Comments on Haq's Musings: IBA's Pakistan Entrepreneurship Report is Flawed!

Here's a Daily Times report on State Bank of Pakistan's National Financial Literacy Program:

...Pakistan’s first-ever NFLP has been launched with the support and collaboration of Asian Development Bank (ADB), Pakistan Banks’ Association (PBA), Pakistan Microfinance Network (PMN), Pakistan Poverty Alleviation Fund (PPAF) and Bearing Point.

He said the programme has been developed after the Financial Literacy Gap Assessment Survey of beneficiaries. The survey has been helpful in development and adaptation of curriculum and dissemination strategy. The curriculum will also be translated into national and main regional languages including Urdu, Sindhi, Punjabi, Pushto and Balochi, he added.

The SBP governor said that the programme is financed under the ADB-funded Improving Access to Financial Services Fund (IAFSF) and implemented under the oversight of the IAFSF committee, which has representation from SBP, PBA, PPAF, PMN, education sector, and the ADB. Upon completion of the pilot phase, an impact assessment of the pilot will be conducted by a third party, he said, adding that based on the experience and assessment of the pilot, the programme will be scaled-up to target more than half a million beneficiaries all over the country.

Anwar said that in addition to focused training sessions of beneficiaries, the dissemination strategy involves street theatres, board games, comic strips, activity-based competitions, website and media campaigns to reach out to the masses on a larger scale. The training sessions will be sourced from banks, Microfinance Banks (MFBs) and Microfinance Institutions (MFIs) based on their interest and pre-defined qualification criteria, he said and added that in order to encourage and incentivise participation from partners, professional fees and out of pocket expenses of partners will be reimbursed from the programme budget.

Besides involvement of local institutions, the project has formed international partnerships with international financial education programmes including Microfinance Opportunities, Finmark Trust, Association of Microfinance Institutions of Uganda (AMFIU), Sewa Bank, Microfinance Innovation Centre for Resource and Alternatives (MICRA), World Bank Institute, Aflatoun, and others, Anwar added.

The SBP governor said that consumer protection and financial education should be vital components of any financial inclusion initiative. It is now clear that policies, which focus entirely on changing the supply of financial products and services can leave consumers ill-informed, vulnerable and not willing to participate in financial markets, he said, adding that focus of financial literacy programme should be broader than financial inclusion.
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He briefly touched upon various conventional and non-conventional measures adopted by SBP to boost financial inclusion.

SBP introduced Basic Banking Account (BBA), a simplified financial product for low income consumers.

SBP introduced Microfinance Banking Regulations in 2001 to specifically meet the demands of low income consumers.

SBP has adopted innovative solutions to overcome geographical barriers, including branchless banking through retail agents and harnessing technology via mobile-phone banking.

SBP has been managing various market interventions funded by donor agencies:

- The Institutional Strengthening Fund providing grant funding to microfinance providers to top and middle tier MFBs and MFIs for key investments in HR, IT, product development, risk management systems, business plans and branchless banking development.

- The Microfinance Credit Guarantee Facility to link microfinance with financial markets for mobilization of wholesale commercial funding through partial guarantees...

http://www.dailytimes.com.pk/default.asp?page=2012\01\21\story_21-1-2012_pg5_16

Here's a Daily Times report on State Bank-LUMS study to lend to small and medium enterprises (SMEs):

The State Bank of Pakistan (SBP) on Thursday launched an important study on fan industry in collaboration with the Lahore University of Management Sciences (LUMS), which will help Pakistan’s banking sector expand access to finance for the Small and Medium Enterprises (SMEs).

The study covers important aspects of fan industry including historical growth trends in the industry, composition, contribution to national economy, supply and demand side issues, SWOT analysis, available growth opportunities, accounting practices, banking and financing needs of the sector, and recommendations on increasing access to finance for the fan cluster.

According to the study, the most essential point for the sustainable development of the fan industry in Gujrat and Gujranwala is to improve the capacity for independent innovation to help the industry reach a higher place along the global value chain.

