- As the third wave continues to disrupt economies worldwide, Pakistan’s economy has a lot going on in its favour this time, according to the Dr. Raza Baqir, Governor of the State Bank of Pakistan (SBP) in an online session with Nest I/O.
- Dr. Raza Baqir explained how the country’s demographic profile, growing mobile penetration rate, and positive economic indicators, especially during the COVID-19 pandemic, have contributed to an increase in investments.
As the third wave continues to disrupt economies worldwide, Pakistan’s economy has a lot going on in its favour this time, according to the Dr. Raza Baqir, Governor of the State Bank of Pakistan (SBP) in an online session with Nest I/O.
P@SHA’s tech incubator, Nest I/O, hosted a 60-minute Fireside Chat on ‘SBP and Startups’ with Dr. Raza Baqir on key reforms that the SBP has instituted to ease investment and growth in the startup ecosystem. Fawzia Naqvi, who is an Advisor on Impact Investments, and Legal Practitioner Mubariz Siddiqui also joined Dr. Baqir to discuss the impact of these SBP policy changes on startups in Pakistan.
Officially launched in January, 2015, the Nest I/O has now evolved from just an incubator to a community hub half a decade later. Nest I/O is home to almost 200 startups now and continues to support thousands of entrepreneurs, students and professionals, providing them a space to experiment with new ideas and be innovative.
Over the past few years, Pakistan’s startup sector has grown exponentially with investment activity heating up and gaining momentum due to favourable government policies. Early Stage investment activity has also shown a lot of promise. According to the i2i Accelerator data research, Pakistani startups raised 19.3 million and closed 13 deals in the first quarter of 2021. Moreover, investments worth 18.85 million approximately came from international investors with e-commerce raising the most funding, followed by fintechs.
During the online session with Nest I/O, Dr. Raza Baqir explained how the country’s demographic profile, growing mobile penetration rate, and positive economic indicators, especially during the COVID-19 pandemic, have contributed to an increase in investments.
“Pakistan, being the world’s 5th largest country right now, is too big a market to ignore,” says Dr. Raza Baqir. “It is a market full of young people. The demographic profile of Pakistan is one which favours the growth of new industries and especially, startups, which cater to a young population,” he adds.
In addition to this, Dr. Baqir also mentioned that the growing mobile penetration in Pakistan offers a very opportune market for anybody who is considering investing in Pakistan.
He also explained that a combination of factors such as elimination of the current account deficit through an institutional reform, and growth in reserves from 7 billion approximately in june 2019 to 16 billion gross reserves are all positive indicators for foreign investors to invest in the Pakistani economy. In addition to this, these signs also give more confidence to regulators like SBP to ease a lot of the restrictions that existed before.
According to the SBP Governor, most of the recent SBP measures have also been focused on long term results rather than just the short term benefits that they have been able to achieve so far.
In response to Fawzia Naqvi’s question on how Pakistan’s economy might be affected by the third wave, Dr. Baqir explained that the country is entering the third wave with much better economic fundamentals as compared to its economic condition during the first wave.
The country’s financial indicators have also improved as foreign reserves have grown, the exchange rates system has survived the test of COVID, and the stock has also demonstrated a great deal of momentum.
Dr. Baqir elaborated that “Pakistan’s economy has a lot more going on in its favour in this wave of covid than the previous wave and we are ready to take any and all measures. We are more confident this time around.”
He added that the SBP was able to offer new policy measures in the first wave, which the industry has appreciated such as concessional financing for companies who would commit to not lay off workers, payroll rozgar financing scheme, healthcare financing for the establishment of covid treatment facilities (with financing as low at zero percent); all of which saved 1-2 million jobs in the process.