Building Entrepreneurial Youth through Corporate and Social Philanthropy than Credit Schemes (Part I) 0

Hassnain Javed

OCTOBER 29, 2019

According to the United Nations, in the present world, there is an approximately $2.5 trillion funding gap between the individuals and the actualization of the sustainable development goals (SDGs). However, on the flip side of the coin on in five people globally is aged between 15 and 34; the cherry on top there are either unemployed, not engaged in any formal education nor involve in specific training. And mostly, developing poor economies like Pakistan is experiencing this global indeed more of an economic and social change at a rate of more than 70%. But, upon pondering this challenge has a fair chance to materialize and exercise as an opportunity only if authentic recipe with the right mix of ingredients, perfect garnishing, and packaging done like a pro to attract the target audience. Moreover, addressing youth unemployment and the promotion of entrepreneurial ventures is a town of talk at the highest international forums and agencies. But, the dilemma is either the western developed economies or poor nations governments have designed the right plan of action to address this rising global challenge cohesively?

Recently, Pakistan Prime Minister Imran Khan keeping in view the global yet local challenge of rising youth unemployment and paving the way to promote entrepreneurship has launched the “Kamyab Naujawan Programme” (KNP). Although, the program is launched still it fails to address the market and information asymmetries as there was no coherent research conducted to first identify the market demand and supply gaps. As experienced by the previous government’s youth loan initiatives this is again a repetitive series of fooling the uninformed audience and wasting the most valuable time. Upon reviewing the details of the program the major elements are vague. For instance, a total of 100 billion rupees has allocated for this purpose whereas the budget for the current fiscal indicates apportioned amounted to 450 million for the KNP. Thus, it is unclear whether the amount announced by the Prime Minister is for the current year alone for it entails the remaining period of his tenure.

Also, it is further declared by the Prime Minister that loans granted to youth will be made under three categories which entail (i) interest-free loans available for those seeking credit amounting to Rs.100,000, (ii) concessionary loans made available for those who seek a loan from Rs,100,001 to Rs. 500,000 but the actual cost of borrowing was not yet declared for public and (iii) those seeking for Rs.500,001 to Rs. 5 million loans would be giving regular loans at the interest rate of 13.25 percent which is I believe fairly not a lucrative option for the masses keeping in view the current economic chock down being experienced by the large-scale to medium and small-sized manufacturing firms. Now, having a glance at these three categories we could picturesque the motive behind it that is fairly not the promotion of small scale start-ups that is defined by the State Bank of Pakistan as the working units comprise of up to 50 employees and generating an annual turnover of Rs.150 million annually. These programs will only inject the unemployed to stay in a static state and indeed act as a source of income. Moreover, it is also not clearly stated how much money will be allocated under each category from the total fund.

New Skills for youth should help upgrade the existing worker’s skill set that further revitalize the cities and promote minority small business owners to gain the required resources to flourish and channel their economic contribution to society

Therefore, the current government should handle the KNP’s loopholes with two possible options. Firstly, the pre-requisites to attain the loan under the first and second category stated above is same thus from a bank perspective it would be less profitable for banks to hire staff for each category separately. It is recommended to make necessary adjustments in the two categories that are attractive for banks to enthusiastically promote in this initiative. Secondly, the major setback for all previous easy credit schemes is the lack of collateral of applicants which must be addressed as the main ingredient of the KNP and situation persists even with the current scheme. In actual this initiative has major similarities to former Prime Minister Nawaz Sharif’s Youth Programme that incorporates the interest free loan scheme, Prime Minister’s youth business loans, Prime Minister Youth Skills development scheme, Prime Minister’s scheme for the provision of Laptops and Prime Minister’s scheme for reimbursement of fee of students from less developed areas. In actual design for these programs are highly ambitious given the number of initiatives. Moreover, interest rates in the previous scheme are pretty much lower than the current discount rates.

The Government of Pakistan needs to strategically address this challenge into an opportunity by developing a government, industry, and academia strong cooperation and integration through public-private partnerships by having an effective association of Career Technical Entrepreneurial Education Consortium. The primary objective of this association should be to germinate “New Skills for Youth” that is designed to dramatically increase the number of fresh blood who have completed their career pathways that should start from middle school and end with postsecondary credentials align with high-wage and high demand jobs to narrow the market asymmetries. Moreover, New Skills for youth should help upgrade the existing worker’s skill set that further revitalize the cities and promote minority small business owners to gain the required resources to flourish and channel their economic contribution to society.

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