Khyber Pukhtunkhwa (KP) Province and the Federally Administered Tribal Areas (FATA) in Pakistan 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 conflict in 2009, which displaced an estimated 2 million people and caused colossal damage to infrastructure and livelihoods. 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 conflict. 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 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 conflict and setting 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 US$ 20 million to an Economic Revitalization for KP and FATA (ERKF) Project. This project provides support to crisis affected small and medium enterprises (SMEs) to facilitate the creation of new jobs and restoration of jobs 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: number of employees, which can range from three to a hundred; its operational existence before August 2012; a sound business plan and financial history.

Like other MDTF-financed projects, Government ownership is a key principle to ensure that the interventions contribute to rebuilding state-citizen trust. The project was launched in Peshawar on 9 May 2012 and the KP Chief Minister Ameer Haider Khan Hoti handed over cheques to the first batch of beneficiaries. 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. '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. 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'.

Many have benefitted from this intervention. For them the inauguration was a very poignant moment in their struggle to rebuild their lives. Among those who received the 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 security operations were underway and, while trying to escape, the militants blew up their vehicles inside the station. Sultan recalls that difficult time, 'I had migrated to Islamabad in 2009. My family was with me, it was very painful'.

As he 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 plans with a renewed sense of optimism.

Laziza Batoon's story is another inspirational one. Being a female entrepreneur, she was forced to shut down her business. Working women were under constant threat as the conflict escalated.  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 readymade garments she sold through her outlet.

Laziza Batoon wanted to enhance production capacity by increasing the number of power looms, and thus applied for an up-gradation grant. She was awarded PKR 420,000. Laziza cannot contain her happiness and has already planned business expansion: 'I will purchase 4 power looms and a generator which will enable me to double my production and having generator at the facility will enable me to continue working despite the power breakdowns'.

Zahid Khan's story is no different. He owned and managed a marble industry since 1992 in Nowshera.  The conflict 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'.  Zahid received a grant of PKR. 1,355,000, with which he will reconstruct part of the building and buy new machines. 

Laiq Shah had been an authorized dealer for a soft drink company since 2002. He recalls the fateful day when his business was destroyed: 'On the evening of 2nd September 2011 an explosive-laden vehicle blew up in front of my shop while attempting to target the nearby police station. 28 people lost their lives that day and everything around that area was destroyed. I had luckily closed my shop just ten minutes before the blast. I was lucky to have made this narrow escape'. Mr. Shah is extremely happy to receive a grant of PKR 1,500,000. He will use it to buy stock and rebuild his livelihood.

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 and provide access to business development services to almost 500 SMEs.