Rural Enterprise Modernisation Company under consideration

The government will establish a Rural Enterprise Modernisation Company (REMC) to facilitate acquisition of skill, know-how, expertise and market understanding by the rural SMEs in the country.
Sources told REMC would be fully autonomous and would report to an independent board of directors, comprising at least six members from the private sector and three from the public sector.
REMC will be led by an internationally experienced chief executive officer to be appointed by the board following a transparent, nationally publicised, competitive recruitment, on a no-objection basis from the Asian Development Bank (ADB).
International experience and current ADB report indicates that opportunities in rural competitiveness could be stimulated by access to a range of business development services (BDS).
Pakistani market is characterised by a generally low usage of BDS in the rural areas, which adversely affect the sector's competitiveness and its potential contribution to the economy of Pakistan.
To fill this vacuum in the rural areas, there is a strong rationale for supporting the institutional processes that could strengthen private business competitiveness in rural areas to achieve growth in employment and income, particularly among enterprising low-income and disadvantaged individuals and groups.
Work carried out to identify potential sub-sectors, consolidate required data, and drawing up the framework for the pilot projects will provide the basis for analysing the institutional processes required to stimulate competitive business development opportunities in the rural areas and to establish the proposed REMC.
The sources said, the market development preparation teams under this project strategy would also analyse alternative institutional support processes to document options available to the government to strengthen private business competitiveness in rural areas to achieve sustained growth of employment and incomes. It is expected that this analyse work would be completed within 18 months.
Presently, ADB in consultation with the government will make a decision on the establishment of the REMC, in case its feasibility is established and the business plan for REMC is approved.
Once the decision is made to establish the REMC, market development preparation teams will define a cost effective management structure and a strategy to ensure outreach in dispersed rural areas. Financial projections to be prepared in support of the feasibility study on the proposed REMC will analyse the financial implications of its establishment.
Strategies will be prepared to demonstrate how sustainability and service cost-effectiveness issues will be addressed.
Assisted by Smeda, the MDP team will fulfil all requirements for registering REMC and obtaining a license to operate under Section 42 of the Companies Ordinance 1984, including the preparation of the memorandum and articles of association, a business plan, and standard operating procedures.
The REMC board of directors will be drawn largely from the private sector. The MDP consultants will prepare a list of potential candidates for the board in consultation with a variety of public and private stakeholder organisations. The government will consult with ADB before the notification of the board and its composition.
To build a business-oriented vision of rural modernisation initiated under this project and subject to the established feasibility of setting up REMC, the MDP team will assist the government in operating REMC, which will initially take on the MDP activities.
REMC will be responsible for expanding its geographic outreach by undertaking rural industry development projects in additional sub-sectors and clusters identified as having good prospects for growth. Research into new opportunities for rural enterprise development will be a core REMC activity.
REMC's approach to developing rural industries will evolve through the lessons learned from the pilot projects supported under the ADB project. A major objective of the project will be to develop the competence and experience that will guide the company beyond the ADB loan period. It is envisioned that ADB may provide additional funding to REMC to expand its operations after the period.
The market development preparation teams and REMC will encourage socially responsible business practices and social protection measures among rural businesses through awareness-raising campaigns by NGOs and incentive schemes to address issues such as child labour, gender-sensitive labour practices, environmental safeguards, the work environment, and fair remuneration and working hours.
Other issues to be addressed include patents, property rights franchising arrangements, and rationalisation of taxes. Initiatives will also be taken to link the ADB loan's target groups to ongoing social service and community development programmes under the rural support programmes across the four provinces.
Linking up with rural support programmes and other NGOs will be particularly useful in mobilising women and gaining credibility in conservative communities.
The government will provide funds to REMC on a grant basis, and assets of the rural enterprise modernisation cell will be transferred to REMC upon its establishment through the articles of association.
To ensure the smooth transition of knowledge resources and partnerships generated, staff associated with the rural enterprise modernisation cell would qualify for recruitment for REMC, subject to demonstrate performance, compatibility with the organisation structure of REMC, and endorsement by the REMC board in consultation with ADB.
All other professional staff recruitment will be outsourced to a human resource consultant and the final selection will be endorsed by the REMC board.
After establishment of REMC, the knowledge management systems developed by the MDP team will be transferred to the company, and it will be responsible for analysing potential opportunities in the selected subsectors, and for implementing the pilot projects.
Expansion of scope and outreach will be undertaken following the evaluation of the first year of its operations, so that lessons learned can be incorporated in the ensuing work programme of REMC.
This assessment will allow REMC to put in place mechanisms for selecting additional sub-sectors, preferably in remote and disadvantaged locations, and designing intervention strategies and plans for supporting small rural businesses and social and environmental compliance.
The immediate task of the core management team will be to develop guidelines and procedures for ensuring geographic outreach and undertaking rural industry research and development projects based on subsectors identified by the MDP team.