Thursday, October 16, 2014

Pakistan: A Land of Opportunity?

"All members of the Commission (on Social Entrepreneurship and Innovation) were agreed, Pakistan is a land of opportunity" i-genius Opportunity Pakistan Report April, 2014

i-genius, headquartered in London, calls itself a "World Community of Social Entrepreneurs". It promotes social entrepreneurship to a network in over 200 countries.


Last year in September, it sent fifteen people (Commissioners) from Australia, Italy, Pakistan and the United Kingdom to Pakistan to survey its social entrepreneurship landscape.  At the end of their trip, all 15 members of the team unanimously conclude that "Pakistan is a land of opportunity" for social entrepreneurship and innovation.  They said:

"The population (of Pakistan) is proportionately one of the youngest in the world. The youth predominately feel passionate about their country and are determined for it to succeed. Entrepreneurship and social entrepreneurship seems almost natural to them, perhaps in part due to the lack of large employers. Where their parents forged family businesses in traditional practices often around clothes, food and retail, Pakistani youth are embracing new opportunities that arise from modern technology and creative industries. Likewise, women (young and old) are making an important contribution to the economy and becoming founders of their own businesses. Pakistanis have had to overcome many hardships, but this in turn has made them resourceful, robust and resilient. Such characteristics are ideal in shaping successful social entrepreneurs."

Particular areas they focused on include energy, water and housing.  Writing for the Guardian newspaper, Nishat Ahmad identified some of the key efforts being made in these two areas.

Clean Water:

Nishat Ahmad highlights Pharmagen Water. Founded in 2007, Pharmagen aims to provide poor communities in Pakistan’s second largest city, Lahore, with affordable clean and purified drinking water. It is supported by the Acumen, which invests in entrepreneurs and creates venture capital which can provide solutions to causes of poverty.


Off-grid Energy:

In energy sector,  SRE Solutions is helping with affordable solar panels for the poor. Established just last year with Acumen’s support it offers to harness solar energy for off-grid customers in districts of Punjab and Khayber Pakhtunkhwa provinces.

Affordable Housing:

Born after the 2005 earthquake, Ghonsla is working to build affordable housing for the poor. In the coming months Ghonsla is looking into increasing production and collaborating with another insulation firm based in Germany while working locally to increase the company’s footprint in Pakistan’s northern district of Chitral, a scenic yet underdeveloped area bordering the Himalayas.

Startup Finance:

In finance, Nishat Ahmed cites SEED, Social Entrepreneurship and Equity Development, a venture which supports startups and grassroots innovations. SEED provided initial funding for Ghonsla. Its incubation center in Pakistan provide opportunities for young entrepreneurs in their early years of startup. It was established by friends Faraz Khan and Khusro Ansari and runs five distinct projects, including StartUp Dosti, a business plan based competition for early stage startups in India and Pakistan. It seeks to build relationships between the next generation of entrepreneurs from the two countries and the wider South Asian diaspora. As part of this it also launched Pakistan’s first television program closely based on the BBC’s Dragons Den format. It is to be aired in India and Pakistan in November.

Other Sectors:

i-genius report on Pakistan also mentions their commissioners' meetings with other important social entrepreneurs such the Citizens Foundation (TCF) in education sector and Zacky Farms in sustainable agriculture.

i-genius report says that Pakistan's social entrepreneurs are actively seeking ways to fill the huge gaps created by successive governments' continuing neglect of the country's social sector and infrastructure needs.

Summary:

Pakistan has many problems in almost all areas including education, health care, food, water, energy, housing and infrastructure. But the country is also home to one of the youngest and most passionate populations which, in the words of i-genius commissioners, is "determined for it to succeed. Entrepreneurship and social entrepreneurship seems almost natural to them, perhaps in part due to the lack of large employers. Where their parents forged family businesses in traditional practices often around clothes, food and retail, Pakistani youth are embracing new opportunities that arise from modern technology and creative industries. Likewise, women (young and old) are making an important contribution to the economy and becoming founders of their own businesses. Pakistanis have had to overcome many hardships, but this in turn has made them resourceful, robust and resilient. Such characteristics are ideal in shaping successful social entrepreneurs".