The study contains four patterns of innovation proposed by the United Nations Industrial Development Organisation, product innovation, process innovation, function innovation and interdepartmental innovation, and emphasises the role of inter-organisational R&D departments, research centres, new and advanced technology and universities.

The study also recommends for the setting up of an implementation committee, whose mandate should be to develop an implementation plan with clear time-lines and targets based on the strategy paper.

A dissemination seminar was held at SBP, Karachi today to share the major findings of the study with banks and other stakeholders. Muhammad Ashraf Khan, Executive Director, State Bank of Pakistan chaired the seminar, which was attended by senior executives of banks and other relevant SME stakeholders.

Addressing the participants, Ashraf Khan commented that in Pakistan, reliable and credible data on existing SME clusters is lacking, which hampers banks’ understanding of SME sub-sectors dynamics and resultantly makes them shy of lending to the SME sector. In this backdrop, he said, the State Bank has been collaborating with reputed research institutions, consulting firms to conduct research on key SME clusters to facilitate financial institutions in better understanding of the sectors and accordingly come up with improved products for these clusters.

‘Today we are here to unveil findings of research report on fan cluster and emphasise upon banks to make maximum use of the study findings while designing banking products for the industry and fulfilling their financing needs,’ he added.

Usman Khan, Project Consultant from LUMS, gave a detailed presentation to the participants covering the important aspects of the study, which was followed by a question-answer session.

The study report on fan cluster is latest addition to the surveys of 10 important clusters recently conducted by SBP in collaboration with International Finance Corporation (IFC). The booklets of these surveys placed on http://www.sbp.org.pk/departments/ihfd-ifc.htm provide important guidance to banks on increasing lending to SMEs through customised and low-cost product programmes.

http://www.dailytimes.com.pk/default.asp?page=2012\01\20\story_20-1-2012_pg5_4

Pakistan's Monis Rahman of Rozee.com makes the...

2012-01-04T19:55:24.820-08:00

Pakistan's Monis Rahman of Rozee.com makes the Forbes Top 10 list of Asian entrepreneurs under age 50. The list includes big names like Jack Ma of Alibaba.com

http://www.forbes.com/pictures/mhe45fee/monis-rahman/

Here's an Express Tribune story on a new business school in Karachi:

Sitting in the corporate office of the Karachi School for Business and Leadership (KSBL), an upcoming graduate management school being established in the financial capital of Pakistan in collaboration with Judge Business School of the University of Cambridge, Dean Robert Wheeler III spoke at length as to why Karachi needed yet another business school.

“No doubt, IBA and LUMS are outstanding business schools. But the academia isn’t like a corporation, it’s not about winning or losing,” Wheeler told The Express Tribune in an interview. “Pakistan needs more top-level business schools, it needs more leaders.”

Having served at the Pennsylvania State University, University of Texas at Austin and Georgetown University in key positions like assistant dean and director of MBA programmes, Wheeler has been associated with KSBL for the past two years. Spread over three acres, a dedicated campus of KSBL is currently under construction on main Stadium Road in Karachi. The construction phase will be over in July 2012 and the first intake of students will be in September. Initially, KSBL will offer a full-time, 21-month MBA programme in general management only.

“Our emphasis is on ethical leadership. It’s not about being right or wrong. It’s about making difficult choices,” he said, adding that KSBL would make an extra effort to infuse students with social responsibility. “We’ll work with students to help them stay here in Pakistan after they graduate, to make them realise that they owe something to this society.”

The MBA curriculum has been designed in collaboration with Judge Business School. Besides conventional teaching methods involving lectures and case studies, KSBL will use videoconferencing to let its students attend live lectures from American and British universities.

“We’re wiring the entire building for videoconferencing so that CEOs from London, Singapore and the US could show up on videoconferencing,” he said, adding that the campus would benefit from natural light optimisation, as more than 70% of the rooms would have natural lighting.

