THE country is overproducing university graduates in the sense that as many as 50pc of the local university graduates are either unemployed or not part of the labour force.

This was stated by Dr. Hafeez Pasha, at the recently held 31st PSDE Conference in Islamabad,The idea was that Pakistan’s economy is not growing fast enough and not creating enough jobs to absorb such highly-educated individuals.

If traditional jobs as paid employees are in short supply, can we not encourage and facilitate university graduates to consider entrepreneurship as a viable alternative? Such an approach could have several beneficial outcomes, both for the individuals themselves and for the economy as a whole.

For individuals, entrepreneurship typically offers a higher risk-reward trade-off than comparable paid employment. Many startups fail, and even those which succeed often do so after surviving initial crunch periods, where revenues and profits are slim, and prospects uncertain. In many instances, there are also severe financing constraints. By contrast, paid employment does not require the wage-earner to invest his/her own savings, and in a conventional sense, may be viewed as a more stable source of income.

“We find numerous examples of individuals who turn down comfortable jobs in order to launch their own ventures to be one’s own boss, and to freely engage in work that one is passionate about”

Yet, we find numerous examples of individuals who turn down comfortable jobs in order to launch their own ventures. Research reveals that many entrepreneurs are more satisfied with the nature of their work — and their lives in general — even when their incomes are lower than those of wage-earners with comparable profiles. There is often a reward incentive for entrepreneurs which trumps income considerations: namely, the ability to be one’s own boss, and to freely engage in work that one is passionate about. Thus, the intrinsic satisfaction is worth the extra trouble and sacrifice.

In terms of benefits for the economy, entrepreneurs not only create livelihoods for themselves, they create jobs for others as well if their businesses scale up and expand over time. Educated entrepreneurs (like university graduates) are more likely to launch ventures in high-tech/high-growth industries, and perhaps also those with export potential. By contrast, uneducated or less educated entrepreneurs are more likely to be engaged in traditional, small scale setups with limited growth potential. Which type of entrepreneur could Pakistan use more of?

University graduates can also opt to become social entrepreneurs, who find creative solutions to society’s pressing problems. A few such young individuals are already operating within Pakistan, tackling challenges relating to education, energy, water, health, and so on. Unlike traditional job opportunities, this space is far from saturated and is, therefore, an alternative channel which can be utilised to absorb qualified individuals into productive activities.

On the plus side, the entrepreneurial ecosystem in Pakistan is gradually evolving. Some universities have begun offering specialised courses and entire degree programmes aimed at producing the next crop of entrepreneurs. Business plan competitions are being held with increasing frequency, with sizeable pools of seed investment available for competition winners.

Other support systems, such as financing from angel investors and venture capitalists, are also gaining traction. A number of incubation centres and accelerators have been set up in the past few years, where budding entrepreneurs can avail shared workspace at reasonable cost and also have access to mentoring and technical advice from experienced entrepreneurs. These support systems are especially beneficial for fresh graduates since they address both financing constraints and lack of market experience — factors which are likelier to hold back individuals fresh from university from launching new ventures.

Conversely, if we take a brief stock of the negatives, Pakistan is ranked 138th out of 189 countries on the World Bank’s Doing Business 2016 report, having slipped two places further down from its revised ranking of last year. Therefore, doing business is a daunting task even for established players, let alone university graduates and nascent entrepreneurs. The country also has a questionable profile in terms of legal protection, copyright laws, intellectual property rights, registration of patents etc. If the experience of developed countries is anything to go by, these provisions are essential incentives which boost innovation and startup activity.

Moreover, a focused national policy with a vision to foster entrepreneurship and innovation appears to be missing. Such a framework is essential to ensure that the various stakeholders, both in public and private sector, work in harmony with each other without duplication of effort. It could also ensure that entrepreneurship development does not become concentrated in just a few urban areas; rather, its benefits should ideally be inclusive and extend to rural and urban areas nationwide.

To close on a more positive note, it is heartening to see that policymakers have increasingly joined the conversation regarding entrepreneurship. While the success or shortcomings of the Prime Minister’s Youth Business Loan scheme are open to debate, it nevertheless indicates a realisation of the need to foster entrepreneurial activity.

Traces of this sentiment are also echoed in the Planning Commission’s Vision 2025. One hopes that these measures are an indication of more concerted steps to follow. Specifically in connection with university graduates, one looks forward to the day when we consider these individuals as assets, rather than a burden, who are provided with the support needed to unleash their entrepreneurial capabilities.

Talha Nadeem is a graduate student and Research Assistant at IB), Karachi.

talhanadeem87@gmail.com

Published in Dawn, Business & Finance weekly, January 4th, 2016