Sunday, March 11, 2012

Pakistani Entrepreneurs Thrive Against All Odds

Growing at more than 55% a year and collectively employing 41,000, the winners of Pakistan Fast Growth 100 contest were announced by Harvard-based Allworld Network last week. Of these 100 entrepreneurial companies, 70 also qualified for the Arabia500, putting Pakistan in second position after Turkey with 117 winners.



AllWorld was co-founded by Harvard Business School Professor Michael E. Porter, Deirdre M. Coyle, Jr., and Anne S. Habiby with the aim to bring visibility to growing companies in emerging markets to increase their odds of success. Any private, non-listed, company with rapid sales growth and an ability to demonstrate results with audited financial statements was invited to compete for a spot on the inaugural Arabia500 which includes Pakistan and Turkey in addition to the emerging economies of the Middle East and North Africa.

Each Pakistan entrepreneur ranked in the top 100 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 from web technology to transportation, food to textiles, and construction to consulting, according to an AllWorld press release. With an average age of 42, nearly all of them plan to establish another entrepreneurial venture within the next two years.

Dr Abdul Hafeez Shaikh, Pakistan’s Minister for Finance, is quoted as saying that “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.”

The fastest growing company from Pakistan, E2E Supply Chain Management, grew at nearly 2000 percent between 2008 and 2010, with 2010 revenues above $50 million and 297 employees. Of the Arabia500 winners from 15 countries, E2E was the third fastest growing. Taking the second spot for Pakistan was Exceed Private Limited with a growth rate of 1,320 percent and 90 employees, and in sixth position overall on the Arabia500.

Pakistan also had the highest number of women entrepreneurs on the Arabia500, and Luscious Cosmetics of Pakistan topped the list of the fastest growing Arabia500 women entrepreneurs with growth of 392 percent and 82 employees.

Complimenting the Pakistan100 winners at the Awards Ceremony held in Lahore, 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.”



A recent World Bank report titled "More and Better Jobs in South Asia" said 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 by choice, it puts Pakistanis among the most entrepreneurial people in the world.

The winners of Pakistan100 entrepreneurs are truly inspirational. They epitomize the Pakistani nation's extraordinary resilience and reaffirm that Pakistan's best days are ahead.


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?

IBA's Entrepreneurship Report Flawed

11 comments:

karan said...

There is no need of getting all excited about this news. Go to any nation and you will find the top 100 fastest growing companies. Even if pakistan did make (that to only) the second spot in the arabia 500, you seriously need to realize that it was the largest country in population terms, more than double the 2nd country on the list.

Instead look at how your country is growing at an absolutely pathetic rate, how your forex reserves are again drying up, how the meagre FDI you were getting is continuing to decline or how your currency is continuously declining to historic lows or how more and more people are being pushed back into poverty unlike other countries who are reducing their poverty or how there are daily bomb blasts in various parts of pakistan or how there is intense load shedding all over your country or how bangladesh (your so called ex poor pakistan) is growing faster than you and is attracting more FDI than you!

Riaz Haq said...

Karan: "Even if pakistan did make (that to only) the second spot in the arabia 500, you seriously need to realize that it was the largest country in population terms, more than double the 2nd country on the list.....Instead look at how your country is growing at an absolutely pathetic rate, how your forex reserves are again drying up, how the meagre FDI you were getting is.."

That's the whole point of the post...Pakistani entrepreneurs are very resilient. They are doing well in the face of all the difficulties you list, with hapless governance and poor macro indicators.

Their enterprises are growing by double digits and creating tens of thousands of jobs in the process, and paving the way for Pakistan's recovery from the current crises.

Anonymous said...

Riaz jee

these types don't make nations you need your Tata Birla types to make nations no nation ever developed with fast growing cosmetic industry.

Riaz Haq said...

Anon: "these types don't make nations you need your Tata Birla types to make nations no nation ever developed with fast growing cosmetic industry."

Don't dismiss these companies like cosmetics makers. Just look at how big the personal beauty companies like Avon, Revlon, Estee Lauder are.

Besides, Pakistan100 companies are in industries from web technology to transportation, food to textiles, and construction to consulting, according to an AllWorld press release.

And, according to a Kauffman study published by Inc. magazine, start-ups create a lot of jobs.

The Ewing Marion Kauffman Foundation study – titled "After Inception: How Enduring is Job Creation by Start-ups?" – found that although only a fifth of start-ups make it to their 25th birthday, employment figures stayed at 68 percent of the initial number. It suggests the number of start-ups that flourish and create jobs balances the jobs lost by companies that close.

The study is based on Business Dynamics Statistics, which is compiled by the U.S. Census Bureau and tracks the number of new businesses from 1977 to 2005. The organization defines start-ups as businesses that are less than one year old.

http://www.inc.com/news/articles/2010/08/startups-create-lasting-job-growth.html

Riaz Haq said...

