UNIDO Technical Assistance

UNIDO has been providing technical assistance in CND as a subcomponent of the Pakistan Integrated Programme since its inception.  The objective of this assistance has been to build the capacity of Pakistani institutions, in the public and private sectors, to promote CND in the country.  This involved the operation of pilot CND activities in five selected clusters, the training of Pakistanis to serve as cluster development agents (CDAs), and the dissemination of information about the results of the programme, and about CND promotion generally, to increase awareness of CND as a tool for SME promotion among both public and private agencies in the country.

The initial activities were undertaken as part of project US/PAK/01/099, which began in mid-2001, and covered the following five pilot clusters:

  • Electric fans in Gujrat;
  • Cutlery in Wazirabad;
  • Ready-made garments in Lahore;
  • Leather and leather products in Korangi, Karachi; and
  • Gems and jewellery in Saddar, Karachi.

All of these clusters were selected by the Pakistani counterparts for their potential to increase significantly their export revenues, in some cases from an already high base.  This project had a modest budget of $235,000 but was able to attract both interest and parallel funding from Pakistani firms and institutions.

Particularly important breakthroughs have been achieved in terms of awareness creation among a wide range of public- and private-sector counterparts in Pakistan, who until the initiation of the UNIDO project had almost no appreciation of the CND concept.  The combination of substantive and advisory activities undertaken in the context of the UNIDO project made a major contribution in helping both policy-makers and private entrepreneurs to gain an understanding of the potential benefits of cluster-based SME development in Pakistan.  This resulted in the adoption of the SME CND programme as a principal element of the Government of Pakistan’s official trade policy in 2003, and in 2005 the National Institute of Public Administration (NIPA) in Pakistan introduced SME cluster development as an integral component of its 14-week Advanced Course in Public Sector Management for senior civil servants of the country’s federal and provincial governments, which is mandatory for their promotion from Grade 19 to Grade 20.

An important result of this success in awareness creation about the potential benefits of the cluster development approach for Pakistan’s SME sector has been the extensive support given to the UNIDO programme by national institutions both in cash and in kind.  Based on an informal agreement reached in 2001 between the then UNIDO Representative in Pakistan and the then CEO of SMEDA, the UNIDO project team have been hosted by SMEDA at the agency’s headquarters in Lahore since that time.  In this connection, they have received all the necessary facilities for a period of more than four years, including office space, furniture and equipment (including internet-capable computer workstations), stationery and free access to internet, fax and telephone connections. This represents a significant and highly valued contribution in kind by SMEDA for the programme, in the absence of which it would not have achieved the successes that it has, but which SMEDA will have to discontinue after April 2006 due to other pressures on its resources. 

Similarly, in 2004 the EPB (now TDAP) decided to make available US$ 211,000 under a self-financed trust fund agreement, plus a variety of additional in-kind contributions, to finance a project for the implementation of important follow-up activities in the five pilot clusters.  This commitment was the first of its kind ever entered into by an official Pakistani entity to provide national funds to a multilateral development agency to finance its activities in Pakistan.  In recognition of the unprecedented nature of this agreement, the release of the first tranche of this payment (US$ 70,000) in February 2005 was accompanied by the release of US$ 50,000 in UNIDO counterpart funds.



"A cluster is a sectoral and geographical concentration of small/medium enterprises facing common opportunities and threats."
Definition of a cluster