Following a session by Yusuf Hussain on how startups are supported by incubators, Aban Haq gave an informative talk on how these startups help in economic growth. The head of innovation at Karandaaz, a non-profit working towards a financially included Pakistan, Aban has over 12 years of experience. She is well known for her knowledge on finance, innovation and social entrepreneurship. Aban used to be very skeptical of startups – she believed that it was just a new buzzword and would eventually die down. Her opinion has since changed and now believes they are critical for economic growth.
Startups: How They can Drive Growth
She began by explaining three key issues that are currently affecting Pakistan and its growth. First and foremost, the country is in a growth and fall cycle, i.e. temporary prosperity followed by economic instability. Secondly, the productivity is low, be it agriculture or industrial sector; thus, making the country perform under par on the competitiveness indicator as compared to rest of the world. Finally, she mentioned jobs: Pakistan needs to create 1.3 million jobs annually and there are less opportunities to cater to the young leaders that enter the market every year. According to Aban, startups can help in solving each and every one of these problems.
Startups can help the economy through various ways. Firstly, they improve productivity and enhance the competitiveness of a country. They usually do this through technology – most startups are investing in innovative technology, new ideas and modern ways of doing things. Larger companies are far less innovative than startups because startups invest more in R&D and technology.
Startups also disrupt – they discover niches and untapped markets and capture them; other times, they enter an already existing market and do something new and exciting. Examples of these are the highly successful companies, Uber and AirBnb. These startups are creating wealth and value, which are essential for growth of the economy.
Finally, they help in creating jobs. While big companies create jobs, they also tend to downsize. The corporate sector and SME sector is not creating jobs at the pace required. Startups are high growth companies, which means they are constantly looking for new people, creating jobs, and hiring people. These are the companies that add jobs by 25% annually.
Aban was of the view that there are a few things necessary to support startups. First is investment: startups do not have a lot of financing and require a decent amount to be able to bring their product to the market and survive for few years that they do not make profits. Secondly, they require policy and regulations. She believes that regulations in Pakistan need to become more startup friendly to support the startup ecosystem. Lastly, they the young entrepreneurs require people that can nurture and mentor them for success and growth.
In the end, we believe that this is why incubation centers are important because they create jobs, empower the youth and provide an entrepreneurial environment for innovation.
Recommended Reading: PTCL goes solar to conserve energy for a green Pakistan