SMEDA and ILO launch project to formalise SME sector

LAHORE: Over 84 percent of Pakistan’s workforce operates informally within the SME and home-based sectors, creating barriers for businesses and workers alike. This informality limits access to critical markets, financing, social protections and skill development.

Chief Executive Officer of the Small and Medium Enterprises Development Authority (SMEDA) Socrat Aman Rana addressed a workshop jointly organised by SMEDA and the International Labour Organization (ILO) to launch the Enterprise Formalisation Project. The CEO of SMEDA highlighted the project’s goals, emphasising its importance for Pakistan’s SMEs in strengthening the national economy. He explained that the Ministry of Industries and Production (MoIP) partnered with the ILO on this initiative as a result of a prior mapping study by the ILO and SMEDA.

“This project aims to bridge formalisation gaps and ensure our SMEs thrive within a supportive economic framework,” he said, adding that the project aligns with MoIP’s vision for a modern, sustainable and inclusive economy.

This vision builds on Pakistan’s SME Policy 2021, the ILO Decent Work Country Programme for Pakistan (2023–27) (DWCP IV), and the United Nations Sustainable Development Cooperation Framework. He noted that the project’s main objective is to create a national roadmap for formalising SMEs and home-based workers, lowering registration barriers and simplifying processes. This will allow even micro-enterprises to benefit from development schemes. The project also includes a digital tool to support large enterprises in formalising their supply chains, particularly SMEs in the textile and automotive sectors. This tool aims to reduce compliance costs, making formalisation more feasible and appealing for businesses.

Other speakers included ILO Country Officer for Pakistan Guillermo Montt; Technical Specialist on Formalisation (Geneva) Shusuke Oyobe; Senior Programme Officer, ILO Pakistan Rabia Razzaque; General Manager Policy and Planning, SMEDA Nadia Jahangir Seth; and Head of the External Relations Department, SMEDA Sheharyar Tahir.

On this occasion, Guillermo Montt reviewed the project implementation plan and monitoring framework. Shusuke Oyobe discussed the informal economy, the importance of formalisation, and the need for a national roadmap for enterprise formalisation in Pakistan. ILO Specialist on Local Strategies for Decent Work Andre Bongestabs explained how large enterprises can aid in supply chain formalisation, while Rabia Razzaque emphasised the role of consultation and project stakeholders.

The CEO of SMEDA also stressed the importance of formalisation to export development, an area of special focus for the government. “This project will provide training and support to help SMEs adopt sustainable production methods, enabling them to meet climate resilience standards essential for business success,” he said. This approach will also enable SMEs meet international standards, particularly in export-driven industries. The project is expected to support formal, export-oriented enterprises in the textile and automotive sectors by developing tools and incentives for formalising their supply chains and workforce.

The CEO urged government bodies, industry leaders, development partners, and the business community to collaborate with SMEDA to realise the MoIP’s vision of a formalised economy.