Related Links:

Haq's Musings

Social Entrepreneurship in America and Developing World

TEDx Karachi

light Candles, Do Not Curse Darkness

Social Entrepreneurs Target India, Pakistan

Pakistani-American Entrepreneurs in Silicon Valley

Fighting Poverty Through Microfinance in Pakistan

Silicon Valley Summit of Pakistani Entrepreneurs 2008

Pakistan's Multi-Billion Dollar IT Industry

Media and Telecom Sectors Growing in Pakistan

Pakistan's Middle Class Growth in 1999-2009

13 comments:

Fatima said...

جب تک رشورت خوری اور بھتہ کلچر ختم نہیں ہوگا ہمارے آگے بڑھنے کے چانسز بہت کم ہیں۔ ۔

Ghulam said...

The simple answer is "not exactly". With widespread extortion, harassment of entrepreneurs by some random thug claiming to belong to the TTP(a pathan mazdoor in reality most of the times) and very little government regulation, there is not a lot of opportunity.

Riaz Haq said...

Fatima and Ghulam:

The word "entrepreneur" means someone who takes the challenge and risks all against all odd to achieve his or her vision. Real "entrepreneur" does not make excuses.

Syed said...

Pakistan has been a land of opportunity since 1947. Our parents moved because they considered where the generations to come would find opportunity, not like India where Muslims have been put in a lower tier of development. But, lately, the 10% mafia is stealing this chance to develop by strong arm methods. Industrialists are being squeezed by unscrupulous government officials to either bribe or get out. I have an NEDian friend who elected to stay and runs a tannery. He pays 17 'Bhattas' every month to the 'wolves at the door' to keep on. The environment is not very conducive with these problems for enterpreneurs.

Riaz Haq said...

Syed: "lately, the 10% mafia is stealing this chance to develop by strong arm methods. Industrialists are being squeezed by unscrupulous government officials to either bribe or get out. I have an NEDian friend who elected to stay and runs a tannery. He pays 17 'Bhattas' every month to the 'wolves at the door' to keep on. The environment is not very conducive with these problems for enterpreneurs."


I'm well aware of the problems. But, in spite of the problems, entrepreneurs take huge risks against all odds and still succeed.

The word "entrepreneur" means someone who takes the challenge and risks all against all odd to achieve his or her vision. Real "entrepreneur" does not make excuses.
Here's an excerpt of a Businessweek story titled "Pakistan, Land of Entrepreneurs "

" (Arif) Habib, who started as a stockbroker more than four decades ago, has expanded his Arif Habib Group into a 13-company business that has invested $2 billion in financial services, cement, fertilizer, and steel factories since 2004. His group and a clutch of others have become conglomerates of a kind that went out of fashion in the West but seem suited to the often chaotic conditions in Pakistan. Engro, a maker of fertilizer, has moved into packaged foods and coal mining. Billionaire Mian Muhammad Mansha, one of Pakistan’s richest men, is importing 2,500 milk cows from Australia to start a dairy business after running MCB Bank, Nishat Mills, and D.G. Khan Cement.

http://www.businessweek.com/articles/2012-11-29/pakistan-land-of-entrepreneurs

Hashk03 said...

I agree that Pakistan is a land of opportunity. Our population does not think in that direction of looking for opportunities in their own land, rather we are in habit of looking for opportunities on someone else's land.

If something is missing or something wrong in community, this is clear indication that opportunity exists to make it right. In making something right we can generate plenty of jobs and our youth can indulge in more constructive rather than destructive future. Whole process will bring a lot of learning which can be implemented on different things.

