Entrepreneurship engine for growth: Govt needs focused policy for startups

The entrepreneurship eco-system in Pakistan remains undeveloped with the government failing to acknowledge the potential of startups in generating economic growth in the country, say business leaders, investors and academics at a Jinnah Institute policy roundtable titled “Micro-business: The Gender Edge.”

Among the issues identified at the roundtable were lack of access to finance, markets, skills development, and an investment culture that remains dismissive of business startup potential. Traditional financing is beyond the reach of small-scale entrepreneurs due to collateral requirements, making it difficult for investors to commit. Unlike India, where startups enjoy tax exemptions for a period of three years, startups in Pakistan have high tax and non-development costs associated with their ventures.

Entrepreneurs from a range of sectors, including microfinance, skills development and technology entrepreneurship said that there was no appreciation for social entrepreneurship at the policy level in Pakistan, nor a mechanism to determine the social impact of business ventures. “Investments are only considered feasible if they have commercial returns. This makes it difficult to secure financing for social entrepreneurship and business models. A large number of women in both urban and rural areas are also associated with home-based ventures. However, in the absence of additional financing, the scope of their business remains limited. Microfinance institutions can help plug this gap, by making their products attuned with the financing needs of home-based business ventures. Given the risks involved in pursuing a business venture, even high-potential projects fail to expand beyond a certain limit.”

It was also noted that entrepreneurial successes were not widely celebrated in traditional media. “In many cases, individuals still seek the security of being in a job instead of investing their skills in a venture that has high financial risks associated with it. Participants also observed that there is a huge skills and knowledge-based gap despite a high supply of labour. The private sector can play an important role in bridging this gap by investing an innovative market-oriented skills development programme.”