Sunday, December 25, 2011

IBA's Pakistan Entrepreneurship Report is Flawed!

A recent report by the Center for Entrepreneurial Development (CED) of the Institute of Business Administration (IBA) finds that Pakistanis are less entrepreneurial than their counterparts in the majority of 59 member nations of Global Entrepreneurship Monitor (GEM), according to Express Tribune newspaper. The report says that the new business ownership rate, which is the percentage of owner-managers of a business that is three to 42 months old, is 2.7% in Pakistan, "considerably less" than the average rate for factor-driven economies (11.8%).

The results of this IBA CED study, as reported by the media, run counter to the findings of a recent World Bank report titled "More and Better Jobs in South Asia" which shows that 63% of Pakistan's workforce is self-employed, including 13% high-end self-employed. Salaried and daily wage earners make up only 37% of the workforce.

Even if one chooses to consider just the 13% who are high-end self-employed as entrepreneurs, it's still much higher than the 2.7% figure reported by CED, and higher than the 11.8% average reported for factor-driven economies covered by GEM.



It seems to me that this discrepancy stems from a very narrow and limited definition of entrepreneurship used in the IBA study which ignores the following realities:

1. The rapid urbanization from massive ongoing rural-to-urban migration in Pakistan is spawning a whole generation of small entrepreneurs who end up working for themselves as small vendors selling their wares on the streets and independent service providers who do basic chores like cooking and cleaning for dozens of clients. Each of these individuals is an entrepreneur by definition. Some of them have also found their way to other nations in Europe and the Middle East where they are earning a good living as street vendors. I saw a recent example of a Pakistani street vendor in Italy who earned enough to send his children to universities....a luxury he didn't have himself.

2. There are many small groups of men and women who are starting businesses at home in both urban and rural areas of the country to sell groceries, sew clothes, raise animals for milk, grow and sell fruits and vegetables, cater cooked food, etc. These small entrepreneurs are managing to put food on their families' tables and put children through good schools. Some of them are being funded and trained by microfinance institutions like Kashf Foundation and others.

People at academic institutions like the IBA who talk about entrepreneurship must research examples like Kraft Foods and Carl's Junior, both of which had humble beginnings on the streets of the United States.

James L. Kraft started Kraft foods by selling milk and cheese from a horse-drawn cart in Chicago in 1903; its first year of operations was "dismal", losing US$3,000 and a horse. Today, Kraft Foods is a multi-billion dollar multinational corporation selling a variety of food products around the globe, including Pakistan.

Carl's Jr, a multi-national fast food giant which operates Hardy's restaurants in Pakistan, began life as a hot dog stand in southern California 1941 with $311 in capital. One cart grew to four, and within five years, Carl's Drive-In Barbecue opened with hamburgers on the menu.

I believe that most Pakistanis are not risk-averse. What is lacking is a supportive environment to help nurture millions of small entrepreneurs to enable them to realize their dreams. The efforts of microfinance sector need to be supported by both the public and private sector through skills training, mentoring and greater funding. Each of us who can afford to help can do so by joining microfinance networks like Kiva.org to lend to such entrepreneurs in Pakistan.

Related Links:

Haq's Musings

Pakistani Entrepreneurs Survive Downturn

Pakistan Leads in Entrepreneurship Indicators

Microfinance to Fight Poverty in Pakistan

Pakistani Entrepreneurs Summit in Silicon Valley

Social Entrepreneurs Target India, Pakistan

Urbanization in Pakistan Highest in South Asia

Start-ups Drive a Boom in Pakistan

P.I.D.E. on Entrepreneurship in Pakistan

Light a Candle, Do Not Curse Darkness

Pakistan Tops Job Growth in Pakistan

Do South Asian Slums Offer Hope?

32 comments:

Javed said...

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.

Habib said...

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?

Riaz Haq said...

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.

Anonymous said...

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.

Riaz Haq said...

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.

Anonymous said...

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.

Riaz Haq said...

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/

Anonymous said...

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....

Riaz Haq said...

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 clichĂ© 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.

Riaz Haq said...

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/

Riaz Haq said...

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/

Riaz Haq said...

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

Riaz Haq said...

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.
-------------
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

Riaz Haq said...

Here's an excerpt from a recent Boston Globe Op Ed on US-Pakistan relations:

Pakistan is a country in which social entrepreneurs and businesses fill urgent public needs. As one Pakistani told us, “We are a culture of problem solvers, and we are a country of entrepreneurs.’’ Despite violence, corruption, weak governance, and many social challenges, this country of more than 180 million has moved forward in growing its economy. Many Pakistanis are investing in their own and their country’s future - small business owners, industrialists, social entrepreneurs, and investors - under deeply challenging circumstances and not without risk.

In a country where public services are in shambles, private-sector innovations are abundant - in agriculture, education, health, social services delivery, and IT. We met middle-class families running schools, philanthropists building universities and hospitals, investors increasing their investment inside Pakistan, and CEOs whose businesses are thriving. Nestle has one of its largest dairy production facilities in the world based in Pakistan. And as Pepsi notes, the second-largest consumer of Mountain Dew in the world after the United States is Pakistan.

The US Chamber of Commerce and the Pakistan Business Council could promote dialogue, explore business ventures, and identify opportunities for mutually profitable market development. Our networks of entrepreneurs and businesses can forge relationships with counterpart networks in Pakistan to find opportunities for collaboration and joint investment, information exchange, and mentoring.

Another area that offers great potential is the opportunity to support Pakistanis in deepening their ongoing democratic transition. Parliamentary elections tentatively set for next year offer an opportunity for Pakistan to hold the second legitimate democratic elections in a row for the first time since the country was founded in 1947. The opportunity for citizen engagement and cooperation comes as US and Pakistani civil society organizations work together to address a wide range of challenges in Pakistan, including good governance, religious pluralism, and women’s rights.