Wheeler said the core faculty of KSBL would be of Pakistani origin with PhD degrees from foreign universities. “We’ll cut back on the administrative work that faculty is often required to do in Pakistan and encourage them to do applied research that could be used in the industry, government and business.” In many classes, especially those on entrepreneurship, Wheeler said more than one person would co-teach students via videoconferencing to provide them with a combination of academic and professional perspectives.

‘Intrapreneurship’

Referring to corporate entrepreneurship, or intrapreneurship meaning working like an entrepreneur within an organisation, Wheeler said the traditional role of an entrepreneur was changing, as big corporations were now looking for business graduates with entrepreneurial mindset.

As for the admission process at KSBL, he said prospective students would be judged on their GMAT scores, GPAs, essays and interview performance. “We’ll have a holistic approach. We want to produce team players, people who can get along with others. You need to fulfil certain requirements, but high scores only shouldn’t guarantee your admission.”

Rejecting the idea that working with the bureaucracy is particularly difficult in Pakistan, Wheeler said the United States was equally bureaucratic. “We’re right on track. Things are going well. The construction phase will be over in July.”

http://tribune.com.pk/story/315063/pakistan-needs-more-top-level-business-schools/

Here's a NY Times story about Dharavi slum that illustrates entrepreneurship at the bottom:

At the edge of India’s greatest slum, Shaikh Mobin’s decrepit shanty is cleaved like a wedding cake, four layers high and sliced down the middle. The missing half has been demolished. What remains appears ready for demolition, too, with temporary walls and a rickety corrugated roof.

Yet inside, carpenters are assembling furniture on the ground floor. One floor up, men are busily cutting and stitching blue jeans. Upstairs from them, workers are crouched over sewing machines, making blouses. And at the top, still more workers are fashioning men’s suits and wedding apparel. One crumbling shanty. Four businesses.

In the labyrinthine slum known as Dharavi are 60,000 structures, many of them shanties, and as many as one million people living and working on a triangle of land barely two-thirds the size of Central Park in Manhattan. Dharavi is one of the world’s most infamous slums, a cliché of Indian misery. It is also a churning hive of workshops with an annual economic output estimated to be $600 million to more than $1 billion.

“This is a parallel economy,” said Mr. Mobin, whose family is involved in several businesses in Dharavi. “In most developed countries, there is only one economy. But in India, there are two.”.....

Similar to Dharavi, Karachi's Orangi town is an example of undocumented entrepreneurship in the shanties. From garments to leather to furniture, there are many small cottage industries operated by small entrepreneurs in Orangi town.

U think Pakistani students would fare any better? ...

2011-12-29T10:21:56.716-08:00

U think Pakistani students would fare any better?

In any case due to rapid expansion of education ~45% of students are the first to go to school so it is to be expected....

Results of PISA international test released by OECD in Dec, 2011, show that Indian students came in at the bottom of the list along with students from Kyrgyzstan:

Students in Tamil Nadu-India attained an average score on the PISA reading literacy scale that is significantly higher than those for Himachal Pradesh-India and Kyrgyzstan, but lower than all other participants in PISA 2009 and PISA 2009+.
In Tamil Nadu-India, 17% of students are estimated to have a proficiency in reading literacy that is at or above the baseline needed to participate effectively and productively in life. This means that 83% of students in Tamil Nadu-India are estimated to be below this baseline level. This compares to 81% of student performing at or above the baseline level in reading in the OECD countries, on average.
Students in the Tamil Nadu-India attained a mean score on the PISA mathematical literacy scale as the same observed in Himachal Pradesh-India, Panama and Peru. This was significantly higher than the mean observed in Kyrgyzstan but lower than those of other participants in PISA 2009 and PISA 2009+.
In Tamil Nadu-India, 15% of students are proficient in mathematics at least to the baseline level at which they begin to demonstrate the kind of skills that enable them to use mathematics in ways that are considered fundamental for their future development. This compares to 75% in the OECD countries, on average. In Tamil Nadu-India, there was no statistically significant difference in the performance of boys and girls in mathematical literacy.
Students in Tamil Nadu-India were estimated to have a mean score on the scientific literacy scale, which is below the means of all OECD countries, but significantly above the mean observed in the other Indian state, Himachal Pradesh. In Tamil Nadu-India, 16% of students are proficient in science at least to the baseline level at which they begin to demonstrate the science competencies that will enable them to participate actively in life situations related to science and technology. This compares to 82% in the OECD countries, on average. In Tamil Nadu-India, there was a statistically significant gender difference in scientific literacy, favouring girls.