I myself moved to UK 14 years ago in a hope that UK will give me more opportunities. I was not thinking in right direction. Now when I look back at my life I can see that real opportunities did exist in my own country which to begin with I could not spot, they were there.

Opportunity is not something that we should expect from someone, opportunity is something that we need to create.

Majumdar said...

Prof Riaz ul Haq sb,

Is any attempt being made to document all these innovations at a central database? It could be useful to both Pakis as well as folks in rest of South Asia.

Regards

Hopewins said...

Latest IMF projections
http://goo.gl/kgFZXY

Riaz Haq said...

Without money or even a laptop to call her own, young Pakistani entrepreneur Sidra Qasim moved from her small hometown in 2011 to the big city of Lahore to start a business.

Her friend, Waqas Ali, asked her to join him as his business partner, and she moved into a hostel and took a job tutoring during the day. In the afternoon, she would walk 30 minutes to Ali's college campus where the two could use a free computer lab to work on their website. When the lab closed at 8, they went to the library and pored over copies of Harvard Business Review, reading case studies about start-ups.

Ali and Qasim are examples of a philosophy that some of the world's leading thinkers and philanthropists have been betting on: that the Internet and technology will help entrepreneurs in developing nations build wealth and pull themselves and their communities out of poverty.

In 2012, they had their first production run, and launched their business selling handcrafted shoes online. Within six months, their company, Markhor shoes, had sold 200 pairs of shoes in 17 countries.

"We were able to give jobs to 24 local craftsmen," says Qasim, who acknowledges that there is still work to be done, but it's a start. "In our next run we would like to increase their pay by two, and offer health benefits."

Technological advancements

Entrepreneurial advancements are especially impressive in the case of Pakistan, where power outages sometimes last 18 hours a day and foreign investment plummeted by almost a quarter in 2012 alone, according to the Central Bank. Facebook — the poster child of the new Internet age — was banned in Pakistan for a time in 2010, and YouTube, though easily reached through proxy servers, has been officially banned for four years.

And yet, information technology and communications is one of the fastest growing sectors in Pakistan's growing economy, which has seen its middle class double since 2002. In 2001, just 1 percent of the population was on the Internet; now Pakistan has 19 million Internet users, according to Census Bureau data.

"Even in small villages, people, especially young people, are using Twitter and Facebook," says Qasim. "People from my village order mangoes on their mobile."

Access to the Internet has made all the difference for young people like herself, says Qasim. Indeed, Ali, her hometown friend and business partner, got the idea for the online shoe business when he met local craftsmen in their village whose families have been making handmade shoes for generations, and saw their beautiful product. He thought they could find a wider audience by using Facebook and the Internet to market their goods.

Markhor's business links the old Pakistan with the new — in the glossy, hand-stitched shoes made in their local village, Ali and Qasim saw an opportunity that would exploit a hole in the market and employ local craftsmen who had been struggling to make ends meet.

Since 2000, Pakistani shoemakers had lost 90 percent of their business to China, leaving thousands without jobs. But the quality wasn't there with Chinese products. Ali and Qasim suspected that an international customer would appreciate a hand-crafted product that was hard to find, but available on the Internet.

http://www.deseretnews.com/article/865614783/Young-Pakistanis-use-Internet-to-embrace-start-up-culture-and-sell-handmade-leather-shoes.html

Riaz Haq said...

Small is beautiful - unless you are a business that wants to grow. In which case, small is not so appealing. In Pakistan, where 90 percent of businesses are small or medium, challenges to scaling-up businesses have kept the private sector from realizing their full potential and contributing as much as they could to the economy. To help address a major constraint to the growth of small and medium enterprises (SMEs) in Pakistan, the U.S. Agency for International Development (USAID) is partnering with local banks to boost lending to SMEs. The new $60 million "U.S.-Pakistan Partnership for Access to Credit" was launched at last week's U.S.-Pakistan Business Opportunities Conference, as part of a larger bilateral government effort to boost trade and investment in Pakistan.

