Author Archives: Majid Shabbir

Barriers to Women’s Entrepreneurship in Pakistan

(Photo: U.S. State Department)

(Photo: U.S. State Department)

Women’s entrepreneurship is now considered an important tool for enabling female empowerment. An economy thrives when women get the same opportunities as men. However, women entrepreneurs in Pakistan face many barriers to starting and growing their businesses.

Women make up more than 50 percent of the population of Pakistan and are playing a positive and constructive role in the development process. The success of agriculture, for example, is due to the excellent logistics provided by women. Women are also playing productive role in other industries, contributing both on the premises of plants, factories, and offices, and also at home. In the service sector, too, women are playing an important role. However, Pakistani women are still a long way from full and equal economic participation.

The British Journal of Education, Society & Behavioral Science recently conducted a research study to examine the gender specific barriers that hamper women entrepreneurs from entering the economic mainstream in Pakistan. The study was conducted in four major cities – Faisalabad, Multan, Sargodha, and Sialkot – over a 6-8 month period. The findings of the study indicated that factors like lack of finance, restriction on mobility, limited decision making, lack of role models and guides, men’s hold on markets, family pressure, and discrimination were the major barriers facing women entrepreneurs in Pakistan.

While the respondents in each city cited different concerns, the top issue for all of them was lack of finance, followed by social pressures (such as limited decision making power, childcare obligations, family pressures, and discrimination). These results show that barriers to women entrepreneurs are formed by a complex mix of institutional, social, and cultural factors. Even when it comes to access to finance, which would seem to be a universal issue for all entrepreneurs, women in Pakistan face unique restrictions.

A World Bank report notes that less than 25 percent of Pakistan’s businesswomen are microfinance borrowers even though the country’s microfinance environment is one of the world’s most progressive. The report says that discriminatory lending practices are forcing Pakistan’s women entrepreneurs to look beyond microfinance providers for capital to start and sustain their businesses.

The report also finds that microfinance loans for businesses are largely unavailable to women entrepreneurs, especially unmarried women who are considered high-risk borrowers.  Microfinance providers enforce strict requirements that make it difficult for businesswomen to secure loans without men.  Nearly 68 percent of women borrowers required a male relative’s permission in order to qualify for any kind of loan.

The report further states that nearly all microfinance providers require clients to provide two male guarantors in order to access a business loan – and at least one of the guarantors should be unrelated to the borrower.  Finding unrelated male guarantors can be a challenge for Pakistani women micro entrepreneurs, who are often constrained by limited mobility and social barriers. Microfinance providers do not accept women guarantors for these loans.

The report proposes that by moving pragmatically to push the frontier of financial outreach to women, Pakistan can demonstrate its position as a global leader in microfinance. Investment in financial literacy and better-designed products, which can give women entrepreneurs the resources they need to grow their businesses, is one part of the solution. The report says that as a driver of microfinance policy, the State Bank of Pakistan can also further spread microfinance by setting standards for consumer protection of women borrowers, advocating for transparency in gender reporting and discouraging discriminatory practices and policies.

Majid Shabbir is Secretary General of the Islamabad Chamber of Commerce & Industry.

A version of this article appeared on the Business Support Organization Forum blog on January 19, 2013.

A Changing Leadership Approach in Business Associations

In Pakistan there are about 45 Chambers and more than 100 sectorial associations. The operations of these business associations are regulated by Ministry of Commerce and Securities and Exchange Commission of Pakistan through Trade Organizations Ordinance and under Securities Exchange Commission regulations.

According to the Trade Ordinance, Presidents and Chairmen of Chambers and Associations are elected for a period of one year through election process. The elected leadership, being the representative of the business community, comes from the trade, industry, or services sectors. But to represent oneself as a leader of the business community from the platform of a chamber or an association for a short period is very challenging because the business dynamics of Chambers and Associations are entirely different from their own business setups.

In the last few years, business associations have been undergoing many positive changes. The elder leadership is proactive in its approach and is encouraging youth to join business associations. The young businessmen and businesswomen becoming part of the elected governing boards and managing committees are contributing a great deal in initiating new and innovative programs.  With the blend of experienced business people and qualified youth, chambers and associations are performing well.

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Youth in Entrepreneurship and Democracy

Participants at a recent Youth Entrepreneurship Forum in Pakistan. (Photo: Staff)

According to the UNFPA, youth represents around 1.8 billion of the total world population. About half survive on less than $2 a day, while more than 100 million adolescents do not attend school. The countries which realize the importance of youth by emphasizing education and skills can turn youth assets into dividends. Fair and transparent systems help them to avail themselves of opportunities to contribute in the economic growth of a country.

Statistics show that in Pakistan, around 60 percent of youth (people below the age 25) constitute a mix of educated, uneducated, skilled, semi-skilled, and unskilled populations.  The ratio of school-going children is increasing but still a lot needs to be done. In the past 10 to 12 years a significant number of universities in the private sector have been established in addition to a few public sector universities. A large number of students are graduating every year but they have limited opportunities for employment in either the public or private sector. As a result, the number of unemployed young people is increasing every year.

To address these challenges, colleges and universities should start focusing on practical entrepreneurial education to help students to choose entrepreneurship as a career, both for their own sustainability and to provide jobs to others. Entrepreneurship courses should be introduced. The universities and business support organizations like Chambers and Associations should work closely to organize mentorship and entrepreneurship training programs and also benefit from the research projects of university students.

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