Pakistan’s media - increasingly free and vocal – are interested in exchanging views with American counterparts on how to better educate the public and hold those in power accountable.

For the past two years, the United States has engaged the Pakistani government in several rounds of a strategic dialogue, and tripled the funding for non-military assistance to Pakistan. But because of the Afghanistan war and the threats posed by Al Qaeda and its affiliates, the US government also adopted a more aggressive military strategy in Pakistan, including the controversial drone strikes.

The efforts to move beyond a transactional relationship with Pakistan fell short, however, not just because of what the governments did or did not do. They fell short because governments are constrained in what they can achieve given how they view the threats posed to their citizens.

Without greater citizen involvement to deepen our ties, the United States and Pakistan will remain trapped in mutual mistrust.


http://bostonglobe.com/opinion/2012/02/25/shock-absorbers-for-pakistan/7baJKG7N3rwKnzkumED2HK/story.html

Riaz Haq said...

Pakistan central bank to boost lending to stimulate economy, reports Bloomberg:

Pakistan’s central bank aims to spur lending to small companies, farming and housing in the next three years to boost growth in an economy where government borrowing has curbed credit and kept interest rates elevated.

“These three areas have to be stimulated and will become engines of growth,” Governor Yaseen Anwar, 60, said in an interview at the State Bank of Pakistan in Karachi on March 2. He forecast the economy will expand by 3 percent to 4 percent in the year ending June.

Anwar has kept the benchmark rate at 12 percent since he was officially made governor in October, refraining from adding to two reductions in 2011 as the nation grapples with the fastest inflation in Asia after Vietnam. He said government borrowing is impeding credit, as insufficient tax collections force Prime Minister Yousuf Raza Gilani’s administration to turn to central bank funding to finance flood rehabilitation and a war against militants in the northwest.

“The State Bank cannot do much in isolation without the government taking some very basic corrective measures,” said Nasim Beg, executive vice chairman of Arif Habib Investments Ltd. in Karachi, which oversees 35 billion rupees ($385 million) in stocks and bonds. “The government will be likely to go for aggressive populist spending early in this election year and worry about meeting revenue targets later -- more pressures for the governor.”
----------------
Anwar, who worked at Merrill Lynch & Co. and Bank of America Corp. in his 33-year career before joining the State Bank, cited the government’s commitment to “zero borrowings” from the central bank as one of the reasons for reducing rates in July.

“We need attention on the revenue side in terms of tax reform,” Anwar said, adding he thinks the government may meet its collection target of 1.95 trillion rupees in the year ending June 30. The ratio of tax to gross domestic product, which the finance ministry estimates is 9 percent, “has to go up into the teens,” he said.

Only one in 10 Pakistanis pay taxes, limiting the government’s ability to fund a budget deficit that the International Monetary Fund estimates may widen to as much as 7 percent of gross domestic product this year.-----------


http://www.bloomberg.com/news/2012-03-04/pakistan-s-anwar-plans-lending-boost-to-bolster-economic-growth.html

Riaz Haq said...

Here's a report on Pakistan's fast growing entrepreneurial companies:

In the midst of challenging political and economic circumstances, the Pakistan100 broke many AllWorld records in relation to 15 other country rankings in the region, coming in only second to Turkey in terms of entrepreneurial growth and transparency. Many of the companies have been founded in the last ten years, and have already grown to be industry leaders. An average of only 42 years old, most Pakistan100 entrepreneurs plan to establish another company in the next two years.
----------------
The Pakistan100 was an unprecedented partnership between AllWorld Network, Cyan Limited, and partners Mishal, P@SHA, LadiesFund, CIOPakistan, TiE, Abacus Consulting and Rozee.PK. Thousands of emails were sent to companies around the country inviting them to compete for a spot on the Pakistan100. Companies had to be rapidly growing private non-listed companies, and they could come from any industry and any part of the country. Each company had to provide audited statements to confirm their revenues and each applicant’s business practices and ethics were strenuously vetted. The fastest growing of these became the inaugural Pakistan100.

Leading the Pakistan100 is number 1 company e2e Supply Chain Management, which grew 1,918 percent between 2008 and 2010, with 2010 revenues above $50 million and 297 employees. Launched in 2005, e2e has risen to become one of the most successful end-to-end logistics companies covering Pakistan and Afghanistan. Taking the second spot for Pakistan was Exceed Private Limited, with a growth rate of 1,320 percent and 90 employees. Founded by the youngest entrepreneur on the Pakistan100, Exceed rose to prominence for its historic restoration of Saidpur Model Village, redeveloped as an 18th Century city-museum with 5,000 residents.

Pakistan also had the most number of women entrepreneurs of any AllWorld list at 8 percent, and 7thranked Luscious Cosmetics of Pakistan topped the list of the fastest growing women entrepreneurs with growth of 392 percent and 82 employees. The Pakistan100 entrepreneurs have built globally competitive businesses with one quarter of their revenues coming from international markets and companies such as ROZEE.PK (#12) having secured VC investment from Silicon Valley.

Commenting on the success of Pakistan100 at the Awards Ceremony, AllWorld co-founders Deirdre Coyle and Anne Habiby urged the Pakistan100 to go further “When no one expected much, the Pakistan100 broke records for growth, transparency and competitiveness. They are the personification of what every country dreams of having. Now raise the bar higher and build Pakistan as a leading entrepreneurial nation.” Added Pakistan100 Founding Director Malik Ahmad Jalal, “As the Pakistan100, you send a signal to everyone in Pakistan and around the world that Pakistan is open for business. There is no more important message to secure peace and prosperity.”