Finance is an important enabler of economic growth anywhere in the world. For Pakistan, which needs annual economic growth of at least 7 percent just to keep up with the number of youth expected to enter the labor market each year, this financing is important not only for the economy but for stability. Yet the private sector credit to gross domestic product (GDP) and financial depth ratios in Pakistan trail behind leading emerging economies.

In the SME segment, the volume of lending and types of financing tailored to SME needs have been very limited. A World Bank study found that only 16 percent of total credit in Pakistan went to SMEs. Moreover, about 70 percent of SME borrowing was used for working capital while only about 12 percent went toward long-term investment. Another survey shows only 11 percent of micro, small, and medium enterprises (MSMEs) in Pakistan report having access to finance, below the 15 percent international average and well below percentages reported in higher performing middle-income countries like Brazil and Turkey (30 and 48 percent respectively).

Despite these limitations, SMEs make an out-sized contribution to Pakistan's economy. The same World Bank study found that SMEs in Pakistan employ nearly 70 percent of workers in the manufacturing, services, and trade sectors and generate an estimated 35 percent of manufacturing's value addition. They also contribute over 30 percent of GDP and more than 25 percent of export earnings. Thus, alleviating a key constraint to their growth could lead to substantial increases in the number of jobs for Pakistan's large number of youth and greater income generation.

The new Partnership reflects a shared commitment to promote broad-based economic growth in Pakistan. Private sector investment was identified as an essential ingredient for growth in the Government of Pakistan's Vision 2025 strategy. The Partnership is part of a larger umbrella of U.S. support to SMEs in Pakistan to help them grow and expand into new markets. It will provide partner banks- Bank Alfalah, JS Bank, Khushhali Bank and First Microfinance Bank- with a loan portfolio guarantee through USAID's Development Credit Authority (DCA). The guarantee will lower the risk to the banks for lending in sectors they would otherwise perceive as being too risky. It will also encourage partner banks to extend longer-term loans and introduce credit products that address the needs of SMEs.

With more access to finance, small and medium businesses are poised to make even larger contributions to the Pakistan economy than they do now. The new U.S.-Pakistan Partnership for Access to Credit will make it possible for dynamic SMEs to be more than small and beautiful. After all, beauty is in the eye of the beholder and for businesses eyeing scale-up, there are few things more attractive than being able to grow.

http://www.huffingtonpost.com/borany-penh/eyeing-business-growth-in_b_6865186.html

Riaz Haq said...

It may very well sound like a cliché, but Samad Dawood – the 32-year-old CEO of Dawood Hercules – made a valid point.

“Why is there so much negativity in what we read about Pakistan,” he asked. “Why is it that the good things about business and the economy don’t get the same amount of coverage?”

Samad sounded upbeat for a man whose family business, by its own standards, went down post 1960s.

The Dawoods were either the first or the third richest business family in Pakistan in terms of assets owned, as per two separate researches cited by Stanley A. Kochanek in his extensive book “Business and Politics in Pakistan”.

They were everywhere – from the production and distribution of textiles, paper, rayon, chemicals and fertiliser to banking and shipping. But the nationalisation of the 1970s and division among family interests relegated them to the sidelines.

Their re-emergence came about when the family branch, led by Hussain Dawood, acquired a controlling stake in Engro Corporation, one of Pakistan’s largest private sector conglomerates.

But that came at a price that saw them re-invent themselves and forgo legacy.

Even after the nationalisation, Dawood Group kept a few businesses with itself – the Dawood Hercules Fertiliser and textile units, which included Burewala Textile Mills, Dawood Lawrencepur and Dillon, which were their mainstay for years.

It is said that Burewala owes its development to Ahmed Dawood, the group’s founder, who established massive textile mills in the city.

