Suggestions for PM's Youth Loan Scheme

[AhsanAmin]

We are a country where percentage of younger population far exceeds the older population which means larger number of youth enter the job market with each coming year. Since our economy is not growing fast enough to provide jobs to all of the new graduates, this creates all sort of economic and social problems and this hurts all of us.

PM's Youth Loan Scheme is a very good initiative in this direction. This initiative that has an honest intent, really has to succeed otherwise it will give political opponents a chance to portray it as a state bribery to the youth to woo their hearts. In order to make it successful, this initiative has to be implemented with great care and tact so as to really achieve the real objectives. Otherwise, nothing could be easier than simply doling out money when banks are the source backed by state guarantees.

My suggestion is that this scheme has to be implemented, at least partially, in cooperation with recognized colleges, universities and vocational institutes. Most good universities have career counselling centers that help their senior classes find work with different businesses after graduation. Career counselling centers also help them in their choice of courses when sstudents are more inclined towards working in a particular field or profession. This concept is borrowed by our good universities from similar practices in foreign schools. I suggest that we also have entrepreneurship counselling centers managed by skilled staff in our academic institutions. The role of these centers would be to help those graduates who want to set up their own businesses or who cannot find work in private businesses due to slow economic activity in the country, inability of the existing industry to absorb a large influx of graduates in the job market, and due to several other reasons. These centers could help their students with guidance towards the process of starting a private business, understanding of various aspects including financial, managerial and technical knowledge required to make a small private business successful, and give advice on the business plans taking into account the economic and industry trends and competence of the student.

Our country's speed of economic growth, our unique population mix, and our different business practices require that government encourages all academic institutions to set up entrepreneurship counselling centers regardless of whether this practice is universally established in foreign countries or not. The staff of these entrepreneurship counselling centers would be well educated and try to stay abreast of new developments in the respective professions and would continue to gain experience and professional acumen that would help in guiding their students. Every center would hire skilled professionals/advisors in all areas whose knowledge is required to run a small business. Many smaller institutions who could not afford to build these centers on their own, could pool resources with similar other instituitions and have a well staffed and managed center that could help the graduates of all the schools in the group successfully.

The government might want to ask some good academic institution or some consulting company about research into how we could successfully start and manage these centres. Some countries might have similar centers and we could adapt their techniques to our country's business environment. If the effort succeeds initially, we could do larger scale research about how to channel our youth into new professions according to our country's needs and changing demands and trends of international trade.

Since the government has asked the banks to participate in these schemes, and they have a huge stake in its success, they might want to fund building of these centers and help the institutions in running them so that a systematic cooperation between the government, academic institutions, the banks and our youth could emerge. Close cooperation between these entreprenurship centers and the banks will also allow the banks to get very good idea about the success of various business plans and where their money would be best invested. This would be far better than any haphazard way of allocating the loans to the youth and stop investment in business plans where it would be detrimental to both the banks and the young people. And if it turns out to be successful and profitable for the banks, government might slowly stop giving any guarantees to the banks and the banks might start such schemes on a commercial basis with huge success..

I am confident that when our youth is guided in the right professions to work hard, they will certainly succeed and make this country a better place for all of us. And this will, among the other things, rid our country of so many social and economic evils that arise when many of us cannot even earn enough to get our basic needs.

 

[AhsanAmin]

If entrepreneurship in our youth becomes a succeessful and commercial phenomenon, this will be akin to turning our disadvantage into a great advantage. And for fast growth in our economy, we need to create several successful self-sustained phenomenons.

Many people would argue that giving large sums of money to a lot of young with little fiscal discipline will create more problems than it would solve. This criticism has quite a bit of truth in it but it should not deter us from following this path. We should rather intelligently try to modify the modalities of this scheme in a way that it does not encourage misuse of loans. For example when the loan is totally unsecured, it might be more prudent for the bank to not release all of the promised loan at the start of the venture, and rather monitor the progress of business and if the money is being spent in accordance with the business plans. Bank could possibly make payments for business those expenses directly to the business counterparties and keep track of fraudulent parties. This could help the bank keep a record of honest businesses and blacklist the dishonest people in order to encourage future business with those entities who have remained honest in the past.

We also need some sort of a national credit rating scheme for our citizens and businesses. Some of us take pride in having a great database of our citizens but this database has to be augmented to keep an authentic record of those individuals who have swindled or defrauded any other institution or individual. This will help promote honesty in our business culture. We have seen examples of individuals in our country who continued to swindle others for decades only because there is no authentic place where people could know that they had already cheated a large number of people before entering into risky transactions.

Really there has to be a systematic study into the procedures of any such scheme which encourages hard work and determination to succeed, while discouraging the efforts to make money overnight by closing several loopholes that shortsighted people could take undue advantage of. And this would help make entrepreneurship a phenomenon in our society and its young people. If we cannot have a huge corporate business landscape overnight that would make employment a certainty for most of the unemployed, we must make great systems that encourage them to work hard and give them enough resources to be able to succeed on their own something that is very difficult in the current system.

 

[AhsanAmin]

Lack of entrepreneurship in pakistan

Entrepreneurship has the connotations of being associated with success and entrepreneurship most cited, and analysed is mostly about those endeavors that become very successful, something which is not known ex ante.

Since in the developed countries, most successful new ventures are highly knowledge based and in the areas of emerging technologies, the new connotations of entrepreneurship continue to have associations with businesses started in younger disciplines there. Since knowledge of most of the emerging technologies is rare in our country, this may not be the exact definition in our country.

 

[AhsanAmin]

To remove ambiguity since I cannot edit my post now, in the second post of this thread I meant to say
"Bank could possibly make loans to businesses in the form of payment of their expenses directly to the business counterparties and keep track of fraudulent counterparties and might even have a list of approved counterparties. In a conventional business setup, if the choice of counterparties by the banks is reasonably broad, this should work for both the bank and the business entity"

instead of
"Bank could possibly make payments for business those expenses directly to the business counterparties and keep track of fraudulent parties."

 

[AhsanAmin]

I came across this video which explains entrepreneurship by a Pakistani expert in the field.

Why Entrepreneurship ? – Dr. Muhammad Azam Roomi | MyLearningz