Pakistan has the silver lining of being down the line of domino of countries affected by the health and economic fallout the virus has had on the world so far. This gives corporate Pakistan with the advantage of learning from businesses and economy lockdowns in China, Singapore, Malaysia, Europe and the US.
The US economy is also applying lessons from the virus' economic impact in China, especially in Wuhan, due to the total iron-clad lock-down. China was the first economy to experience supply-chain disruptions; lack of market access and other economic collapses and will now lead the way in its rebound strategy too.
Certainty is a huge element of business confidence and subsequently affects economic growth, investments and stock market movements. By nature of doing business in a developing country with uneven politics, changing policies and changing rates of economic growth, corporate Pakistan is intrinsically at an advantage to deal with the current economic crises. Companies doing business in Pakistan have exposure to creating order within chaos; to creating business solutions to bottlenecks they face and reacting to a difficult business enabling environment - the shocks can range from terrorism, to market manipulation; corruption; shortages and currency shocks just to name some. Yet, companies excel in this uncertainty - Outfitters, Khaadi, Olpers (Engro Foods), Shaan Foods, Pak-Suzuki and hundreds of other businesses & brands continue to grow. And Sialkot, as a business community great example of a city which pooled resources and solved its own issues; as a hub for surgical instruments, sports goods and leather - the Sialkot Chamber of Commerce essentially pooled developed their own downstream assets including warehousing, airport and other links needed to export their goods internationally. One finds similar localized innovation with the furniture cluster in Chiniot, the furniture sector in Lahore and or the dairy sector especially in Punjab, but across Pakistan.
Therefore, in leveraging from knowledge of how businesses are responding in Asia and the US, businesses in Pakistan are at an advantage in both managing uncertainty and taking steps to create a path for itself in the midst of a meltdown. However, lets note that this is a necessary advantage, because unlike many businesses in Singapore, Malaysia and the US, Pakistani firms have limited access to credit lines, capital or the potential financial support by the government. The current administration has a strong policy focus on poverty management for the most vulnerable, although Prime Minister Imran Khan recently announced that the construction sector would be boosted, to enable continued mass worker employment and so economic activity does not grind to a halt in a worse-case-scenario health lockdown.
The author having coordinated business and policy with thirteen of Pakistan's fastest growing districts, the takeaway is that district chambers of commerce are acutely aware of their needs, gaps and solutions in the marketplace. Technical assistance and resources to fulfill value chain gaps is necessary but the knowledge of business bottlenecks at the district level is impressive.
Corporate Pakistan is well positioned to step back from the chaos all countries face right now and address the upcoming uncertainty with better resilience than other countries. Businesses are uniquely placed to determine a path forward for themselves, given the extent of uncertainty which will unfold, is almost guaranteed. The point is not to deny how unforgivable the circumstances are for corporate Pakistan; rather state that given the unprecedented collapse we face, businesses and people of Pakistan are psychologically better off than many societies to face the unfolding struggles.
Also, though our leadership needs to customize solutions locally, there are lessons to be learned in highlighting approaches we are seeing in Asia and the West and by sharing this knowledge, to instigate Pakistan's provincial and district governments to coordinate a broader response with the business clusters and chambers of commerce in their periphery. To take a positive spin; how many times have we heard about the potential of Pakistan and its industries? Dairy, agriculture, food processing, marble, surgical; local fashion retailers and furniture sectors have succeeded; continue to grow and diversify against all odds. Perhaps, in this time of crises in a weak macro-economic environment, we galvanize from within; we do have a champion in our Premier Imran Khan who may not have all the solutions but will be a supporter of change. Perhaps its time for Fauji Foundation's Fauji Foods to make a better attempt at penetrating local markets with customer driven branding and supply of food; for Utility Stores of Pakistan to working further downstream the chain on sourcing local goods; for Mitchell's Farms to upgrade, expand and diversify food production; for our dry fruit producers to look to Philippines dried mango brands as a guide to extend their value chains, domestically - there is a 220 million rupees captive market to serve.
Corporate Pakistan, is in a position to show other economies such as Nigeria, Indonesia, Malaysia and others, how to lead in a chaotic, rapidly changing unstable economy. However, at a micro-economic level, businesses can also learn business approaches so far, and see if these can be adapted locally. The path companies are taking in the corona economy, are basically dependent on a business' liquidity right now. Based on that, there are three strategic pivots for companies in terms of opportunities and challenges ahead.
Cruise. A lucky few organizations have already raised funding, have liquidity or access to reserves of funds. Such companies are in an ideal position to step back from 'business as usual' and take this pause and opportunity to deeply diagnose the company's strategic model to think along the lines of resource reallocation, business innovations previously on pause or to create efficiencies/create advantages (think end-to-end digitization). Other opportunities include looking at acquisitions, bottom fishing to negotiate deals for expansion - especially looking at a portfolio of companies that may be struggling financially. Just like a business would do anywhere else in the world.
Fight. Over 80% of businesses in Pakistan are SME's; and a huge informal economy is the foundation of entrepreneurship in the country. These statistics mean, SME's will be the hardest hit and disappear; this is already visible in our local neighborhoods and marketplace - large brands and national brands such as Shaheen Chemists; D. Watson's Pharmacy; Gourmet Bakery, Imtiaz Super Market and franchises such as McDonalds and KFC continue to do business, however, small independent mobile phone operators, trading companies, milk-sellers, sweet-makers, shoe designers, fashion retailers are likely collapse. This trend will deepen, as our micro-enterprises lack resources to survive the fallout. Unlike the US, where Small Business Associations provide credit; companies can access banks for debt; tap lines of credit; think of divesting certain assets/portfolios; review opportunities to raise capital or think about survival through joint ventures. Certain medium size enterprises in the formal (documented) economy in Pakistan may have the opportunity to do that - especially pharmaceutical companies; logistics companies and sharing economy platforms such as Airbnb and Uber which if mobilized properly, can help alleviate unemployment in Karachi, Lahore, Peshawar, Islamabad and other large growing urban centers.
Hibernate. Like a bear in winter, you may decide it's easier to wind the company down and start back up, if possible when business conditions are fundamentally different. However, think beyond the current crises with an expansion mindset. What would it take, to solve the country's food problems? We have the capacity to be self-sufficient. What would it take, to establish small centers at a district level and train drivers and maids to be certified and work professionally? Lets bring in Careem/Uber and maid training agencies from the Philippines. What would it take, to unleash our assets such as properties, cars, gold, office spaces into income generating platforms. Its time to realize and believe, we as a nation have an advantage over many countries, in providing leadership in a time like this, to the world - and to our own people.
(Shamza Khan has written for Harvard Business Review and graduated from Columbia University: She can be reached at [email protected])
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