But now they are not in the textile business and Dawood Hercules’s fertiliser has been sold off. “We had a choice to make as far as textile operations were concerned. They required significant amount of capital to be globally competitive,” said Samad, Hussain’s youngest son.

Another option was to pump additional liquidity into Engro. They opted for the latter.

Since the mid-2000s, Engro has expanded massively – first came a $1.1-billion investment in a new urea plant, then the launch of a food division with Olper’s packaged milk, a unique 217MW power plant that uses permeate gas, building the country’s first LNG terminal and finally, the $2-billion investment plan to develop a coal mine and power plant in Tharparkar.

Dawood Hercules, the holding company, which has a majority stake in Engro, also has substantial shareholding and management control of Hub Power Company, another cash-cow.

Most of its focus is on energy projects.

“Why should a small SME entrepreneur invest in a generator?”

“Good businesses have to solve large problems … and better the solution the more value gets created for stakeholders.”

Dawood’s three power projects in the pipeline include two 660MW plants that will be built by Hubco and will use imported coal, the Thar power plant and a 50MW wind farm.

http://tribune.com.pk/story/964022/the-dawoods-growing-bet-on-pakistan/

Riaz Haq said...

In #Pakistan, cultivating young #entrepreneurs by specialized vocational training | Pakistan | UNICEF https://shar.es/16POwy via @sharethis

A vocational training programme supported by Barclays and UNICEF gives a young motorcycle mechanic in Pakistan just the start he needed.

OKARA, Punjab Province, Pakistan, January 2015 – “I have my own motorcycle repair shop and am earning enough for my family to have a decent life,” says Mohammad Tanvir, 19. “Circumstances forced me to give up education after middle school. I started working in a motorcycle repair shop just to learn some skills. I did not get paid for my work since I was a novice and the owner of the shop was teaching me.”

Poverty, along with limited access to both quality education and employment opportunities, is often a major factor hindering young men and women from fulfilling their potential. Through learning demand-driven skills and getting guidance on employment or entrepreneurship opportunities, young people can have the opportunity to brighten their futures. This is precisely the objective of Building Young Futures, a project implemented by UNICEF Pakistan, with funds from Barclays UK.

While working in the shop, Mohammad heard about a course on motorbike mechanics for young people, offered at the Vocational Training Institute (VTI) in Okara. “I thought, Why not do it the proper way and be a certified motorbike mechanic from a reputable organization? I joined the course and am enjoying the benefits now.”

After completing a 14-month training course at the VTI Okara in 2013, Mohammad had enough confidence as a mechanic to start his own business, rather than work for someone else. On the basis of his certificate from the Institute and pledging the land of his modest family home, he secured a bank loan of PKR 80,000 (about US$760).

Hard work and confidence

With capital in hand, Mohammad rented a shop in one of the bazars in Okara and bought all the tools he needed. His hard work and confidence paid dividends, and in a little over 18 months, he managed to establish his shop as a reliable and professional repair point for all types of motorbikes.

“I earn between 20,000 and 25,000 rupees [$190 to $240] per month from my shop,” Mohammad says. “Sometimes I buy a motorcycle that needs major repairs and sell it at a good price after overhauling it. This helps me make additional money, which I invest in purchasing another bike or covering an unexpected family expense.”

In 2012 in selected districts of Punjab province, UNICEF initiated the second phase of the Building Young Futures project. Its goal is to improve income-generating opportunities for socially excluded and vulnerable adolescents by enabling them to access training in life skills, financial literacy and enterprise management. To support the implementation of the project, UNICEF partnered with the Punjab Vocational Training Council (PVTC) and the Department of Youth Affairs, Sports, Archaeology and Tourism.

At the VTI Okara, Mohammad was trained by Zahid Iqbal. For many years, Zahid worked at the Atlas Honda Motorcycle factory in Lahore, but with a passion for teaching, he switched jobs and joined VTI Okara.

