the means of verification provided as supporting documents. Telephonic data was also collected from more than 600 SMEs that received training through the project. The M&E team physically verified 5 percent of these SMEs at the field level.
Special emphasis was given to verify the milestones and progress data of CF grantees. 100 percent milestone-based payments of CF grantees were verified by M&E before any payment was made to grantees. Similarly, continuous field monitoring visits are carried out to assess the performance of grantees against the set deliverables.
As part of its regular support to program teams, the M&E unit provided orientations/trainings to SMEA staff on data for AMEP indicators and data collection formats. M&E also provided orientations to partner BDSPs and grantees on M&E data requirements during field visits.
During this reporting period, SMEA implemented ‘DevResults’, an online web-based system specifically designed for USAID project’s reporting and is globally used by Chemonics. The implementation of this robust system has helped with maintenance of cloud-based database, ensuring data accuracy, reliability, and timeliness of reporting. SMEA plans to link this system with a state-of-the-art online data collection platform during the coming year for a seamless android/iOS-based data collection and reporting system. The performance against AMEP indicators are provided in the Indicator Tracking Table (ITT) with detailed disaggregates provided as Annexure 1.
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Indicator Tracking Table
INDICATOR TRACKING TABLE (MARCH 2018 – SEPTEMBER 2019)
REPORTING % OF UNIT OF YEAR REPORTING MEASUREMENT REPORTING YEAR TARGET AS DETAILS/DISAGGREGATION OF RESULTS FOR INDICATOR YEAR TARGET S# & (REPORTING TOTAL PER REPORTING PERIOD ACHIEVED TO FREQUENCY) APPROVED DATE AMEP-2017
The target was rationalized in the revised AMEP document submitted to USAID for approval. As per the revised AMEP, the target of jobs/employment is 670. The reported numbers are FTE jobs; however, Ind. G.1: Number of # of jobs 862 FTE 2,630 fulltime/part time jobs were created during the 1 jobs/employments 6,000 14% (Annual) 2,630 new jobs reporting period. attributed to SMEA
For disaggregates on sector, male/female, province see Annexure -1
The overall target of women owned/led SMEs is 10% of the total SMEs reached. As of date, 431 women- Ind. G 2: Proportion of led SMEs out of 1603 total SMEs are women women participation in % expressed in owned/let. In the revised AMEP, the target is 10% of 2 SMEA to increase access 431 120 359% whole # (Annual) assisted SMEs to productive economic
resources. For disaggregates, see Annexure -1
Objective 1: Improved business enabling environment (BEE) Ind. 1.1: Number of reforms consistent with Five (5) policies were analyzed and recommended. World Bank benchmarks The policies were analyzed against 10 WB Ease of # of reforms 3 on doing business are 5 3 167% Doing Business benchmarks. (Quarterly) analyzed and recommended for For disaggregates see Annexure: 1 improvement.
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Ind. 1.2: Number of policies / regulations /
administrative procedures # of policies 4 12 3 400% For disaggregates on policy name, stage and at a given stage of (Quarterly) province see Annexure: 1 development as a result of USG assistance. Sub-Objective 1.1: Improved GoP ability to develop and implement reforms of policies, laws,
and regulations Ind. 1.1.1: Number of USG assisted meetings with A total of 57 meetings with Government entities government officials (such were held during the year as SECP, SBP, BOI) # of meetings 5 57 8 712% regarding proposed (Quarterly) For disaggregates on policy name, stage and province changes in see Annexure: 1 legal/institutional framework. 27 Public entities received capacity enhancement on Ind 1.1.2: Number of policy development, analysis and implementation as of entities receiving USG Sep 30, 2019 supported capacity 6 # (Quarterly) 27 2 1350 % enhancement on policy For disaggregates on province and sector see development, analysis and Annexure: 1 implementation.
Sub-Objective 1.2: Strengthened private sector and civil society engagement in policy-making Ind. 1.2.1: Number of 10 organizations participated in legislative USG-assisted organizations proceedings and/or engage in advocacy 7 that participate in # (Quarterly) 10 2 500%
legislative proceedings
and/or engage in advocacy. Ind. 1.2.2: Number of SMEs and private sector A total of 86 SMEs/entities participated in entities participating in workshops during the reporting period. events for public/private 8 # (Quarterly) 866 5 1720% stakeholders to facilitate For disaggregates on sector and province see private sector engagement Annexure: 1 in policy making as a result of USG assistance
6 134 SMEs/Private Sector entities were reported as of June 30th, 2019. After data verification, the updated value for the year 2019 is 86.
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2.2.2b. Number of events for public/stakeholders’ consultation to enhance Nine (9) events were held for public/stakeholder sector governance or 9 # (Quarterly) 97 5 180% consultations during the reporting period. facilitate private sector engagement in policy For disaggregates on events see Annexure: 1 making as a result of USG assistance Objective 2: Improved Economic Performance of Focus Enterprises The targets for sales revenue have been rationalized in the revised AMEP submitted to USAID for approval. The revised sales/ revenue target is 12%. The incremental value of export sales is $1.3M. The data of 62 SMEs were gathered who completed their Ind. 2.1: Value of % expressed in intervention with SMEA in 2019. The post 10 incremental sale revenue 32.1 16 201% whole # (Annual) intervention data has been compared with relevant attributed to SMEA baseline quarters of the previous year.
For disaggregates on sector, male/female owned/led, province is provided in Annexure: 1
The targets for export sales revenue have been rationalized in the revised AMEP submitted to USAID for approval. The revised sales/ revenue target is 3%. The incremental value of sales is $668,127. The data Ind. 2.2: Value of exports of 15 SMEs was gathered who completed their of targeted commodities % expressed in intervention with SMEA. The post intervention data 11 25.3 14 180.5% as a result of SMEA’s whole # (Annual) has been compared with relevant baseline quarters of assistance the previous year.
