ISLAMABAD, March 17: The Asian Development Bank (ADB) will provide $200 million for the development of small and medium enterprises (SMEs) in the country.
A senior official in the local ADB office told Dawn that a high-level bank’s mission is arriving Islamabad this week to finalize $200 million new ADB assistance for the SME sector.
The purpose, he said, was to help Small and Medium Enterprise Development Authority (Smeda) adopt a new approach to boost the SME sector by providing it maximum loaning on reduced mark-up rate.
Earlier, the ADB had extended $100 million to the SME Bank in May 2002 for capacity building and strengthening loaning to the SMEs.
The major objective was to develop institutional building so that increasing number of loans could be extended to the deserving SMEs.
Nevertheless, the ADB believes that unless instant infrastructure facilities such as telephone, gas, electricity, water, etc., were offered, it would be difficult to convince the private sector to greatly invest in the SME sector. The labour and social security departments of the provinces were also reportedly discouraging the investors to set up industries for want of different kinds of bribes.
The ADB lending programme in 2003 comprises seven loans for a total of about $720 million that include the FATA Rural Development, the Early Childhood Development, the Decentralized Social Services in Sindh, the SME development, the Punjab Resource Management Programme, the Industrial Efficiency and Environment Management and the Balochistan Road Sector Development Projects. Some flexibility, the bank says, will be maintained in the lending as projects and programmes are processed further.
The 2003 Technical Assistance programme consists of 17 TAs for a total of $7 million, which include both project preparatory TAs and advisory TAs.
According to ADB officials, they had been assured at both the federal and provincial government levels that, with the setting up of new democratically elected government, commitments to the ongoing governance and economic reform would be honoured. The bank was also encouraged by the willingness and desire expressed by the federal and provincial governments to continue and enhance the scope of their long-term development partnership with the ADB.
“The new political government in Pakistan is receptive to have the ADB funding and is offering all commitments to the reform agenda initiated three years ago,” said the senior ADB official.
He said the ADB mission would also look into extending financial assistance for some other new sectors like housing and infrastructure development.