CSF for knowledge based business to boost economic growth
By Saad Saud

ISLAMABAD—Competitiveness Support Fund (CSF) starts with its third operating window to boost the knowledge driven economy in Pakistan through establishing business incubators and promoting venture capital.
The Competitiveness Support Fund, a joint initiative of the Ministry of Finance, Government of Pakistan and the United States Agency for International Development (USAID), started with its operation in May, 2006. CSF is one of the best driving forces currently in Pakistan providing policy assistance, identifying sectors that have potential and competitive advantage to grow as well as co-financing innovative projects based on a solid strategy to support a long-term economic growth in the country. Now, CSF has put its third window into operation to establish business incubators and promote venture capital in Pakistan.
CSF has three operational windows, namely the Technical Assistance, Matching Grants and Business Incubators/Venture Capital. The Competitiveness Support Fund (CSF) has started with its third window, aiming to establish business incubators in the leading research institutions in Pakistan. The Technical Assistance and Matching Grant windows of the fund are being supported by a grant of US$ 12 million by the USAID, whereas the initiative of business incubators and venture capital will become operational by a matching grant of US$ 10 million contributed by the Government of Pakistan for the next 5 years. The Executive Committee of the National Economic Council (ECNEC) approved an amount of US$ 10 million last December, as a part of the agreement between the Government of Pakistan and USAID on establishing the Competitiveness Support Fund.
To make business incubation and venture capital a success in Pakistan, CSF has now undertaken initiatives working closely with the Higher Education Commission of Pakistan (HEC) which is a partner organization of the CSF and both the organizations signed an MOU last year to support initiatives promoting knowledge-based economic development. Another essential component of the undertaking was envisioned to establish business incubators. HEC and CSF together will develop and implement a monitoring and evaluation system to ensure the successful and timely completion of the projects selected for the incubators. Finally, CSF will explore the possible financial involvement of other relevant bilateral institutions to share the cost of the relevant projects as well.
Business incubation is a business support process that accelerates the successful development of start-ups fledgling companies by providing entrepreneurs with an array of targeted resources and services. These services are usually developed or orchestrated by incubator management and offered both in the business incubator and through its network of contacts. A business incubator's main goal is to produce successful firms that will leave the program financially viable and freestanding. These incubator graduates have the potential to create jobs, revitalize neighborhoods, commercialize new technologies, and strengthen local and national economies. CSF will be introducing the best international practices for promoting business incubators in the country.
CSF will promote venture capital and encourage a number of relevant institutions to establish Business Incubators. CSF will extend co-funding as grants to these Business Incubators which will be used for financing incubates in the form of equity participation and for meeting their initial management overheads. In the long term the Business Incubators will be expected to meet their operational expenses through returns from their equity investments. The Venture Capital window, among other things, will be used to promote the creation of Business Incubators and provide funding for their incubator programs. However, Business Incubators will then make funds available to incubator companies and earn profits on the funds they receive for making loans and/or venture investments in incubates and incubator graduates.
The first in the three pilot projects have been identified at the National University of Science and Technology, Rawalpindi. The University already has an incubator initiative and the CSF intervention will bring the international perceptive for supporting its successful implementation. CSF will be exploring the possibility of developing similar facilities in Faisalabad and Karachi. Support for CSF is part of the $1.5 billion in aid that the U.S. Government is providing to Pakistan over five years to improve economic growth, education, health, and governance. CSF supports Pakistan’s goal to have a competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country. CSF also provides technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector-led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy.