SME Research

Part
01
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Part
01

SME Research

There are over 38 million small and medium enterprises in Pakistan. By sectors, 1.8 million SMEs are in commercial and retail, 1.2 million service industries, and 0.8 million industrial. Further breakdown by industry was not possible due to a lack of data. But we were able to estimate it from other data as reported below.
  • According to the CEO of Karandaaz Pakistan, a non-profit company that promotes accessibility of financing for SMEs in Pakistan, there are over 4.5 million SMEs operating in Pakistan.
  • In a report from the World Bank, it stated that "The number of small firms in Pakistan is difficult to estimate, since official surveys do not capture unregistered and informal firms, which are numerous and likely to be small-sized."
  • The complication of defining SMEs and estimating the number is due to inconsistent definitions by different authorities. For instance, the Small and Medium Enterprise Development Authority of Pakistan (SMEDA) defines it as a firm with less than 250 employees, the Federal Bureau of Statistics defines it as a less than 10 employees.
  • According to the SMEDA, there were more than 38 million small and medium enterprises in Pakistan by 2019. Out of those enterprises, 800,000 in industrial units, 1.2 million in the service sector, 1.8 million in the commercial and retail sector.
  • The further breakdown by industry was not available publicly. For instance, SMEDA was not able to measure a share of SMEs in exports in their 2018 report. The report noted, " The exact share of SMEs in exports cannot be calculated due to lack of data on SMEs, that are classified according to parameters of size (employees), turnover and paid up capital."
  • More than 90% of all the economic establishments in Pakistan are SMEs and employ 80% of the nonagricultural workforce.
  • According to the Worldbank's calculation, by the share in employment, agriculture accounted for 40%, low-skilled services 26%, construction 8%, high-skilled services 3%, manufacturing 7%, apparel, textiles leather 8%, and public and social sector 7%.

Strategy

In order to determine the number of micro, small, and medium enterprises (MSMEs) operating in Pakistan and the breakdown by industry, we searched through the databases of the relevant organization such as the World Bank, the Small and Medium Enterprise Development Authority, the Federal Bureau of Statistics among others. The results varied from source to source due to different procedures. Thus, we decided to focus on the data from SMEDA.
An attempt to breakdown the SMEs by industry didn't provide any further results as well. The further search confirmed that there is a lack of data regarding SMEs in Pakistan, and SMEDE itself faces the same issue. Since SMEs in Pakistan employ 80% of the total workforce, we also provided sectoral employment shares data as a general estimation.
Sources
Sources