For disaggregates on sector, male/female, province is provided in Annexure: 1
Ind. 2.3: Value of new 240 SMEs reported investment including partially private sector investment Value in USD 12 $1,318,199 $10 Million 13 % contributed cost of project-supported initiatives and leveraged with SMEA’s (Quarterly) personal investments in businesses. resources
7 Updated yearly data has been reported after data verification.
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Distribution of SMEs in accordance with the required disaggregates, i.e. Sector, gender of the owner of SME, size of the SME and province is given in the annexure 1.
Ind. 2.4: Percentage of Out of 45 CF Grantees, 8 grantees are women % expressed in 13 women engaged through 17 2 850% owned/led businesses whole # (Annual) grant funding Sub-objective 2.1: Improved economic performance in select sectors Productivity analysis on selected SMEs receiving BDS and CF grants was analyzed using sales and employees Ind. 2.1.1: Increase in as proxy indicators. % expressed in 14 productivity of SMEA 8.5 8 106% whole # (Annual) assisted SMEs. Distribution of SMEs in accordance with the sector is given in the annexure 1.
Ind. 2.1.2: Percentage % expressed in 15 increases in sales revenue 32.1 16 201% Same as above reported in Ind.2.1 whole # (Annual) at SMEA assisted SMEs. Sub-objective 2.2: Improved technological readiness and innovations Ind. 2.2.1: Number of USG 276 SMEs applied new technologies/innovations assisted SMEs that applied during the year. 16 new technologies or # (Quarterly) 276 960 29% management practice as a See Annexure: 1 for disaggregates: Size, Sector, result of USG assistance Province
The indicator definition has been revised in the Ind. 2.2.2: Number of new AMEP document. Corrections in previouse technologies and reporting is required to align with the new 17 innovations introduced as # (Quarterly) 98 4 225% technology types, management practices. a result of SMEA
assistance See Annexure: 1 for disaggregates: Technology
186 SMEs reported the use of e-payment methods. Ind. 2.2.3: Number of 18 # (Quarterly) 186 300 62% Distribution of SMEs in accordance with the SMEs in target sectors that required disaggregates, i.e., sector, gender of the
8 Updated yearly data (9 technologies) has been reported after data verification, in comparison to 23 technologies reported in quarter 3.
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report using electronic owner of SME, size of SME and province is given in payment methods Annexure 1.
A total of 1,379 (Male: 974; Female: 405) unique persons received training on skill development Ind. 2.2.4: Number of
19 persons receiving training # (Quarterly) 1,379 1,925 72% Disaggregation by sector, gender of the owner of on skill development SME: size of the SME and Province is provided in Annexure 1.
A total of 2,509 (Male:1725, Female:784) persons days of training on skill development were conducted during the year Indi 2.2.5: Number of
20 person-days of training on # (Quarterly) 2,509 3,850 65% Disaggregation by sector, gender of the participant: skill development size of the SME and Province is provided in Annexure 1.
Sub-objective 2.3: Increased access to markets Ind. 2.3.1: Percentage of USG assisted SMEs that The target for this indicator has been rationalized in % expressed in 21 engage with new 215 960 (16%) 22% the revised AMEP submitted to USAID for approval. whole # (Annual) domestic/export markets The revised target is 80% of the assisted SMEs. and customers Ind. 2.3.2: Number of 24 SMEs including 10 in this quarter participated in project assisted SMEs project assisted international trade fairs & participating in exhibitions during the year. 22 international trade # (Quarterly) 24 6 400% fares/exhibitions as result Disaggregation by sector, gender of the owner of of USG assistance. SME: size of the SME and District is provided in Annexure 1. 37 SMEs including 29 in this quarter received Ind. 2.3.3: Number of certifications. project assisted SMEs 23 achieving domestic or # (Quarterly) 37 6 617% Disaggregation by sector, gender of the owner of internationally recognized SME: size of the SME and Province is provided in standards/ certification. Annexure 1.
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Sub-objective 2.4: Increased access to finance
A total of 1,397 SMEs received business development Ind. 2.4.1: Number of services through trainings, workshops, extensive SMEs receiving business support and grant funding. 24 development services # (Quarterly) 1,397 806 173% from USG assisted Disaggregation by sector, gender of the owner of sources. SME: size of the SME and Province is provided in Annexure 1.
289 unique SMEs have now improved financial worthiness either by showing improvement in sales, Ind. 2.4.2: Percentage of jobs or private investment in businesses. SMEA assisted SMEs with % expressed in 25 289 840 34.4% improved financial whole # (Annual) Disaggregation by sector, size of the SME is provided worthiness. in Annexure 1.
Sub-objective 2.5: Enabled women owned/managed SMEs to run profitable business 3 Women- Owned/Led SMEs out 15 accessed Ind. 2.5.1: Number of financial services as a result of SMEA support. SMEA assisted women 26 # (Quarterly) 3 72 4% SMEs accessing financial Disaggregation by sector is provided in Annexure 1. services.
70 Women – Owned/Led SMEs entered new Ind. 2.5.2: Number of USG domestic/export markets. assisted women SMEs 27 # (Quarterly) 70 84 83% entering new Disaggregation by sector, size of the SME is provided domestic/export markets. in Annexure 1.
Ind. 2.5.3: Percentage increase sales revenue at % expressed in Disaggregated data on sector and province is 28 78 10 780% the USG assisted women whole # (Annual) provided in Annexure: 1 SMEs.
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PROBLEMS AND SOLUTIONS
Business Enabling Environment
Challenge: A key challenge that SMEA faced during this year was constant changes in federal and provincial appointments and continuous altering commitments from government officials, which caused delays in garnering necessary responses from government counterparts on certain reform initiatives. SMEA observed inconsistencies and variance in demands for technical assistance given the priorities of changing personnel. These factors limited the project’s ability to gather requisite information and caused delayed implementation of programmatic activities.
Solution: In all its interactions with government counterparts, SMEA stresses developing long-term, organizationally-embedded understanding and commitment to reforms, independent of the leadership.
