Under the first-phase of the project, a grant to the tone of Rs 460 million was distributed in 400 SMEs, which was manifold higher than the given target. For the Round-II, the PU has already received 1700 applications so far while dozens of people are visiting the office on daily basis for either to collect the application form or submitted it along with the required documents. The grant is being provided on the criteria of first-come-first-served basis. The project is a joint initiative for both Khyber Pakhtunkhwa and FATA to provide support to the Small and Medium Enterprises (SMEs), attract Diaspora investment, and strengthen institutional capacities to foster investment and implement regulatory reforms. The project is a response to the priority interventions identified under the donor-supported Post Crisis Needs Assessment (PCNA) Report. The MDTF for Khyber Pakhtunkhwa, FATA and Balochistan was established to support the recommendations made in the PCNA report, and is being administered by the World Bank on behalf of 10 donors. The Project is divided in three components, SME Development, Investment Mobilization, Capacity Building to Foster Investment and Implement Reforms.
Under the Rehabilitation Support direct support is provided to the affected SMEs. ERKF is providing assistance in the form of matching grants to eligible enterprises. These grants may be used as working capital, for reconstruction of basic infrastructure, and acquiring/repairing machinery and equipment, etc.
Under the sub-component of up-gradation support, the project will support SMEs for improving business productivity and efficiency. Matching grants to eligible individual SMEs for projects, as well as to a group of SMEs for cluster development programs will be provided. These grants could be used for technological innovation, product development, adopting new packaging/labeling requirements, establishing common facility centers (CFCs), etc. Funds may be used for both capital investment and working capital. Furthermore, under the sub-component of Capacity Building and Business Development Support, the project is supporting capacity building of SMEs in partnership with the Business Edge Program of International Finance Corporation (IFC) and through procurement of business development services (BDS) required by the SMEs.
The eligibility criteria for CFC/Cluster SME include that CFC/Cluster SME owner is a citizen of Pakistan doing business in Merged Areas Districts (Ex- FATA), FC/Cluster SME employs minimum of 3 (including owner) and maximum of 200 individuals (except that businesses owned by women and by returning TDPs in the Merged Areas Districts (Ex-FATA) must employ at least 2 workers (including owner) and maximum of 200 individuals, CFC/Cluster Group Leader (Partner 1) business began operations on or before May 1, 2014 and the other partner SMEs on or before May 1, 2016, CFC/Cluster SME has proof that his/her business is operational, CFC/Cluster SME is not a bank defaulter (except if crisis was the reason for default), CFC/Cluster SME has not received/ approved/ rejected grant under ERKF-I, CFC/Cluster SME business is not on the official negative list (arms and ammunition, explosives, radioactive substances, security printing, alcoholic beverages etc.