Name: Muhammad Mustafa Memon

Reg: 2011306 BBA 8E

Course: Entrepreneurship

Instructor: Sir Fahad Zuberi

 Essay

“Challenges Faced by Entrepreneurs in Pakistan in Starting a New Venture

and Managing”

Entrepreneurship is the backbone of economic progress in any country and Pakistan is the
case in contention. However, setting up a new business and keeping it afloat is a venture that
is riddled with insurmountable challenges for entrepreneurs. This essay establishes some of
these challenges that face the entrepreneur and justifies the existence of these challenges. The
essay also takes a leap and offers recommendations for tackling the challenges. The
consequential state is that business wise an entrepreneur’s standpoint would be at a better
place to succeed when operating in Pakistan a country with a promising entrepreneurial life.
The essay creates diverse factors that pose a businessman with road blocks and thus proposes
to find a way to thrive under Pakistan’s business complexity.

Startup is the backbone of any country’s economy and social development. Creating an
effective business ecosystem is essential for placing fresh ideas and innovation in the market.
According to research conducted in the United States, Pakistan requires 1.3 million jobs and
Startup prospects to create new jobs. According to the latest report Small and medium
enterprises contributed 40% to the GDP and 26% to the exports of Pakistan. However, there
are many challenges that we face in Pakistan as Entrepreneurs.

Pakistan’s economy has remained increasingly volatile due to several reasons including
political instability, national security challenges and fluctuation in macroeconomic indicators.
For example, the Pakistan Bureau of Statistics indicates that the revised growth rate of GDP
for the year 2022-23 was at -0.17%. One of the negative ramifications of such economic
instability is that entrepreneurs cannot determine the market conditions, obtain stable finance
or formulate long-term goals for their ventures.

In addition, access to finance is another major challenge faced by entrepreneurs in Pakistan.

Although the government and financial agencies have been encouraging the culture of
entrepreneurship but a large proportion of the nation’s population is either unbanked or
underbanked. The World Bank reports that only 21% of adults in the country have an account
with a financial institute compared to the global average of 69%. Moreover, the high interest
rates and the need for collateralization to secure a loan in most bank have rendered capital
access difficult for small and medium enterprises.

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 Essay

Furthermore, the bureaucratic hassle associated with obtaining business permits and licenses
further deters entrepreneurial ventures in Pakistan. The World Bank’s Ease of Doing
Business Index ranks Pakistan 108th out of 190 countries in terms of the ease of doing
business. Complex regulations and procedures, corruption and inefficiencies in public
departments make it costly and time consuming to get the necessary permits for operation and
the cherry on the top for it is the terrorism in the country which further do hindrances in
doing business as the country ranks sixth in the Global terrorism index.

While the challenges outlined above may appear daunting, entrepreneurs in Pakistan can
consider the following approaches to help them navigate obstacles and ensure successful
ventures:

Diversification: Entrepreneurial businesses can reduce the impact of economic instability by

diversifying their products or target markets. Assigning their growth ambitions to various
sectors or regions helps reduce their dependence on a single market segment or region.

Alternative financing: An entrepreneur who is unable to receive traditional bank financing

can seek alternative sources from venture capitalists, money donors or crowdfunding
networks. Financing structures are versatile and may be reasonable for startups and SMEs.

Technologizing: Although rural entrepreneurs have limited resources and capital, they can
still invest in technology to save time and energy. E commerce cores and accomplices,
automation and cloud options allow entrepreneurs to conquer geographic limitations and
reach markets around the world.

Network and collaboration: Engaging with the entrepreneurial ecosystem by developing a

business network offers support, mentorship and collaborating options. Startups and SMEs
can join industry bodies, attend networking gatherings and collaborate with other companies
to share resources and integrate.

In Conclusion, Entrepreneurship is crucial in fueling innovation, employment and fostering

economic expansions in Pakistan. However, it is vital to note that Pakistani entrepreneurs
face more challenges than their global peers and for them to succeed is very difficult but as
Pakistanis we should look for opportunities because every issue has a solution, we just need
to be able to sell it.

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References

Khan, I., 2023. Pakistan’s Gender Gap in Financial Inclusion. [Online]

Available at: https://karandaaz.com.pk/blog/pakistans-gender-gap-financial-inclusion/
#:~:text=Pakistan%20has%20long%20struggled%20with,a%20global%20average%20of
%2069%25.
[Accessed 22 March 2024].

Khan, I. A., 2023. Ease of doing business. [Online]

Available at: https://www.thenews.com.pk/print/1139588-ease-of-doing-business
[Accessed 22 March 2024].

Pakistan Bureau of Statistics, 2023. PRESS RELEASE (28th November 2023). [Online]
Available at: https://www.pbs.gov.pk/sites/default/files/press_releases/2023/Press%20release
%20for%20107th%20NAC%20Meeting%20Final.pdf
[Accessed 22 March 2024].

Statista, 2023. Global terrorism index 2022, top 50 countries. [Online]

Available at: https://www.statista.com/statistics/271514/global-terrorism-index/
[Accessed 22 March 2024].

ZAHID, R., 2023. Startups in Pakistan: Challenges and Solutions. [Online]

Available at: https://iips.com.pk/startups-in-pakistan-challenges-and-solutions/
[Accessed 22 March 2024].

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