Project Data Sheet

Project Data Sheets (PDS) contain summary information on the project or program: Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

PDS Creation Date 23 Aug 2006
PDS Updated as of 14 May 2009

Project Name PAK: SME SECTOR DEVELOPMENT PROGRAM:SME GUARANTEE FACILITY COMPONENT
Borrower/Equity Investment Name SME PCG FACILITY (PAK)
Country Pakistan
Project/Program Number 37907-014
Status
Geographical Location Karachi
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
Sector and/or Subsector Classification Finance
/ Small and medium enterprise finance and leasing
Thematic Classification Economic growth
Private sector development
Gender Mainstreaming Categories

Financing

Type/Modality of Assistance Approval Number Source of Funding Approved Amount (thousand)
PS7190Partial Credit Guarantee
(Documents under Negotiations)
65,000
TA7190Partial Credit Guarantee
(Documents under Negotiations)
65,000
TOTAL USD 130,000

Summary of Environmental and Social Issues

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples

Stakeholder Communication, Participation and Consultation

Already done.

During Project Design
During Project Implementation

Description

Pakistan's SMEs absorb more than 80% of non-farm employment. However, SMEs have yet to realize their growth potential. Currently, the small-scale industrial sector accounted for only 17.8% of the industrial sector output and 4.2% of gross domestic product. To create an enabling environment for SMEs and to realize their growth potential, the Government of Pakistan and ADB agreed to prepare the SME SDP, which is included in the 2003 Country Strategy and Program, which aims at enhancing SME competitiveness, on a sustainable basis to support income generation, employment creation, and poverty reduction. It will be the anchor program loan for the proposed PCG Facility and possibly a number of other private and public sector investments supporting SMEs. Channel financing is a mechanism that builds on a bank's network with large corporate clients to extend credit, mostly for working capital purposes, to SME suppliers and buyers of these corporate entities. The mechanism improves the creditworthiness of SMEs that are referred or endorsed by large corporations who are willing to share risks with or provide first loss back up guarantee to banks in case of the default by their SME suppliers or buyers. The proposed PCG will permit the banks to go into riskier SME markets without exceeding their current exposure limits.1

Objectives and Scope

A revolving local currency partial credit guarantee facility (PCG Facility) of up to $60 million equivalent, whereby individual PCGs will be issued to Standard Chartered Bank (SCB) and Citibank which were selected during due diligence to cover up to 50% of the commercial and political risks associated with their portfolios of credits to small and medium-sized enterprises (SMEs) as defined by the State Bank of Pakistan. Under the PCG Facility, uncommitted sub-limits will be given to the two participating banks, which have proven ability and willingness to extend financing credit to SMEs targeted under the PAK: Sector Development Program for SMEs (SME SDP which is being processed by SAGF) and follow prudent credit evaluation and due diligence guidelines acceptable to ADB. This PCG Facility will be anchored by the public sector program loan of the ensuing SME SDP.

Project Rationale and Linkage to Country/Regional Strategy

Outputs and Implementation Progress

Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Status of Development Objectives
As of 1Q2009, outstanding exposure stood at PKR112.1 million ($1.4 million) covering 27 accounts. Portfolio will not increase any further as the facility's availability period has ended in Dec08. Final maturity of the exposure is expected by November 2009.
Material Changes
None.

Business Opportunities

Date of First Listing
Consulting Services
Procurement
Procurement and Consulting Notices
http://www.adb.org/projects/37907-014/business-opportunities

Timetable

Concept Clearance 12 Mar 2003
Fact-finding 16 Jun 2003 to 20 Jun 2003
Management Review Meeting 07 Nov 2003
Approval 18 Dec 2003
Last Review Mission

Milestones

Approval No. Approval Signing Effectivity Closing
Original Revised Actual

Contacts and Update Details

Responsible ADB Officer Veronica John ( @adb.org)
Responsible ADB Department Private Sector Operations Department
Responsible ADB Divisions Capital Markets and Financial Sectors Division
Executing Agencies

Links

Project Website http://www.adb.org/projects/37907-014/main
List of Project Documents http://www.adb.org/projects/37907-014/documents