Most people including potential entrepreneurs the target of the PM’s loan scheme are reluctant to invest in the city because of fears ranging from extortion threats to kidnapping for ransom. PHOTO: FILE
KARACHI: The Prime Minister’s Youth Business Loan Scheme comes at a time when the country is desperate to boost its economy, which grew by a meager 3% on average in the last five years – between fiscal year (FY) 2009 and FY2013 to be exact.
A lot has been written about the merits and demerits of the youth loan scheme offered by the Pakistan Muslim League Nawaz government, but the project certainly has a potential to spur much-needed economic activity across the country, create jobs and help the national exchequer increase its revenue base if brought in the tax-net.
If utilised to its full potential, the project can provide some support to the federation as it tries to meet the conditions set by the International Monetary Fund (IMF), the Washington-based lending agency that helped the country avoid bankruptcy last year.
The IMF approved a $6.7 billion loan for Pakistan for the next three years on conditions of economic reforms such as broadening the tax-net, privatisation of loss-making entities and cutting of government expenditures. Though it has revised Pakistan’s economic growth forecast to 2.8% for FY14, the lending agency expects the country’s GDP to achieve 5% growth in the medium term. These conditions are in addition to a quarterly review of the country’s economic growth.
It is, therefore, important for the government to ensure that the loan scheme is a success. It cannot afford to fail at this stage. One can dig into the procedural transparency or technicalities of the project to find its demerits which is not the topic for this article but the government must acknowledge that among other issues, restoring peace in its largest metropolitan city of Karachi is a pre-requisite for the project’s success.
Most people including potential entrepreneurs−the target of the PM’s loan scheme are reluctant to invest in the city because of fears ranging from extortion threats to kidnapping for ransom and the worst of all, getting killed upon failure to pay the extortion or ransom money.
There are militant wings of political parties, gangsters and banned outfits with links to the Taliban that are very active in the city and pose a great personal and financial threat to the business community. Many businessmen have relocated to the other cities, abroad in some cases, while those who have established their businesses are compelled to pay the extortion money. These groups frequently target businessmen, mostly small and medium size businesses, to spread fears.
The private businesses covered by The Express Tribune do not disclose their revenues and those who did later got them removed from the website for security reasons. Such is the fear they experience.
Similarly, a bulk of the youth who have returned to the country after completing their education abroad, want to launch their own business but fear they will meet the same fate as those killed for non-payment of extortion money. One entrepreneur said he wanted to invest Rs10 million to start a restaurant but did not go ahead with his plan because of security reasons. Those who have established their businesses can afford an army of private guards but most people can’t, he said.
Karachi, which accommodates more than 10% of the country’s population accounts for 15% of the country’s GDP, according to conservative estimates and up to 30% according to some studies. The port city, therefore, can play an important role in the success of the PM’s youth loan scheme.
But before expecting Karachi’s youth to avail this loan scheme and make their contribution to the economy, the federation has to restore peace in the city.
Published in The Express Tribune, January 13th, 2014.
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I bet if we just start by scratching the surface of ingenuity in our youth it will be half as hard to promote entrepreneurship. Self employment or entrepreneurship if like a talent of poetry & art hidden in someone and only come out in extreme desire for survival. Without the desire or understanding of self help no amount of money or opportunity will work. I am an entrepreneur & a successful businessman and I simply started very early by selling candies in summer vacations from home and sling shots cut that I made by myself from brush woods and used bicycle tubes. My father was not poor but I wanted to have my own money so I could buy stuff I like from sweets to marbles to repair my bicycle. What you need above all fearlessness due to shame or people's opinion about you or your family. Once you overcome that: It's all fun and games and manhood. Young men should start with getting a T-Shirt printed "FEAR LESS" or "NO FEAR". Good Luck!