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Invest in sustainable business for economic growth in the country-Pakistan economy
The current economic situation of Pakistan places a duty on both public/private sectors and households to take reforms to propel the economy towards stages of stability and growth.
This fiscal year, Pakistan is expected to post a growth rate of 2.8%. Pakistan remains stuck in a growth boom and bust cycle, and this recurrent economic crisis is because of its short-lived phases of growth, which are largely driven by private and government consumption, and not by investment and increase in productive capacity. In particular, private investment has remained around 10% of GDP, due to which Pakistani firms have not been able to boost gains in productivity from the economies of scale as they struggle to grow larger over time.
Meanwhile, the economy faces a lack of investment, the masses face loss of their wealth due to a spiraling inflation which touched 38% in May 2023. A rising concern for a vast majority of households has become their continual reduction in purchasing power. If secure return investments are not made from the accumulated incomes, loss of wealth for each household is inevitable.
It would therefore be instrumental to channel private investments into the business sector for businesses to achieve sustainable increases in productivity and in return boost overall GDP.
Private sector investments for investors and households can be high risk ranging from investments in mutual funds, hedge funds, and stocks, to more secure options like gold, savings account, or bonds. However, all these investments merely impact overall growth in GDP, business capacity and job creation. A more responsible and sustainable outlook that all investors and households ought to adopt are investments in growing businesses.
Following we explore investable options that offer secure returns and a spirit of entrepreneurship to all investors.
- Investing in startups that are working towards resolving real-life issues with an innovative product or service. These startups are developing businesses for Pakistan’s market which promises to be an emerging market. Based on demographics, Pakistan has the fifth largest population in the world, approaching 230 million. It also has one of the fastest-growing middle classes, with more than 100 million mobile broadband subscribers, making it a fertile market for new enterprises.
- There are multiple startups in the pipeline that require seed money to establish their business and in return, they offer profitable returns. Many incubations are also fostering these startups, and with strategic mentorship in product development and business growth, startups have been seen to grow rapidly just in their initial phases. Startups therefore advocate entrepreneurship in the country and build businesses that add to Pakistan’s GDP and also absorb young human capital.
- Investment in Etimad Online Groceries (Pvt) Ltd. which is a technology-based marketing and business management company. Etimad is helping manufacturers, growers, and entrepreneurs to get connected with consumers, through its technology-driven digital platforms and a vast network of retail outlets. Its mission is to enable and support local manufacturers and budding entrepreneurs, by providing them with shelf spaces, enlisting them on Etimads Online sales platforms, introducing them to new consumer markets, enabling them to make sales and generate high-margin revenues and also increasing their export capabilities, propelling manufacturers, growers and entrepreneurs to unprecedented heights. The company is currently operating successfully in Karachi and has been expanding its retail network with an aim to reach 200 stores in Karachi and then operate all across Pakistan.
- The business is admitting investors and households to become a shareholder in its grocery marts, which offers a high margin steady income stream through sales of groceries, and a secure return on investment as the business grows exponentially. Each grocery mart operates as a private limited company, and investors depend on Etimads operation team to set up the mart from shelving to procuring goods, sales, security monitoring, finance management and growth of the business. The business will be operated by a team of professionals that mitigates risk and enables business growth. Investments can be as small as one share to owning multiple grocery marts under a franchise.
- Urban farming is a great low-investment business in Pakistan. An urban farm can be set up in a backyard, lawn or terrace or any other outdoor space. Fruits and vegetables can be grown using fusion technologies of hydroponics vertical farming to produce higher units, which can then be sold at local stores. With constant farming, this can turn into a profitable business. Everyone is aware of the volatility of the agricultural sector these days in terms of products and prices. Through investment in urban farming, the agricultural private sector can grow and also offers employability to the masses.
By redirecting investments in private sector, Pakistan can reach its growth potential alongside triggering higher rates of job creation. Although correct investment channels can aid Pakistan’s economy there are several reforms that need to be undertaken especially in areas of capital formation and labor productivity. Maintenance of macroeconomic stability would however remain the foremost priority, as persistent macroeconomic instability has been the root cause for discouraged savings and private investment in Pakistan.
Disclaimer:
None of the information published in this article should be taken as investment advice. We strongly advise our readers to always do their due diligence before investing in any project. It is the reader’s responsibility to know the laws regarding investments in their region.