Islamabad, 9 August -- The first meeting of the finance sub-committee on the Task Force on Finance and Competitiveness of the horticulture sector in Pakistan was held today at the Ministry of Finance, under the chairmanship of Mr. Javed Malik, Additional Secretary of the Ministry of Finance. The meeting was attended by the representatives of the various relevant ministries, concerned provincial departments and the banking as well as the non-banking financial institutions.

The aim of the Sub-Committee on Horti-business Finance (SC-F) is to help the Task Force on Horticulture Finance and Competitiveness (TFHFC) achieve its goal by ensuring that all relevant actions are taken in the banking and financial sector to facilitate those wishing to invest in the horticulture sector. In addition, the Sub-Committee will pay special attention to exporting and export finance and insurance issues of the sector.

Chairing the sub-committee, Javed Malik, briefed the committee members about the importance of the role that the sub-committee has to play in improving the competitiveness of the sector. He said “we have to look at the horticulture sector in terms of its entire supply chain and the value chain it is creating, to capitalize the potential of the sector we must create innovative financial tools for the sector. The committee will propose these new instruments to finance the horticulture sector in Pakistan”. He also informed the members that Pakistan should target $1 billion from the horticulture exports by 2012 from the current exports of $150 million.

Javed Malik, further briefed the members of the sub-committee about the new methods used in several emerging market economies to promote financing and competitiveness of the sectors that have potential to grow. Mr. Malik explained the structure and the functionality of the Task Force, as well as, of the sub-committees that were set-up by the meeting of the Task Force chaired by Dr. Salman Shah, Advisor to the Prime Minister on Finance and Economic Affairs on the 12th of July.

The Competitiveness Support Fund (CSF) was earlier tasked by the Ministry of Finance to undertake a comprehensive study entitled “The Competitive Advantage of the Food Processing Industry: Focus on Quality, Safety and Standards”.

Competitiveness Support Fund (CSF) is a joint initiative of the Ministry of Finance, Government of Pakistan and the U.S. Agency for International Development (USAID). Support for CSF is part of the $1.5 billion in aid that the U.S. Government is providing to Pakistan over five years to improve economic growth, education, health, and governance.

The Sub-Committee on Finance will work with the stakeholders in horticulture and in the financial sector to coordinate and facilitate initiatives currently being taken to provide finance to the industry. Where necessary the Sub-Committee will identify areas that require further intervention and liaise with the relevant line ministries, agencies and institutions to bring these about.

In order to achieve the aims and goals of the Task Force, the Sub-Committee on Finance (SC-F) will establish a profile of financing in the agricultural sector with particular reference to horticulture. The SC-F will also identify the major participants in the financing of horticulture. The SC-F will establish the relationship between market pricing of horticultural products and the provision of credit. The committee will also put special emphasis on the fact that horticulture is often undertaken by the poorest of the rural population and will therefore establish the operations and concerns and issues of micro-credit institutions and the overall provision of micro-credit for horticulture developments.

The representatives of the banking sector informed the committee that a total of Rs. 169 billion lending has been made by the banks in last 5 years.

The committee agreed to improve the competitiveness of the value chain in the Horticulture sector and built consensus on identifying the importance of finance as the most critical requirement at all stages. The SC-F will establish the stages of the value chain that require the most financing and where the principle gaps in financing exist.

Furthermore the SC-F will indicate the various kinds of issues that relate to the different aspects of the industry; for example, the financing of crop inputs perhaps via the forward sale of the crop is qualitatively different from the kind of finance required for infrastructure or for export financing.

The Sub-Committee on Finance will develop a set of action points for consideration for the Task Force. In particular the SC-F will assist the Agricultural Support Fund of the Government of Pakistan, with matters relating to horticulture grants. In addition, the SC-F will also develop a set of guidelines for the banking and insurance sectors. These guidelines will include size and types of financing working capital, term financing, eligibility, repayment terms, channels, documentation, conditions/covenants, monitoring and recovery.

The SC-F will report to the Task Force Implementation Committee via the Secretariat established under the Ministry of Food Agriculture and Livestock and will liaise closely with the Competitiveness Support Fund in its day-to-day activities.

Due to the importance of finance and the role of the commercial banks, the Task Force was placed under the Ministry of Finance to enhance the finance and competitiveness of the horticulture sector.

Speaking on the occasion, the Senior Advisor to the Competitiveness Support Fund informed the members that the objective of the Sub-Committee is to provide the Task Force for Horticulture Finance and Competitiveness with recommendations for a clear management and financial structure for the industry in the context of coherent, well-planned and well-coordinated studies, research activities, regulations, policies, strategies and interventions.

The Competitiveness Support Fund (CSF) was earlier tasked by the Ministry of Finance to undertake a comprehensive study entitled “The Competitive Advantage of the Food Processing Industry: Focus on Quality, Safety and Standards”.

Competitiveness Support Fund (CSF) is a joint initiative of the Ministry of Finance, Government of Pakistan and the U.S. Agency for International Development (USAID). Support for CSF is part of the $1.5 billion in aid that the U.S. Government is providing to Pakistan over five years to improve economic growth, education, health, and governance.

The Competitiveness Support Fund has been created to support Pakistan’s goal to have a competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country. CSF also provides technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector-led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy.

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