‘Legal regime imperative for social enterprises’

Islamabad : Given the potential to address core societal issues and helping the government in enhanced public service delivery, the social enterprise sector in Pakistan is struggling for survival mainly due to lack of recognition in the legal regime. In order to help thrive the social enterprises, a holistic legal framework and law is imperative for the sector.

These views were expressed by experts during the “Orientation Workshop on Social Enterprise Policy Toolkit for Pakistan” organised by the Sustainable Development Policy Institute (SDPI) in collaboration with British Council, Pakistan office and UNESCAP here.

Joint Executive Director, SDPI, Dr Vaqar Ahmed said that social enterprises can be a vibrant vehicle for achieving Sustainable Development Goals (SDGs) and help lift the social sector by addressing issues of health, education, clean drinking water, affordable housing, and affordable energy solutions etc.

He, however, said there were very few social enterprise incubators in the country, whereas startup social enterprises also struggle to scale up.

"It is essential that there should be a government-led working group to discuss and understand the constraints faced by social entrepreneurs," he said.

The SDPI JED said the organisation had conducted active research on how Pakistani social entrepreneurs can be facilitated through better reform of taxation, funding and finance and public procurement regime.

He said the issue of legal identity and definition of social enterprise can be resolved through appropriate legislation. In this regard, Pakistan can learn from social enterprise laws in South Korea, Thailand, Vietnam and Philippines, he added.

Dr Vaqar said that the central bank and SECP could lead the exercise of better educating lenders and investors wishing to participate in social enterprise sector, where commercial bank can also fund social enterprise if better valuation and guarantee schemes are encouraged. He said that the concerns of Pakistani diaspora wishing to invest in local social enterprises must be addressed. These concerns also include Pakistan’s current placement in the grey list of FATF.

“The federal and provincial public procurement regulatory authorities (PPRAs) can help promote such businesses by including a social value consideration in bids of public sector,” he said.

Dr Vaqar said the Competition Commission of Pakistan may look into creating an enabling environment where enterprises with a pure social impact and those which reinvest their profits back in the mission, are able to compete with conventional enterprises.

He said in the coming days, SDPI team will be drafting a social enterprise law for which inputs of stakeholders from public and private sector are welcome.

"We also hope that relevant standing committee of the parliament will take keen interest to discuss this draft law and process it for next stages," he added.

Talha Chishti, Head of Programme-Society, British Council said that under its Developing Inclusive and Creative Economies (DICE) programme, the British Council aims to address the critical issues of emerging economies including rising unemployment of young generation and lack of inclusive growth.

He said through DICE Fellowship initiative, they trained more than 600 individual creative social entrepreneurs who are trying to address the challenges of their communities through holistic solutions. The Fellowship programme is designed to help creative and social enterprise leaders in ease of doing businesses, to sustain their businesses and multiply their impact, he added.

The participants while suggesting reform measures on taxation, funding and finance, access to procurement and other regulatory issues for social enterprises highlighting the need for automation of system to minimize the human interaction, provision of preferential tax treatment, simplifying the procurement processes and legal agreed definition for social enterprises.

The workshop was attended by officials from Ministry of Planning, Development and Reforms, Public Procurement Regulatory Authority (PPRA), Competition commission of Pakistan (CCP), Higher Education Commission of Pakistan (HEC), National Incubation Centre (NIC), KP-Board of Investments and Trade (KP-BoIT), Baluchistan Revenue Authority, Punjab Revenue Authority, Sindh Revenue Board, SECP, Nestle Pakistan, representatives of different social enterprise and entrepreneurs.