The problem of the enterprise ecosystem in Pakistan has a structural flaw, which is hardly ever discussed in policy-making circles, and it is that Pakistan lacks an institutional framework of micro, small, and medium enterprises (MSMEs) as a unified economic category. Compared to the other institutions, which serve only portions of this ecosystem, such things as micro enterprises, which are the most vibrant and the fastest rising section of this ecosystem, are the greatest unknown in policy-making.

Pakistan Bureau of Statistics shows that out of the estimated 5-6 million business establishments in Pakistan, more than 90 percent are micro or small with an employee count of less than 10 workers. The small and informal enterprises contribute approximately 40 percent of GDP, and more than 70 percent of non-agricultural employment. Nonetheless, their macroeconomic significance notwithstanding, the institutional structure of Pakistan fails to consider them as a strategic source of growth.

At the federal level, there is the Small and Medium Enterprises Development Authority (SMEDA) that offers advisory and facilitative services to SMEs. On the provincial level, small industries are dealt with in the Small Industries Corporations, which deal primarily with small and cottage manufacturing. Independently, there are microfinance banks and institutions (regulated by the State Bank of Pakistan) that cater to over 10 million borrowers, although they are not being targeted as an enterprise in need of productivity, technology, and integration into the market.

What Pakistan does not have is an institutionalized MSME- an institution in which micro, small, and medium enterprises are seen as a component of an ongoing growth pipeline and not policy........

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