Citibank Pakistan recognized for corporate responsibility, reports Pak Observer:

Islamabad—Citi Pakistan has been awarded the ‘Best Community Program’ Award for its pioneering work in microfinance and vocational training at the International CSR Awards 2012. This award comes on the heels of two global awards that Citi Pakistan received at the Global CSR Summit and at the Asian CSR Awards in 2011, for its corporate citizenship initiatives in Pakistan. The bank has been focusing its programs on microentrepreneurship for vulnerable groups, including helping female entrepreneurs set up businesses. This is evidenced through the Citi Microentrepreneurship Awards (CMA) program which has been run in association with the Pakistan Poverty Alleviation Fund (PPAF) for the past (8) years through an annual grant provided by the Citi Foundation.

Now in 28 countries, CMA promotes the effective role that individual microentrepeneurs have made to the economic sustainability of their families as well as their communities. This year also marks the completion of Citi’s flood relief efforts in Pakistan to provide reconstruction and rehabilitation for affectees of the 2010-11 disaster. ‘This award is a solid recognition of our commitment to responsible finance in the country, particularly through meaningful microfinance and income-generation programs,’ said Aliuddin Ahmed, Acting Citi Country Officer for Pakistan. ‘Our community projects in Pakistan aim to create sustainable small-scale businesses with clear and measurable objectives and good process tools attached to all our social responsibility initiatives.’

The bank has had a continuous presence in Pakistan over the last 50 years and remains fully committed to serving its corporate clients and retail customers in the country, as well as fulfilling its role as a responsible corporate citizen. As it marks its 200thanniversary this year, Citi is considered to be the world’s global bank and a key partner-in-progress by public sector entities, top corporations and MNCs that operate in Pakistan and elsewhere in the region.


http://pakobserver.net/detailnews.asp?id=153685

Riaz Haq said...

Here's a Reuters story of an entrepreneurs helping enhance cow milk yield in Pakistan:

Pakistani Shahzad Iqbal abandoned the jet-set lifestyle of a corporate executive because he wanted to do something worthwhile for his country. So he invested his life savings in world-class bull semen.

He imports the sperm from potent bulls in the West, with names like Socrates, Air Raid and Liberator, and sells it at affordable prices to farmers so they can breed cows that produce higher volumes of quality milk.

Iqbal is one of a band of trailblazers - from small-town entrepreneurs to managers in multi-national companies - who want to transform Pakistan's ramshackle dairy industry into a multi-billion dollar enterprise.

"It's going to take a revolution to turn it around," said Iqbal, as his farm workers moved metal cylinders filled with liquefied nitrogen gas that store the semen at -196 Celsius (-321 Fahrenheit).

If Iqbal and his comrades can succeed in their mission to overturn centuries-old practices and introduce modern techniques, they could open the door to a revolution in the livelihoods of millions of impoverished farmers.

The dismal state of the dairy industry is a striking example of Pakistan's habit of missing opportunities throughout a 65-year history tainted by military coups, political infighting and a form of crony capitalism that has stifled entrepreneurship.

With 63 million cows and buffaloes, Pakistan has one of the world's biggest herds, but it cannot export milk because the animals' yields are so low.

Preoccupied by power struggles and tension with the army, successive governments have failed to realize the potential of the sector, which engages about 35 million people, or 20 percent of the population, in direct or related work
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DREAMS

After 15 years of making good money as an executive for Western beverage and tobacco companies overseas, Iqbal decided he wanted to do something for Pakistan.

To Iqbal, there was no more glaring example of the gap between Pakistan's potential and its performance than the dairy industry.

Rather than despair, he saw an opportunity, pouring his savings of $1 million into creating a breed improvement project called Jassar Farms.

He dreams of the day when the average Pakistani cow, which yields about 1,600 liters (420 U.S. gallons) of milk after it calves, can compete with the top of the line Israeli Holstein that churns out 12,500 liters (3,300 gallons).

Iqbal acknowledges the odds are stacked against entrepreneurs in Pakistan because of red tape, corruption, poor governance, chronic power cuts and a Taliban insurgency that keeps many investors away.

"I'm not saying I'm mad, but certainly I'm not absolutely normal either, because it takes a lot of persistence to undertake this kind of challenge," said Iqbal, wearing a pink polo shirt and jeans.

BIG MONEY

Iqbal can take comfort from the fact that he is not alone in his quest for reform. Some international companies are also working for change.

Nestle has installed 3,200 industrial-size milk refrigerators at collection points across the country to lay the foundations for the kind of cold storage chain essential for a modern dairy industry, and give farmers a steady market for their milk.

At a training centre with manicured lawns and spotless dormitories for farmers in Punjab, Nestle holds workshops to drive home a simple message - properly managed cows produce more milk.

