I read an article by Ambassador Karl Inderfurth and Persis Khambatta related to entrepreneurship in India. They say, when thinking of Indian entrepreneurship, it is hard not to focus on names such as Tata, Ambani, Premji, and Murthy, who pioneered Indian industry, not only globalised Indian business, but also paved the way for a new entrepreneur generation. Don't they remind of Dasas, Gnanams and Moosajees of Sri Lanka?
They pointed that, along with a very deliberate effort by new networks of professionals, they slowly but surely led to a growing number of start-ups across a range of industries. Did this happen in Sri Lanka?
Therefore, isn't it worth looking at this phenomenon on entrepreneurship for a vital, vibrant, growth-oriented economy, for Sri Lanka to be the Miracle of Asia, after a lengthy conflict?
Here we learn from India not only on their rhetoric, but on facts submitted by persons such as Inderfurth et al, who keep their ears to the ground on development.
Growing India
Let us look at the advantages enumerated for sharp growth in India, especially following reforms during early 1990s, carved out by technocrat Prime Minister Rajiv Gandhi. Cannot India take a quantum leap soon with Rahul Gandhi reaching the portals of political power? Sri Lankans should be mindful of such potentialities, because it is not the sneeze in the British Raj that would give us the next "hembirissawa" (common cold) or a dengue epidemic, but the Asian Giants.
American scholars have found that India has two distinct advantages in terms of creating new entrepreneurs and start-ups: It is facing a surge in its working-age population, when the rest of the world is confronting an aging citizenry; and the ability to technologically leapfrog decades. I add the huge market that could buy their products, produced with higher technology and managerial enhancement. Indian commercials on television are proof of the competition for quality satisfaction and reiteration of "Customer is King".
Consequences of Indian development
According to Inderfurth and Khambatta, India's high rate of economic growth can only be sustained if, approximately, 1 million jobs are created per month. If India can, in the next decade, provide its next generation with the education and training for entrepreneurial ventures, it will not only create the jobs necessary to stay on a growth trajectory, but foster more start-ups, accelerate growth and spawn creative industries benefitting millions, including many residing outside India." This "outside India" reference includes Sri Lanka and others who lag behind, but accessible to Indians.
It is an indirect warning on lethargy, demanding immediate radical change, and predicts threat on those lagging in development. This is premonitioned by some Sri Lankan businessmen who abhor trade relaxations with India. Politicians have scented this status, and this may be the reason for the President to request technology and management capacity enhancement to be competitive, and for the Speaker to request revisiting the grass roots for decision-making.
Relevance to Sri Lanka
What the researchers say, overstating the importance of demographics to India's economic growth, is relevant to Sri Lanka too. We have somewhat similar under-35 population in small numbers. Like India, we are currently undergoing a faster "demographic transition"-where high fertility and mortality rates decrease. We have a large number of over-60 populations due to higher health standards. This translates into a larger working-age population and a substantial dependent one. Additionally, the extended family concept is not totally erased in us demanding income generation also to support them. But, can we think of increasing employment for such an eventuality, though not to generate one million jobs per month?
In India, the researchers feel that the environment might also translate into workers having more freedom to choose their careers, rather than be forced to work because of family circumstances, caste affiliation, or lack of a social safety net. Even if we drop the last three concerns, for the potential labor force to freely choose careers, depend on adequate investment, economic development environment to generate employment.
Reality for employment
Sri Lanka's foreign reserves were at US$ 8.6 billion, which slipped 11.8% to US$ 7.1 billion by end September, which is one concern. Slow attraction of foreign direct investments (FDIs) was another, but Deputy Minister Lakshman Yapa Abeywardena countered by stating that FDIs surpassed US$ 1 billion. In 2010, Sri Lanka drew US$ 516 million as FDIs, US$ 602 million in 2009 with US$ 889 million in 2008. Now the Deputy Minister can prove, by employment generation, that he had spoken the truth, and nothing but the truth. Incidentally, devaluation may cause higher export demand for products and generate employment.
Some economists have complained of inadequate lower saving rates against the GDP, calling for other sources of investment finances, which sometimes depend on human rights and good governance, rather than on economics. It is noted that export earnings increased over the year by 27.7% , apparel earning increased by 25.7%, 48% of tourism earnings and 25.9% increase of foreign remittances, which show where jobs should focus upon. The Opposition has been querying the viability of repayment of the capital and high interest on sovereign bonds, and widening trade deficit by 93.6% - increasing to US$ 6,685 million over the year, which affects employment generation. However, import bills increasing for capital goods and improved trade in garments etc may show positive trends for job creation. These are the unsorted battles in economic development.
Learning from India
The researchers have said that, in India, through an initiative called the National Entrepreneurship Network (NEN), co-founded by the Wadhwani Foundation and some of India's leading universities, there is contribution made for entrepreneurship building. Another initiative changing the start-up environment is TATA First Dot, powered by NEN, the country's first platform for young entrepreneurs to hone their skills, compete, and secure funding for their start-ups. A decade ago, there were 5 institutes, 30 faculties teaching entrepreneurship, and 200 students in entrepreneurship clubs. Today there are 500 institutes, 1,200 faculties teaching entrepreneurship, and 70,000 students in the NEN. Hundreds have already begun start-ups, with many more in the pipeline.