Challenge: This reporting year coincided with the budget preparation cycle for both the Federal and Provincial Governments, which fully occupied the attention of government counterparts. As a result, institutional and working-level arrangements with relevant government counterparts took longer than anticipated.
Solution: SMEA continued to stay connected with focal personnel in relevant departments to stay up to date with developments.
Challenge: A key challenge that the project faces while working with government entities such as service delivery units, special departments, and semi-autonomous bodies relates to limitations and delays with respect to scheduling broader consultative events involving key stakeholders and experts providing advice on a voluntary and/or mandatory basis. Due to altering commitments of the relevant office bearers, it becomes a challenge to have them focus on one subject and to also ensure their full endorsement on timely allocation of resources and support in consultative events.
Solution: SMEA works closely with counterparts and tries to ensure maximum stakeholder engagement through frequent one-to-one meetings in between such larger consultative sessions.
Challenge: The work on the integration of the NMDs with KP has been slow. Despite the formal merger, there is a lack of clarity on the institutional roles and responsibilities of various departments and government entities. Despite KP Government’s approval of the Tribal Decade Strategy 2020-2030, intra-departmental differences, persistent transfers, and postings of the officials – usually posted for around three months – incapacitated the Government of KP. The lack of strategic direction has also made the merger process much slower.
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Solution: During this reporting period, SMEA adopted a strategic approach and interacted with senior-most stakeholders, particularly provincial ministers. SMEA found them forthcoming which provided much needed ownership and momentum to the project’s technical assistance.
Challenge: SMEA continuously tried to engage the Government of Balochistan, however, the four-party provincial coalition government had intra-coalition challenges coupled with frequent changes of senior government officials. In this reporting period, two Chief Secretaries and two Additional Chief Secretaries were posted and transferred out of the province. In mid-2019, the province achieved much needed political stability after overcoming intra-coalition challenges, which resulted in sustained appointments of government officials.
Solution: SMEA strategized and engaged the Provincial Chief Minister and senior government officials who could help ensure government ownership from top to bottom. The nomination of a focal person by the Government of Balochistan for SMEA and its expeditious responses to the project’s proposals for reforms is an illustration of this ownership.
Competitiveness Enhancement
Challenge: Considering the diversity in scales and types of SMEs being supported by the project, along with the variety and multiple combination of services being requested by the project’s beneficiaries, ensuring reasonability of the prices being offered by contracted BDSPs was a challenge faced by the component during this reporting period. Due to the difference in variables involved, such as the SME size, revenues, number of employees, sector, location, and their business needs, the intensity and/or frequency of BDS support demanded by SMEs is almost always unique. In addition to this, the selected BDSP’s final offer also varies in terms of their daily rate, agreed level of effort (LOE), as well as external factors, which differ on a case to case basis.
Solution: In order to overcome this challenge, SMEA has now instituted a modified approach where all BDS cases that are finalized with SMEs are then compared to the prices from either the existing BDS pool, or prices are collected from the market with an allowable level of deviance. Once the specifics of a BDS support case are finalized that allows for all variables to be locked down, quotes against this bundle of services are collected. This new modified approach not only considers existing price points, but also takes market research into account. Based on this, the team also worked on establishing a price index to facilitate SMEs in terms of average cost of services, LOE, and the service providers. This modification in the model is helping SMEA in catering to SMEs in a more standardized manner.
Challenge Fund
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Challenge: A major challenge that Challenge Fund is facing while implementing the grants is the significant depreciation of the Pakistan rupee, which is causing drastic price hikes for imported equipment. When the grant award process for applicants of Round 2 of SME Growth and Innovations Grants was initiated in October - December 2018, budgets were drafted with the PKR/USD rate for these months (approximately 125.97 PKR/USD). When the grants were awarded between the months of March - June 2019, and grantees needed to place orders for imported machinery in May and June 2019, the dollar price and equivalent PKR value had increased by 10-15 percent. This change in exchange rates is an additional burden that the grantees have to bear; first on the decreased value of the grant support, and secondly on the increased amount in their contributions to the grant activity to make up the difference. As a result, there were further complications. In the recent budget announcements, the Government proposed to abolish zero-rated regime for exporters. This required any grantee purchasing locally or internationally procured equipment to pay an additional 17 percent in sales tax, which would make the price of the grant activity even higher. These depreciating values of the local currency and the possible increase in taxes on goods are creating a liquidity crunch for grantees – and SMEs in general – who are now facing issues with banks for opening their LC’s.
Solution: Grantees requested to increase the grant amount for the balancing amounts that they have to bear from their pockets due to forex rate fluctuations. SMEA worked with grantees to adjust timelines and budgets within the parameters of the approved grant manual, applicable regulations, RFA ceilings, and existing vetting approvals, where possible.
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BEST PRACTICES
CHALLENGE FUND
SMEA continues the practice of open and transparent solicitation process for the CF grant applications, through advertisement of request for applications (RFAs) in leading Pakistani English and Urdu national newspapers, postings on the USAID and Pakistani U.S. Consulate social media pages, and distribution of information at other SMEA outreach and training events. This ensures that the general public is well aware of solicitation procedures and application deadlines and makes the outreach more effective.
To ensure transparency of the grant application and award process, the project organizes multiple orientation sessions (with flexible timings and dates) in major cities across Pakistan. Innovation Grant applicants are also provided an opportunity to attend co- creation workshops held at major cities of Pakistan prior to the closing of the solicitation. The co-creation workshops offer additional opportunities for applicants to develop partnerships or collaboration with other like-minded SMEs. Shortlisted Innovation Grant applicants are invited to attend a free, two-day Build a Business workshop, followed by up to four weeks of mentorship with local sector and business experts and a one-day business pitch training. This practice has helped applicants develop improved business plans and make better pitches/presentations about their grant activities, both to the panel of judges during the final selection process, as well as external investors to attract additional private-sector investment.
