small businesses- a promise for future Pakistan

Written by admin on December 5th, 2010





Small business refers to a privately owned enterprise that operates at a minor level. It may also include bakeries, restaurants, cottage factories etc. Usually it is taken as any business that employs less than fifty workers (if it is a trading concern) and not more than 250 workers (if it is a manufacturing concern). Whereas, in the developing countries the figure may vacillate, for the simple fact they are by and large underserved in this industry as compared to the developed world. Despite that, its potential as an imminent boost to the economy must not be underrated.


Small businesses are, ideally, privately financed-either purely privately financed or a private organization provides for the funds. In America, Small Business Bureau takes the charge of financing these businesses. Still, the government can play an important role by subsidizing them. A significant part of the budget must be dedicated to the small businesses to at least cater to the startup cost incurred by these businesses.


In Pakistan this sector lacks direct access to avenues of such “hand holding” and business support services, let alone a source of substantial financial back up. One of the fundamental obstacles hurled in its way is, that large companies have to intervene and mediate for the provision of loans to the small business sector or guarantee on-lending to them. Hence, the need to provide the entrepreneurs the ease of accessibility to banks is vital to the continued existence of this promising sector.


Another major problem in Pakistan is the government’s inordinate focus upon the large manufacturing industry. This attitude discourages the small business owners because the government fails to provide for their needs. And the private sector too turns a deaf ear on them in their hour of need. Although the development in small businesses has gone up a notch higher but these efforts have been at an individual and not at collective level. In addition to that the success at it is more of a gamble, with an eventual break down of momentum. This way, companies face undercapitalization and an eventual bankruptcy. This is highly disheartening for forthcoming entrepreneurs. This all-pervading sentiment of inconstancy and instability has compelled scores of people to migrate from Pakistan to foreign countries. Thus, depriving Pakistan of its potential economic investors.


The situation in Pakistan, as opposed to other countries which attract foreign bodies to elevate their economic status- we repel them! Albeit, we should invite them and provide them investment opportunities, that must not be to the detriment of our local asset industry. Any foreign company that wishes to invest is either held off by the corruption at all levels or the omnipresent law and order chaos that puts all prospects of future success in jeopardy here. Therefore, only a balance in our approach towards foreign and local entrepreneurs will ensure a sustainable economic progress.


The government must harness this sector of small businesses before it goes to irredeemable ruin. In the past, labor unions have injured the prospective success of SME, so have the institutional malpractices and constant economic slumps. Considering the constant law and order chaos and a sizeable part of our budget going to the defense causes, the prospect of SME sector being provided for seems an implausible idea!



Nevertheless, keeping hope alive at all times and in order for the effects of these injuries to ebb, the government must begin to exercise its firm writ over the unchecked and unprecedented multinational expansion in Pakistan. Due to this unparalleled barrage of transnational companies, local industry is getting disrupted. Nevertheless their presence must be utilized to the maximum national interest, not instead at the cost of it. Our local industry, exotic and unique in its nature, consists of unmatched handiwork, carpet weaving, knitting and all forms of indigenous cottage industry. If it is not facilitated in the form of one year or longer startup allowances, this cultural heritage of ours will be lost forever. So to salvage the situation before it goes beyond repair, special measures must be taken. It needs to be also understood that the profit and the positive outcome of promoting cottage industry will open up avenues for better employment opportunities and will result in a marked difference in our annual GDP.



Another point of concern is that small businesses are only advertised, if at all, through radio or the word of mouth; but they never receive any air time on the mainstream media. Networking is used in very few instances. Are they too insignificant to demand the media notice or is it the media that does not think it its duty to raise issues of “real” concern?  On the other hand the multinationals seem to be the talk of the town. Any product not boasting a multinational stamp is turned down by the common public, as unviable. This attitude does not augur well for the future of our local craftsmanship. This attitude needs to be mended; for this will eventually get us to forget all our identity and sense of oneness with our national heritage. To dispel this popular belief the government must issue orders in order for the multinationals to be given less air time, so that our cultural dominance over international influence can be witnessed in the electronic media as well! This will disseminate the idea that our own culture is self sufficient and needs to be spread through economic means.


Multinationals on the other hand prove detrimental and exploitive to the labor force, which could otherwise prove to the advantage of local industry. Therefore the government must revamp its policies concerning these foreign investor companies. To extract maximum benefit, they need not be repelled, but made to function on our terms and not the opposite. The state needs to chip in and contribute towards encouraging the small businesses that will in turn raise the employment ratio, education and reduce the crime rate. The government must not leave any stone unturned in promoting these cottage businesses, so that none faces financial loss and the eventual loss of hope in Pakistan’s economic struggle.



On the other hand, if we look up to USA in every sector and try, though in vain, to imitate them, we must also try to imitate the hefty amount of GDP that they extract from the small scale industries. It amounts to around 50% of their economy. Pakistan boasts a majority of these in the Gilgit and Baltistan region, where female owned cottage industry and consumer goods market is still thriving. The government needs to elevate and facilitate the ongoing small business set up and further on, encourage its fruition where it is absent. These must be promoted to the best of our abilities for they are not just a means to our cultural promotion but a financial autonomy for many who other wise may turn to antisocial acts of sabotage to feed their families.  To let such a future take hold by ignoring this industry we would not be doing justice to the next generation. Unlike many other hazards that herald serious concerns for our coming generation, at least this one must be excused!


On the social level, it is vital that the society is informed and made aware of the increasing opportunities for them to invest in the small business sector. It will help us mobilize the masses and enable them to think beyond the multinational supremacy and work towards improving our local asset industry. Local food chains, designer labels, handicraft and other goods will encourage the national economy. It will shift the production possibility curve (ppc) upward and a steady rise in GDP will result.  The value of promoting the small business sector lies in that it helps the country withstand unanticipated economic upheavals because of the indigenous nature of this field- which is the key to sustainability and self sufficiency. The concept of self help and entrepreneurial culture brings together the skills and capital through various lending and skill enhancing schemes. This attitude trickles down to all levels of the society and ripples across the nation to help it appreciate its true worth, both domestically and globally; and it is the very belief in one’s potential that Pakistan needs most today. In addition to that, a major use of local raw material helps improve the trade balance, thus, improving the export potential of the state. An overall success package that it is, the SME development will lead to a steady rise in our identity as an open economy.


In a nutshell, a sustainable and thriving small business market can only be ensured through a public and private partnership, although the international standards demand a veritable private venture. But considering the case of Pakistan, true success can be ensured in the two-pronged approach. Provided, that it should be put into practice without any sway of institutional malpractices or the non co operative attitude at worker and managerial levels. The need is to provide for these businesses economically and create a favorable social set-up that buys their products. This will raise our awareness about our domestic talents and help us further hone it to meet international standards.  Once these businesses manage to create a niche for themselves in the international market, our cultural heritage will be made known to the world at a different footing.



For Pakistan it will promote our soft image abroad and dispel the lingering negativity about our ever declining socio-economic status in the world. All this is attainable. All it needs is a group of dedicated

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