http://www.acer.edu.au/media/acer-releases-results-of-pisa-2009-participant-economies/

Anon: "Even in 1930s US was much much much ri...

2011-12-28T09:03:24.994-08:00

Anon: "Even in 1930s US was much much much richer than PAkistan is today.In PPP adjusted terms the US per capita income at the height of the great depression is $10,000."

In 1903, when Kraft started selling cheese from a cart in Chicago, the US per capita income was about $7000 in today's dollars, and in much of Europe (France, Sweden, Germany, etc) was just over $3000, about the same as Pakistan's today, according to Gapminder.org which compares such metrics.

Adult literacy rate in 1903 US was higher than in Pakistan today, but life expectancy in US in 1903 was only 51 years, less than 66 years in Pakistan now.

Also, literacy and human development indicators for Pakistani cities today are much higher than the 1903 US.

Overall, the situation in Pakistan is, in some respects, comparable to the early 20th century America, and the middle class and infrastructure in Pakistan today is much more advanced than was the case in early 20th century America which gave birth to great entrepreneurs.

http://www.gapminder.org/

Kraft (1903) and Carl's Jr. (1941) began and g...

2011-12-28T08:25:30.430-08:00

Kraft (1903) and Carl's Jr. (1941) began and grew in an America which was not much better than Pakistan is today.

Even in 1930s US was much much much richer than PAkistan is today.In PPP adjusted terms the US per capita income at the height of the great depression is $10,000.

Also the literacy,institutions,society etc was far more advanced.

Here's an Express Tribune story on the state of higher education in Pakistan:

....“To create a knowledge capital, particularly in an emerging economy, a country has to invest heavily in the education sector,” said Dr Laghari, citing examples of South Korea, Singapore and more recently of Thailand, Malaysia, Turkey and Indonesia, who invested in education and made significant progress. Sadly, he said, Pakistan invests only 0.7% of its Gross Domestic Product in education, “which is too meagre to achieve its future goals”.

Dr Laghari said we need at least 15,000 PhDs in the next decade, which is only possible if more than 1,000 PhDs are produced every year. However, he said within the available budget we are hardly producing 600 PhDs annually.
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Dr Laghari said that at least 20 to 30% of the population aged 17 to 23 should have accessibility to the higher education, but in Pakistan only 7.8% have this facility. In the Muslim world, 27% population in the given age group in Indonesia has access to higher education, in Malaysia it’s 30% and in Turkey it is 37%, he added. He cited that Brazil has invested $26 billion on its higher education and is expected to produce 75,000 PhDs in the next ten years.
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But despite outlining the issues marring education in Pakistan, Dr Laghari dispelled the impression that the higher education sector is stagnant.

He said that in spite of the financial crunch, HEC has succeeded in improving the quality of education and research. He said that rate of enrolment in higher education is growing by 15 to 20% annually, and published research is increasing 20 to 25% annually.

He said that 10 offices of research innovation have already been set up and another 12 are in the pipeline. Moveover, three centres of advanced studies focusing on water, agriculture and energy are currently being established at different universities, which are priority areas for developing countries like Pakistan, he added.

