Social Business in Pakistan

Guest post by Laila Jiwani, an Erasmus Mundus Joint Master Degree candidate studying International Development with a focus on economics. She was an APF Fellow in 2019.

After decades of mismanaged grants, dependence on foreign loans and tiresome corruption, many underdeveloped and emerging markets are turning to social enterprise to provide solutions to today’s biggest social and economic challenges. Companies creating products and services targeted to lower-income customers are championed for reaching an underserved market. Apps that increase mobility and provide avenues for formalized economic activity are expanding what it means to be an entrepreneur in a developing country. Even larger retail, food and media businesses have taken on a social lens to direct revenues to more meaningful causes.

In Pakistan, I am seeing the growth of social businesses at a more visible scale than ever before. What people call Medium, Small and Micro-enterprises (MSMEs) have driven Pakistan’s economy since its very creation. The chai-wallas (tea sellers), dhood-wallas (milk sellers), dhabay-wallas (small restaurant owners), karigars (embroiderers), darzis (tailors), baawarchis (cooks), rickshaw drivers, maasis (house help) are the original entrepreneurs here. Such vocations have all been major contributors to GDP regardless of Pakistan’s political climate, proving to be some of the most resilient sources of economic activity for the country. Furthermore, a spirit of generosity, welfare and hospitality seeps into the way business is done here. Surpluses are often distributed to those in need and the value chains themselves provide jobs for anyone willing to do them. In a way, social enterprise has always been an integral part of Pakistan’s development. Now it simply has a label.

According to a British Council report titled The State of Social Enterprise in Pakistan, the country’s youth bulge is helping continue this trend. The report states that most social enterprises are led by people under the age of 35, 20% of whom are women. Women owned businesses are reported to be more likely to recruit and provide employment to other women, creating a ripple effect of inclusion. Our team of fellows witnessed this firsthand as we met female leads of both formal and informal groups that hand-embroider the clothes worn all across Pakistan. One lead managed over 100 female artisans, running her own medium-sized enterprise whether she realized it or not. These artisans partner with vendors and social enterprises in larger cities to gain access to markets and technical trainings that help scale their businesses and increase their own incomes.

Through the American Pakistan Foundation and the National Rural Support Program, we had the unique opportunity to see the untapped potential that lies in rural areas of Pakistan. For every successful embroidery enterprise, we saw multiple struggling artisan groups. Challenged by a lack of access and capital, many groups rely on middlemen that can often be exploitative yet necessary. Such circumstances leave the women and their families unable to afford adequate food, healthcare, education and electricity. However, when supported by Technical and Vocational Skills Training (TVSTs), micro-loans, community grants and other sources of capital, rural female artisans were able to formalize their businesses, contribute to household expenses and support the livelihoods of their communities overall.

As an overseas Pakistani, understanding the complexities of both the formal and informal markets has been an exciting and eye-opening process. As much as the nation endures politically, economically and socially, Pakistanis find ways to keep going with business as usual for the sake of themselves and others. The carefully orchestrated interdependence of every actor in the value chain allows for the market here to be ripe with potential for enterprises big and small. A growing number of socially oriented businesses that partner with a variety of institutions - universities, non-profits, NGOs, venture capital firms, governments, incubators - are helping harmonize these actors to create both social and financial returns. Overseas Pakistanis like me are also an undeniable source of knowledge, capital and access to larger markets that can catalyze and scale the unparalleled impact of social businesses. As my time in Pakistan comes to a close (for now), I hope to help strengthen this ever evolving legacy of social business and continue to be part of its growth.