The Pakistan winners are in Lahore for the two-day Pakistan100 Awards & Summit from March 9-10. The Summit will be an action packed two days featuring the Pakistan100 along with prominent speakers, panel discussions, networking sessions, and Pakistan100 Awards Dinner. Over 160 representatives from the winning companies will be in attendance and close to 150 VIPs and influencers.


http://www.newspakistan.pk/2012/03/10/pakistan-fast-growth-100-break-entrepreneurial-records/

http://www.allworldlive.com/feed/press/pakistan-2-arabia-fast-growth-500-pakistan-breaks-records-hub-entrepreneurs

Riaz Haq said...

Here's Daily Times on Pakistan100, a programme of AllWorld Network in partnership with Harvard Business School Professor Michael Porter and presented by Cyan Limited:

US ChargĂ© d’ Affaires Ambassador Richard Hoagland, US Consul General in Lahore Nina Maria Fite, Securities and Exchange Commission of Pakistan (SECP) Chairman Muhammad Ali, Nishat Group Chairman Mian Mansha, Dawood Hercules Corporation Chairman Hussain Dawood and Pakistan Business Council Chairman and Engro Corporation CEO Asad Umar attended the two-day event.
Talking to the entrepreneurs in Pakistan Richard Hoagland expressed his appreciation for fastest growing entrepreneurial companies who achieved exponential growth in the last few years. He advised Pakistani business community to lobby with its government to have strong legislation for the investors’ protection to ensure better environment for doing business.
He said that Central Asian states offer immense opportunities for Pakistani investors and Pakistani businesses should also take advantage of the same.
SECP Chairman Muhammad Ali said that SECP was working on detailed guidelines for the function of corporate social responsibility in the country in order to help the corporate sector helping the society back in a better manner. He said that success of Pakistani entrepreneurs was a testimony of the great potential this country possesses and how talented its human resources are. He appreciated the idea of having Pakistan 100 summit that seeks to highlight the success and achievements of resilient Pakistani entrepreneurs.
Dawood emphasised the need of having solid values for the successful business. He said that a business based on solid ethical values is bound to grow faster and is beneficial for the society at large.
Mansha said that Pakistani businesses need to venture out of the country and invest in potential markets like Africa too. He said that in next two decades the world would be at our doorstep to eagerly invest in Pakistan.
Cyan Limited CEO Samad Dawood said that the Pakistan100 are a testament to the zeal and passion of the Pakistani private sector. Their accomplishment is even more impressive given the challenges that they have had to endure in the recent years.
AllWorld Network also announced the winners of the Pakistan Fast Growth 100 (Pakistan100), a ranking of the fastest growing non-listed companies in Pakistan.
Leading the Pakistan100 is number 1 company e2e Supply Chain Management, which grew 1,918 percent between 2008 and 2010, with 2010 revenues above $50 million and 297 employees. Launched in 2005, e2e has risen to become one of the most successful end-to-end logistics companies covering Pakistan and Afghanistan. Taking the second spot for Pakistan was Exceed Private Limited, with a growth rate of 1,320 percent and 90 employees. Founded by the youngest entrepreneur on the Pakistan100, Exceed rose to prominence for its historic restoration of Saidpur Model Village, redeveloped as an 18th Century city-museum with 5,000 residents.
Commenting on the success of Pakistan100 at the Awards Ceremony, AllWorld co-founders Deirdre Coyle and Anne Habiby urged the Pakistan100 to go further when no one expected much, the Pakistan100 broke records for growth, transparency and competitiveness.


http://www.dailytimes.com.pk/default.asp?page=2012\03\11\story_11-3-2012_pg5_9

Riaz Haq said...

Entrepreneurship to stimulate economic growth in Pakistan:

..Wayne Beeson, supporter of Expeditionary Economics and other entrepreneurial economics initiatives, spotlights and recommends in his blog the entrepreneurship-based Expeditionary Economics model for Pakistan and similar countries to stimulate and sustain economic growth. He explains that Expeditionary Economics was put forth by The Kauffman Foundation in 2010 as an alternative to the largely ineffective international economic development policies of the U.S. State Department for the purpose of developing economic growth in areas where the U.S. is involved in counterinsurgency missions or disaster relief. Economic growth is vital for the stability of countries challenged by war and disaster. Mr. Beeson agrees with The Kauffman Foundation that entrepreneur-led economies are a proven model for developing economic growth.

“Entrepreneurship positively impacts the economic well-being of individuals, families, and nations, and Expeditionary Economics recommends entrepreneurship as the foundation of our international economic development policy and endeavors,” says Mr. Beeson. He notes that Professor Looney’s study on applying Expeditionary Economics to the economy of Pakistan to stimulate economic growth is not only a model for Pakistan, but also a model for other countries facing similar challenges.

“Professor Looney’s study is the beginning of a plan of action to systematically implement entrepreneurial activity in a distressed economy in which the U.S. is committed to providing assistance for various reasons. If the U.S. can be successful in helping create prosperous, self-reliant economies, it is a win-win outcome. I individuals, families and nations prosper and support democratic reforms where the people of a country own their own economy and government, and the U.S. wins by having friends in the international community who support rather than threaten U.S., because they support our values and ideals,” explains Mr. Beeson.

Professor Looney’s paper can be downloaded at expeditionaryeconomics.org., or from this news release.


Read more: http://www.timesunion.com/business/press-releases/article/Wayne-Beeson-Recommends-Expeditionary-Economics-3437021.php

Riaz Haq said...