HEC is focusing on promoting a culture of innovation and entrepreneurship in universities and has defined their roles in building economies, communities and leadership, said Dr Laghari. As a result, he said research output has increased significantly in the last few years and so has as the number of PhD graduates. He said although the commission could not send a single person abroad for PhD last year, this year it managed to send abroad 600 to 700 scholars.

“The biggest challenge for higher education is improving both the quality of education and research, which is only possible if the sector gets appropriate funding,” he maintained. The HEC chief said the commission has gotten some financial respite from the World Bank, which recently loaned it $300 million, in addition to funds from USAID and the British Council.

He said funds allocated to the HEC last year were insufficient, and warned of massive protests by employees across the country if they are not paid their raised salaries.

http://tribune.com.pk/story/312462/laghari-calls-for-heavy-investment-in-higher-education-disapproves-of-commercialisation/

Asasah, a microfinance institution (MFI) in Pakist...

2011-12-27T17:13:56.456-08:00

Asasah, a microfinance institution (MFI) in Pakistan, reportedly has announced that it will be utilizing Easypaisa, the branchless banking service of MFI Tameer Microfinance Bank Limited (TMFB) of Pakistan, as an option for borrowers to repay their loans [1]. Easypaisa is a joint venture of TMFB and Telenor Pakistan, a subsidiary of Norwegian mobile communications company Telenor Group. Easypaisa users are able to conduct financial transactions using mobile phones or by visiting an Easypaisa shop, Telenor service center or TMFB branch. There are reportedly 14,000 Easypaisa agents in approximately 600 cities across Pakistan.

As of 2010, Asasah reported to the US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 1.9 million and 18,900 active borrowers, most of whom are women. TMFB reported to MIX total assets of USD 61.7 million, a gross loan portfolio of USD 36.2 million, return on assets (ROA) of 3.74 percent, return on equity (ROE) of 12.6 percent and 111,100 active borrowers as of 2010.

By Nisha Koul, Research Associate

About Asasah: Asasah was established in 2003 in Pakistan as a nonprofit organization with the aim to “enhance the micro productivity of the house hold living below the poverty line by providing economic, educational and diversified information opportunities” and has since been operating as a microfinance institution (MFI) with 100 percent of its funding supplied by commercial sources. As of 2010, Asasah reported to the US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 1.9 million and 18,900 active borrowers.

About Tameer Microfinance Bank Limited: Tameer Microfinance Bank Limited is a licensed commercial bank in Pakistan that provides microfinance services such as small business, group and emergency loans; micromortgages; microinsurance; savings; and money transfers. It was founded in 2005 and is based in Shahrah-e-Faisal, Pakistan. Telenor Pakistan, a subsidiary of the Norwegian mobile communications company Telenor, owns 51 percent of TMFB. As of 2010, TMFB reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 61.7 million, a gross loan portfolio of USD 36.2 million, return on assets (ROA) of 3.74 percent, return on equity (ROE) of 12.6 percent and 111,100 active borrowers.

About Telenor Pakistan: Telenor Pakistan is fully owned by the Telenor Group, a communication services provider operating in 11 markets in Europe and Asia as of 2010. Telenor Pakistan began commercial operations in Pakistan on March 15, 2005. At the end of October 2010, it reported a subscriber base of 24.1 million and a market share of 24 percent. Telenor Pakistan acquired 51 percent of Tameer Microfinance Bank in November 2008. In 2009 it launched Easypaisa to offer branchless banking services across Pakistan. There are reportedly 14,000 Easypaisa agents in approximately 600 cities across Pakistan.

http://www.microcapital.org/microcapital-brief-asasah-of-pakistan-to-collect-microloan-repayments-via-easypaisa-service-of-tameer-microfinance-bank-telenor-pakistan/

Anon: "For all this we need investments in in...

2011-12-27T16:07:45.897-08:00

Anon: "For all this we need investments in infrastucture mainly electricity generation"

America's industry and wealth were created by great entrepreneurs who made such investments possible. They didn't wait for the govt to do it.

