Pakistan has seen growth in startups and incubators supporting entrepreneurs, but social enterprises face challenges. A survey identified top challenges as lack of working capital, competition, and lack of participation in business networks. To help social enterprises grow, policies need to incentivize procurement from women-led enterprises, increase lending to social enterprises, lower taxes on enterprises in agriculture and livestock, and ease regulations for rural social enterprises. Current government centers and programs intended to support social enterprises have lacked leadership and engagement with entrepreneurs.

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To mainstream women social entrepreneurs, there is a need to incentivise their businesses
through public procurement mechanisms. There could be fixed and time-bound quotas in
select sectors under public sector development programme and provincial annual
development plans which could source their materials from women-led social enterprises.
Second, the central bank will need to see how to channel greater lending to such enterprises.
One way to do so is through introducing lower short-term borrowing rates at least for those
firms having ability to export their output.
Third, Federal Board of Revenue (FBR) will also need to see how it can zero-rate the inputs
used by enterprises offering social impact. A related point for provincial revenue authorities
is to lower their tax rates (and number of taxes) on social enterprises working in agriculture
and livestock sectors - directly helping improve food security and livelihood outcomes in
rural areas.
Fourth, as mentioned above, growth of social enterprises in general has mostly been an urban
phenomenon until now. For this growth to move to rural communities, regulatory burdens for
incorporating a social enterprise need easing. This task had to be initiated by Planning
Commission's Centre for Social Enterprise. After several rounds of advertisements this centre
remains without visionary leadership. With half of the approved project life already gone, rest
of the staff has yet to be hired. The member (social sector) at the Planning Commission who
had initiated the PC-I is also not in position. Contrary to the promises in the project
document, until now, none of the research studies and outreach meetings have been held.
What is most unfortunate is that most social entrepreneurs in the country do not even know
about the existence of this centre - indicating a lack of public-private engagement.
While the above mentioned laxness needs to be addressed at the federal level, the situation is
not very different at the provincial level. The growth strategies and related policy documents
in Punjab and Sindh do realise the potential of social enterprises and women entrepreneurs,
however, these documents fall short of providing targeted and customised interventions for
such entities. The provincial planning and development departments or their research arms
have never convened a meeting to discuss the potential of women-led social enterprises.
Fifth, an urgent study is required to see why small-scale social enterprises funded through
social safety nets, including Benazir Income Support Programme, are unable to sustain over
the medium term. Apparently, the regulatory burden faced during the process of expanding
and diversifying the businesses involves heavy compliance and related transaction costs.
Finally, the past federal and provincial budgets have made life complex for those working in
the social work sector in general. Social enterprises and even community-based organisations
engaged in social work now face 56 annual taxes, levies and surcharges in various modes,
including withholding taxes, advanced tax and minimum tax. Besides, these entities now also
face provincial government's general sales tax on services, apart from 15 other provincial
taxes. This fiscal regime is leaving social enterprises incapable of graduating to the status of
an exporting entity.
Web link:
http://dailytimes.com.pk/pakistan/07-Jul-17/why-are-social-enterprises-not-growing