TO ease the immense population pressure on the economy and the 6pc high rate of unemployment, engaging and supporting a potential mass of 95m plus youth in entrepreneurial activities may be the only solution.
The small and medium enterprises are a good source of low-cost employment creation. Interestingly, Japan spends around $78 per capita, Korea $70 and Turkey $0.53 per capita for the development of SMEs in their respective countries.
However, spending for SMEs development in Pakistan has been only $0.01 per capita, when analysed with respect to the resources provided by the government to the apex SME development organisations, according to a 2010 World Bank study.
SMEs are a source of low-cost employment generation. To quote the Census of Economic Establishment 2005, out of the total countrywide 3.2m economic establishments, around 1.4m are located in rural areas as compared with 1.8m urban enterprises. The life of 70pc of our rural population directly or indirectly depends upon 44pc of economic establishments operating in rural areas. Rural entrepreneurship development, however, has not been given due attention.
Agro-based industry, dairy and livestock and horticulture have great potential to attract the young breed of potential entrepreneurs, if necessary support is provided to start small enterprises in their own regions/areas. This will discourage youth migrating to urban areas in search of jobs. Businesses with potentials in rural areas based on their indigenous resource must be prioritised and supported.
About 35pc post-harvest losses in horticulture sector are reported mainly due to the lack of processing facilities. Small scale agro-processing facilities like fruit and vegetable dehydration, dairy farming, honey beekeeping, quail farming and sheep and goat farming are among the potential businesses which need focus for development.
Here too, Prime Minister Youth Business Loan Scheme (MYBL) may be utilised as an effective tool to promote regional entrepreneurship by promoting small businesses in rural areas.The investor can benefit from the Smeda’s pre-feasibilities in a wide range of activities.
Smeda has prepared 85 business pre-feasibilities, both in English and Urdu languages to provide support to potential applicants. Important training videos on marketing, developing business plans and financial calculators have also been uploaded on Smeda’s website.
So far around 6,500 beneficiaries of MYBHL have availed a total credit of Rs5.8bn. Higher education institutions should offer skills programmes that match the requirement of the rural industry and also helps the unemployed youth cohort to become self-employed. Establishing centres by HEIs to help young students to incubate their business ideas before they enter into the business world are rare.
The universities also consider introducing entrepreneurship development courses at undergraduate level programmes which should be conducted by successful entrepreneurs.
Similarly, though the skills development institutions (SDIs) impart skills on different vocational trades, a majority of them are not demand-driven. During their stay at the SDIs they are not imparted business know-how skills, which leave a gaping hole in pushing them towards self-employment.
Entrepreneurship development modules, both in Urdu and English languages, may be prepared and introduced to enable students to build upon their technical skills and become entrepreneurs.
Smeda offers a limited number of programmes for final year students of HEIs every year on the theme of ‘Entrepreneurship as a Career Option.’
Credit access to formal bank finance seems to figure in as the most important issue hampering the growth of new business startups and business expansion. Most small businesses operate through self-financing or retained earnings.
SME financing still remains at a low of 5.86pc of the total credit off-take by the private sector. Investment by the government towards supporting entrepreneurship initiatives can yield phenomenal benefits for our economy.
Writer is CEO of Smeda