The Skype software was developed in Estonia, a small Baltic
country with a population of 1.3 million people. The promising landscape
it offers for entrepreneurs has earned it the title of ‘Europe’s new
start-up hub.’ Besides Skype, which today has 74 million users, multiple
billion dollar start-ups, including TransferWise have emerged from
Estonia.
The Estonian Government has largely facilitated the growth process of the local start-up industry. The Estonian Entrepreneurship Growth Strategy 2020,
an ambitious yet strategic policy document to drive economic activity,
was set in place. By increasing productivity, stimulating
entrepreneurship and encouraging innovation, the Estonian Minister of
Economic Affairs and Communications says: “Estonia should be one of the
best countries in the world to establish and develop a company.”
In short, the State has put in place a structured, coherent and measurable pathway for the industry to follow.
In
another part of the world, with a similar ‘risk-averse’ attitude, the
local entrepreneurial landscape is fast developing. Similar to Estonia,
it is being driven by the State and more specifically, the IT department
of the Government of Punjab that has been the catalyst of change.
Dr
Umar Saif, who leads the department, has made it his mission to turn
Lahore into our own Silicon Valley. As a first step, Plan9, a technology
incubator (named after the first free-share operating software by Bell
Labs) was launched in 2012. With the completion of its eighth incubation
cycle, 130-plus start-ups have come up, some with net valuations
ranging between six and $10 million. Collectively, they have made a
sizable contribution to the IT job market.
How important has this incubator been in shaping the local scene? More importantly, what role has the State played in this?
To answer this, it is important to first analyse the factors
which have hampered entrepreneurial evolution in Pakistan. Firstly, the
people of Pakistan are risk-averse. From a young age, children are
instructed to opt for mainstream career choices, such as engineering,
medicine and teaching; the reason being the social status attached and
the income flow these professions promise. Secondly, a typical household
has limited capital funds available and these are not enough to allow
young people to become involved in activities such as entrepreneurship,
which are deemed risky. Therefore, entrepreneurship has not been a
career option much experimented with, prior to the setting up of Plan9.
Taking
into account these factors, the Government of Punjab decided to provide
solutions. At first, through the IT Board and Plan9, the Government
introduced the concept of ‘business incubation’. As the initiative was
government backed, it was perceived as credible. In contrast, services
offered by a new sector or by lesser known agents may be categorised as
potential scams. In addition, the Government has a national outreach. As
the message was spread, a new narrative was shaped.
Conceptually,
entrepreneurship began to be embedded in the minds of young people and
incubation became a new buzzword. This was furthered by Plan9’s efforts
to encourage universities to replicate the incubation model. As a
result, entrepreneurship received attention from academia as well. At
present, 20 universities across Pakistan have set up incubators in
collaboration with Plan9.
The importance of the need to
promote entrepreneurship is captured by statistics. The unemployment
rate in Pakistan is six percent (source: Pakistan Economic Survey 2014-2015);
that is 3.58 million people who remain unemployed despite being able
and willing to work. For the young, the figure stands at 8.5% (2013).
The
situation becomes worse due to the fact that the growth rate and
changes in the population are not proportionate. Today, with a
population growth of 1.95% and the economy growing at 4.24%, one million
jobs need to be created annually to fill the gap. Yes, one million
jobs.
The unemployment rate in Pakistan is six percent; that is 3.58 million people who remain unemployed despite being able and willing to work.
With the vision to promote entrepreneurship and develop more
job creators in the economy, the Punjab Government realised that the
model they adopted had to be localised; therefore, a zero equity model
was introduced. Plan9 provides facilities seen as necessary for a
start-up to progress, such as office space, basic utilities, legal aid
and a professional network, free of cost. In addition, start-ups are
offered stipends for financial sustenance. With nothing to lose in
monetary terms, young people have been attracted to entrepreneurship as a
viable career option.
Furthermore, as the effort had an
objective to impact the economy at large, entrepreneurship had to be
categorised as a ‘public-good’. Therefore, going by basic economics
theory, the cost associated with its provision may be ‘too-high’ for the
private sector to operate on its own. This has positioned the IT Board
in a critical way.
Similar to Estonia, the IT Board has
been involved in ‘building blocks’ to develop a local entrepreneurial
ecosystem. The Plan9 experience brought to the fore the need for yet
another platform aimed at further refining graduate start-ups. The six
months incubation programme turns a start-up from a business idea to a
scalable model. However, it needs to be polished in order to become a
company. As a result, PlanX, a technology accelerator was launched to
bridge that gap. To date, PlanX has produced 30 start-ups and raised an
investment of three million dollars. In a nutshell, the Government has
the scope to practise ‘horizontal integration.’
Expanding
the playing field to make these efforts more encompassing, the Punjab
Government has launched additional initiatives powered by the IT Board.
‘Herself’ is a capacity building platform for aspiring women
entrepreneurs that has trained a 100 women over a period of six months.
By introducing alternate home-based economic participation models,
Herself aims to increase the female labour force participation rate that
stands at a low 25% (source: World Bank, 2014). Techhub
Connect is a co-working space for freelancers and bridges the gap
between academia and industry. Recently the e-Rozgaar scheme has
launched 40 training centres across Punjab aimed at providing a three
month training programme to 10,000 individuals in one year.
As the Punjab Government continues to deepen its efforts to strengthen the entrepreneurial ecosystem locally, persistent effort by their provincial counterparts and active participation from the private sector will make Pakistan ‘Asia’s next start-up hub.’
At a macro-level, the IT Board has played the role of an
intermediary between different government departments and industry
stakeholders. Round table conferences are organised on a regular basis
to bring together key stakeholders to evaluate relevant matters. An
output of these conferences has been the introduction of Punjab’s first
IT Policy and revision of the taxation policy for SMEs and start-ups.
Dr
Saif’s vision has started taking shape as the roots of entrepreneurship
have spread beyond Punjab, inspiring efforts by other provinces and the
private sector.
The Federal Government has set up the
National Incubation Centre in Islamabad and is now working on the
National IT Policy. The Provincial Government of KP, spearheaded by the
KP IT Board, has set up technology parks in Peshawar and Abbottabad and a
KP Digital Strategy is set to be launched. In addition, Digital Youth
Summit – a premier tech conference and start-up expo – is supported by
the provincial government.
The private sector, having
assessed the feasibility of the concept in Punjab, has stepped up and is
participating actively. Corporate players such as Mobilink and Telenor
have powered business incubators, while academic institutions, such as
LUMS, have set up centres for entrepreneurship that provide research
input as well as practical, hands-on facilities to budding
entrepreneurs. Initiatives such as Basecamp, Invest2Innovate, DotZero
and Daftarkhwan highlight the thriving entrepreneurial culture in
Pakistan. The Nest I/O in Karachi, powered by P@SHA and Google for
Entrepreneurs is changing the game in Sindh and has made a plausible
contribution to cementing the landscape with Punjab.
As
the Punjab Government continues to deepen its efforts to strengthen the
entrepreneurial ecosystem locally, persistent effort by their provincial
counterparts and active participation from the private sector will make
Pakistan ‘Asia’s next start-up hub.’
It’s not long before an app like Skype will emerge from Pakistan.
