EU and Pakistan agree on €20 million grant to enhance governance and business conditions
The European Union (EU) has recently launched a €20 million initiative, titled the "Better Governance and Business Environment" programme, in Pakistan. The initiative was signed in July 2025 by EU Ambassador Dr Riina Kionka and Secretary Economic Affairs Division Dr Kazim Niaz.
The programme is designed to improve governance and create a more conducive business environment, with a strong focus on the development of small and medium-sized enterprises (SMEs) in Pakistan. This initiative aims to foster easier investment and trade, as well as enhance governance efficiency, which is a crucial factor for EU investment decisions in Pakistan.
The "Better Governance and Business Environment" initiative aligns with the broader framework of the EU’s Global Gateway strategy, the EU’s largest external investment program, aiming to leverage €300 billion of investments worldwide until 2027. Pakistan benefits from this program, and the initiative complements efforts to attract investment and promote sustainable development.
The programme also supports Pakistan's status as a beneficiary under the EU’s GSP+ trade scheme, which significantly boosts Pakistan’s exports to the EU by offering tariff advantages. The continuation of GSP+ until 2027 encourages alignment with EU standards on governance, labour rights, environmental protection, and sustainable development, which the initiative supports.
Moreover, the initiative is consistent with the EU Green Deal objectives. Pakistan has shown strong interest in aligning its export sectors with the EU’s Green Zero targets, implying a focus on environmental sustainability and green standards in governance and business practices. This alignment is expected to make Pakistan’s exports more competitive and accessible in EU markets.
The initiative will also support the green transition of export-oriented businesses and SME-related legislation. Ambassador Kionka affirmed the EU’s commitment to investing in green innovation, women-led enterprises, and public-private partnerships in Pakistan, aiming to build a more inclusive and sustainable economy.
The programme is part of the EU's Multiannual Indicative Programme 2021-2027. Dr Niaz expressed gratitude for the EU's continued support, describing the program as a timely intervention aligned with Pakistan's "Uraan Pakistan" strategy for institutional reforms and responsible private sector growth.
The establishment and scaling up of the EU-Pakistan Business Network, which engages over 400 EU companies active in Pakistan and promotes business-government dialogue to address challenges and opportunities in sectors such as textiles, agriculture, pharmaceuticals, renewable energy, and connectivity, were also discussed in relation to this initiative. Strengthening these governance and business frameworks supports deeper trade-investment linkages, consistent with the EU and Pakistan’s joint commitment to closer economic cooperation.
The "Better Governance and Business Environment" initiative, aligned with the EU's Global Gateway strategy, aims to foster growth and easier investment in Pakistan, particularly for small and medium-sized enterprises (SMEs). This program supports Pakistan's status under the EU’s GSP+ trade scheme, and the initiative encourages alignment with EU standards, enhancing the Competitiveness of Pakistani exports in EU markets, which aligns with the EU Green Deal objectives, focusing on environmental sustainability and green standards.
