Pakistan’s social enterprise ecosystem faces many challenges that affect sustainable investment
By Shewa Ram Suthar
Pakistan’s social enterprise ecosystem faces many challenges that affect sustainable investment. Lack of legal recognition, mistrust, and lack of self-confidence prevents social enterprises from accessing financial incentives and regulatory support. Limited access to impact investment increases due to investor skepticism and inadequate data on social impact. Weak entrepreneurial ecosystems and low awareness further restrict the growth of purpose-driven businesses.
The one of Lesser Practices due to minimal government policy support for social enterprises, and public-private collaboration remains weak. Most financial institutions do not offer customized funding models, forcing social enterprises to rely on donor-based funding. Corporate sector engagement in social enterprise development is also limited, missing opportunities for shared value creation. Addressing these gaps through policy reforms, impact measurement frameworks, and investor engagement can unlock the sector’s potential for sustainable development in Pakistan. For years, Pakistan’s entrepreneurial landscape had been constrained by traditional funding models, leaving little room for enterprises driven by both profit and purpose. There is old mindset and less impactful narrative is affecting overall enterprise in Pakistan. There is also less stakeholder’s engagement of various sectors, and lack of confidence among local entrepreneurs is remained a big issue.
To mitigate this big gap, Social Innovation Academy (SIA) organized a Social Enterprise Summit 2025 (SES 2025) on February 26, 2025 in Islamabad. This summit proved a good milestone with, the first of its kind in Pakistan. This summit brought together a diverse group of impact investors, entrepreneurs, academics, and development experts from Saudi Arabia, Thailand, and beyond. The goal? To shift the narrative around social entrepreneurship, making it a viable and legally recognized sector in Pakistan.
This Social Enterprise Summit 2025 (SES 2025) sought to change that narrative and supported Pakistan to re-build some more sense of enterprise through mutual coordination and combine investment. This summit was the birth of a movement. For the first time, Pakistan was shifting the conversation from reliance on aid and grants to the power of impact investment. From Saudi Arabia to Thailand, from the USA to local change-makers, stakeholders came together to explore how Pakistan could build a thriving ecosystem where social enterprises could not only survive but grow towards sustainable model. More than discussions, this summit aimed to take real action—connecting investors with startups, advocating for legal recognition of social enterprises, and setting the stage for sustainable, long-term change.
As there is need to Transforming Mindsets on Sustainable Investment. Traditionally, Pakistan’s development landscape has been heavily reliant on aid and loans. SES 2025 challenged this outdated model by introducing impact investment as a sustainable and scalable solution. The discussions highlighted that social enterprises should not only aim for profitability but also drive meaningful social change.
As Pakistan faces many Challenges & Key Gaps in Social Enterprise Ecosystem. Despite the potential for social entrepreneurship in Pakistan, Lack of Legal Recognition for Social enterprises currently operate in a legal gray area, lacking a distinct framework that allows them to register as separate entities. The second big gap as Limited Access to Investment, unlike in developed economies, impact investment remains relatively unexplored in Pakistan, making it difficult for social enterprises to secure funding. Third big challenge is Cultural Barriers, some myths and taboos for Entrepreneurship, especially social entrepreneurship, is not widely promoted in educational institutions or policy discussions. The last big challenge is Regulatory guideline and absence of a clear policy framework makes it challenging for investors to navigate the Pakistani market confidently.
Social Innovation Academy (SIA)’s Social Enterprise Summit 2025 contributed in fulfilling and addressing these Gaps, this took key steps toward bridging and facilitated Key Partnerships through MoUs with major organizations, including Value Makers Studio (Saudi Arabia), STEP Schools, Arweqah Alreyadah, and SEED Ventures. These collaborations will provide Pakistani entrepreneurs with mentorship, funding, and strategic guidance and proper road map.
This summit urged the Securities and Exchange Commission of Pakistan (SECP) to introduce a legal framework for registering social enterprises, ensuring they receive due recognition and support. A platform was created for Pakistani startups to pitch their ideas to impact investors from Saudi Arabia, Thailand, and other countries, opening doors for potential funding opportunities.
This Promoted Social Entrepreneurship Education among Academics and policymakers for integrating social entrepreneurship into university curricula, ensuring future generations understand its value.
There are many International Examples of Social Entrepreneurship in our neighbor country India, who have successfully developed thriving social enterprise ecosystems, this model be implemented for this. The one big example is SELCO India: A solar energy enterprise that provides affordable and sustainable electricity to rural households. The second biggest successful model is Araku Coffee, A social enterprise supporting tribal farmers by offering them fair-trade prices and international market access. Third one big successful model is Goonj, a nonprofit that transforms urban waste into essential resources for rural communities, creating employment and reducing environmental waste.
Such models be created in Pakistan with the right investment, direction and regulatory framework, Pakistan can build same models.
Mr. Khet Kumar Suthar one of Founder of Social Innovation Academy (SIA) shared SES summit’s best thing was engaging key Role of major Stakeholders and to fulfill the biggest gaps, this is important for further collaboration among impact investors, entrepreneurs, academics, and development experts, this probably will provide financial backing for socially-driven enterprises in Pakistan. We can drive innovation by developing scalable solutions to societal challenges. After this summit, Development Experts will align sustainable development goals (SDGs) and maximize their social impact in country.
There is need to more focus on social enterprise ecosystem because this only a inspiration which help local enterprisers to invest in academic. By initiating high-level discussions, forming strategic partnerships, and advocating for legal recognition, we can build foundation for a thriving social enterprise ecosystem in Pakistan.
Moving forward, sustaining this momentum requires Policy Advocacy, this can be continued by engagement with SECP and government bodies to ensure legal reforms for social enterprises. There is need to establish funding mechanisms, this can be dedicated for social impact investment funds to support emerging enterprises.
Awareness & Capacity Building and Conducting workshops, replication of this summit, smart training sessions, and mentorship programs will create further hype to educate entrepreneurs and investors. For the Promising Future for Social Enterprises in Pakistan, there is need to more focus on social entrepreneurship with technical, smart and profitable way to sustain the economic growth of country. With the right support, Pakistan can build its entrepreneurial spirit to address pressing social issues and generate more new economic opportunities. By building on the success of this summit, we can ensure that social enterprises become a driving force in Pakistan’s economic and social development.
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