MAY 20, 2019
Pakistan is densely populated economy with more than 200 million people residing. According to the Centre for International Development at Harvard University, it is rank among one of the fastest growing economies in Asia. As the Pakistan economy will develop and grow, it is forecasted to have additional 2.1 million middle-income households to be found by 2025. Based on World facts currently, Pakistan is rank among the sixth most populous country in the world and classified as fifth largest youth population in the world in the absolute terms with approximately half the population under the age bracket of 25 years. With the ever-growing population, there is a constant threat to cater for micro and macroeconomic indicators specifically the rising unemployment rate. In addition, by 2030 Pakistan economy will have higher proportion of the youth population so to address this issue it is important to design a policy framework and economic viable model for sustainable society. With high population growth rates, it is difficult to cater the market demand and supply which has translated into evolution of startup activities and entrepreneurial culture. The government in specific has taken the initiative by establishing the national and provincial incubation centers, devising policies and regulatory frameworks to allow local venture capital (VC) firms and likewise promotion of the investor to setup the businesses in the country. Both the private and public sector is actively taking interest and having participation in this sector. However, the growth rate of Pakistan start-ups are far less in comparison to its peer countries for instance Nigeria.
Although Pakistan has all the key elements available to liftoff, the current situation through significant changes made both at the private sector and government settings. Currently, there are three weakly dominated pillars in the domestic start-up ecosystem. Firstly, government needs to design the enabling policies and build the relevant facilitating infrastructure. To achieve this objective there is need to simplify the policies and procedures for doing businesses to promote the formalization. It could be achieved by establishing a one-stop shop for registering the businesses and filling of taxation. Moreover, there is need to invest in the enabling infrastructure for instance with the introduction of payment gateways or either upgradation of government organizations such as Pakistan Post. Secondly, investors should be informed how to provide the funds. It should have six key ingredients which includes developing a robust plan specifically leveraging the local context, developing a consortium of social networks that capture and have proactive multiplier effect engineering network effects, investment should be done at scale, there should be performance management but with programmatic growth mindset, there should be secure investment independence with the main objective to win and target the right talent and to critically monitor and evaluate the key performance indicators that are in line with the creation model. Thirdly, the entrepreneurial ecosystem game players should help grow the local talent through leveraging the existing university network to support the entrepreneurial environment. Moreover, there should be introduction of digital skills by establishing the strong network of vocational institutes around the Pakistan and upgrade the existing institutes with latest competency based curriculum design. In addition, there should be building of strong connectivity with white-collar spread for innovation in Pakistan.
Pakistan entrepreneurial startup ecosystem is growing but at a slower rate. The government at both the federal and provincial level should carry out the initiatives to give support to the entrepreneurial environment and establishing of entrepreneurial ventures
In Pakistan, there is need for the government and private to both works collectively to reach the potential and share the mutual gains. For instance, the government can establish the enabling environment for germinating the entrepreneurial behavior and grounds for their respective establishment whereas the private sector should cater for the value creation by funding the next big disruption. The combined efforts made by the pole could enable the right talent to unleash the entrepreneurial revolution in an economy that has the full potential to take off and lead Pakistan towards the road of prosperity.
Besides this, Pakistan is an emerging economy, which has forecasted to rank among the fastest growing nation in the upcoming future with projected annual growth rate of approximately 6 percent by 2026. In addition, in 2016 the MSCI redefined the Pakistan’s status from the frontier markets to be among the emerging market, which has international funding access. Although, currently Pakistan economy is undergoing difficult times with a significant macroeconomic imbalances issues such as devaluation of currency but still the fundamental drivers are still positioning tailwinds towards future growth.
Pakistan economy intrinsic drivers need to be focused, as it is line with the next big South Asian market for start-ups. As stated earlier Pakistan, economy has large population base in specific the burgeoning middle class, which has ever-increasing internet penetration and the prevalent occupants in the key industries and sectors are endemic for disruption. Although, it is challenging but we still have the basic infrastructure existing in Bangladesh or either Nigeria who have already succeed in having creditworthy startup success stories.
Besides this, the entrepreneurial ecosystem in Pakistan however remains nascent. Although with passing time, the ecosystem is becoming more indigenized. Entrepreneurial culture has accelerated which clearly depicts the wider global trends. Since 2010, approximately 720 startups have launched out of which 67 percent of them are still operational whereas 100 of them were also successful in raising the funds. Moreover, there are many agreements and funding deals signed in Pakistan in recent times that shows there are vast opportunities available for local startups. Although, startups are off small scale in nature but there are interesting scope of self-organized entrepreneurial behavior identified. They key components of startup ecosystem include the government engagement, support for talent and its linkages with global incubators and venture capitals. The government, industry and academia collective efforts are required to utilize the real potential of talent in Pakistan. In recent times the universities and academia is actively taking part in promoting the nascent entrepreneurial activities among the students. For instance, the leading private sector universities like LUMS, LSE, NUST, IBA, UMT, UCP and FAST lead the way. They have introduced their students with not only entrepreneurship courses and offered them degrees indeed developed the incubation centers and entrepreneurial labs.
In order to conclude, Pakistan entrepreneurial startup ecosystem is growing but at a slower rate. The government at both the federal and provincial level should carry out the initiatives to give support to the entrepreneurial environment and establishing of entrepreneurial ventures. Stock Exchange Commission of Pakistan (SECP) has recently approved the license for Pakistan’s first private entrepreneurs and venture capital funds in 2017 (Ijara Capital and Laksons Investments). Likewise, the prevalent abundant talent needs promotion and support through academia, universities and technical and vocational institutes specifically providing space to the nascent entrepreneurs to test, experiment and incubate the potential businesses and craft their entrepreneurial skills. Moreover, there are corporations, foundations and government institutes that should play active role to provide funds for nascent entrepreneurial setups to speed up the growth process.