Here's a Bloomberg report on Pakistan's plans for small cap company shares market:

Pakistan may set up a stock exchange for small companies to raise capital as part of government plans to provide more financing channels for Asia’s fifth-smallest economy and as initial public offerings dry up.

The Securities & Exchange Commission of Pakistan may form the exchange or create a board within the bourse, Muhammad Ali, chairman of the regulator, said in an interview at Bloomberg’s office in Karachi yesterday. There haven’t been any listings on the Karachi Stock Exchange this year after four companies went public in 2011, according to the exchange’s website.

“So much creativity dies in this country without seeing the light of day because we can’t provide vehicles for financial capital,” said Ali, 43. “Unless this happens we won’t achieve corporatization, documentation of the economy or tax collection.”

Prime Minister Yousuf Raza Gilani’s government is seeking to get more revenue from an underground economy that employs more than three quarters of the nation’s 54 million workers and is worth as much as 50 percent of the $200 billion official gross domestic product. There are 60,000 registered companies and 3 million small- and medium-sized sole proprietors and partnerships, most of which are part of the underground economy.

The Karachi Stock Exchange 100 Index (KSE100) has surged 24 percent this year after the government eased rules on a capital-gains tax and demand for energy and building materials bolstered company earnings. The measure was little changed at 14,019.56 at 10:03 a.m. local time.
Huge Potential

The stocks gauge, which slid 5.6 percent in 2011, is trading at 6.9 times estimated earnings, the lowest valuation in Asia, reflecting the country’s struggles to cope with militant attacks and political instability. The BSE India Sensitive Index trades at 12.4 times forward profit after gaining 3.1 percent this year.

“A platform for small businesses will allow investors to tap the potential of growing companies,” Farid Khan, who manages 65 billion rupees ($706 million) in stocks and bonds as chief executive of ABL Asset Management Co. in Karachi, said by telephone yesterday. “However, only selective institutions should be allowed to invest in these companies because these are higher risk concerns.”

Companies may be segregated into categories with rules allowing only larger investors to trade in riskier stocks, said Ali, who joined the agency in December 2010.

His commission has recommended changes in tax rates and also plans to amend the company law by next year to introduce different reporting requirements for smaller businesses that list on the exchange. There are 591 companies listed companies.
Bigger Tax Net

The SEC has also proposed that the 35 percent corporate tax rate be reduced and the 25 percent levy paid by unlisted businesses be raised to encourage public share offerings.

“If we have this fiscal change and a new law that differentiates between reporting requirements based on the size of the company, businesses will be corporatized in the country and that’s the way forward to document the economy and broaden the tax net,” said Ali, a former broker who led Indosuez W.I. Carr Securities in Karachi for six years.

Pakistan’s ratio of tax to gross domestic product was 8.6 percent in June, one of the world’s lowest, according to Macro- economic Insights in Islamabad. Only 25 percent of the economy is taxed if the undocumented sector is taken into account, Sakib Sherani, the chief executive officer of the economic research company, said by e-mail last month
---.


http://www.businessweek.com/news/2012-05-24/pakistan-may-set-up-small-company-exchange-sec-chief-says

Riaz Haq said...

Here's a Bloomberg story titled "Pakistan, Land of Entrepreneurs":

On a warm Sunday morning in November, Arif Habib leaves his posh home near the seafront in southern Karachi and drives across town in a silver Toyota Prado SUV. About half an hour later, he arrives to check up on his latest project: a 2,100-acre residential development at the northern tip of this city of 20 million. He hops out, shakes hands with young company call-center workers who are dressed for a cricket match, and joins them at the edge of the playing field for a traditional Pakistani breakfast of curried chickpeas and semolina pudding. After a quick tour of the construction site, he straps on his leg pads, grabs his bat, and heads onto the field. “The principles of cricket are very effective in business,” says Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”

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 (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.

These companies have prospered in a country that, since joining the U.S. in the war on terror after Sept. 11, has lost more than 40,000 people to retaliatory bombings by the Taliban. Political violence in Karachi has killed 2,000 Pakistanis this year, and an energy crisis—power outages last as long as 18 hours a day—has led to social unrest. Foreign direct investment declined 24 percent to $244 million in the four months ended Oct. 31, according to the central bank.

At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad. A boom in agriculture and residential property, as well as jobs in hot sectors such as telecom and media, have helped Pakistanis prosper. “Just go to the malls and see the number of customers who are actually buying in upscale stores and that shows you how robust the demand is,” says Azfer Naseem, head of research for Elixir Securities in Karachi. “Despite the energy crisis, we have growth of 3 percent.”

Sherani of Macro Economic Insights estimates the middle class doubled in size between 2002 and 2012. “Those who understand the difference between the perception of Pakistan and the reality have made a killing,” Habib says. “Foreigners don’t come here, so the field is wide open.” The KSE100, the benchmark index of the Karachi Exchange, has risen elevenfold since mid-2001. Shares in the index are up 43 percent this year alone. Over the past decade, stocks have been buoyed by corporate earnings, which were bolstered in turn by rising consumer spending.
---------
Today, Habib has 11,000 employees and annual revenue of 100 billion rupees. He plans to expand into commodities trading and warehousing. “I’ve created all my wealth in Pakistan and reinvested all of it here,” says Habib, who drives himself to his cricket matches and is never accompanied by security guards. In 1998, when Pakistan’s share index fell to a record low after the government tested nuclear weapons, Habib bought shares even though “people thought I was mad.”...


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

Riaz Haq said...

Here's a San Francisco Chronicle story on an e-commerce entrepreneur in Pakistan:

Waqas Ali grew up in a small town in Pakistan called Punjab.

