By: Suman Abbasi
In mid-July 2022, Airlift, Pakistan’s top startup, announced to shut down its operations in Pakistan which has sent shock waves to the nascent but fast-growing ecosystem in the South Asian market. And then in mid-October 2022, ride-hailing app Uber announced that it is shutting down operations in five out of six cities where it carried out operations in Pakistan, amid growing competition and record inflation that is showing no signs of abatement.
The news of the closures of these tech-based startups Airlift and Uber has posed serious impacts on our job sector and has put the country’s youth especially underprivileged ones in trouble who are already facing unemployment and inflation-related problems, The country plunges into another phase of difficult times characterized by the economic turndown which has been forcing the startup businesses eco-system to be pushed in puddles of ordeals. With inflation at its peak, the position of small startups seems to be pretty bleak. Implications of the closure of such businesses pose a great threat to the overall country’s economic stability—especially in a given scenario, more so upon the job sector and youth’s diminishing hopes.
Economic turndown shuns many startups to render their services. Even the ones blooming from the parameters of a successful commerce startup. Just a couple of days ago, ride-hailing businesses like Uber confirmed shutting down operations in six major cities—in light of the recent economic downturn and global recession, soaring fuel prices and growing competition. Uber’s subsidy Careem continues operations in 11 cities, will most likely be absorbing the influx of captains +and customers affected by the shutdown in these cities. There happen to be grass era of competition in the market which has been replacing the former businesses which actually launched the trend. Such as InDriver; rebranded as InDrive.
Starting up a startup and maintaining it requires a genius and visionary mind and precisely in third-world countries like Pakistan where there is a lack of capital, few opportunities, and very few entrepreneurs with expertise in developing a profitable product-based.
The situation for the local startups has gotten worse as there’s no splendid information coming from this quarter because of political uncertainty, the economic disaster, and the greenback achieving new heights every day. “While the current decline inside the startup markets and the financial disaster have had an influence on economic activity throughout the board, they have had a disastrous impact on Airlift and made its closure inevitable. The firm Airlift, which operates a grocery and pharmacy delivery carrier and received greater than $85 million in investment, have given up operations simply lately in July. Yet extra is covered. Other well-known startups, including the Turkish 2d-hand car market VavaCars and the Egyptian bus sharing carrier Swvl, each confirmed a shutdown and a final go out from the Pakistani market in June.
Implications of such closure pose great threat to our overall economy, job market or just basically upon youth hopes and morals.
With an unsettling on-going state of affairs, and drastic financial constraints faced by the layman including the changed behaviour of customers, and unwillingness to invest in seed capital due to venture capital been shunned off. Loans and liabilities have kicked off and there is a state of uncertainty amid job market and youth. With the pace, startups have been deteriorating in the Pakistani market. It would further push the youth towards unemployment and loss of opportunities. Which may drive them towards poor-stricken situations which again may lead them to take regretful steps.
Lastly, there’s a funding curse when it comes to Pakistan’s investment market. There are several potentialities for global investors to penetrate this undeveloped market in Pakistan, which has the fifth-largest population in the world. Furthermore, it is past time for Pakistan to begin focusing on these problems and to endeavor to give overseas investors self-belief while making an investment in businesses there. The moment to act is now considering the fact that the amount of cash invested globally in startups is growing quickly. Pakistan must seek to absolutely capitalize on these traits by means of facilitating Pakistani innovators’ capability to comfy funding from foreign investors.
The writer is Sub Editor at The Dayspring.