market. In the past several initiatives were taken in the public sector to nudge small- and medium-size businesses in the form of loans to the youth but unfortunately they all failed due to the rampant corruption in public organisations. The parties in power favoured their own political workers and in most cases loans were advanced on fake documents without proper collateral and on the basis of political influence.
As a result billions of rupees were lost and despite the best efforts of the State Bank the money could not be recovered. The other reason for the failure of the efforts was that the other basic ingredients of entrepreneurship – technical know-how and talent to start a business – were totally neglected while giving out loans. There was no support available in the public sector for carrying out research and preparing feasibility reports. The result was that institutions like Youth Investment Programmes (YIPS) and Small Business Finance Corporation, the two main financial institutions in the public sector for promoting small and medium industries and businesses, had to be shut down.
But it is encouraging to note that recognising the importance of small- and medium-size industries and business, creation of self-employment opportunities for the youth and learning from the past bitter experience the PML-N government took a step in the right direction by launching the Prime Minister’s Youth Programme in September 2013; a package comprising the Youth Business Loan Scheme, Youth Skill Development Programme, Youth Training Programme, programme for provision of laptops, interest-free loan scheme and Fee Reimbursement Scheme for Less Developed Areas.
These initiatives were designed to create a culture of entrepreneurship by making available all the required ingredients to the youth for starting their own business and enhancing their technical know-how and skills for gainful employment in different sectors of the economy. The defined objective of this package was “Enabling the youth and poor segments of the population to get good opportunities of employment, economic empowerment, acquiring skills needed for gainful employment, spreading use of computers and imparting on-the-job training for young graduates to improve probability of getting a productive job”.
The flagship initiative of the package was the Youth Business Loan Scheme. The National Bank of Pakistan and Women Development Bank were entrusted with the responsibility to disburse these loans amounting to up to two million at a nominal interest rate of eight percent, ensuring gender equality in advancing these loans. The step to advance these loans through banks was taken in light of the unenviable experience of the past, to ensure transparency and eliminate prospects of political interference. Another very important aspect of the scheme was that the Small and Medium Enterprises Development Authority (Smeda) carried out pre-feasibility studies as guidelines for prospective borrowers. These studies provided a general understanding of the proposed business and were meant to promote an entrepreneurial culture in the country.
A recent review of this scheme and other initiatives reveals that so far Rs11.03 billion has been sanctioned for 15,101 individuals. Though the progress is much below the hundred thousand mark for a variety of reasons, the programme is absolutely on track. In view of its importance, transparency and its unblemished track record so far, other banks like Sindh Bank, HBL, MCB, Habib Metropolitan Bank, Meezan Bank and UBL are also joining the scheme.
The National Bank is also contemplating to develop pre-feasibilities for almost 100 trades in addition to restructuring the scheme. From now on balloting will be replaced by the existing loan processing procedures. These measures will ensure quick disposal of the loan applications and identification of trades where the applicants can invest profitably.
Under the supporting initiative of the Skill Development Programme, 22,000 students have been imparted training in different skills. In the second phase of the programme students from seminaries will also be eligible to apply. Under the Laptop Scheme the HEC has distributed 32,000 laptops among PhD, MPhil and MS students.
Similarly 50,000 students from 78 universities have been paid back their fees by HEC. However, from now on the HEC will make upfront payments to the eligible students at the time of admission. Under the interest-free loan scheme Rs1.75 billion has been given to 17,588 applicants. These are encouraging results and there is a need to pursue these initiatives more vigorously.
The writer is a freelance contributor.
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