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Research Studies on SME Lending Requirements for Printing and Graphic Arts Cluster

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Client Name

National Business Development Program, (NBDP) Small & Medium Enterprises Development Authority, (SMEDA). Ministry of Industries & Production Government of Pakistan, (GoP) (A PSDP Funded Program)

Project Title

Research Studies on SME Lending Requirements for Printing and Graphic Arts Cluster

Description of the Project

Carried comprehensive and focused research studies of the SME lending requirements within the Printing and Graphic Arts Cluster. This project involved understanding the specific lending needs of small and medium-sized enterprises (SMEs) operating within the Printing and Graphic Arts Cluster value chain. This value chain comprises various stages, including raw material procurement, finished product manufacturing, wholesale and distribution, and retail trade. To achieve this, the NJHR project team engaged in a detailed analysis of the lending requirements and conditions that SMEs encounter while seeking financial assistance and lending practices/criteria set by financial institutions, with a focus on understanding how these criteria align with the characteristics of businesses within the Printing and Graphic Arts value chain.

Task Performed

Main Task Performed:

1. Conducted desktop research concerning selected SME Clusters' contribution to Pakistan's overall GDP and export earnings, where applicable, employment generation, and value addition in the country.

2.Conducted Global trade and market analysis through authentic data sources (e.g., UN Comrade, Trade Map, ITC, etc.), where applicable.

3.Developed a questionnaire for conducting a primary research survey.

4. Performed Sampling of SMEs for conducting primary survey.

5.Ensured that the sample size for the primary survey should not be less than 20 SMEs per City with a total of 150 SMEs per sector/cluster with the following category-wise distribution; o Small Size (S): 15% Units o Medium Size (M): 70% Units o Large Size (L): 15% Units

6. Ensured that the sample size would be distributed among the subsectors/value chain players as per the estimation of several units in the value chain. The definitions of S, M, and L will be considered per the prevailing 'Cluster Dynamics' and 'Business Volumes and finalized in consultation with the Client.

7. Studied the existing value chains, its backward and forward linkages, and identification of geographic sources of raw material, product mix, exportability, and market segmentation in which the particular cluster is potentially active.

8. Conducted SWOT analysis of the cluster

9. Analyzed the growth potential of the cluster in various domestic and international market segments.

10. Suggested improved technologies that need to be introduced/improved along the value chain to meet the high-end market. The following table will be provided for Small, Medium, and large units in each value chain segment.

11.Quantified the future financing needs of SMEs belonging to a particular category (i.e., S, M, and L), especially related to the identification of 'Short Term,' 'Medium Term,' and 'Long Term' financing needs/requirements. For instance;

12.Identified the short-Term Financing (e.g., Working Capital) Requirements for S, M and L

13. Identified medium Term Financing (e.g., Technology Upgradation) Requirements for S, M and L

14. Identified long Term Financing (e.g., Business Expansion) Requirements for S, M and L

15.Identified business areas for which these enterprises feel financial crunch/cash flow problems and are willing to seek funding from financial institutions to bridge this gap.

16. Made a comparison of the impact of informal / trade credit with formal / bank financing in terms of the IRR, Annual Revenue, and net cash at the end of the year.

17. Developed a detailed financial model for each type of Financing. The economic models comprise projected expenses, estimated revenues based on certain assumptions, sensitivity analysis, and financial statements.

18.Developed draft lending programs for each category (S, M, L), including loan type, average loan size & tenure of the loan.

19.Identified issues faced by the SMEs in the sector concerning policy & regulatory processes, market development/marketing, capacity building & training, etc. Provided high-quality pictures and 03-05 minutes of high-definition video of the production process.

Geographical Spread

Lahore and Karachi