To ensure due diligence of the grant award process, the grant applications are verified at multiple stages. At the evaluation stage, SMEA engages relevant industry experts that include business analysts, financial reviewers, and industrial experts to evaluate grant applications and proposed budgets. Later, on a need-basis, SMEA’s in-house sector experts work with the grants team to carry out pre-award risk assessment visits to the applicant sites to assess their current deployed technology, in-house capabilities, outsourcing mechanism, and associated costs. Lastly, during the grant budget finalization stage, grantees provide valid comparative quotations for the all procurements/tech work to be carried out through grant funds that is above the micro-threshold level. During the implementation stage, technical consultants regularly visit grantees to ensure compliance.
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SUCCESS STORIES
CONNECTING PAKISTANI ARTISANS DIRECTLY WITH LOCAL AND INTERNATIONAL MARKETS THROUGH THE CHALLENGE FUND
According to a British Council survey, approximately 15 percent of the Pakistani population is associated with the handicraft business. Pakistani handicraft products are predominantly produced by skilled female workers who have the potential of becoming independent SMEs and valuable contributors towards the export of Pakistani-made crafts. However, artisans do not get their fair share of revenue largely due to A carpet-making facility in Hunza, Gilgit Baltistan run by exploitation by middlemen and women artisans is now registered with Vceela's online their inadequate knowledge of platform e-commerce. Due to the absence direct linkages between artisans and end buyers, the artisans forgo almost 60-80 percent of their profits because of these middlemen. This has led to many handicraft workers to leave their profession to look for other jobs.
To help mitigate these challenges, SMEA awarded a Challenge Fund Innovation Grant to Vceela (Private) Limited, an SME that has developed a village-to-world marketing model that allows artisans from smaller cities and villages in Pakistan to connect with global markets, without the need to have digital skills. This innovative idea disrupts the traditional middleman business model, allowing artisans to directly sell and market their products to consumers. This helps increase their profits and provides products to consumers at a reduced price.
Through SMEA’s grant, Vceela integrated a payment solution into their platform, developed an online web-portal that serves as a reliable directory of artisans and a complete repository for data, and developed Android and IOS applications. Vceela also organized trainings for artisans on ICT skills, e-commerce, packaging, quality assurance,
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and logistics. Through the Innovation Grant, Vceela successfully brought on board 600 artisans to their online portal.
The successful implementation of the Innovation Grant by Vceela put “It has been a great learning experience. We divided it in a well-placed position to scale- the country into 22 craft clusters and with the initial up its model and become a market grant support of USAID, we have been able to cover leader in the export-oriented seven of these clusters” handicraft market. To augment - Akeel Khalid, CEO, Vceela these efforts, SMEA awarded a follow-on Scale-up Grant to Vceela to help further upgrade its technological capacity to reach out to all promising craft clusters across Pakistan, including possible expansion into the Newly Merged Districts of Khyber Pakhtunkhwa. Vceela will use the Scale-up Grant to develop a business-to- business model with additional payment gateways, allowing registered artisans to grow their market share and exports. This enhanced capacity will enable Vaceela to register an additional 10,000 artisans.
Vceela has also partnered with Akhuwat Foundation, a Pakistan-based social enterprise, to provide access to finance to its registered artisans though micro loans. Overall, Vceela’s grant activity has leveraged more than the grant amount as private sector investment and will create 2,000 new full-time jobs through registration of artisans on its online platform.
www.vceela.com
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USAID SMEA HELPS REVISE PAKISTAN’S SME POLICY
SMEs are undeniably the mainspring of any economy and have an important role to play in promoting inclusive and sustainable economic growth, providing employment, fostering innovation, and reducing income inequalities. SMEs constitute nearly 90 percent of all enterprises in Pakistan, are responsible for providing 80 percent employment to the non-agriculture labor and contribute 40 percent towards the country’s GDP.
With the Government of Pakistan’s renewed commitment to augment the SME sector and enable “Promotion of local small and medium-sized enterprises to benefit from businesses is the most effective and sustainable emerging opportunities in solution for inclusive growth”. domestic and international -Ms. Nadia J. Seth, General Manager – Policy markets, SMEA, at the request of and Planning Division, SMEDA the Ministry of Industries and Production, recently helped revise the SME Policy of Pakistan.
Working closely with SMEDA, the project carefully designed the revision process to effectively understand the perspective of the public and private sector on SME development challenges and solutions. This included a series of focused group discussions and consultations with over 200 SMEs and stakeholders in 11 cities across Pakistan. The revised policy resonates the real concerns of SMEs and provides a set of recommendations for the government, which are private sector responsive and business friendly.
The SME Policy is based on two central pillars: reforming the policy and regulatory environment and addressing SME market constraints. Within the policy and regulatory environment, the Policy focuses on creating enabling and business friendly policies and regulations for SMEs to flourish. SME constraints on the demand side look at issues of market access and the role of public procurement in creating demand for SME products and services. Supply side constraints focus on business development services, entrepreneurship and innovation, access to finance, the skills market, and infrastructural provisions necessary to support SME growth.
The Policy is presently at an advance stage of evaluation at the Ministry of Industries and Production and is expected to be submitted to the Cabinet for approval shortly. Once implemented, the National SME Policy 2019 will serve as the Government of Pakistan’s
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basic strategy for providing support to catalyze growth of Pakistan’s SME sector. It will help trigger private sector growth, which is geographically and socially inclusive; generate countrywide employment; improve business competitiveness; and increase exports.
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ENHANCING COMPETITIVENESS OF WOMEN ENTREPRENEURS IN KHYBER PAKHTUNKHWA
Pakistan presents exemplary cases of women, young and old, struggling with challenges of dynamic modernization, heritage, and conviction. In Khyber Pakhtunkhwa (KP), female entrepreneurs do not enjoy the same business opportunities as men, Women entrepreneurs following the completion of their training however, as we reach on 'Business Management and Marketing' held in Mardan, Khyber new summits of Pakhtunkhwa advancement, women have pushed to remain in the vanguard of the entrepreneurial eco-system; discovering new avenues and changing the world one idea at a time. USAID Small and Medium Enterprise Activity was presented with a unique request by all the Women Chambers of Commerce and Industries (WCCIs) in KP, who unanimously highlighted skill gaps of women-led businesses (WLBs) in their regions in terms of marketing their enterprises successfully. Due to a lack of prospects for business development, it became apparent that issues faced by male-owned enterprises are accentuated when faced by female entrepreneurs. This included the need for better growth planning, identifying ideal target markets, optimizing customer segmentation, devising the right pricing strategies, and other techniques that enable WLBs to maximize their outreach and revenues.
