Pakistan needs to take entrepreneurs seriously

Published: November 22, 2010
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Getting the poor and college students to start their own small business ventures is the best way to create jobs.

Our governing mentality has mostly been about ‘providing’ jobs and not ‘creating’ them. There is a very big difference between the two approaches that also reflect different governing philosophies. When you hear stories about inefficiency and corruption in government run institutions (like the Pakistan Railways), it is due to the first approach.

Governments find it expedient to hand out jobs to people to improve employment figures even when state owned companies do not need any more people. Jobs are also given to party workers to find a way to keep them satisfied. Alas, our political culture is as such! This approach has disastrous results – it only marginally improves employment figures and causes losses of billions of rupees annually.

There are many ways to create jobs and I will argue that the most productive way is to encourage entrepreneurs to take risks and start new businesses. With Pakistan’s booming youth population and dripping foreign investment this might even be the only way to revitalise an economy numbed into inaction by the pain of several external and internal shocks.

Turning the poor into entrepreneurs

The following steps could be very beneficial in getting this economic model started:

1) Add another category to the Benazir Income Support Programme.

Currently, the way this programme runs is very unimaginative – you hand out money (numbering Rs1,000) every month to those low income households who need it. No doubt times are extremely difficult and such a financial cushion is vital for thousands of families. However, how about adding another category of Rs 5,000 given to a low income family who has started a business within the last year that employs three people with no family ties? This would give incentives to low income families to start their own business – which would be small scale but nevertheless decrease unemployment and ‘create’ jobs. This also has the potential to empower women who might be encouraged to become entrepreneurs in Pakistan’s cottage industry and will also lead to a more efficient documentation of workers and their incomes which can help bring the informal economy to the mainstream.

2)  Use a sum of Rs12 million every year the government could set up three entrepreneurship funds.

The first Rs4 million should be – and please bear with the math for a second – broken into eight parts consisting of grants worth Rs500,000 each. Each of these grants should be used to form business competitions in two of the largest public universities in each province. If necessity is truly the mother of invention, then tough economic times like these are the best incubators for great and successful business ideas.

Take it to the college entrepreneurs

College students also have the most idealism and energy out of all age groups, so they are well suited to becoming entrepreneurs. Students can pitch their business ideas and business plans (with their relevant research) to a panel of entrepreneurs who would then allocate the money to the student group that they think is the most likely to succeed with their business idea. This will also give many students the opportunity to take an initiative and exercise leadership in an academic environment. There is also the likelihood that groups who did not win would still go on to be entrepreneurs if they have enough faith in their business plan.

This plan can also be replicated to make two more funds – one designated specifically for IT services and one focused on madressas. The IT industry enjoys the advantage that new project do no have that many startup costs. To make good software or a web programme you need an original idea, programming skills, a computer, some internet and some electricity. In today’s economy this sector is churning out some of the brightest entrepreneurs that have given us services like YouTube, Google and Skype. Students going to madressas should be given an equal opportunity of being entrepreneurs; this will also encourage maddressas to give students better proficiency in subjects like math to boost their business skills.

Such an approach does not require heavy investment by the government. Moreover, if the government does not step up, the private sector should. All the big businesses that want to help Pakistan could contribute funds for such a programme – it is truly something that could make a difference.

asad.badruddin

Asad Badruddin

A student of economics and international relations at Tufts University in Boston who hails from Karachi. He blogs at octagonaltangents.blogspot.com

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