Ali studied physics while attending a university in Lahore, but eventually dropped out when he was inspired by a group of five craftsmen making handmade shoes in his home town, Ali writes on Medium.

So he started working on an online shoe store called HOMETOWN because he wanted to help those craftsmen build a sustainable business.

He ended up returning to Punjab to meet with a "shoe master" named M Hussain, who would become the official shoemaker. He got his friend Sidra Qasim to come on board as a co-founder, and in November 2012, he secured a $10,000 seed fund from P@SHA Social Innovation Fund.

The two eventually moved to Lahore so they could get in touch with designers, find high quality raw material, and start building the website.

But it wasn't easy. They were living in a hostel and using a Kentucky Fried Chicken restaurant as their office.

After about for months, Ali and his team were able to make super comfortable and lightweight shoes.

But selling those shoes proved to be more difficult than they expected. They spent about 60% of their money on building inventory, there wasn't much left for marketing and operations.

Since they were strapped for cash, they simply interacted with potential customers both online and offline. When they sold their first shoe, Ali wrote a handwritten letter to the customer, and he still does that to this day.

"Honest communication, delivering on promises, and most importantly showing human side of our business helped us increase both our traffic and sales," Ali writes.

In August 2012, Google and Punjab's government proclaimed HOMETOWN as an "Innovation Hero."

Now, Ali and his team are part of a Punjab-based incubator. Ali was also recently selected to be an Acumen Fund Pakistan Fellow.


http://www.sfgate.com/technology/businessinsider/article/What-It-s-Like-Launching-An-Ecommerce-Startup-In-4242765.php

Riaz Haq said...

Here's a Daily Times report on academia promoting entrepreneurship among students:

LAHORE: Government College University Lahore’s Economics Department, in collaboration with Entrepreneurial Development and Advisory Services (EDAS), Pakistan, organised a one-day seminar, on the “Role of educational institutions in entrepreneurship ecosystems”.

The seminar was attended by academia, entrepreneurs, public sector representatives and students. Speakers included renowned academics, notable business personalities and organic entrepreneurs of Pakistan. SPEL Group CEO Almas Hyder, a founding member of EDAS, introduced the topic of the seminar and spoke succinctly about the need to bridge the gap between industry and academia to foster entrepreneurship and innovation in Pakistan. He stressed the role of government as a facilitator of knowledge-based interaction between the university and business so that research and ideas could flow seamlessly and become economic value by means of the market. He highlighted the role EDAS had played in collaboration with GC University’s Economics Department in the introduction of the Master’s programme in Entrepreneurship and SME Management. The purpose of the course of study, he shared with the audience, was to inculcate entrepreneurial spirit in students and underscore the role played by SMEs in fostering innovation in Pakistan. Fifteen percent course graduates went on to become entrepreneurs, he said, and the goal was to turn ten percent of Ravians into entrepreneurs every year.

Amer Hashmi, himself a successful entrepreneur with global experience in business creation and management and currently the Adviser to Rector National University of Sciences and Technology (NUST) and President, NUST Global Think Tank Network (GTTN), delivered the keynote address. His address presented a comprehensive kaleidoscope of various successful initiatives taken by NUST to promote entrepreneurship and innovation in Pakistan. NUST’s Corporate Advisory Council (CAC), he informed the audience, was the key body in the university for consolidating the triple helix interaction and collaboration between university, business and academia.

CAC had played a key part in bridging different NUST schools with relevant industries through a unique organisational structure that ensured two-way flow of feedback and information between NUST and industry centred on industry-commissioned R&D at NUST. CAC partners included top domestic and international business and corporate entities like Indus Motors, Millat Group, Huawei Technologies, Oracle, Microsoft, Allied Bank, Interactive Group, etc.

Hashmi explained GTTN was a key initiative of NUST aimed at establishing policy research and knowledge partnerships with renowned academic and non-academic think tanks in China, US, Russia, Asia-Pacific and Middle East. The first of the planned series of think tank collaborations with Tsinghua University, Beijing, had been successfully functioning since early 2012. The vision of GTTN was to create a pool of viable policy options in critical sectors of national socio-economic development which were also regionally and globally applicable with the potential to create peace, prosperity and harmony in the region.

NUST Centre for Innovation and Entrepreneurship (CIE) was actively helping commercialise technology produced from university research and had established an advanced business incubation centre that housed companies involved in cutting edge technology business market globally. NUST had recently completed the pre-feasibility for its National Science and Technology Park (NSTP), the first proper university-hosted science park in Pakistan ...


http://www.dailytimes.com.pk/default.asp?page=2013\03\13\story_13-3-2013_pg13_6

Riaz Haq said...

Here's an Aljazeera report titled "Pakistani economy grows in spite of state":

Lahore, Pakistan - Zia Hyder Naqi started his first business when he was eight years old, turning old newspapers into paper bags in the eastern Pakistani city of Lahore. He didn’t earn much, but the 1.5 Pakistani Rupees ($0.02) he made every day was enough to buy him his lunch, and a sense of satisfaction at having made something.

Today, 40 years later, Naqi is the managing director at a plastics manufacturing firm that employs 430 people, and earned $14.2m in revenue last year.

Synthetic Products and Enterprises Ltd (SPEL) is one of the largest firms of its kind in the country, and makes everything from plastic cups to the inner sides of car doors for firms such as Toyota, Honda and Suzuki, and everything in between.

Business has been good for SPEL, Naqi says, but that's not because the government is providing a conducive climate for economic growth.

"Let's start by saying that we work in spite of the government and not because of the government," Naqi told Al Jazeera. "It really means that we have to struggle. We compete against the best in the world."