To assist women entrepreneurs to grow their To date, 27 percent of all SMEA enterprises and learn new business skills, SMEA beneficiaries have been women-led organized a series of two-day trainings on businesses and recent results have ‘Business Management and Marketing’ in shown an incremental increase in sales collaboration with the WCCIs of Peshawar, of 78 percent for these enterprises as Mardan, Nowshera, and Hazara Division, for a result of project support. interested WLBs and entrepreneurs. The trainings covered topics such as introduction to business management, customer persona building, strategies for pricing, and digital marketing. Extra care was taken to contextualize each training as per the needs and level of understanding for local women entrepreneurs in KP.
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Participants consisted of women running small businesses in different sectors such as garments, gems, daycare, grooming, bakeries, and handicrafts, while some outliers were also found where women were running mineral water plants, exporting spices, and running franchises of large-scale businesses. Based on SMEA’s interaction with these SMEs, it was found that they are typically reluctant or apprehensive of documentation and found it difficult ‘The idea behind Kimmy's was to develop a viable to understand the business and effective source of income that is compatible registration or taxation with our traditions and culture. Specializing in bags, requirements by the government. luggage, and fashion accessories we launched our Many of the formal businesses micro enterprise with the timely support from reported that they did not maintain SMEA, which first trained us and then provided us books and records of their with an E-commerce platform with great possibilities revenues and expenses; to the for expansion. This has surely given us the required extent that they did not consider help in better marketing our products.’ indirect expenses in their costing structures. The lack of -Ms. Manaza Hyat, Owner, Kimmy’s Bags and Accessories, Abbottabad, KP bookkeeping or revenue documentation also prevented them from approaching banks for formal financing or setting profitable prices for their products and services.
Subsequently, some of the participants also went on to apply for Business Development Services (BDS) support from SMEA. BDS support included improved ICT solutions such as E-commerce websites and digital marketing for enhanced social media presence.
Despite cultural constraints and family pressures, women entrepreneurs were motivated enough to attend SMEA’s trainings and some of them even brought along their children and family members (SMEA accommodated such cases owing to its gender sensitive policies). The participation of these women entrepreneurs in SMEA’s trainings shows that WLBs in Pakistan are on the lookout for learning and growth opportunities.
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FINANCIAL REPORT
Pursuant to section F.6.12 of the SMEA contract, the following information summarizes SMEA’s financial progress from October 1, 2018 to September 30, 2019.
• Total funds obligated to date by USAID into the contract: $22,988,837 • Percent of obligated funds expended through the end of this year: 56% • Summary of expended funds by main line items:
Table 4: Summary of SMEA's financial progress over the past year
Previously Contract Funds Expended Remaining Cost Category Expended Budget This Year Budget Funds 1. Salaries and Other Benefits (i) $6,691,832 $2,658,845 $1,939,969 $2,093,021 2. Travel and Transportation $285,795 $79,670 $57,596 $148,529 3. Equipment $315,186 $204,907 $8,308 $101,970.48 4. Other Direct Costs (ii) $4,472,487 $503,910 $364,188 $3,604,3894 5. Subcontracts $8,581,472 $1,485,697 $1,301,455 $5,794,319 6. Pakistan Challenge Fund $7,500,000 $5,614 $656,880 $6,837,506 7. Indirect Cost (iii) $5,037,728 $1,442,444 $1,048,733 $2,546,548
Total Estimated Cost (Excluding Fixed $32,884,501 $6,381,088 $5,377,129 $21,126,284 Fee) $1,951,722 $678,965 $370,344 $902,413 8. Fixed Fee (i) includes Salaries and Fringe Benefits, and Allowances (ii) includes Other Direct Costs and $2.5 million Competitiveness Enhancement Fund
(iii) includes Overhead and General and Administrative costs
• Significant expenses incurred during the period:
o Salaries and Allowances. Salaries of $909K, and direct fringe benefits of $354K including annual health insurance premiums and severance for employees who departed early due to budget constraints, including the fielded expatriates DCOP Barbara Yale and M&E Lead Shahzad Tahir. Indirect fringe benefits billed in accordance with Chemonics’ current provisional NICRA totaled $134K. Allowances, including danger pay, post differential, and living quarters allowance, for fielded expatriates DCOP Ms. Yale and M&E Lead Mr. Tahir, as well as project-wide per diem, totaled $140K. A Cost of Living Adjustment of 15 percent was applied to all Long-term staff retroactively effective December 2018.
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o Other Direct Costs. The primary driver of ODCs over the year was the provision of STTA and services from SMEA BDSPs under the Competitiveness Enhancement Fund, totaling $677K. o Subcontracts. A total of $1.3M in subcontractor invoices was incurred this year from international subcontractors Enclude Limited, GriffinWorx, and J.E. Austin Associates, in addition to expenses from local subcontractors Semiotics, The Indus Entrepreneurs, Premier Security Services, and Consortium for Development Policy Research. As of March 2019, subcontractors Enclude Limited, GriffinWorx, and The Indus Entrepreneurs ceased work under SMEA, and thus have not been incurring costs for the majority of this year. o Pakistan Challenge Fund. A total of $657K was disbursed in the form of milestone payments to SME Growth and Innovation grantees from the Challenge Fund. o Indirect Cost. This line item includes overhead and general & administrative indirect expenses billed in accordance with Chemonics’ current provisional NICRA.
