Raees Khan, 40, waits for potential customers in his newly-opened shop which, due to electricity loadshedding, is only illuminated by the reflected sunlight. He opened this shop at G-9 Markaz Karachi Company three weeks ago for the sale of laptops and computer accessories. Most of these items are still packed in cartons at the rear of the shop, while a few have been put on display on a glass shelf.

“I opened this shop last month for a monthly rent of Rs150,000,” says Mr Khan while pointing towards the shop’s boundary.

“Luckily,” he continues, “I had a similar business in G-10 and have the relevant experience. Therefore, I can bear these initial costs and wait for my business to establish.”

However, he agrees that establishing a new business is no easy task, even with the relevant experience.

“Rents are extremely high especially in popular shopping areas such as Karachi Company. Moreover, with electricity and gas loadshedding, there really isn’t much one can save,” he maintains.

Mr Khan says his lawyer handled all the paperwork such as registering the business and filing income tax, adding that the trade union was also helpful at times.

Without his lawyer, he says establishing the new business would have been an arduous task.

This view has been endorsed by several other traders who believe acquiring capital is only the first of many challenges they had faced while establishing a business.

Therefore, despite the tough conditions of providing a guarantor, traders commended the government’s efforts to provide loans to unemployed youth for starting up new businesses. However, they maintained that the funds (which amount to a total Rs100 billion) were better suited for established businesses or to tackle the energy crisis.

In addition, traders maintained that the individual loan amount (a maximum of Rs2 million) was not enough to establish a new business.

“Starting a business requires millions, and investing a mere Rs2 million will get you nowhere,” said Sarfaraz Mughal, the president of Super Market Traders Welfare Association.

“For starters, an aspiring businessman has to rent or, if enough funds are available, buy a shop. This is no easy task especially in Islamabad where the price of land has increased in leaps and bounds over the years.

“Later, millions have to be paid to the shop owner as a goodwill gesture, for which Rs2 million is far too less,” he said.

Mr Mughal added that there was no law to ensure that landowners did not overcharge while demanding rent and the new businessman has to cough up the amount.

Once the shop is bought or rented, he said it was necessary to renovate it to attract customers which led to additional costs. Then, the goods to be sold have to be bought, and electricity and gas connections need to be established.

“After this comes the registration of the business. Officials of the income tax department and Capital Development Authority come into play. They may cause bureaucratic hurdles in establishing the business and some may even demand bribes,” he said.Furthermore, Mr Mughal said the turnover of a business, especially in the current economic conditions of Pakistan, was very low.

“By the time the business is established, the first loan installment is already due, and yet you have no money to pay,” he said.

Similarly, the general secretary of Melody Market Trade Association, Mehboobul Mukarram, said that even businessmen were finding it hard to survive in the competitive market, and new traders would have to strive much more.

He too reiterated that the government, instead of investing the amount in new businesses, should have provided loans as running finances to established businesses.

Otherwise, he said the loan amount could also be invested in generating electricity, importing gas or other such projects which would benefit the public at large.

“This would help reduce unemployment and boost the economy,” he claimed.

“You cannot do business if you do not have the relevant experience,” said Chairman Traders Action Committee Ajmal Baloch while talking to Dawn.

Quoting examples, he said he knew several people who, after retirement, had decided to run their own business but had no idea of it.

“They were not able to sell their products, and after a couple of years, they were willing to sell their businesses for half the price,” Mr Baloch said.

“Even an established businessman who tries to open a new branch in some other market has to face several problems,” he said, reinforcing Raees Khan’s remarks.

“The loan amount should be invested in running businesses so that the traders are able to return the amount,” he said.

“Had the government contacted the business community before deciding on the loan, we would have provided more practical suggestions which would have helped overcome unemployment,” he said.

When contacted, the senior vice president of Islamabad Chamber of Commerce and Industry (ICCI), Khalid Chaudhry, said most people who were opting for the loan had no idea what business they wanted to start.

“All they (aspirants) know is that they need to obtain the loan. I have seen ‘business plans’ of several people, and the majority has no idea what they are doing,” he told Dawn.

“Most reports contain absurd assumptions such as ‘we will rent a shop for Rs50,000 and then buy the stock with the remaining amount’. They have no idea of the market rates, the turnover time, cost of utilities and so many other factors,” Mr Chaudhry added.

He said it was important to understand that without any prior experience, it was impossible to establish a business.

When asked about the incidents of corruption and bribery, he said: “This is the common culture in Pakistan and there is rarely any respite from it.”

Hanzla Latif, 29, who owns a mobile repair shop in Karachi Company, said the market was extremely competitive, and with increased property rates, it was becoming more and more difficult to run the business.

“Increasing your sales in the competitive environment is no easy task, especially as customers have options to choose from. I can’t say that a new business cannot be established but there are several hurdles in starting one,” he said.

Waleed Zeb, the former president of National University of Science and Technology (Nust) Entrepreneurs’ Club, said: “The government is providing loans without considering that investors are already fleeing from the country due to lack of security and power loadshedding.

“The government must resolve these issues as a priority and also provide guidance to aspiring entrepreneurs especially in urban areas. There is no forum which can guide aspiring businessmen of the problems faced,” he maintained.

Therefore, it is perhaps more important for the government to focus on the obstacles that businesses in Pakistan already face, instead of providing loans that may not, in the long run, benefit anyone.