P@SHA Committees

In the third episode of Candid with P@SHA, a knowledge sharing session was held around discussing the best practices for organizational skill development. The panellists involved people representing diverse backgrounds including larger IT companies and SMEs having well-established training and career growth programs, as well as a boot-camp, focused towards the empowerment of the Pakistani women through vocational and IT business training.

The talk covered a lot of ideas and suggestions aiming for the improvement of the digital learning process for organizations under the current state of affairs. The acceptance towards digital and online learning has increased exponentially during the COVID-19 pandemic. It is expected to go even higher post-pandemic as educational institutions and individuals will more likely move towards economical learning platforms. While there are many courses currently being offered free of cost to encourage online learning, it is still highly dependent on how passionate an individual is about learning and improving their skill set.

A point mutually agreed upon by the panellists was that while the youth of Pakistan are energetic, smart, and large in number, they generally lack enthusiasm towards learning or retaining the core concepts of education which later is visible in their professional lives.

For any organization, be it big or small, it is of utmost importance to nurture the passion of its employees and create a robust culture which emphasizes not only on working for a set number of hours but also concerns the personal and career development of an individual. In an execution-oriented culture where employees engage in a friendly and competitive learning environment, the motivation to excel and move ahead has been experienced to originate amongst the employees.

A few other ways of creating a learning environment discussed during the candid talk are as follows:

• Training the employees in batches with assigned mentors so the success of the mentor ultimately relies on the success of the batch. This will create vested interest from both sides.
• Humanizing the learning process by combining e-learning with human interaction and creating localized content which improves the understanding of the native employees not proficient in a foreign language.
• Focusing more on contributing to open-source projects with real-time fieldwork instead of solely relying on certifications.
• MOOCS and Nano degrees.
• Soft-skill training to become a prevailing part of the workplace culture instead of making it a singular or infrequent session(s).
• Presentations based on learning outcomes from online courses which can then be shared to a larger group(s).

Moving towards IT-related academia where the focus is usually inclined towards getting an education for good software development, many important aspects such as product development, design thinking, leadership, and communication skills are often overlooked. A multi-faceted concept of learning which covers all bases while keeping into consideration the personality of the pupils was suggested by the panellists to create better engagement and industry-academia linkage.

Another sore subject in the IT industry is frequent employee turnover. Employees are often perceived to find better opportunities upon receiving expensive training from organizations. Most IT companies invest a large amount of money in the initial training but then proceed to offer little or no career development paths to the employees. To overcome this, creating a road map for the professional development of the employees at the very early stages of recruitment may help the organizations to retain their workforce for longer time periods as the employees keep looking forward to newer challenges and clear chances of growth. That being said, maintaining one-on-one relationships with the employees and creating a healthy turnover which benefits both parties in their long-term goals are also great learning points to consider for the companies.

In times like this where technology and craft keep changing with such great volatility, self-motivated individuals who keep on innovating and improving their skill-set through diversified means are the first ones who hit it out of the park and have much better chances of grasping the opportunities as organizational cultures progress.

The second episode for the topic COVID-19 & the New Business Regime revolved around the myths and facts based around the recently launched Temporary Refinance Scheme for Salary Support by the State Bank of Pakistan.

The panellists in this discussion represented all major stakeholders involved in the refinance scheme – State Bank of Pakistan (Regulator), Commercial Banks (the lending entities), and IT-focused SMEs (the beneficiaries/borrowers). The moderator raised the pertinent matters concerning the IT sector and the panellists responded to them with their knowledge and experience. Some of the key takeaways include:

