LONDON: The first part of this article, carried two weeks ago on September 1, discussed how different vendors, in many cases, offer their services in the same premises, but they do not join hands to build a joint business. It explained several factors that lead to this lack of organisation.
This second part will shed light on what could be done to encourage better organisation of business given the economic reality in Pakistan. At least, three key steps are required to be taken in this regard.
It is absolutely important to offer better and more conducive environment for small businesses to help them grow into medium and large businesses. This can be done by developing business parks.
Instead of letting the clusters of businesses develop in a haphazard way in different parts of the cities, the government should develop business parks for different trades. For example, for tailors and stitching businesses that are normally found around fabric shops, there is a need to bring them under one organised premises to offer them support services.
Similarly, Hafeez Centre in Lahore has grown into a computer and IT hub without any proper planning or government action. There are hundreds of related businesses in and around Hafeez Centre offering goods and services related to computers, mobile phones and IT.
Although now the government of Punjab has developed Arfa Software Technology Park in Lahore to establish an organised IT hub, already existing IT businesses do not benefit from this facility. There is a need to develop more such facilities.
There is also a dire need to develop financial services specific to micro and small businesses with an objective to help them grow. Unfortunately, while there is some limited focus on microfinance, small and medium enterprises (SMEs) remain underserved by banks and other financial institutions.
It is important that banks and financial institutions should have their presence in different business clusters to understand the nature of such businesses and come up with financial products specific to their needs.
For example, shoe-making in Charsaddah, durree manufacturing in Gakkhar Mandi and many traditional crafts need special attention of the government and support from financial institutions.
In recent times, a number of local brands have emerged especially in the telecommunications industry including the likes of Q-Mobile and G Five and the country has witnessed emergence of a few home-grown brands that have become recognised from the initial stage of almost non-existence.
These include Khaadi, Breeze and Junaid Jamshed in fashion and the likes of Bundu Khan and Salt n Pepper in the food industry.
There is a need to help small businesses to organise themselves into organised firms with distinct brands. Branding brings distinct quality controls that fetch added value for businesses. This would require government support as has been the case in some other countries, like Malaysia, where the government provides financial and technical advice for brand development.
These are only a few suggestions based on some anecdotal evidence. There is a definite need that local universities initiate research projects to understand the real nature of the firm and business organisation in Pakistan.
The writer is an economist and a PhD from Cambridge University
Published in The Express Tribune, September 15th, 2014.
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