Power cuts

Pakistan suffers from a raft of economic problems - spiraling inflation and unemployment, a chronic energy crisis, a lack of implementation of existing policies and an unstable investment environment, owing to the country’s tense security situation.

Primary among those difficulties, Naqi says, is the issue of power cuts - or load-shedding, as it is referred to in Pakistan.

"Our reliability is affected when we have load-shedding, because we don't know when power will arrive and go. So we have to create back-ups, which means that the cost of operations goes up. It affects morale, it affects our work, it affects our delivery, it affects our customers. [It affects] the cost at which we deliver, and how competitive or uncompetitive we become to the customer," he says, estimating that the cost of putting in those back-up system raises the overall cost of his products by as much as 10 percent.

Last year, Naqi’s firm spent an extra $1.2m on putting back-up generators into place, fuelling them and paying for their general upkeep, as opposed to taking electricity off the grid. Moreover, he says, that $1.2m is a sunk cost, as it is not being invested into productive processes. The result: it’s harder for Pakistan’s products to compete in the international market, as the cost of producing electricity pushes firms into a loop of spiraling costs and being unable to further invest in new technologies.

Pakistan’s electricity woes, analysts say, are a result of industrial growth outstripping the pace of growth in generation, and a woefully maintained distribution system that results in line losses of around 20 percent At its peak last summer, the country’s electricity shortfall was a staggering 8,500MW - about 40 percent of the country’s total generation capacity (not counting transmission losses)
-------
Meanwhile, far from the think tanks and policy committees, the entrepreneurial spirit of the eight-year-old Naqi is still alive and well. Over the last month, dozens of shops have sprung up all over Lahore, selling elections campaign-related merchandise - everything from pins and badges (for about $0.40 each) to gigantic flags ($2.44), from T-shirts ($3.05) to stuffed soft toys in the shape of party election symbols.

"With the amount of money that I’m making right now," says Muhammad Imran, 30, the owner of one such shop, "we could have built a whole bridge!"

....

http://www.aljazeera.com/indepth/features/2013/05/201358163114782192.html

Riaz Haq said...

Groopic’s Rehan said that Plan9 helped in four key ways: mentorship, networking opportunities, office space, and stipend.

However, it hasn’t all been smooth sailing.

Plan9 conducts reviews every six weeks to ensure that startups are on track. After one and a half months they should have a business model developed based on real world feedback; at the three-month mark they should put their alpha product in front of early adopters; and at 4.5 months they should introduce iterations to refine their market strategy. If they can’t meet their goals, they’re out of the program.

Of the incubator’s inaugural round, only eight of the 13 startups graduated.

“The others were eased out. They weren’t serious or committed enough, or they just couldn’t pull it off.”

Rehan and his friends were just one of eight teams to have graduated from Plan9′s inaugural incubator class, but it appears there are more of their kind out there. More recently, Pakistan emerged as one of the world’s biggest locations for individual outsourcing via sites such as odesk, elance, and freelancer.com.

The social and political winds are also shifting.

Internet and cloud technologies have lowered the barriers to entry to compete in the global digital economy; and among Pakistan’s 183 million strong population there are almost 30 million internet subscribers. Meanwhile, voters recently appointed the second successive democratically elected government — the first time that’s happened in the 64-year troubled history of a country whose progress has been sabotaged by regular military coups.

http://techcrunch.com/2013/09/05/pakistan-government-backed-incubator-seeds-local-investor-appetite/

Riaz Haq said...

Maha is the inventor of a ‘Piezoelectric Shoe’ (a customized engineered shoe that converts the daily mechanical energy of the walk into electrical energy) along with her team in NUST, Islamabad. The shoe charges low voltage mobile batteries up to 3-4 volts. http://lesjeunesentrepreneursduglobe.tumblr.com/post/65601505554/meet-maha-an-entrepreneur-from-pakistan

Riaz Haq said...

Here's an Express Tribune report on youth business loans in Pakistan:

With his new financing scheme for the youth, Prime Minister Nawaz Sharif on Saturday unveiled a plan to enable budding entrepreneurs to run their business ventures.
The Youth Business Loans initiative is the government’s delivery of a promise made during the election campaign. “During the election campaign, I witnessed the vigour and enthusiasm that the youth showed, and promised that if voted to power, the PML-N would empower the youth of Pakistan so they can contribute effectively towards the development of the country,” he said at the launch of the scheme.
The chairperson of the prime minister’s Youth Business Loans scheme, Maryam Nawaz, said the aim was to convert young ‘dependents’ into ‘providers’.
-------------
The scheme is designed to provide subsidised financing at eight percent mark-up per annum for 100,000 beneficiaries through National Bank of Pakistan and First Women Bank.
The total mark up rate would be 15 per cent but the government would pay the remaining seven percent on behalf of the applicants.
Those falling in the age group of 21 and 45 years are eligible to apply for loans from Rs100,000 to Rs2,000,000.
Small business loans with a tenure of up to seven years plus one-year grace period and a debt-equity ratio of 90:10 will be disbursed across the country including Gilgit-Baltistan‚ Azad Jammu and Kashmir and the Federally Administered Tribal Areas.
Youth will have an eight-year payback period with the first year as a grace period for repayment.


http://tribune.com.pk/story/642764/pm-business-loans-scheme-govt-launches-initiative-to-empower-youth/

Riaz Haq said...

Here's a Tech-in-Asia piece on Start-up activity in Pakistan:

Until recently, the only incubators in Pakistan were found in hospitals or poultry farms. But now startup incubators are proliferating. This phenomenon is part of the global wave of shared office spaces, accelerators, incubator programs, and university labs that cultivate entrepreneurship and innovation in the hope of kickstarting their local tech ecosystems and becoming their region’s Silicon Valley.