Instructors show farmers how to treat their animals - the Nestle cattle lounge around on soft sand under powerful fans, chewing nutritious fodder. They have constant access to water - essential practices of which most farmers are ignorant....


http://www.reuters.com/article/2012/08/26/us-pakistan-milk-idUSBRE87P0D220120826

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.
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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 an ET blog post taking media to task:

A recent article in Wired, Danger Room highlighted the resurgence of the US drone campaign in Pakistan. While it focuses on the war, a lot was left untold about the nation’s story that is as heartening as it is heartrending, and as inspiring as it is seemingly dismaying.
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The story of four of these start-ups, that launched in 2012 speak volumes about the resilience, commitment and resourcefulness of its founders.

The first is Vital Agri Nutrients, a young, agricultural Research and Development focused company that is working on developing innovative products for farmers. It has had some recent breakthroughs with their micro-nutrients and soil amendments which are currently in field trials. Given the expected shortage of water and growing prices of fertilisers world-wide, the company and its products present a promising opportunity for small and large farmers to improve the crop yield and lower their input cost per acre by employing soil amendments that help with more efficient use of fertilisers and water in plants.

Next, four young entrepreneurs at Eyedeus, aided by decades of joint research in computer vision, have developed technology that enables mobile devices to have eyes and intelligently process real-world imagery using an increasingly powerful mobile processors. Unlike the cameras on mobile devices that just allow ‘dumb’ recording of images or videos, Eyedeus technology allows developers to augment the reality around users. The company’s first product, called ‘Groopic’ (beta available on the AppStore) is already getting rave reviews. Groopic allows group pictures to be taken in a way never before possible. The person taking the picture can now be part of the group picture, go figure!

Eyedeus, by the way, is part of a full-service technology incubator called Plan 9, that’s a visionary initiative of the government of Punjab, and it hosts at least a dozen other start-ups alongside Eyedeus, working on equally innovative products and services.

Similarly, Invest2Innovate is another accelerator that is supporting at least five entrepreneurial ventures focused on businesses with a large social impact.

Third is a new age production house called JugnooMedia, developing interactive, digital musical toys for mobile devices with an aim of providing toddlers and young children new avenues of learning that are more fun and effective than the traditional, classroom teaching. The demos of their first title are very impressive and the company has announced that it will be released on the Apple AppStore and Android Marketplace soon.

And finally, there is BLISS – a social venture that is aimed at improving the livelihood of women in Pakistan alongside educating them. BLISS has already done a pilot program in a small village of Pakistan where women were taught embroidery skills alongside formal school education in the first phase. In the second phase, BLISS provided the same women an opportunity to co-op with the company and develop handbags designed by professional designers which were then marketed by BLISS through its online store as well as an impressive list of global brand ambassadors. The women who made the bags got the lion’s share of the revenue from those sales and the rest of the money is being used to sustain the operations of the organisation and scale the program.
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The next time a story is told about the problems Pakistan is having with the political instability, corruption, energy shortage and terrorism the world must know, that to the same land belong some of the best, battle-tested and inventive entrepreneurs working on shaping the future of the world!



http://blogs.tribune.com.pk/story/15611/pakistan-more-than-just-drones-blasts-and-terrorism/

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 PakistanToday report on SBP support of small businesses:

The State Bank of Pakistan's (SBP) Credit Guarantee Scheme (CGS) has helped small enterprises and farmers to access Rs 2.83 billion in bank financing over the last 18 months.

The Scheme (CGS) has facilitated financing in 105 districts across the country with 85 percent of loans provided to previously un-served/under-served clients in rural areas, of which 81 percent were subsistence farmers, said a SBP press statement on Wednesday.

Similarly, 91 percent of the loans under the Scheme were provided to small businesses with less than five employees of whom 90 percent were
Sole proprietors the statement added.

Under the CGS, banks also focused on serving the lower end of the commercial banking market through smaller loans, with an average loan size of Rs 390,000 for agriculture and Rs 2.1 million for small enterprises. Specific to the needs of the clients, the durations ranged from less than one year to three years.

The Scheme through its support to previously un catered small rural enterprises is likely to enhance economic opportunities and increase employment in the rural areas of the country.

The Technical Committee of the bank during its annual review of the Scheme observed that despite the extensive geographic spread and a focus on under-banked segments, the participating banks demonstrated prudent lending practices reflected in an infection ratio of only 2.91 percent for agriculture and 1.07 percent for small enterprise loan portfolios, which are much lower than the industry averages.

It shall be noted that the CGS is monitored by the Technical Committee drawing membership from the UK's Department for International Development (DFID), SBP and the Pakistan Banks Association (PBA).

The Scheme is working in tandem with nine banks including big five banks which were selected after due screening by the Committee.


http://www.pakistantoday.com.pk/2013/02/20/news/profit/smes-farmers-get-rs-2-83-bln-financing-under-cgs/

Riaz Haq said...

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

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

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

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

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

Technological advancements

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

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

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

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

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

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

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