Dynamics and Prospects Role of Business Schools in Developing Enterprises and SMEs Mohammad Sajjad Moghal Team Leader Private Sector Development - USAID

Source: *Economic Census Pakistan 2005 & Labour Force Survey A Brief Profile of SME Sector  Number of Enterprises: 3.2 million (99% employ > 10)  Value Addition in Manufacturing: 35%  Contribution to GDP: 30%  Share in manufactured exports: 25%  Contribute 35% in Manufacturing Value addition  Contribution in industrial employment – 78%  84% of enterprises have sales below Rs. 0.5 million & 93% have sales below Rs. 1 million

Business Sector by Size, Sales & Emp Employment Categories Median Employm ent Size Median Sales Number of Firms '000 Total Sales Rs. Billion Total Employmen t in Million Emp ,0003, , Emp , Emp , Emp ,580, Emp ,000, Emp ,000, Emp ,700,

Top Ten Business Sectors Economic Sectors Median Emp. Size Median Sales Rs. ‘000 # of Firms ‘000 Total Sales Rs. Billion Total Emp. in Million % Cont. Emp. Retail Trade , % Services % Manf. of Textiles Apparel Leather products % Personal & Household Services % Government Excl Defense % Manufacturing of Food Beverages & Tobacco % Restaurants & Hotels % Manf. Fabricated Metal Prod % Wholesale Trade % Manf. Wood/Wood Prod. Incl. Furniture %

Enterprises by Emp. Size and share in Total Employment Source: Economic Census of Pakistan 2005

Industrial Units by Employment Size Source: Gallup Survey of 1000 Industries in 2002 covering 12 cities & 8 sectors

7 Labor Productivity Due to Skill Difference Source: World Bank, Investment Climate Survey

Low Export Orientation Source: World Bank, Investment Climate Survey

9 Growth Small vis-à-vis Large Scale Large-ScaleSME Sector Output Growth Rate % Capital Formation Growth % Output Growth Rate % Capital Formation Growth % 1970s s s Source: Dr. Ehsan ul Haq, Dr. Faisal Bari- LUMS; Barriers in SME Growth

10 It is Difficult to Grow for an SME Growth in Employment MicroSmallMediumLarge Negative Growth11%12%16%18% No Growth46%50%48%30% Growth39%36%35%51% Source: SMEDA World Bank Investment Climate Survey 2001

Dearth of Business Leadership  Overly focused on corporate and industrial sector  Business schools have abdicated their role in:  supplying leadership for small businesses  Business Services sector  Future opportunities are in the Retail, Wholesale, services and Agriculture

Business Service Agencies Business Schools Project Ownership SMEs Policy Interventions Reshaping the Business Environment Need analysis Org. Spin Offs/ Solutions Strategy Formulation – HR Dev. Packages/ Business Managers Research/ Analysis – Markets, Industry, Technology and Regulations Industry-Academia Coordination and Sustainable Commercial Linkages Need Assessment/ Feedback: CCIs, TAs The Role of Business Schools Business Services Sector Specialists

Thank you very much