Read about people like Andrew Carnegie, Nelson Rockefeller, Cornelius Vanderbilt, Thomas Edison, JP Morgan and others (who were denounced as Robber Barons in the Gilded Age) to find out how they did it.

Read books on America's economic and industrial history by John Steele Gordon to learn how America transformed itself from a poor agrarian society into world's sole superpower.

Sir you are right we are today the 1930s of Americ...

2011-12-27T14:32:50.588-08:00

Sir you are right we are today the 1930s of America we have to modernise and build a strong manufacturing and service industry base agriculture needs to be also improved. For all this we need investments in infrastucture mainly electricity generation and distribution. Fuel for generating Electricity also needs to be secured. Policies need to be made for the above all these.

Habib: "it is the government in Pakistan fail...

2011-12-27T13:18:28.046-08:00

Habib: "it is the government in Pakistan failing to provide basic (electric power etc) to these people."

I have seen many street vendors and small business owners in Karachi use generators to continue their operations regularly.

Kraft (1903) and Carl's Jr. (1941) began and grew in an America which was not much better than Pakistan is today. Real entrepreneurs know adversity and find ways to overcome it, as many poor migrants do every day in Karachi and other major cities in developing countries around the world.

Rather than dismiss the report as "faulty&quo...

2011-12-27T12:10:34.730-08:00

Rather than dismiss the report as "faulty" and comparing to Kraft and Carl's, one major difference between the US and us is not the entrepreneurial spirit; however, it is the government in Pakistan failing to provide basic (electric power etc) to these people. Haven't you heard what Imran has been talking about?

agreed that this kinda stupid reports always fails...

2011-12-26T08:22:50.419-08:00

agreed that this kinda stupid reports always fails to see the ground reality & are always biased...just see:

Pakistan Ranked 2nd in Arabia Fast Growth 500

Pakistan unleashed its potential once again at the global platform as it has been ranked no 2 on Arabia Fast Growth platform, terming it an emerging hub of talented entrepreneurs.

Pakistan’s 70 fast growing companies qualified for the Arabia500, putting the country in second position after Turkey with 117 winners.

AllWorld Network announced the Pakistan winners of the Arabia500+Turkey, a ranking of the fastest growing young companies in the Middle East and North Africa, Turkey and Pakistan.

Each Pakistan entrepreneur on the ranking has grown an average of 40 percent annually between 2008 and 2010, created an average of 200 jobs per company, and is succeeding in industries ranging from web technology to transportation, food to textiles, and construction to consulting. An average of only 42 years old, nearly all of them plan to establish another entrepreneurial venture in the next two years.

The fastest growing company from Pakistan, E2E Supply Chain Management, grew at 1,918 percent between 2008 and 2010, with revenues above $50 million and 297 employees. Of the Arabia500 winners from 15 countries, E2E was the third fastest growing company.

Taking the second spot for Pakistan was Exceed Private Limited with a annual growth rate of 1,320 percent and 90 employees, and became sixth in overall Arabia500 positioning. Pakistan also had the most number of women entrepreneurs on the Arabia500 list, and Luscious Cosmetics of Pakistan topped the list of the fastest growing Arabia500 women entrepreneur with growth of 392 percent and 82 employees.

In January 2012, AllWorld will announce the winners of the Pakistan 100, with 70 having already qualified.

“Pakistan is open for business. Pakistani entrepreneurs are defying widespread misperception about our country and building world-class enterprises that are globally competitive”, official statement quoted Pakistan 100 Founding Director Malik Ahmad Jalal.

“Pakistan Fast Growth entrepreneurs show that the best bet for the country’s economic future is relying on the entrepreneurial spirits of its citizens,” he added.

The strong performance of Pakistani companies in Arabia500 illustrates that in spite of the challenges there continues to be strong business and investment opportunity in Pakistan. Pakistani companies in Arabia500 are surfacing new horizons for growth and quickening the pace of economic development and regional integration.