• IT firms appear to be lacking awareness of the scheme details and the concessions, including collateral-free, clean financing of Rs 5 M. SBP shared that only 27 IT firms have applied for the Salary Support Scheme out of a total of 1442 applicants. 26% of the total applicants comprise of SMEs.
• Contrary to the scheme and its objectives set by SBP, the process in some cases is taking longer even for the large software companies with solid financials, strong banking relationship and availability of collateral.
• The commercial banks do not fully understand the specifics of the software business and this is a hurdle in access to finance by the sector. The SMEs and exporters in the IT sector often find it difficult to convince banks to issue loans regardless of their strong cash-flows and financial health.
• Up to Rs 5 M of clean lending (without hard-collateral and with borrowers’ personal guarantee) is available, on the basis of GoP risk-sharing facility with the banks where GoP is willing to take the first loss of up to 40% on the disbursed loan amount.
• SBP advised the micro and small enterprises to also evaluate the government programs like “Kamyab Jawan” to avail up to Rs 5 M of working capital loan on easy terms and develop their credit history and banking relationships.
• SBP shared that the recently launched STR (Secured Transactions Registry) by SECP will help in issuing loans even on software IPs, which considers them immovable assets and registers them as collateral. Bank Alfalah shared that the lending based on IPs is relatively slow due to the very recent launch of STR but it has started to trickle down and will eventually pick up the pace.
• SBP also showed keen interest in adding the IT sector as a vertical under the Development Finance Group (DFG), headed by Samar Hasnain, to better supervise credit uptake and focused policy interventions.
• Bank Alfalah also expressed interest in working with P@SHA to develop a better understanding of the peculiar nature of the IT-related businesses to offer focused awareness sessions and customized products specifically for the sector.
• Businesses are encouraged to reach the SBP at stimulus@sbp.gov.pk or (021) 111-727-273 to register complaints against any banks who do not cooperate in regards to the scheme. The scheme details are available at http://www.sbp.org.pk/corona.asp and the SBP Circulars below:

http://www.sbp.org.pk/smefd/circulars/2020/C6.htm

http://www.sbp.org.pk/smefd/circulars/2020/C7.htm

http://www.sbp.org.pk/smefd/circulars/2020/C9.htm

http://www.sbp.org.pk/smefd/circulars/2020/CL10.htm

SBP wishes to support the IT sector and has invited P@SHA recommendations on improving the financing scheme.

Information on the Scheme:

Objective: To prevent employees layoffs by the businesses due to the COVID-19 pandemic, the State bank of Pakistan has been actively trying to facilitate businesses by launching several initiatives, one of which is the Temporary Refinance Scheme for Salary Support.

Salient points of this scheme: 

• Eligible Businesses: All registered businesses of any size can benefit from the scheme
• Disbursing Banks: Both Conventional and Islamic Banks
• Eligible Employees: All employee types including permanent, contractual, daily wages as well as outsourced workers are included.
• Excluded Payouts: This supports payment for salaries only and excludes bonuses, commissions, etc.
• Financing Term: This scheme is to support the salaries from Apr 20 till Jun 20 (3 months).
• Interest Rate: The interest rate is kept at 3% for businesses in active taxpayers list and 5% for the rest.
• Repayment: Deferred repayment. The principal amount payable in 8 equal quarterly instalments, starting from Jan 2021. Interest will not be charged for the first 6 months.

Source: Clause 7 –  Period of Financing and its Repayment

• Financing Limits: The financing limits are below:

• Collateral for Loan: The commercial banks require the collateral but Federal Government has taken 40% risk of first loss on the disbursed loan amount, hence the collateral requirement is lower and business relationship with the banks will help with lower collateral for loan approval
• Alternatives to Physical Assets as Collateral:

o   Invoice refinancing:  Borrowing IT companies can apply for a loan on the basis of their receivables instead as well if the hard collateral does not cover the security entirely. A few IT companies have had success doing that with their banks.

o   Corporate Guarantee: Borrowing IT company can get a guarantee from its corporate client; the onus on repayment shall fall on the guarantor in this case. SBP and Bank Alfalah confirmed that this is not unusual for the corporates to issue guarantees for their key suppliers.

o   Collateral-free loan: With the Federal Government’s first loss guarantee of 40% to the commercial banks, the SMEs can avail clean lending of up-to 5 Million PKR without any collateral. This must be a big relief especially for the small IT firms who struggle to provide collateral.

o   Processing Time: PFIs shall not take more than 15 working days for the credit approval process (from the date of receipt of complete information).  Where the request is declined, the PFI will explicitly apprise the reason for rejecting the application to the prospective borrower. Where the request is declined, a copy of the rejection letter to the prospective borrower will also be forwarded for information to the Director Off-Site Supervision and Surveillance Department (OSED) simultaneously.

o   Employment Condition: Objective of this scheme is to prevent layoffs, so the banks will disburse the salaries directly in the employees’ bank account instead of loan amount going out to the business.