Table 5: Projected expenditures for the next year
Projected expenditures over next Cost Category quarter
1. Salaries and Other Benefits (i) $1,538,529 2. Travel and Transportation $100,467 3. Equipment $79,000 4. Other Direct Costs (ii) $980,661 5. Subcontracts $835,354 6. Pakistan Challenge Fund $1,508,000 7. Indirect Cost (iii) $918,090
Total Estimated Cost (Excluding Fixed Fee) $5,977,608 8. Fixed Fee $370,344 (i) includes Salaries and Fringe Benefits, and Allowances (ii) includes Other Direct Costs and $2.5 million Competitiveness Enhancement Fund (iii) includes Overhead and General and Administrative costs
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ANNEX 1: DISAGGREGATED DATA
Indicator G.1: Number of job/employments attributed to SMEA Full-Time Employment (FTE): SME Ownership Hospitality ICT Logistics & Textiles Leather Agribusiness Other Total Packaging Male-Owned 133.58 446.73 190.88 0.58 0.08 17.07 14.64 803.56
Female-Owned 5.28 39.03 0.51 1.51 11.98 58.31 Total 138.87 485.76 190.88 1.08 0.08 18.57 26.62 861.87
Gender Hospitality ICT Logistics & Textiles Leather Agribusiness Other Total Packaging Male 134.03 204.17 184.38 0.83 0.08 16.50 20.66 560.65 Female 4.84 281.59 6.50 0.25 0.00 2.08 5.96 301.22
New Jobs: Province/Region Hospitality ICT Logistics & Textiles Leather Agribusiness Other Total Packaging Federal Capital Territory 221 105 58 384
Gilgit Baltistan 75 75 Khyber Pakhtunkhwa 73 18 110 2 1 2 4 210
Punjab 39 938 2 30 1,009
Sindh 74 159 659 2 58 952 Total 482 1,220 769 4 1 62 92 2,630
Indicator G.2: Proportion of female participation in SMEA to increase access to productive economic resources Province/Region Light Hospitality ICT Logistics & Minerals Textiles Leather Agribusiness Other Total Engineering Packaging Balochistan 0% 28.57% 0% 50% 100% 0% 48% 48.98%
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Province/Region Light Hospitality ICT Logistics & Minerals Textiles Leather Agribusiness Other Total Engineering Packaging Federal Capital 0% 38.46% 15.05% 0% 0% 0% 20% 55.56% 27.95% Territory Gilgit Baltistan 1.1% 33.33% 0% 0% 2.02% Khyber Pakhtunkhwa 0% 1.31% 21.88% 0% 0% 84.62% 0% 0% 71.01% 19.22% Punjab 6.67% 18.03% 18.81% 60% 66.67% 32.14% 25% 8.33% 66.37% 30.71% Sindh 0% 33.33% 16.58% 0% 33.33% 42.86% 100% 11.43% 61.62% 31.74%
Indicator: 1.1 Number of reforms consistent with the World Bank benchmarks on doing business are recommended for improvement Policy Name/Title Federal Capital Khyber Punjab Total Territory Pakhtunkhwa E-Commerce Policy Framework (Development of ICT Chapter for the Strategic 1 1 Trade Policy Framework) Investment Policy Punjab 1 1
Develop Environmental Standards for Leather Value Chain 1 1
Revised SME Policy of Pakistan 1 1
Investment Policy Review for Khyber Pakhtunkhwa (KP) province 1 1 Total 2 1 2 5
Indicator: 1.2 Number of policies/regulations/administrative procedures at a given stage of development as a result of USG assistance Policy Name/Area Federal Capital Khyber Punjab Sindh Total Territory Pakhtunkhwa E-Commerce Policy Framework (Development of ICT Chapter for the Strategic Trade 1 1 Policy Framework) Investment Policy Punjab 1 1
Minor Minerals Permit Rules (Part of SMEA assistance for Minerals Subsidiary 1 1 Legislation-Amendment in Rules)
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Policy Name/Area Federal Capital Khyber Punjab Sindh Total Territory Pakhtunkhwa Mineral Titles (Large- and Small-Scale Mining) Governance Rules. (Part of SMEA 1 1 assistance for Minerals Subsidiary Legislation-Amendment in Rules) Regulation & Enforcement Rules (Part of SMEA assistance for Minerals Subsidiary 1 1 Legislation-Amendment in Rules Minerals Auction Rules (Part of SMEA assistance for Minerals Subsidiary Legislation- 1 1 Amendment in Rules) Diagnostic Study for Restructuring Sindh Small Industries Corporation 1 1
Develop Environmental Standards for Leather Value Chain 1 1
Revised SME Policy of Pakistan 1 1
Legal & the Regulatory Review of Mineral Sector, Khyber Pakhtunkhwa (KP) 1 1
Investment Policy Review for Khyber Pakhtunkhwa (KP) province 1 1
Royalty Auction Rules-Minerals 1 1 Total 2 7 2 1 12
Indicator: 1.1.1. Number of USG assisted meetings with government officials Meeting Type Balochistan Federal Capital Khyber Punjab Sindh Total Territory Pakhtunkhwa Meeting with Government for policy 4 9 7 18 19 57 change
Indicator: 1.1.2. Number of entities receiving USG supported capacity enhancement on policy development, analysis and implementation Type of Entity Balochistan Federal Capital Khyber Punjab Sindh Total Territory Pakhtunkhwa Public Entity 4 6 1 13 3 27
Indicator: 1.2.1. Number of U.S. government-assisted organizations that participate in legislative proceedings and/or engage in advocacy
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Entity Type All Pakistan (National) Sindh KP Punjab Total