Like all trends in Pakistan, entrepreneurship is a hot buzzword that’s thrown around too often and hyped beyond what the market fundamentals can support. It’s encouraging to see people get excited about running their own companies, but it’s critical to provide them the tools and most importantly the mindset to achieve extraordinary success on a global scale, rather than ending up as an ordinary local company.

Before looking at the 27 incubators that now exist in the country (embedded below), first we need to understand the environment in which these wannabe entrepreneurs are dreaming about making their first million dollars. Or, inspired by the Zuckerberg story, a billion dollars. Maybe we need a reality check first.

Ground realities
Most tech grads swept away in entrepreneurship fever follow the familiar path of two or three friends moonlighting on freelance work and then finishing their computer science degree to start a “company”, which basically means the three of them sitting at someone’s home and making websites for random clients on Odesk, Elance, or their cousin in Toronto. Once the money starts flowing in, they get a small office and hire three more people to start app development services for iOS and Android. There might be Macbooks and iPhones on the table and a Steve Jobs poster on the wall but it’s a slow, linear slog of adding “seats” and scrabbling around between between rock-bottom hourly rates, Pakistan’s image problem, and offshore client’s expectations.

This service model offers the low hanging fruit that helps get a foothold in the market but it also sucks away the time and energy needed to work on your own products. If services do well, you get more work and more money and the option of risking all that for a fantasy product with no guarantee of success is a difficult decision, one that seems harder with every passing year. It’s a bit like painting walls on daily wages and wishing that one day you’ll create the next Mona Lisa.

Even the largest tech companies in Pakistan are primarily providing services or earning from consulting focused on the typical ERP, CRM, HR, business outsourcing (BPO) solutions that a thousand other providers are vying for. Only a handful have been able to make standalone products that are profitable, let alone become leaders in their segments or globally known brands.


http://www.techinasia.com/27-startup-incubator-programs-funds-in-pakistan-2014/

Riaz Haq said...

Ratio of informal (shadow) to formal (documented) entrepreneurs:

Indonesia 131

India 127

Philippines 126

Pakistan 109

Egypt 103

In a study of 68 countries, Professor Erkko Autio and Dr Kun Fu from Imperial College Business School estimated that business activities conducted by informal entrepreneurs can make up more than 80 per cent of the total economic activity in developing countries. Types of businesses include unlicensed taxicab services, roadside food stalls and small landscaping operations.

In a study of 68 countries, Erkko Autio and Kun Fu of London's Imperial College Business School found that after Indonesia, India has the second highest rate of shadow entrepreneurs.

This is the first time that the number of entrepreneurs operating in the shadow economy has been estimated.

Shadow entrepreneurs are individuals who manage a business that sell legitimate goods and services but they do not register their businesses. They do not pay tax and operating in a shadow economy where business activities are performed outside the reach of government authorities.

Indonesia has 131 shadow businesses to every business that is legally registered compared to India's 127.

Philippines have 126, Pakistan has 109 and Egypt has 103 shadow businesses to every legally registered business.

Experts say the shadow economy results in loss of tax revenue, unfair competition to registered businesses and also poor productivity - factors which hinder economic development.

As these businesses are not registered it takes them beyond the reach of the law and makes shadow economy entrepreneurs vulnerable to corrupt government officials.

The researchers said, "If India improved the quality of its democratic institutions to match that of Malaysia for example, it could boost its rate of formal economy entrepreneurs by up to 50% while cutting the rate of entrepreneurs working in the shadow economy by up to a third. This means that the government could benefit from additional revenue such as taxes."

The UK exhibits the lowest rate of shadow entrepreneurship among the 68 countries surveyed, with a ratio of only one shadow economy entrepreneur to some 30 legally registered businesses.

Autio said, "Understanding shadow economy entrepreneurship is important for developing countries because it is a key factor affecting economic development. We found that government policies could play a big role in helping shadow economy entrepreneurs transition to the formal economy. This is important because shadow economy entrepreneurs are less likely to innovate, accumulate capital and invest in the economy, which hampers economic growth."

http://timesofindia.indiatimes.com/India/India-has-2nd-highest-no-of-shadow-entrepreneurs-in-the-world/articleshow/35653042.cms

http://www3.imperial.ac.uk/newsandeventspggrp/imperialcollege/newssummary/news_27-5-2014-9-53-29

http://link.springer.com/article/10.1007/s10490-014-9381-0

Riaz Haq said...

The term social enterprise may be relatively new in Pakistan but it is gaining popularity in its areas of development.

While it may be an unfamiliar concept for many engaged in local grassroots businesses they can nevertheless see the potential of engaging in ventures which have a social impact.

According to the Opportunity Pakistan Report – produced by i-genius, an initiative supporting social entrepreneurs worldwide – despite the country’s social and political unrest, it offers opportunities for investment and innovation.

“Countries experiencing transition are fertile places for new ideas to thrive”, said Shivang Patel, commission coordinator of i-genius. “Despite media attention in the west on all things bad in the region we found a country progressing through slow but significant positive reforms. There is considerable untapped potential for social businesses”.

A new wave of creative and confident young entrepreneurs has emerged developing innovative start ups in areas such as environment, health and skills. Scores of young women and men from remote areas of Pakistan are becoming social entrepreneurs.

A longstanding lack of investment in Pakistan’s public sector has prompted local business leaders to invest in ideas which tackle issues such as water and sanitation problems as well as those which can address its energy and environmental concerns.

One such example is Pharmagen Water. Established in 2007,it 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.

