The Enigma of SMEDA
Picking up
the trail from last week where I had related the story of SMEDA’s
creation, we are going to explore the enigma that SMEDA
has been since its inception. It has been the best kept secret after the
nuclear program of the country. Part of the ambivalence stems from its concept
that does not fit into the categories of other developmental agencies in
The new
regime of General Musharraf had a close look at SMEDA
in December 1999 – top officials of Ministries of Finance, Industries and
Commerce sat together in a meeting to decide whether it would be thumbs up or
down for SMEDA in the new scheme of things. Since the new
economic team leaders where cognizant of the inherent debilitation of their
respective ministries in analysis and planning, and had in mind to rely upon
private sector professionals, SMEDA fitted their
vision snugly, being an organisation with a dynamic, private sector
professional character. At the same time, they felt that previously SMEDA had been too headstrong by the dint of its direct
reporting line to the cabinet division of the Prime Minister’s Secretariat. SMEDA was attached to the Ministry of Industries &
Production (and by default to the Ministry of Commerce, since both had a common
minister in R.D.). It was to function through ‘proper channels’ so to say.
Funding
came from Ministry of Finance but the administrative control was delegated to
Ministry of Industries and Production. By executive order it was an autonomous
body and the assumption was that the Ordinance to follow will formalise its
autonomous status under a Board of Directors – four from government sector and
six from the private sector. Until the promulgation of the Ordinance a managing
committee of high officials from the ministries was to run SMEDA
as temporary arrangement with R.D as chairman. Virtually,
SMEDA had three masters to serve in this arrangement:
the two ministers and the bureaucracy, especially of the Industries and
Production through which all its administrative affairs were routed.
Finance
expected SMEDA to create a credit market in the SMEs for the old restructured SBFC
to pump credit in the sector – a sort of an workhorse
extension for SBFC, later merged with RDFC and made the SME Bank. It
created further confusion since people could not distinguish between SMEDA and SME Bank. Moreover, SME Bank started advertising technical services to the SMEs exactly as SMEDA. SME Bank had the money but little expertise; SMEDA has some expertise but no money. They served under
different ministries and their enforced cooperation at the Head to Head
personal level did not permeate down the cadres which remained suspicious of
one another. As the arrangement did not materialise into exponential growth of
credit to SMEs through the SME
Bank, and other Banks, ministry of Finance began to lose faith in SMEDA.
Ministries
of Industries and Commerce were fire-fighting economic revival at the business
front. SMEDA seemed as the most proficient and
convenient vehicle for sector analysis and strategy formulation, having
introduced the new concept of ‘value-chain’ analysis so successfully. SMEDA was laden with analysis and planning work during the
whole year of 2000. It was buried with Textile Vision 2005, Leather Vision
2010, Hexpo 2005 (horticulture), Fisheries, Edible Oil
Policy, Sugarcane Industry Analysis and Strategy, amongst many other policy
issues. All these were presented to the President by the Ministry with SMEDA’s support. As
they say, “to whip a willing horse” other ministries began to purloin SMEDA’s technical expertise in preparing plans for
development.
This
diversion in mandate re-enforced the perception that SMEDA
may have good analytic and planning skills it is not reaching to help the SMEs in flesh, which was true to a large extent, although some
of its policies were beginning to benefit the SMEs in
their respective sectors indirectly. While SMEDA served
many masters, it kept straining at the leash to return to its actual mandate of
helping SMEs with its own home-grown plan of action.
This was perceived by the bureaucracy as unhealthy independence of mind.
However, by
January 2001, I managed to convince R.D. that SMEDA may revert to its actual
mandate, and move away from sectoral analysis and
strategic planning. Massive re-structuring followed that tacit understanding
with R.D. and SMEDA began to put together its SME outreach programs. Website was launched (which became
the 3rd best website of the year in 8 months), front desks were
opened to provide consultancy services to walk-in SMEs
for finanicial, technical, marketing, management and
HR services. A very amibitious training program was
launched and in the first year SMEDA provided short
training workshops (over 80) in diverse fields to SMEs
in four corners of the country – as remote as Sukkar,
Sargodha, Turbat and Wazirabad. Concurrently, SMEDA in collaboration with ILO, World Bank and Asian Development Bank was working on
policy framework for SMEs. The strategy documents produced
are the first ones in country to lay down policy guidelines for the government
to help SME sector. State Bank has issued a new set
of Prudential Regulations for SMEs as one of the
outcomes.
While R.D.
was happy with SMEDA, claiming in
The
momentum SMEDA had gained with the technical
assistance of ADB under a one million dollar PPTA grant (endorsing its overall structure and direction,
and praising its past performance by stating that SMEDA
had achieved in three years what other similar agencies have taken over 10
years to reach) stalled with the change of government. ADB
technical assistance program developed a business plan for SMEDA,
laying out the conceptual elements and delivery mechanisms in collaboration
with SMEDA itself. It was scrapped by the new
government and SMEDA was back to the square one.
The
incumbent minister (chairman SMEDA) has spent the
past year bitterly criticising and chiding SMEDA for
being elitist and useless; promising to ‘fix it.’ How long will he need, is
anybody’s guess. His Board of Directors with six private sector members is back
to the drawing board. SMEDA is being re-structured
again, its mandate redefined and the wheel is being re-invented. Meanwhile the
Ministry officials rule the roost and SMEDA’s
autonomy has been scrapped for the red tape of the bureaucracy. In the previous
regime there was strong political ownership of SMEDA
but little understanding of it and hence it was put to questionable use; never
the less, it was a well-oiled, efficient machine that delivered quality
products. In the democratic regime today, there is neither understanding (hence
the fresh exploration) nor any political ownership (therefore the ministerial
lashings). Its staff has dwindled and there are plans
to chop the headcount further. The Board and the Minister plan to uplift
250,000 odd SMEs in the country with a staff of 80
de-motivated employees under bureaucratic guidance. It would need more than
good luck.
SMEDA was
a high-tech tool in the hands of a primitive artisan: That has been its enigma.
Now it is being transformed into a primitive tool with which the artisan feels
comfortable. It may not produce wonders but the enigma will be no more – it
will become another useless appendage to the Ministry, as many other
institutions. This is the achievement of the democratic regime, but then who
are we to question this democracy which is a far bigger enigma than SMEDA ever was!
Iqbal
Mustafa
1400 words