Now is the right time to invest in Pakistan startups: report

Updated July 07, 2014


In a recently released report titled the Pakistan Startup Report, the organisation reveals the potential the Pakistani market possess. — File photo
In a recently released report titled the Pakistan Startup Report, the organisation reveals the potential the Pakistani market possess. — File photo

KARACHI: With Pakistan's population expected to reach 210 million by 2020, experts term the world's sixth most populous country as a perfect place for startups to launch their businesses, says the World Startup Report, a Silicon Valley-based organisation.

In a recently released report titled the Pakistan Startup Report, the organisation reveals the potential the Pakistani market possess. A hypothetical online-market comparison was drawn keeping in view the expansion of the industry at current pace to become a lead player in the future.

According to the report, 136.5m mobile phone users 110m were likely to subscribe to 3G/4G by 2019, with the issuance of license for the third and fourth generation network in the country and the services' increasing popularity among users.

The report also quoted 12,500 Pakistanis working in the Silicon Valley, imparting their skills to technological advancements taking place across the globe.

There is hope that if the trend in working for corporations is shifted to setting up individual businesses, it would act as a booster not only in terms of individual growth but is also expected to effectively exploit a massive 180m population to its maximum, benefiting the country's economy at large.

The report quoted that educational institutes such as Lahore University of Management Sciences (LUMS) and Institute of Business Administration (IBA) encourage their students to become entrepreneurs, deeming it a step in the right direction.

"The target is to contribute to the evolution of a more efficient business ecosystem in the country," the report quotes Jamal Khan, founder of software house Arpatech, as saying.

Many would agree that with the policy shift by the current government air for investment is fresh. The government is offering local entrepreneurs loans of up to $20,000 with a fixed eight per cent interest cost including a year's grace, whereas 50 per cent of the loan is designated for women entrepreneurs alone.

The report also highlights that the Punjab IT Board (PITB) is pioneering in entrepreneurship, m-governance and e-governance by empowering workers with smartphones.

The PITB is using custom apps to report the water levels in canals and monitor the spread of diseases. Utilising robot calls and SMS messaging, the PITB has also implemented a Citizen Feedback Model as a proactive measure to curb corruption, improve service levels and customer engagement, the report adds.

Oliver Samwer of Rocket Internet says that "building a business in Pakistan is like Germany, but only 20 per cent more difficult. But we are in it to do whatever it takes, if we have to build a Pakistani Post, we build a Pakistani Post."

The report further argued that lack of competition provides a great opportunity for entrepreneurs and investors alike. Recently, online classified sections have begun to face stiff competition with the entry of Schibested in the local market to challenge Nasper's OLX.

"There is competition in the ecommerce sector, however this is still primarily limited to the electronics market. For most players to make a dent in this market they will have to enter with significant funds," the report stated.

It also advises local entrepreneurs to approach incubators and accelerators, participate in startup competitions and always remain optimistic.

The report also advises foreign companies to have reasonable expectations as the market in Pakistan is still growing, and asks them to adapt to local norms.

It also reminds foreign companies that there is no intermediate liability protection, meaning Pakistan has no cybercrime laws at the moment. However, a cybercrime bill awaits approval by the parliament and a cybercrime agency is supposed to be established shorty.

The reported established few facts which determine a key potential in the Pakistani market: 60 per cent of the population is aged between 15 to 45, Pakistan has the fourth largest middle class population in absolute numbers in developing Asia — 25m to 45m broadband users are expected by 2020 — and investors in the country are allowed to hold 100 per cent equity and full repatriation of capital.

Future seems bright, Pakistan is generally five years behind India in terms of growth and development, the report estimated, adding that now is the time to start building up startups.

"Pakistan will grow, the only uncertainty is the speed at which it does," the report concluded.