In Khyber Pakhtunkhwa almost 99% setups are in SMEs. During Round-I and Round-II of the Multi Donor Trust Fund (ERKP Project) only around 4,500 SMEs have been supported through rehabilitation and up-gradation matching grants mainly in the most affected Districts of Khyber Pakhtunkhwa and Merged Areas due to flood, war on terror and natural disaster, the supported SMEs are not more than 0.9% whereas major clusters of SMEs are still leftover and needs financial & technical support. Present assistance to SMEs is not enough, therefore the Government, specialized financial & technical institution and Donors Agencies have joined hands to support SME sector. This will be the only way that the Government could achieve its goal of job creation, poverty reduction, economic prosperity and all value addition process by promoting the SMEs, cottage industry and create avenues for new entrepreneurships which will ensure that the poor masses of Khyber Pakhtunkhwa shall not live poor anymore.
The provided support to SMEs was not adequate; therefore, the Government of Khyber Pakhtunkhwa proposed to allocate PKR 4159 Million out of ADP Fund for further support to the left-over SMEs, with the objective of supporting the existing individual and group of SMEs in the Province through matching grants. This Project will provide direct support to the eligible, individual SMEs, a group of SMEs (cluster), cottage industry and startups through matching grants and technical assistance.


Main objectives of the project are:
  1. Mapping of SMEs and Cottage Industry in the Province
  2. Up-gradation of SME sector and Cottage Industry
  3. Enlistment of SMEs
  4. Enhance economic growth and job creation through private sector investment
  5. Engage potential youth in economic activities of the Province.
  6. nhance skill capabilities of the youth and HR development for more productivity.

Project Indicators

  • Up-gradation of existing SMEs in potential sectors
  • Up-gradation of cottage industry/clusters
  • Support startups for new entrepreneurship

Project Components

Following are the main components of the project

Component-I SME Development

Up-gradation of SMEs:

1. This component will provide direct support to the eligible, individual SMEs or a group of SMEs for cluster development programs for improving businesses productivity and efficiency through up-gradation matching grants, which will be managed and administered by Program Management Unit.

2. This component will also facilitate the development of a centralized data base system for SMEs, cottage industry and startups which should have feature of integration with other SMEs data base available with the relevant organizations/institutes. The data base will help in documenting the SMEs as well as will minimize the chances of availing facilities from multiple resources.

Promotion of Cottage Industry:

3. This sub-component will provide direct financial and technical support for promotion of cottage industry in the province and will create value and innovation but the real problem associated with Cottage industry promotion is financing and technical assistance. Promotion of cottage industry is a challenge for the Province and is critical for enhanced productivity and accommodating more youth, enabling them to earn their livelihoods through decent means. An amount of PKR 50 M is allocated for this sub-component to support eligible cottage industry clusters through technical and financial support.

Component-II Establishment of New Enterprises (Startup):

4. Objective is to engage un-employed skilled workers having potential business idea within the age group of 20 to 45 years for establishing their new businesses in potential sectors. On approval of the business plan of the selected youth they will also be provided entrepreneurship training. Selection will be made on the basis of laid down criteria by a committee.