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Investment and Funding in Pakistan – A Study


Over the last couple of years, the investment and funding industry in Pakistan has revolutionized to a great extent. The credit for this magnanimous change goes to the surge in the number of start-ups, accelerators, and incubators throughout the country. With the growth in the entrepreneurial ecosystem, there has been a subsequent rise in investment pools in Pakistan as well.

For the past 5 years, start-ups alone have managed to raise over US$200 million in funding. Surprisingly enough, the global pandemic which was predicted to put businesses at a standstill did not affect the investment environment in the country.  According to “The early-stage investor guide” startups managed to raise more than a million worth of US Dollars in 2020 as compared to the year 2019. It has also been predicted the current year will bring a higher amount of investment in comparison.

To facilitate start-ups into raising foreign investment, The State Bank of Pakistan (SBP) has further improvised its policies. The central bank has not only relaxed its rules for start-up companies but it has allowed them to apply for a loan that will be able to meet the needs that are specific to start-ups.

Companies will be allowed to raise investments in the form of “convertible debt” which means that the lender can convert the loan into the equity of the said company. The amended policies by the central bank also ensure that foreign investors can get their investment out of the country in case they wish to exit the investment venture.

Other than the SBP policies, the Securities and Exchange Commission of Pakistan (SECP) has also made amendments to its existing laws to cater to startups specifically. Among many other items, SECP has allowed Employee Stock Ownership Plans (ESOPs), issued sweat equity, and different classes of shares.

The policies set by these organizations have helped Pakistan earn the maximum possible points in the ownership and control index which points towards safeguarding the rights of shareholders from board control. Pakistan has been able to climb World Bank’s Doing Business rankings 2020 to 108 – jumping up by 28 points in just one year!

“Pakistan earned the maximum possible points on the extent of ownership and control index, which measures governance safeguards protecting shareholders from undue board control.” –

World Bank, 2020

The digitalized age has further improved the investment and funding climate in the country by providing uncountable benefits to the investment and banking community. The Application Programming Interface is one such advancement in the digital environment which has proved to be highly beneficial in this regard. The API technology is a set of protocols that define the interaction between software. You may think of it as a technology that connects several other technologies and help them communicate real-time data.

What is Codebase Technologies?

Codebase Technologies is a platform that provides Global Open Banking Solutions which allows banks, financial institutions, and FinTech organizations to understand Digital Financial services in a better way. Codebase technologies further helped organizations provide their customers with experiences that would help them make decisions throughout the customer lifecycle. The company’s rich financial background has helped them expand to 4 continents today and has helped millions of customers unlock the next generation of digital financial systems.

Conclusive Remark

It is safe to say that the investment and funding environment in Pakistan is promising. With the policy amendments provided by the State Bank of Pakistan (SBP) and SECP, it can be said that the investment climate is on the road to progression. Aforementioned, the country has risen to 108 rankings on Pakistan’s Doing Business ranking and ranks to top 30 economies that protect minority investors which is a positive sign.

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