In Pakistan, businesses and the enterprising individuals who conduct them make up the country’s backbone. While individual Pakistani entrepreneurs may have their own reasons for embracing entrepreneurship, however, they all share similar challenges when trying to ‘break-even’ on a daily basis. Here are some of the main obstacles that business people deal with, whether they sell their products in the bazaar down the street, by exporting surgical tools and sportswear, or online through an e-commerce store.
There is nothing particularly unique about setting up a business in Pakistan, at least that appears to be the case from a distance. Like other businesspeople the world over, Pakistanis also devote considerable time, energy, and money into recruiting, interviewing, hiring and training employees. Human resource managers are often challenged with numerous applicants that are either oddly-skilled or are lacking key skill sets for the advertised position. This indicates how universities and colleges are unable to equip their students with employable skills. Once successful recruitment takes place, now they must retain quality employees, who will be recruited by competing organisations.
The (Lack of) Infrastructure
One worry that plagues all entrepreneurs is how to deal with taxation. There are ad-hoc taxation campaigns that attempt to bring businesses into the tax bracket. These attempts clash with the limited to non-existent government subsidies available for the average Pakistani business person.
Access to Capital
There is a serious shortage of easy-to-understand informational campaigns that encourage entrepreneurship for the layman. Not only that, banks and other formal financial institutions do lip service to periodic pressure by government ministries to accommodate the everyday Pakistani. Most Pakistanis will not be able to tell you how to access a business loan from a bank, simply because they might not be even aware that such a facility exists! Shrouded in technical jargon and layers of frustrating red-tape, applying for even a simple car loan becomes a prohibitive and time-wasting exercise. Similarly, the path to acquiring start-up capital or a business loan is shrouded in equal parts mystery and mismanaged policies. The only choice left for most risk-taking individuals is to approach a family member or a friend for a personal loan.
Unreliable and Uncertain Amenities
An on-going energy crisis and severe shortages in basic amenities (water, gas, and even the internet) all negatively impact the entrepreneur’s ability to run their business. This is the case, whether you look at a factory in the outskirts of a major metropolis or an upscale co-working space in Lahore’s or Karachi’s business districts. These basic utilities are also unsubsidised for the local entrepreneur. They must not only worry about maintaining a steady supply of electricity, water, or gas. Entrepreneurs must also invest in costly back-up systems like generators and universal power supplies.
Way To Pay
To drive down overhead costs, Pakistani businesses have increasingly turned towards e-commerce storefronts. However, at this moment in time, consumers are not ready to use digital payment channels while accessing e-commerce “shops”.
Literacy rates within a community have an undeniable impact on local businesses. Let’s suppose that a business person is running their hand-woven novelty socks and scarves business from home. They reach their customers using targeted advertising through popular social media platforms, such as Facebook and Instagram. Their target consumer may not be able to either place an order, make a payment or receive an order due to a number of reasons.
For Pakistani businesses, a majority of their prospective customers belong to at least one (if not more) of the following categories:
- Functionally Illiterate
- Numerically Illiterate
- Digitally Illiterate
- Financially Illiterate
According to the Population and Housing Census of 2015-16, the current literacy rate for Pakistan is holding steady at 58 %. The gender-wise breakdown of the national literacy rate has men at 70% and women at a dismal 48% of the total population. A consumer who is numerically illiterate will not be able to perform basic mathematical calculations, recognise a promising discount, nor will they able to easily understand written instructions. Today’s consumer must be able to manage multiple literacies, often at the same time. A potential customer with limited numeracy and digital literacy will be hesitant to navigate digital payment channels. This may also be the case if they are unable to understand how to use the required applications or access the payment process independently. Since they are dependent on others to carry out basic tasks, like sending or receiving payments, such consumers are discouraged from ordering from a wider range of goods and services- especially those that are only available online. Being digitally illiterate prevents people from enjoying the benefits of many common-place technological advancements – from using a smartphone to placing an order through a mobile application.
The Global Marketplace
Due to unregulated imports, local entrepreneurs must endure both high production costs and slow-moving inventory. The unchecked availability of cheaper Chinese products as well as regional competition from India, Bangladesh, and Sri Lanka also drives up overall production costs.
All the previously mentioned barriers to profitable business threaten both the present circumstances of Pakistani entrepreneurs as well as their future potential to contribute to the nation’s sustainable growth.