The promotion and facilitation of an entrepreneurial culture in the society is necessary for a prosperous future
Progress and prosperity of leading economies around the globe is the result of entrepreneurship that flourished in the relevant societies through facilitation towards an appropriate ecosystem.
China’s success in eliminating poverty has been the result of an entrepreneurial culture in almost every sector of the economy — from high-tech industries to form products. China can now claim that nobody in the country is now below the official poverty line of $2.30 per day at their disposal.
This is, indeed, incredible in a country of almost a billion and a half. The miracle has been wrought by the entrepreneurial culture inculcated in the society over recent years.
Small-scale entrepreneurs are vital drivers of China’s economy; they contribute 60 percent of the GDP, provide 80 percent of jobs and pay about half of national tax revenue. Small and medium enterprises (SMEs) have been declared the backbone of the US and EU economies.
In the United States, 30 million small businesses account for nearly two-thirds of net new private sector jobs in recent decades. According to the official website of the European Commission, SMEs represent 99 percent of all businesses in the EU.
The website further states, “SMEs employ around 100 million people, account for more than half of Europe’s GDP and play a key role in adding value in every sector of the economy. SMEs bring innovative solutions to challenges like climate change, resource-efficiency and social cohesion and help spread this innovation throughout Europe’s regions. They are, therefore, central to the EU’s twin transitions to a sustainable and digital economy. They are essential to Europe’s competitiveness and prosperity, industrial ecosystems, economic and technological sovereignty and resilience to external shocks.”
Setting up a business and taking on financial risk requires nerves, energy and patience. People who create new businesses are a rare species, more so the innovators.
It is the responsibility of educational institutions and government agencies to sensitise and mentor people in developing their unique ideas. It is, however, not a straightforward undertaking in a conservative society.
There is a need to encourage working age people to take the risk of establishing new ventures to realise their dreams of independence and self-actualisation. It needs training and development on one hand and an appropriate start-up ecosystem on the other.
We can reach an economic turnaround if we perform appropriately on the training and development front. Two recent events have strengthened my belief that our youth, especially women, have enormous potential to foster entrepreneurship in the society.
The first is the project titled, Financial Empowerment of Women Through Entrepreneurship in Pakistan, a collaboration with the Cardiff University UK and ACF UK funded by Higher Education Funding Council for Wales. We enrolled 24 women and trained them for three weeks followed by mentoring sessions to develop their business plans which they eventually presented to some high-net-worth-individuals, corporate executives and academics in a showcasing event at the end of the project.
The process of setting up a business and taking on financial risk requires nerves, energy and patience. People who create new businesses are a rare species, more so the innovators. It is the responsibility of educational institutions and government agencies to sensitise and mentor people in developing their unique ideas. It is, however, not a straightforward undertaking in a conservative society.
One of the participants visited me a month later and shared her success story of selling the specially-designed mask and matching headscarf through a social media campaign. Her enthusiasm was amazing.
The second is my recent visit to Pakistan Institute of Fashion and Design where I delivered a lecture on the importance of entrepreneurship to final year students. A hall full of participants, most of them female students, took keen interest in the subject and expressed the desire to learn more about the start-up ecosystem of the country.
According to a recent study, Pakistan needs to create 1.3 million additional jobs on average every year till 2035 to cater to the growth of working-age people. Considering the existing circumstances, it seems quite impossible for the government sector to fulfil this need. We can address this huge demand by ensuring an extensive growth of entrepreneurship in every sector and a switch from replicative to innovative entrepreneurship.
Pakistan’s recent ranking in the Global Innovation Index is 107, two points below the previous ranking. This means that we cannot expect frequent innovative breakthroughs on the entrepreneurial front. But there is a huge potential even in replicative entrepreneurship for Pakistan in several sectors.
Unique selling propositions coupled with compliance to standards can open innumerable doors for Pakistani start-ups in both local and international markets. The survival rate of new businesses is 50 to 60 percent globally. Interestingly, it is around 80 percent in Pakistan, according to a study conducted in 2016. Causes failure in Pakistan include the inability to access capital, absence of appropriate business plans and avoidance of partnership.
These factors clearly indicate a lack of awareness and training. There are quite a few venture capital firms and individual and syndicate angel investors that are investing in Pakistani start-ups. According to a news report, Airlift raised $12 million and Bykea $13 million in 2020. Overall, 28 percent of the venture capital was invested in the transport industry.
In terms of the number of deals, e-commerce ranked first, followed by FinTech. In Pakistan, generally, entrepreneurial initiatives lack appropriate training and development support. Mostly, people have realised their dreams through their own conviction and personal endeavours. Now there are many opportunities to seek formal guidance and counselling to develop well thought-out business plans, market analyses and survival income estimates.
Therefore, all those who desire to realise their dreams through entrepreneurship should look around for mentoring opportunities. Partnership remains a taboo in our society even today. This limits the potential for entrepreneurial initiative.
In today’s closely-knit global community collaboration multiplies the chances of success and fast growth. It is necessary for aspiring entrepreneurs to welcome partnership opportunities, adopting necessary regulations in terms of ideas, expertise, finance and facilitations to bring synergy in their operations.
Currently, Pakistan stands at 120 on the Global Entrepreneurship Development Index (GEDI). In its immediate neighbourhood, India stands at 68 and China at 43.
The role of the government remains vital to develop a nurturing ecosystem. Initiatives like ITBs, NICs and Ignite are worth appreciating but ignoring other sectors is harmful for equitable progress. The government needs to develop sector-wise incubation centres and sector-specific funds to seed start-ups in every sector of the economy. The bottom line remains the promotion and facilitation of an entrepreneurial culture in the society.
The writer is an associate professor of management sciences and heads Centre of Islamic Finance, COMSATS University, Lahore Campus. He can be reached at email@example.com