Govt must provide entrepreneurs with necessary ecosystem for growth

LAHORE: There is no dearth of entrepreneurial spirit in Pakistan but the ecosystem that nurtures them to achieve their full potential is missing; informal sector is flourishing in the country due to this spirit, and numerous informal companies have turned formal after success.
Pakistan has produced many successful entrepreneurs in trade and industry partly on the strength of the business acumen of the enterprise and partly on the strength of ecosystem provided by the state from mid ‘60s till early ‘90s.
Sialkot emerged as an outstanding source of entrepreneurship when the government provided common facility centre arming the small artisans with tools to produce value-added products by providing missing facilities in their factories through these centres.
Today Sialkot accounts for over $2 billion yearly exports conducted by thousands of small and medium entrepreneurs. The closure of common facility centres by the state has arrested the progress of new and prospective entrepreneurs.
As far as trade is concerned, there are thousands of examples where a street vendor after a few years of struggle, opened a shuttered shop and later many branches.
Nirala operated a small sweet shop at Fleming Road Lahore. It went on to become a quality sweet supplier globally in places where Pakistanis live. Qarshi was a traditional medicine shop at Mcleod Road Lahore. Now, it is a respected name in herbal medicine.
Take the example of Gourmet in Punjab that started informally two decades back as a one shop bakery. Today, it has over 160 outlets in and around Lahore. It is one of the largest producers of carbonated drinks in Punjab competing head on with multinational beverage producers. It operated numerous marriage halls and is one of the largest caterers in Lahore.
Gourmet also has petrol pumps in various parts of the country, and runs many pharmacies. The success has been so large that it recently acquired a television channel.
It has factories in Kot Lakhpat, Sundar Industrial Estate and a big 40 acre factory in Rahimyar Khan producing bakery products, processed milk, jams, marmalades and soft drinks. It is an enigma for the multinationals who have not been able to increase the rates of their beverage brands because of similar quality replacement by Gourmet.
While entrepreneurs were able to carve out a place in trade and industry, they have been unable to make significant impact in the knowledge economy. Here the geniuses usually do not have any resources.
They develop software and programmes that can make the services or products of better quality than available in the market and at a cheaper rate. These programmes or ideas are useless unless they are tested in the market.
For this they require finances that are not available in Pakistan. Venture capital is mostly unheard of in our society. The investor does have a stake in the idea but the risk is that the investment will only return with profit if the idea clicks, otherwise the investor must be prepared for total loss.
Most of the entrepreneurs idealised in Pakistan are from knowledge economy. Majority shareholders of Microsoft, Google, Facebook, Whatsapp and apple launched their companies without capital; some from their garages. However, through venture funding they are all now giants in the global economy.
Lately, some government universities, private sector educational institutions and some NGOs have established incubators for the knowledge economy start ups. For instance Arfa Kareem University of Information Technology holds hand of 30-32 start ups through a merit-based selection system. In five years, they provided 160 startups with training, arranged peer to peer meetings with globally renowned IT experts for them, and gave all secretariat facilities and some remuneration for the startups for six months.
According to their spokesman the success rate has been above global average and those 160 startups that came with no resources, have cumulative assets over $700 million (Rs70 billion). In fact, they sent 22 percent most brilliant of these startups to Austin United States at the request of Austin mayor.
Through their presentations to entrepreneurs in Austin, 60 percent of them were able to get venture capital that was elusive in Pakistan. Now an Austin-based investor has opened a $20 million venture capital fund for Pakistani startups only.
Similar efforts by universities like LUMS, Lahore School of Economics, and Aga Khan University are facilitating startups in knowledge economy, but they all lack the kind of funds to launch them according to their potential in the global economy.