Another business offering a solution to parts of Pakistan’s energy strapped areas is SRE Solutions. 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.

Similarly a low-cost engineering and construction enterprise, Ghonsla, was set up in the aftermath of Pakistan’s devastating earthquake in 2005. With 73,000 people killed and large parts of its cities and villages destroyed in the north by the disaster, the plight of 2.5 million people left homeless hung in the balance

The initial funding for Ghonsla’s pilot project came from Seed, Social Entrepreneurship and Equity Development, a venture which supports startups and grassroots innovations.

Its incubation centres in Pakistan provide opportunities for young entrepreneurs in their early years of startup.

http://www.theguardian.com/sustainable-business/2014/oct/10/social-enterprise-is-an-emerging-force-in-pakistan

http://www.i-genius.org/

Riaz Haq said...

Opportunity Pakistan Report by i-genius commission on social entrepreneurship:

In September 2013, fifteen people (Commissioners) from Australia, Italy, Pakistan and the United Kingdom, embarked on a journey to a country which for many was an entirely new experience. The aim was to discover the true story of a country which much has been written about but few, outsiders at least, have understood. The prism of this journey was social entrepreneurship – a form of business whereby the initiators explicitly seek to develop businesses to achieve a social or environmental benefit.

This Report seeks to articulate what the Commission discovered. Yes, it illustrates the many problems facing Pakistan but as any entrepreneur - social or otherwise - knows, such problems represent opportunities.
Pakistan’s problems present Pakistan with opportunities. Pakistan is a highly complex country. No body of people, however well intentioned, can hope to capture the magnitude of this complexity in a short visit of several days. But this, we trust, is an
authentic and considered portrayal of what we found.
All members of the Commission were agreed, Pakistan is a land of opportunity
---------

The Commission, convened by i-genius, comprising 15 members from UK, Italy, Australia and Pakistan,
visited Karachi, Lahore, Islamabad and Punjab to ascertain the opportunities and challenges facing the
development of social entrepreneurship and innovation. In understanding its work, the Commission was
mindful of the positive changes taking place such as the historic transfer of power from one
democratically elected government to another, the talent residing amongst young people, the growing
empowerment of women and the long tradition of social giving.
The Commission was impressed by the optimism and resilience of all those it encountered in both urban
and rural communities, but it does not underestimate the enormous hurdles Pakistan faces in
overcoming corruption and division within its society, which are the primary barriers to fulfilling its
potential.
Social entrepreneurs are people who create businesses to promote social or environmental
improvement. The agenda for social innovation and entrepreneurship in Pakistan and beyond is to build
sustainable businesses and institutions for all the people of Pakistan.
The guide for all stakeholders who desire a prosperous and inclusive economy should be to make easier
the journey of those who desire to improve their country. The commission believes Pakistan has
considerable untapped potential amongst all sections of society which needs to be recognised and
supported.
A full report will be published in the coming weeks which will include recommendations for political
leaders, corporations, NGOs, finance and by specific sections of society including the wealthy elite. The
Commission encourages relevant government ministries to integrate social entrepreneurship and
innovation into government policy. It is willing to contribute to this process by sharing better practice
from other parts of the world.


http://www.i-genius.org/images/Opportunity-Pakistan-Final-Report.pdf

Riaz Haq said...

Opportunity Pakistan Report by i-genius commission on social entrepreneurship:

In September 2013, fifteen people (Commissioners) from Australia, Italy, Pakistan and the United Kingdom, embarked on a journey to a country which for many was an entirely new experience. The aim was to discover the true story of a country which much has been written about but few, outsiders at least, have understood. The prism of this journey was social entrepreneurship – a form of business whereby the initiators explicitly seek to develop businesses to achieve a social or environmental benefit.

This Report seeks to articulate what the Commission discovered. Yes, it illustrates the many problems facing Pakistan but as any entrepreneur - social or otherwise - knows, such problems represent opportunities.
Pakistan’s problems present Pakistan with opportunities. Pakistan is a highly complex country. No body of people, however well intentioned, can hope to capture the magnitude of this complexity in a short visit of several days. But this, we trust, is an
authentic and considered portrayal of what we found.
All members of the Commission were agreed, Pakistan is a land of opportunity
---------

The Commission, convened by i-genius, comprising 15 members from UK, Italy, Australia and Pakistan,
visited Karachi, Lahore, Islamabad and Punjab to ascertain the opportunities and challenges facing the
development of social entrepreneurship and innovation. In understanding its work, the Commission was
mindful of the positive changes taking place such as the historic transfer of power from one
democratically elected government to another, the talent residing amongst young people, the growing
empowerment of women and the long tradition of social giving.
The Commission was impressed by the optimism and resilience of all those it encountered in both urban
and rural communities, but it does not underestimate the enormous hurdles Pakistan faces in
overcoming corruption and division within its society, which are the primary barriers to fulfilling its
potential.
Social entrepreneurs are people who create businesses to promote social or environmental
improvement. The agenda for social innovation and entrepreneurship in Pakistan and beyond is to build
sustainable businesses and institutions for all the people of Pakistan.
The guide for all stakeholders who desire a prosperous and inclusive economy should be to make easier
the journey of those who desire to improve their country. The commission believes Pakistan has
considerable untapped potential amongst all sections of society which needs to be recognised and
supported.
A full report will be published in the coming weeks which will include recommendations for political
leaders, corporations, NGOs, finance and by specific sections of society including the wealthy elite. The
Commission encourages relevant government ministries to integrate social entrepreneurship and
innovation into government policy. It is willing to contribute to this process by sharing better practice
from other parts of the world.


http://www.i-genius.org/images/Opportunity-Pakistan-Final-Report.pdf

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