New startups ensure that the costly inventions and creative ideas created in one industry or business concern are shared, commercialized and converted into innovative pursuits, which not only revolutionize those industries but also spur economic growth, job creation and development of a competitive culture. The hall mark of entrepreneurship is innovation and risk taking. Countries like USA, Japan, Denmark and Taiwan are quintessential of the role that entrepreneurship can play in the economic development of a country.

To promote entrepreneurship it is important that the people with innovative ideas and skills have access to the vital entrepreneurial resources like money, talent to initiate a new business, especially small and medium size enterprises which are less volatile and more stable than the big and mega industrial ventures due to their ability to provide bulk of the jobs in a country. One of the major objectives of the governments and its economic managers is to ensure full employment in the country and the creation of maximum job opportunities for the ever growing labour force.

In Pakistan the government employs only 7-8% of the labour force. So, like all other nations, the only option available to it is to nudge economic activity in the private sector through encouraging entrepreneurship by making available necessary resources and technical know-how to the youth entering the labour market. In the past, several initiatives were taken in the public sector to nudge small and medium size business in the form of loans to the youth, but unfortunately they all failed to create the desired impact due to rampant corruption in public organizations. The parties in power actually showered favours on their own political workers and in most of the cases loans were advanced on fake documents without proper collateral and on the basis of political influence. The result was that billions of rupees were lost.

The other reason for the failure of those efforts was that the basic ingredients of entrepreneurship were totally neglected while advancing loans. There was no support available in the public sector for carrying out research and preparing feasibility reports in regards to different lines of business and industry. But it is encouraging to note that, recognizing the importance of small and medium size industries and business and creation of self-employment opportunities for the youth, the PML-N government took a step in the right direction by launching Prime Minister’s Youth Programme in September 2013- a package comprising Youth Business Loan Scheme, Youth Skill Development Programme, Youth Training Programme, Scheme for provision of laptops, Interest Free loan Scheme and Fee Reimbursement Scheme for Less Developed Areas. These initiatives were designed to create a culture of entrepreneurship by making available all the required ingredients to the youth for starting their own business and enhancing their technical know-how and skills for gainful employment in different sectors of the economy.

The major and the flag ship initiative of the package was the Youth Business Loan Scheme. The National Bank of Pakistan and Women Development Bank were entrusted with the responsibility to disburse these loans amounting to two million, at a nominal interest rate of 8%, ensuring gender equality in advancing these loans. The step to advance these loans through banks was taken in light of the unenviable experience of the past, to ensure transparency, and eliminate the prospects of political interference. Another very important aspect of the scheme was that the Small and Medium Enterprises Development Authority (SMEDA) carried out pre-feasibility studies as guidelines for prospective borrowers. These studies provided a general understanding of the proposed business and were meant to promote entrepreneurial culture in the country as they were structured like a business plan.

A recent review of this scheme and other initiatives reveals that so far Rs.11.03 billion have been sanctioned for 15,101 individuals. Though the progress is much below the hundred thousand mark for a variety of reasons, the programme is absolutely on track. In view of its importance, transparency and its unblemished track record so far, other banks like Sindh Bank, HBL, MCB, Habib Metropolitan Bank, Meezan Bank and UBL are also joining the scheme. The National Bank is also contemplating the development of almost 100 trades in addition to restructuring of the scheme. From now on, balloting will be replaced by the existing loan processing procedures. These measures will ensure quick disposal of the loan applications and identification of the trades where the applicants can invest profitably.

Under the supporting initiative of the Skill Development Programme, 22,000 students have been imparted training in different skills. In the second phase of the programme students from seminaries with education equivalent to Secondary School Certificate will also be eligible to apply. Under the Laptop Scheme the HEC has distributed 32000 laptops among Phd, Mphil and MS students. Similarly 50,000 students from 78 universities have been paid back their fees by HEC. However from now onward the HEC will make up front payments to the eligible students at the time of admission. Under the interest free loan scheme Rs. 1.75 billion have been given to 17,588 applicants. These are encouraging results and there is a need to pursue these initiatives more vigorously to achieve the desired objective.