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Small Endeavors, Big Rewards

June 5, 2012

Laiq Shah had been an authorized dealer for a soft drink company in Lukki, Darra Pizzo in Khyber Pakhtunkhwa (KP) province since 2002. He recalls the fateful day when his business was destroyed. “On the evening of 2nd September 2011 an explosive-laden vehicle exploded in front of my shop while attempting to target the nearby police station. Twenty-eight people lost their lives that day and everything around that area was destroyed. I had luckily closed my shop just 10 minutes before the blast. I was lucky to have made this narrow escape.”

Now Shah is one of 850 small business owners in KP and the Federally Administered Tribal Areas (FATA) in Pakistan who will receive a grant to help rebuild their businesses and lives after the crisis in 2009, which displaced an estimated 2 million people and caused colossal damage to infrastructure and livelihoods. Shah will use his PKR 1,500,000 grant to buy stock and rebuild his livelihood.

Limited Economic Opportunities

KP and FATA have consistently been among the poorest regions in the country. The growth rate in KP was already slowing in the period leading up to the crisis. Similarly, in FATA, the majority of the unemployed were young men, some of whom were enticed by those who offered financial incentives to propagate the crisis. Over time, limited economic opportunities in both KP and FATA have encouraged people to seek employment elsewhere, even outside Pakistan. This has serious social implications.

In 2010, the government and the development partners came together to conduct a Post-Crisis Needs Assessment (PCNA) for KP and FATA. This was a multi-sectoral assessment ascertaining the damage done in the aftermath of the crisis and defining the strategic direction of the rehabilitation effort. The PCNA defined employment and livelihood generation as one of the strategic objectives, recognizing economic deprivation as a key driver of the crisis.

The Multi-Donor Trust Fund (MDTF) for KP, FATA, and Balochistan allocated $20 million to an economic revitalization project for KP and FATA. This project provides support to the crisis-affected Small and Medium Enterprises (SMEs) to facilitate the creation of new jobs and restoration of jobs that were lost during the crisis. It will also mobilize the diaspora to facilitate local and foreign investments in KP and FATA, while improving the overall business environment in these areas. It follows well-defined criteria for selection, including the number of employees which can range from three to 100, operational existence before August 2012, a sound business plan and financial history.

Chief Minister Launches Project

Like other MDTF-financed projects, government ownership is a key principle to ensure that the interventions contribute to rebuilding state-citizen trust. At the project launch in Peshawar on May 9, KP Chief Minister Ameer Haider Khan Hoti handed over checks to the first batch of beneficiaries (right). He acknowledged the contribution of the international community and recognized the resilience of the displaced people as they returned to their homes in Swat and surrounding areas.

" I will purchase four power looms and a generator which will enable me to double my production, and having a generator at the facility will enable me to continue working despite the power breakdowns. "

Laziza Batoon

Garment business owner

“Never have we witnessed such a safe and honorable return as we did in Swat. You can only achieve this with the ownership of the people,” Hoti said. “Today, schools have reopened and you see normalcy. This is the Swat of today, and this could not have happened without support from the international community. The PCNA is certainly the way forward.”

Among those who received grants that day was Sultan Room, who had lived in Buner all his life. He had been running a petrol pump since 1985. His filling station was the first one on the main road. In April 2009, it suffered collateral damage as the security operations continued and while trying to escape, the militants blew up their vehicles inside the station. As Room receives the SME grant of PKR 1,783,200, he looks forward to rebuilding his life. “With this money I will buy dispensers, a storage tank, and a generator and use the grant to reconstruct the station” he said.

Laziza Batoon’s story is another inspirational one. Working women were under constant threat as the crisis escalated, and she was forced to shut down her business. In 2010 she was able to restart her garment business through the facilitation of the Women Business Development Centre. Building on her success, she also started a textile weaving unit in Peshawar and installed three power looms for producing cloth for the ready-made garments she sold through her outlet.

Batoon applied for a grant to enhance production capacity through more power looms. She was awarded PKR 420,000. ”I will purchase four power looms and a generator which will enable me to double my production, and having a generator at the facility will enable me to continue working despite the power breakdowns.”

Rebuilding Productive Capacity

Zahid Khan owned and managed a marble company since 1992 in Nowshera. The crisis and 2010 floods affected his business immensely, damaging the machinery and infrastructure. “My business was in full swing and I was providing good quality marble and tiles to the local market at a reasonable price. This is my only source of income but now it is not going smoothly because the existing machinery is not in good running condition,” he said. Zahid received a grant of PKR 1,355,000 through which he will reconstruct part of the building and buy new machines.

These are a few of the 850 SMEs across KP and FATA that will be supported through the matching grants under this project, which will restore and create employment opportunities for an estimated 8,000 people. These matching grants are specifically for SMEs that have been adversely affected by the ongoing crisis to enhance their productive capacity and restore lost employment. The grant recipient matches the grant in the form of equally valued assets, labor or finances. Additionally almost 500 SMEs will be provided access to business development services (accounting, financial and legal services, market development, and project management).