Invest2Innovate has launched the Khyber Pakhtunkhwa Startup Ecosystem Report 2021, a first-of-its-kind ecosystem mapping study at the provincial level, in cooperation with the UK Aid-funded Sustainable Energy and Economic Development (SEED) Program.
The research compiles secondary and primary data from important players like as entrepreneurs, entrepreneurship support organisations (ESOs), policymakers, and investors/funders to create a comprehensive analysis of the startup ecosystem in KP.
Because embryonic entrepreneurial ecosystems, like the one in KP, are hampered by a lack of data, the paper fills in the gaps by applying a systems approach to the ecosystem and analysing its essential pillars. SEED will next use these findings to create interventions for ecosystem stakeholders and contribute to KP’s overall economic development.
Currently, 63 percent of Pakistan’s population is under the age of 30, and while the country’s overall employment rate for the age group 20-24 years was 11.56 percent in 2020, Pakistan’s third-largest province by population, Khyber Pakhtunkhwa, has the country’s highest youth unemployment rate.
Young people make up more than half of the population of KP, and they provide an untapped resource for assisting the province’s transformation to a digital economy.
“The government fully realises the potential of the startup segment to become a significant contributor to the provincial economy, create jobs, raise exports, and support livelihoods across the province,” said Atif Khan, Minister of Science and Technology and Information Technology for the KP Government.
The Aspen Network of Development Entrepreneurs (ANDE) Ecosystem Survey Instrument was utilised in the research, which focused on five important pillars: business support, finance, policy, human capital, and market. According to the survey, one of the most significant difficulties facing the KP ecosystem is a lack of formal and institutional finance, with 83 percent of entrepreneurs seeing a lack of venture capital-friendly legislation and processes as a roadblock.
The lack of finance is even more of an issue for female-founded firms, as the survey revealed that only three of the 18 startups in its sample (16.7 percent) were female-founded/co-founded, compared to 15 male-founded startups (83.3 percent ).
Furthermore, statistics showed that the availability of a sufficiently educated/trained general workforce is a key limitation on the ecosystem attaining its full potential for entrepreneurs (76 percent), policymakers (100 percent), ESOs (100 percent), and investors (91 percent).
In interviews, entrepreneurs support organisations (ESOs) seemed to echo this sentiment, stating that the relative lack of originality in business ideation in KP (which is a common feature of nascent ecosystems worldwide) could be attributed to inadequate entrepreneurial training and education provided to the youth early on.
A focus group discussion on the ground with stakeholders helped generate a deeper knowledge of the gaps and issues experienced by the major stakeholders. It allowed i2i and the SEED Program to make recommendations on how to eliminate or lessen these limits.
“This study will play a key role in setting up the entrepreneurship ecosystem in KP for future success,” said Mehvish Arifeen, CEO of Invest2Innovate. The findings of this study will provide a strategic direction for all stakeholders going forward.”
“An enabling policy framework is crucial to put in place startup-friendly policies in taxation and registration,” said Hasaan Khawar, SEED Team Leader. Human capital must be continually invested in. It is necessary to build connections to both new and existing markets. Women entrepreneurs want a fair playing field to be able to take advantage of possibilities that are rarely offered to them.”
“SEED is thankful to the Government of Khyber Pakhtunkhwa for its sustained assistance, particularly the Science and Technology and Information Technology Department, and we hope that this report will guide future government policies and plans for this potential sector,” he added.