Small Medium Enterprises (SME) is the crucial part of any economy as it helps to enhance the economic growth. It is the backbone for large enterprises for instance if a company needs Raw Material Company would contact small or medium enterprises for their need. In my point of view, SME’s are more productive as SME’s are engaged with innovation they produce innovative things to fulfill the demands of local markets and SME’s are more risk takers rather than large enterprises, SME’s provides value added services and goods in an economy, SME’s are the need of any economy.
Pakistan’s economy is comprised on SME’s. We cannot ignore the role of Small and medium enterprises (SME’s) in the development of economy SME’s prevail in every sector of the economy, if we promote or develop our SME’s sector it can enhance Economic Growth rate. As we know SME’s contributing 30 percent of GDP, which is 140 billion Rupees. And SME’s are contributing without any development in their sector. SME’s provide jobs to 78 to 79 percent of People who are not associated with agriculture sector in the country.
SME’s uses low cost machinery basic technologies and provide a high rate of output. For any country, it is a favorable condition when they must invest less and they have more output, it can enhance savings of a nation. SME’s are the major source of employment in a country and it can enhance exports too. SME’s considered as a great source to reduce unemployment and poverty in the economy. SMEs are the key source of foreign earnings (exports). In 2009-10 SME’s 25% of foreign earnings, but still Small and Medium Enterprises facing heaps of hurdles and challenges which prevent them from further improvement and further growth.
These hurdles include low budget, lack of resources, political instability in Pakistan, poor infrastructure, Energy shortages in Pakistan these problems will not let SME’s grow. An institution which is specially set up for the welfare of SME’s “SMEDA” (Small Medium Enterprises Development Authority). SMEDA work for SME’s sector it acts as the policy-advisory body of SME’s it provides finance to SME’s also facilitate stakeholders in development of SME’s agenda in Pakistan.
For the Development of SME’s Government should provide this sector an enough capital, better policies, and policy makers for them. And the most important government should polish their skills and provide them training.
SME’s cannot compete on an international level due to lack of Competency for the competition SME’s should have enough capital and modern technologies. For finance, government announces loan schemes and the institution which is providing capital to SME’s is SBFC (Small Business Finance Corporation).
The government should also establish an act to protect the potential rights of SME’s and the government should help them by training (formal and informal training) so that people will encourage forming Small medium enterprises. And government should make long-term policies to enhance the output of SME’s. By the development of SME’s nation will get rid of poverty, unemployment, and economic instability. It is a rule of nature that if you put the effort you would enjoy the success one day.
This article is jointly authored by Manan Aslam Lecturer at Department of Marketing &
Agribusiness in Muhammad
Nawaz Shareef University of Agriculture, Multan, Pakistan and Maria from University of Management and Technology (UMT), Sialkot Campus.