Public Entity 3 1 2 4 10 Indicator: 1.2.2. Number of SMEs and private sector entities participating in events for public/private stakeholders to facilitate private sector engagement in policy making SME Size Light Hospitality ICT Logistics & Minerals Textiles Agribusiness Other Total Engineering Packaging Small 9 7 2 1 5 4 2 17 47
Medium 5 1 4 5 2 19 36
Large 1 1 1 3 Total 14 8 2 1 9 10 5 37 86
Province/Region Balochistan Federal Capital Gilgit Baltistan Khyber Punjab Sindh Total Territory Pakhtunkhwa Total 15 3 13 11 21 23 86
Indicator: 1.2.3. Number of events for public/private stakeholders to facilitate private sector engagement in policy making as a result of U.S. government assistance Event Type Balochistan Gilgit Khyber Punjab Sindh Total Baltistan Pakhtunkhwa Workshop/Seminar 1 1 Focus Group Discussion (FGD) 1 1 1 3 2 8 Total 1 1 1 3 3 9
Indicator 2.1: Value of incremental sales attributable to SMEA SME Ownership Hospitality ICT Logistics & Textiles Agribusiness Other Total Packaging Male-Owned 49.72% 38.06% 48.23% 19.64% 16.44% 28.02%
Female-Owned 4.36% 211.85% 945.9% 529.59% 78.23% Total 35.44% 45.61% 48.23% 19.64% 23.25% 529.59% 32.13%
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Indicator 2.2: Value of incremental exports attributable to SMEA SME Size Hospitality ICT Textiles Agribusiness Total
Small 25.32% 29.74% 23.25% 23.64%
Medium 50% 19.55% 31.12% Total 25.32% 42.76% 19.55% 23.25% 25.27%
Indicator: 2.3 Value (in USD) of new private sector investment leveraged with SMEA’s resources SME Size/SME Light Hospitality ICT Logistics & Textiles Leather Agribusiness Other Total Ownership Engineering Packaging Small
Male-Owned 290,076.72 287,530.34 6.84 8,615.38 17.09 57,906.17 26,376.19 670,528.74
Female-Owned 28,550.67 138,173.19 4,198.29 4,172.93 29,208.94 204,304.03
Total: Small 318,627.40 425,703.53 6.84 12,813.68 17.09 62,079.10 55,585.13 874,832.77
Medium
Male-Owned 17,094.02 46,000.86 250,819.32 106,946.32 20,153.85 441,014.37
Female-Owned 2,522.52 615.38 3,137.90
Total: Medium 17,094.02 48,523.38 250,819.32 106,946.32 20,769.23 444,152.27 Grand Total 17,094.02 318,627.40 474,226.91 250,826.16 119,760.00 17.09 62,079.10 76,354.36 1,318,985.04
Province Balochistan Federal Capital Gilgit Baltistan Khyber Pakhtunkhwa Punjab Sindh Total Territory PSI (USD) 1,367.52 151,643.97 141,606.84 343,843.59 344,349.98 336,173.13 1,318,985.04
Indicator 2.4: Percentage of women-owned/ led SMEs engaged through grant funding SME Size Light Hospitality ICT Logistics & Textiles Agribusiness Other Total Engineering Packaging
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Small 100% 14.29% 33.33% 0% 14.29% 0% 23.53%
Medium 0% 0% 0% 0% 0% 0% Total 20% 14.29% 31.25% 0% 0% 12.5% 0% 17.78%
Indicator 2.1.1: Increase in productivity of SMEA assisted SMEs Sector Textile Logistics & ICT Agribusiness Hospitality Others Total Packaging
% change in Productivity 79.92% 31.20% -9.12% -38.65% 31.19% 364.78% 8.48%
Indicator 2.1.2: Value of incremental sales attributable to SMEA SME Ownership Hospitality ICT Logistics & Textiles Agribusiness Other Total Packaging Male-Owned 49.72% 38.06% 48.23% 19.64% 16.44% 28.02%
Female-Owned 4.36% 211.85% 945.9% 529.59% 78.23% Total 35.44% 45.61% 48.23% 19.64% 23.25% 529.59% 32.13%
Indicator: 2.2.1 Number of U.S. government-assisted SMEs that applied new technologies and/or management practice as result of U.S. government assistance Size/SME Light Hospitality ICT Logistics Minerals Textiles Leather Agri- Cross- Other NA Total Ownership Engineering & business cutting Packaging Small
Male-Owned 1 60 99 2 7 2 5 3 3 182
Female-Owned 4 29 1 10 1 29 2 76 Total: Small 1 64 128 2 1 17 2 5 1 32 5 258
Medium
Male-Owned 10 1 4 15
Female-Owned 1 1 1 3
Total: Medium 1 11 1 4 1 18
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Grand Total 1 65 139 3 1 21 2 5 1 33 5 276
Province Balochistan Federal Capital Gilgit Baltistan Khyber Punjab Sindh Total Territory Pakhtunkhwa # of SMEs 3 25 29 63 73 83 276
Indicator: 2.2.2 Number of new technologies and innovations introduced as a result of SMEA assistance # New Technology Type # of SMEs
1 TECH - Digital Marketing/E-commerce 182 2 TECH - MIS/ERP 12 3 TECH - Mobile Applications 19 4 TECH - Data Protection Regulation 14 5 TECH - Accounting & Finance 13 6 TECH - Operational and managerial practices 43 7 TECH - Product/service improvement 55 8 TECH - Improved environmental practices 39 9 TECH - Food Safety 20
Indicator: 2.2.3 Number of SMEs in target sectors that report using electronic payment methods Size/SME Ownership Light Hospitality ICT Logistics & Minerals Textiles Leather Agribusiness Other NA Total Engineerin g Packaging Male-Owned
Small 22 77 1 3 1 7 4 4 119
Medium 1 10 11
Total: Male-Owned 1 22 87 1 3 1 7 4 4 130
Female-Owned
Small 1 21 1 10 17 3 53
Medium 1 1 1 3
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Total: Female-Owned 1 22 1 11 18 3 56 Grand Total 1 23 109 1 1 14 1 7 22 7 186
Province Balochistan Federal Capital Gilgit Baltistan Khyber Punjab Sindh Total Territory Pakhtunkhwa # of SMEs 2 20 15 26 67 56 186
