KARACHI, Jan 16: The Asian Development Bank (ADB) will provide $150-200 million loan to the Small and Medium Enterprise Development Authority (Smeda) by April next year under Trade Enhancement Finance Programme for the SMEs development.

This was stated by the chief executive officer, Smeda, Iqbal Mustafa in a press conference on Wednesday.

Under the first phase, he said, the Bank will provide one million dollars grant to Smeda in April for technical assistance.

Smeda is also likely to get $10 million from the European Union (EU) for undertaking institutional building of SMEs in Pakistan, he said adding that the Ministry of Finance is currently in the process of negotiating these loans with the EU.

Besides this assistance, the World Bank has also provided $200,000 to carry out investment climate survey for promotion of local and foreign investments.

On the regulatory front, he said, the ILO-Smeda report on regulatory mapping of the country with special focus on SMEs and employment generation has been completed and it was launched from Geneva on December 17.

He said entrepreneurs do not feel satisfaction due to lack of conducive business environment. He said Smeda has asked the government to come out with a long-term policy for SMEs by June this year and identify sectors which have potential to grow.

The law ministry has been holding back our draft relating to the legal cover for Smeda. Hopefully it will be in place this year, he added.

Iqbal said that Smeda, the SME Bank and the State Bank are jointly working on making changes and amendments in prudential regulations so that banks could easily finance the SMEs. Under the amendments, it will be easy for the SMEs to get a collateral for funds. He said changes in prudential regulations are necessary as banks are reluctant to finance SMEs.

Besides, a venture capital fund will also be formed under which 50 per cent equity will be owned by banks.

A Credit Guarantee Scheme will also be launched under which a pool will be formed to finance SMEs, he said.

Smeda chief said that UNIDO is also launching a cluster development project where Smeda has been identified as one of the counterpart agencies. He added that cluster development activities are in full swing in all regional offices.

An economic census has also been planned with the help of Federal Bureau of Statistics (FBS) to share date with Smeda. This data will help in providing direct assistance to the SMEs. Currently, there are 220,000 SMEs in Pakistan.