“I always wanted to teach and transfer my knowledge about motorbikes to the younger generation,” Zahid says. “It gives me a great deal of satisfaction to help young people progress in life. Some of them become entrepreneurs; some move abroad. But whenever they return, they come to see me and pay a lot of respect. It is a wonderful feeling to see my students do well in life.”

Prosperity and encouragement

Around 850 students are enrolled in the VTI Okara at one time, receiving vocational training in two shifts. Nearly 40 per cent are girls and young women, who often take up embroidery, cutting and stitching, dress-making or beautician courses.

Riaz Haq said...

t’s No #SiliconValley, but #Pakistan is Building Its Own Startup Scene. #Technology http://www.newsweek.com/pakistan-building-silicon-valley-scene-426408 …

In the past five years, Pakistan’s startup ecosystem has grown from a nascent colony to a self-sustaining environment. Zameen, an online real estate startup based in Lahore, has ridden that startup wave in developing a Zillow-like app and website that allows users to search and buy real estate listings in Pakistan’s largest cities.

Like many famous U.S. internet companies, Zameen started with a gamble. In 2006, Zeeshan Ali Khan and his brother left their e-commerce business in the United Kingdom to move to Pakistan and started Zameen in their bedrooms. Back then, online-only services in Pakistan were rare, but Ali Khan followed the money coming into Pakistani real estate from expats living abroad—a million of whom lived in the United Kingdom. Now Zameen employees 500 people and has offices in nearly all major cities in Pakistan.

“Zameen.com came into being when we realised there was a desperate need for a trustworthy online real estate enterprise in Pakistan, especially given the importance the average Pakistani attaches to property,” Ali Khan tells Newsweek in an email. “Back then the state of internet infrastructure in Pakistan was extremely poor but the offline property market was exploding. Facilitated by large investments from the Pakistani diaspora, people found that investing in real estate would earn them significant returns.”

Pakistan’s fast-growing economy and, perhaps more importantly, large English-speaking population has provided a backbone to encourage startups to form and work with foreign companies.

The country has seen startup hubs form around elite universities in cities like Lahore and Karachi—similar to Boston and San Francisco—in the last few years. The Punjab province, where Lahore is located, has been the major hotspot for startups in Pakistan. Plan9, the Punjab provincial government-run technology incubator, hosts over 80 startups. Ali Khan believes there are 140 startups in Lahore, a city of 5 million people.

But Pakistani startups are still minnows compared to those in Silicon Valley. Cultural and economic norms, like being predominantly reliant on cash for transactions, are big obstacles for startups. Despite leading the South Asian region in consumers using mobile payments, only 9 percent of Pakistani men and 2 percent of women have used mobile phones for money transfers. Around 39 percent of Americans have used mobile banking in 2015, according to a report from the Federal Reserve.

To accommodate its cash-based users, Zameen employs motorcycle riders to collect payments from Zameen agents across 30 Pakistani cities in person. “The situation is improving, and a lot of people are beginning to feel more comfortable with online payments and even mobile transactions,” says Ali Khan.

Earning public trust for a little-known startup—a concept now just becoming understood in Pakistan—was a big challenge as well. When Zameen began, it discovered most of the Pakistani property market undocumented, and reliable data was nearly non-existent.

Pakistani consumers, including Ali Khan’s family, had a hard time becoming comfortable with Zameen and its Silicon Valley-inspired ideas. “My family was a little apprehensive when I told them I wanted to start a business of my own,” Ali Khan says. “Today however, the attitudes have greatly changed, thanks to the startup ecosystem that is supporting the startup culture in Pakistan.”

The two biggest hurdles Zameen and fellow startups face are the low penetration rates of 3G/4G mobile Internet and the lack of support from its government. In 2015, only 22 million out of 182 million Pakistanis had 3G/4G technology, leaving little room for startups to continue growing and scale upwards with their online services.

Infrastructural issues like 3G/4G technology need the government’s help, but such support has been lacking, according to Ali Khan.