Indicator: 2.2.4 Number of persons receiving training on skill development Participants Light Hospitality ICT Logistics & Minerals Textiles Leather Agribusiness Other Total Gender Engineering Packaging Male 6 269 482 4 65 3 108 37 974
Female 18 139 3 4 68 2 7 164 405 Total 6 287 621 7 4 133 5 115 201 1,379
Participants Age Azad Jammu Balochistan Federal Gilgit Khyber Punjab Sindh Total & Kashmir Capital Baltistan Pakhtunkhwa Territory Age 15-19 1 1 2 4 3 3 14
Age 20-24 2 15 21 31 61 55 185
Age 25-29 1 31 16 68 87 85 288
Age 30-65 16 76 45 173 282 219 811
Age 65+ 2 1 3 6
Unknown 4 17 13 25 16 75 Total 1 23 123 103 290 458 381 1,379
Indicator: 2.2.5. Number of person-days of training on skill development Participant Light Hospitality ICT Logistics Minerals Textiles Leather Agribusiness Other Total Gender Engineering & Packaging Male 6 390 1,023 21 81 9 128 67 1,725
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Female 41 321 7 8 111 4 7 285 784 Total 6 431 1,344 28 8 192 13 135 352 2,509 Indicator 2.3.1: Percentage of USG assisted SMEs that engage with new domestic/export markets and customers Province/Region Light Hospitality ICT Logistics Textiles Leather Agribusiness Other Total Engineering & Packaging Balochistan 3 2 5
Federal Capital Territory 1 20 1 5 27
Gilgit Baltistan 9 9
Khyber Pakhtunkhwa 3 8 2 3 2 8 26
Punjab 2 9 39 6 3 15 74
Sindh 5 42 1 9 5 12 74 Total 2 27 109 3 21 1 10 42 215
Indicator: 2.3.2. Number of project-assisted SMEs participating in international/national trade fairs and exhibitions as a result of U.S. government assistance SME Ownership/Sector Chitral Islamabad Karachi City Lahore Mansehra Peshawar Quetta Rawalpindi Total
Male-Owned
Hospitality 1 4 1 3 1 4 4 1 19
ICT 1 1 Total: Male-Owned 1 1 1 4 1 4 4 1 20
Female-Owned
1 Hospitality 3 4
1 Total: Female-Owned 3 4 Grand Total 1 5 1 7 1 4 4 1 24
Indicator: 2.3.3. Number of project-assisted SMEs achieving internationally/domestically recognized standards/certifications
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SME Size/SME Ownership Hospitality ICT Textiles Agribusiness Total
Small
Male-Owned 5 4 13 22
Female-Owned 3 2 1 6
Total: Small 8 6 14 28
Medium
Male-Owned 2 5 1 8
Female-Owned 1 1
Total: Medium 2 6 1 9 Grand Total 10 12 1 14 37
Indicator: 2.4.1 Number of SMEs receiving business development services from U.S. government assisted sources SME Size/SME Ownership Light Hospitality ICT Logistics Minerals Textiles Leather Agribusiness Other Total Engineering & Packaging Small
Male-Owned 5 284 347 4 41 2 130 40 853 Female-Owned 1 24 85 1 4 63 1 8 207 394 Total: Small 6 308 432 5 4 104 3 138 247 1,247
Medium
Male-Owned 4 11 77 3 23 4 5 127
Female-Owned 2 4 1 2 1 6 16
Total: Medium 4 13 81 4 25 1 4 11 143
Large
Male-Owned 3 3 1 7
Total: Large 3 3 1 7
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Grand Total 10 321 516 9 4 132 4 143 258 1,397 Province Azad Jammu Balochistan Federal Capital Gilgit Baltistan Khyber Punjab Sindh Total & Kashmir Territory Pakhtunkhwa # of SMEs 2 26 149 85 315 420 400 1,397
Indicator 2.4.2: Percentage of SMEA assisted SMEs with improved financial worthiness SME Size Light Hospitality ICT Logistics & Textiles Leather Agribusiness Other Total Engineering Packaging Small 86 103 2 8 1 22 29 251
Medium 1 30 2 3 2 38 Total 1 86 133 4 11 1 22 31 289
Indicator: 2.5.1 Number of SMEA assisted women owned/led SMEs accessing financial services SME Size Hospitality ICT Other Total
Small 1 1 1 3
Indicator 2.5.2: Number of USG assisted women-owned/led SMEs entering new domestic/export markets SME Size Hospitality ICT Textiles Agribusiness Other Total
Small 5 11 15 1 35 67
Medium 1 2 3 Total 6 11 17 1 35 70
Indicator 2.5.3: Percentage increase sales revenue at the USG assisted women-owned/led SMEs Province Hospitality ICT Agribusiness Other Total
Federal Capital Territory 63.6% 1096% 242.84%
Khyber Pakhtunkhwa 0% 0% Punjab 2.98% 757.47% 7756050% 371.49% 55.64%
Sindh 133.27% 358.77% 200.89%
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Total 4.36% 211.85% 945.9% 529.59% 78.23%
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ANNEX II: LIST OF DELIVERABLES SUBMITTED TO USAID
SR. LIST OF DELIVERABLES DATE 1. Quarterly Report (July – Sept 2018) October 15, 2018
2. Revised Gender Inclusion Assessment Report December 14, 2018
3. Quarterly Report (Oct – Dec 2018) January 14, 2019
4. Extended Year 2 Workplan January 26, 2019
5. Extended Year 2 Workplan: revision 1 February 28, 2019
6. Annual property Report February 28, 2019
7. Quarterly Report (Jan – Mar 2019) April 15, 2019
8. Extended Year 2 Work Plan: revision 2 April 15, 2019
9. Annual Tax Report FY2018 April 15, 2019
10. SF-425 Financial Report (FY2019 Q2) May 1, 2019
11. Revision to Annual Tax Report FY2018 July 10, 2019
12. Quarterly Report (Apr – Jun 2019) July 15, 2019
13. SF-425 Financial Report (FY2019 Q3 August 5, 2019
14. Year 3 Annual Work Plan August 30, 2019
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USAID Small and Medium Enterprise Activity Annual Progress Report October 2018 – September 2019