A changing mindset can help the country establish an enabling environment that social enterprises can flourish in.
The social enterprise landscape in Pakistan is nascent but fast-growing. From diverse sectors ranging from dairy farms to educational hubs to micro drip irrigation, early-stage enterprises have the potential of achieving hybrid financial return and social impact. Crucially, they are attracting interest from impact investors and business angels alike.
But how can these entrepreneurs be better financed, nurtured and trained?
Crucially, funding for small enterprises should meet the specific needs of the entrepreneur from seed financing to venture capital to growth equity. Social entrepreneurs need financial, but also non-financial, support such as mentoring, implementation guidance, and skills training development. Business school 'accelerator' programs and incubator hubs, which aim to accelerate the development of successful enterprises through such support mechanisms, combined with strong policy frameworks, can help create a long-term, self-sustaining ecosystem.
A report launched today by the Economic Policy Group (EPG) explores how incubator hubs can unlock the innovation potential of Pakistan's social entrepreneurs.
Successful incubator models already exist in some of Pakistan's premier business schools. The country's top business school, the IBA in Karachi, has in fact launched a partnership with Invest2Innovate (i2i), a social impact intermediary, to fast track the best entrepreneurs through its i2i Accelerator, a four-month program providing access to quality entrepreneurship education, skills, and opportunities.
"The IBA-i2i partnership helps start-ups who have passion and ability, but not the resources, to start their own businesses. It is a necessary step for growing and scaling viable businesses in the Pakistani market," says Kalsoom Lakhani, founder of i2i.
Other independent incubators across Pakistan, such as the Pasha Social Innovation Fund and Women's Business Incubation Centre, work with entrepreneurs across demographic segments in both rural and urban areas. The rise in popularity of these players is largely due to their ability to harness technology and digital media as communication platforms to empower entrepreneurs.
In the northern areas of Pakistan, where honey is one of the main agricultural commodities, Hashoo Foundation's Honeybee Project provided female beekeepers with beehives, as well as the associated training programmes to transfer this specialised skill-set to the wider community.
According to the report, there are specific roles that investors, entrepreneurs and policymakers can play to make the social innovation movement in Pakistan more dynamic.
Investors can support the growth of high-potential social enterprises by placing initial seed funding in business school incubators across a predefined growth cycle. According to Lakhani, the enterprises that are incubated within these hubs can become 'investor ready' more rapidly, and capital can be directed more effectively.
In addition, entrepreneurs or innovators can finesse their own hubs by exploring business school incubators in other countries. The report showcases one of India's top business schools, the Indian Institute of Management in Ahmedabad (IIMA), which, with the help of its alumni pool, has created an entrepreneurship fund, in conjunction with the government, for graduating students to provide seed funding of up to £35,000. The incubator delivers an initial salary to entrepreneurs to allow for a steady student loan payoff and a clause in the funding agreement stipulates payback within a particular timeframe if the venture starts making profit.
Similarly, Pakistan's social entrepreneurs can pitch for non-financial resources to fill employee skills gaps and shortages in their enterprises. Examples include business development services, financial literacy programmes, technology advice and mentoring, alongside access to networks and markets. We've seen that often, the most important factor for success is not funding, but the free coaching and mentoring, particularly for ventures in rural areas or those started by women.
Lastly, policymakers need to take an interest in supporting incubator hubs for social enterprises in Pakistan. A Social Innovation Coalition such as that proposed by the report, and comparable to the UK's own Big Society, could be implemented, consisting of interlinked units such as stakeholder dialogue, a social investment fund, an innovation lab and cross-border entrepreneurship modelling.
By leveraging public private partnerships, as well as alliances with government units such as the Pakistan Innovation Board and the Competitiveness Support Fund, multiple players can be aligned to drive social innovation forward in Pakistan.
According to Dr Iman Bibars, regional director of Ashoka Arab World, "creating awareness for the potential of entrepreneurship among policymakers, relevant institutions and the public at large is essential to help establish an enabling environment that social entrepreneurs can flourish in."
On a macro level, the investment in human talent and institutions will raise both investor confidence and entrepreneurial confidence in the country. By changing minsets through incubator hubs, education, mentoring and training programmes, a strong enabling environment for social entrepreneurship can be fostered in Pakistan.
Pratik Dattani is managing director and Priya Shah is a consultant at Economic Policy Group (EPG). EPG's new report 'Social entrepreneurship in Pakistan: Unlocking innovation through enterprise incubation' is launched today.
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Pratik Dattani and Priya Shah
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