Sindh government tends to get bad repute. And perhaps not without good reasons given poor delivery of public goods in the province, whose government over the last decade championed devolution ten years ago on the very basis that provincial autonomy will lead to better public service and local development. But there are some islands of good thought and action that often gets unnoticed.
Soon after Covid-19 struck the country Sindh’s cabinet summed its key departments to come up with different ways and measures to address the risks to lives and livelihood in the province. Many of those measures later reflected in the provincial budget FY21, one of which revolves around spending Rs500 million on incubators, and Rs700 million for start-ups.
Both these projects have been assigned to Sindh Enterprise Development Fund (SEDF) that works under the department of investment, and sources say that SEDF’s plans for tech-based interventions were the first Covid-19-related budgetary interventions that was finalized by Sindh’s steering committee for Covid-19. BR Research is informed that if the projects under these interventions are successful, Sindh government may double the funding next fiscal year. What then is the plan?
Under the first intervention – Rs500 million - a cohort of general-purpose start-ups will be supported through existing incubators in Karachi and Sukkur. Industry estimates suggest that funding a cohort of 18-20 people for a six-month period costs about Rs30 million, which implies a decent number of cohorts could be funded under this head. Whilst Sindh government seems clear that it does not want to use Rs500 million to set up brick and mortar for incubators, it is exploring the prospects of setting up facilities for pre-screening of the candidates (for these cohorts) in Hyderabad, Shaheed Benazirabad, and Larkana.
The second intervention is sector specific, where Sindh government has decided to focus on fin-tech, agri-tech, health-tech, educational tech, artificial intelligence, and any other aspect relevant to Covid-19. And this is where it gets interesting because investing in start-ups is more than simply spending to mitigate Covid-19 related loss to lives and livelihood. If done right, it is about post Covid economic growth and development in the province.
Here three specific proposals are worth considering, the first of which revolves around the integration of agri-tech and educational tech. Scores of studies show that farmers in Sindh, like their peers in other parts of the country, lack training in critical aspects of farming including aspects of adequate usage of farm inputs, sustainable farming, usage of farm technology, branding and packaging of their produce, and so forth. SEDF therefore would do well to encourage start-ups to come with tech-based solutions to cater to the training needs of farmers in Sindh.
Second proposal revolves around market discovery. There is plenty of evidence to support that farmers don’t get the right prices, and that the middlemen enjoy the bulk of margins even after accounting for entrepreneurial risks, storage and transportation costs and so forth. One key reason behind this is the fact that farmers don’t always have access to information about market prices, trends and forecasts thereof. Accordingly, start-ups under the SEDF run programme should be encouraged to come up with tech-based solutions to reduce information asymmetry.
Lastly there is a critical need to develop farmers registry as was argued earlier in this space, and to improve financial inclusion where it is rather appalling that even corporations buy their farm supplies on cash basis. The SEDF should encourage solution in this space through its Rs1.2 billon incubator and start-up spending programme. (Read ‘Fast-tracking finclusion’ Oct 29, 2020 & ‘Farm reforms: time for registry & associations’, Dec 1, 2020)
Of course, for Sindh or other provinces to succeed in ventures like this, it would help that USF monies are well spent to increase mobile and internet penetration in the hinterlands, alongside giant leaps in digital mapping and secure digital payments. But that requires Islamabad to play its role, and fast.
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