In Sri Lanka too, there had been a growing tendency of this type of a spike in senior school level students engaging in entrepreneurship training. Sri Lankan initiatives are less comparable with India's. However, this system is more concentrated here in city-bound colleges than the rural areas. Can the education authorities facilitate, not only the commencement, but the follow-up of NEN in rural Sri Lanka?
Kashmir Case Study
What Abhimanyu Chandra, another commentator has said about Kashmir, may be compared with Sri Lanka focusing on development in a former conflict zone. He said that Omar Abdullah, the state's Chief Minister, has repeatedly invited investors and entrepreneurs to Kashmir, with assurances of allaying any security concerns. Is it not comparable with the assurances by President Rajapaksa and Defense Secretary Gotabaya Rajapaksa? Concurrently, diaspora and Tamil politicians complaining of "militarisation" and "Sinhalisation", rightly or wrongly projecting complicity of the government for other misdoings such as disappearances, abductions, encroachments of civilian lands, continuation of High Security Zones etc, and passage of legal instruments such as the Underperforming Enterprises & Underutilised Assets Act, run counter to the just mentioned good expectations of the President.
The scenario in Kashmir is a welcome relief from suffering, of India-Pakistan and army-insurgency conflict that is 60 years old. In Sri Lanka's case, the only changes are of country names, personalities and conflict duration. The rest are common. When we compare this gradually emerging economic scenario, it seems that, Kashmir today, could be making a transition toward greater economic activity. The aim, now, should be to facilitate this nascent transition. Entrepreneurship may be one way of doing so. Isn't the same in the former conflict zone in Sri Lanka too, though Kashmir's population is less than 50% of our population, and having 71% of the population below 35 years, which is also a contradiction to ours?
Adjusting to Indian experiences and lessons
The basics of India are most important, as the researchers say. Chandra says, "While the entrepreneurial ecosystem is starting to grow, there are a number of obstacles to clear, before start-ups can flourish in the Indian context. To put this in a broader perspective, the World Bank and International Finance Corporation's report, 'Doing Business 2012', ranks India at 166 out of 183 countries, for ease of starting a business….."
According to the report, it takes 29 days to register and start a business; it took 89 days to do the same in 2004. That is moving in the right direction. Sri Lankans are sometimes better off, and the government has been trying to accelerate the pace. Our improvements are registered in global evaluations. The researchers say, "The bad news is that India has stayed the same in the following categories: Enforcing contracts, dealing with construction permits, and trading across borders." I am confident, Indians may refute this stated status. Where are we in Sri Lanka?
Researchers say, "A Legatum Institute 2011 survey found that, Indian entrepreneurs are increasingly optimistic of their country's future, but this must be juxtaposed upon the fact that they are far less approving of the government." They point out that the top five constraints to starting a business in India are mostly within the purview of the government: Electricity, corruption, tax administration, labour regulations, and labour skills, while industry surveys show the biggest constraint to creating and growing a small business is lack of infrastructure- power, roads, water and public transportation. Co-founder of NEN, Laura Parkin explains that, lack of governance makes it most difficult for entrepreneurs, while lack of infrastructure disproportionally affects small businesses. To what extent is Sri Lanka in the same boat?
Endemic corruption is another constant complaint of entrepreneurs. Local officials reportedly request bribes, seek a lengthy list of approvals and licenses, and even cite rules to follow, which they often cannot explain or produce. Hiring lawyers to deal with opaque procedures, costs start-ups valuable time and income. Probably, Anna Hazare may have affected local officials' behavior temporarily, but a sustained effort to eradicate low level corruption would benefit entrepreneurs, and the jobs and economic growth they spur. According to Transparency International, Sri Lanka has improved from its earlier status of corruption, but isn't it still a bane? And, unfortunately, we do not have Hazares either!
As Chandra says, "If the government of India places a high priority on easing the burden of its latent entrepreneurial workforce, providing basic inputs such as reliable electricity, and curbing corruption, would be the place to start. Venture capital, angel investors, innovation incubators, and programmes for skill-building, all contribute greatly to economic activity, but unless the basic infrastructure exists, the "entrepreneur gold rush" that many foresee for India will take much longer to realise." Cannot this be applied to Sri Lanka?
Especially, and additionally, the cases of Tiger cadres who lost years of education and hence, qualifications to be employed, should be looked at differently. The development of vocational skills, as happening in Kashmir, and investment of Tamil diaspora finances for the benefit of the affected, relaxation of rules to suit the affected, for a given duration at least etc, have to be considered in Sri Lanka. Can we be more generous and magnanimous to ensure that they are brought back into normal society, through such change? But, this has to be done in a way not to instigate the southern youth into thinking that taking arms is the way to earn relaxations.
Cannot we, in Sri Lanka, learn lessons, even though the status may be less volatile and damaging? Can we say that, we are devoid of all these sins, to constructively engage in development? Hence, the financiers, along with the government, should consider these experiences elsewhere, with a sense of review and adjustment, to suit the Sri Lankan issues. It is time we learn from others.
The writer is a former Defence Secretary |
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