Great changes have been witnessed in the outlook of Pakistan’s status in the international market and its demographics. According to Mckinsey’s report on Pakistan’s entrepreneurship scene, Pakistan is an emerging economy projected to be among the fastest-growing the coming years with a projected annual growth rate of ~6% through to 2026. Moreover, in 2016 MSCI reclassified the country’s status from frontier market to emerging market, easing international funding access. Despite the economy undergoing a challenging period, with a significant balance of payments issue and a declining currency, the intrinsic drivers suggest tailwinds for growth. How Startups can Drive Economic Growth in Pakistan.
Economic Growth in Pakistan- A Debatable Topic
In addition to that, being the sixth most populous country in the world, Pakistan is home to around 200 million people with the fifth largest youth population in the world in absolute terms, with roughly half the population under the age of 25. Household consumption accounts for ~80% of Pakistan’s GDP and consumer spending is projected to grow at ~15% in the coming years driven by the expanding middle class.
Pakistan is an emerging economy projected to be among the fastest-growing the coming years with a projected annual growth rate of ~6% through to 2026
Beyond economic indicators, digital consumption is on the rise driven by an improvement in connectivity. Local telecoms boast ~164 million subscribers with ~35% of these having access to 3G/4G. The number of 3G/4G subscribers has grown four-fold in the last three years alone, reaching ~74 million subscribers as of November this year. All of these indicators show the immense potential Pakistani market has for entrepreneurship and startups. Some of the biggest funding deals in Pakistan have taken place in recent years, highlighting the vast opportunity for local startups and increased investor focus on a country that is still yet to produce its first high-valuation startup.
Startups may be small, but they create a great impact when it comes to the country’s economy that changes people’s way of living. Old giant companies are more focused on investing in R&D on existing technologies and innovation. Whereas, startups are more interested in bringing unique and new technologies and cutting-edge innovation. They are free from multilayered corporate bureaucracy, so they are more flexible and easily transform an idea into a product and will consistently improve it upon consumer demand having more accelerated decision-making.
Small businesses are more innovative as they keep on looking for new technologies and new ways of doing business to engage customers
Startups usually create new markets and can even transform the old markets completely. New technologies introduce new opportunities. With time startups create cumbersome advantages over the mature business. In this way, they inspire the competition, impacting the country’s economy to evolve.
Some of the biggest funding deals in Pakistan have taken place in recent years, highlighting the vast opportunity for local startups and increased investor focus on a country that is still yet to produce its first high-valuation startup
Startups fulfill an absolutely vital role in the country’s economy that equally benefits local communities and larger businesses. Their importance is likely to grow over the coming years. These days starting a business is quite easier than before. This era of technology has facilitated people in running small businesses. The ever-growing popularity for Social media marketing and brand awareness has also given rise to the number of startups. Small businesses are more innovative as they keep on looking for new technologies and new ways of doing business to engage customers. In this way, Startups can spur the economic growth of the country and at the same time, benefit the community.
All the senior analysts believe that startups have disproportionately higher technology which drives up production of goods and services. In a 2017 report by the Center for Economic Studies at the US Census Bureau, it was discovered that startups generated more revenue with the same number of capital inputs as compared to older companies.
Startups have direct impacts on the cities where they are located. For instance, we can take an example of Google and how it changed Mountain View California. Such startups bring in wealth in the city by attracting experienced professionals from other locations and building new industries over time, and once they are developed enough, they become money-making engines now just for the owner but also for the employees and country.
Startups generated more revenue with the same number of capital inputs as compared to older companies
Greater Employment opportunities
Pakistan has many universities that are graduating millions of students every year. Due to more students graduating and less job creation, approximately 3.58 million people are still unemployed even when they are eligible. It is a major issue in Pakistan, and it needs to be addressed. This problem can be overcome by the creation of jobs through new businesses and startups. The transition of youth from the role of job seeking to job creation has helped immensely in the case. According to a rough estimation, thousands of jobs have been created as a result of new emerging startups in country.
The transition of youth from the role of job seeking to job creation has helped immensely in the case
Stronger Build Economy
The increasing startup culture in Pakistan is helping in stable economic expansion in the country having long-lasting solutions and stable business models. Startups can support the country with the economic growth provided they have brilliant ideas, a qualified team, and excellent infrastructure. The Gross Domestic Product (GDP) in Pakistan expanded 3.3 % YoY in Jun 2019, following a growth of 5.8 % in the previous year; tech revolution played a major role in it.
Financial experts believe that this boom of financial development in Pakistan is due to the kick start of startup culture. The penetration of innovative ideas has given life to economic dynamism for the very first time in Pakistan.
Spiking Interest from International Business Community
Some startups in Pakistan, including Pakwheels, Zameen, Patari, Netsol and QMobile have received investments from international investment firms. This foreign investment is a big boost to the economy of Pakistan.
The growing interest from the international community has proved Pakistan as a viable contributor on the map of the global tech ecosystem. The Pakistani startup Cowlar has recently received investment from Ashton Kutcher, which clearly shows the growing confidence of foreign investors in local businesses.
Increase in Import and Export
Many startups in Pakistan are acting as a middle man when it comes to connecting local artisans to international markets. Traditional handicrafts and cultural products are imported to different parts of the globe. Pakistan is full of talent, even the footballs for FIFA world Cup 2014 were made in Sialkot. As the startups in this sector are rising, they are bringing the expertise of local workers to the international markets. It is helping in the increase in imports and exports of the country.
Empowerment of Women
According to the Global Entrepreneur Monitor, there are around 200 million women entrepreneurs in 83 economies globally. Sadly, in Pakistan, only 22.7% of women contribute to the labor workforce as compared to 83.3% of men. Pakistan has 48% of women, so the above figure is quite alarming.
With the increasing number of startups in Pakistan, the interest of women in starting their own business is also increasing, and many women are running their own startups quite successfully
With the increasing number of startups in Pakistan, the interest of women in starting their own business is also increasing, and many women are running their own startups quite successfully.