Pricey Currency Causes Problems For Startups

Digital businesses reduce costs by switching from the dollar to the rupee.

Businesses operating in Pakistan are beginning to reduce their costs by converting from the US dollar to the Pakistani rupee as a result of the country’s ongoing rupee devaluation versus the US dollar.

According to economists, when difficulties multiply, business owners and individuals start thinking about how to overcome them and get out of sticky situations.

The depreciation of the Pakistani rupee, which has reached a level of about Rs283 to the dollar during the previous two years, has made life difficult for both businesses and individuals.

The nation’s economic problems have also gotten worse in light of the terrible floods of 2022, a decline in export and tax revenue, depleting foreign currency reserves, and unpredictability in the world economy.

Foodpanda CEO Muntaqa Peracha stated in a media interview that they had also been touched by the challenging circumstances as the economy was struggling.

Although they are expanding in terms of rupees, their parent firm, Delivery Hero, which is situated in Berlin, faces difficulties when seen in terms of dollars.

In 2016, Hero purchased Foodpanda for $500 million, based on the information that is currently accessible.

The CEO stated, “To address the situation, we have begun optimising our expenses by switching from the US dollar to the Pakistani rupee.

For instance, past marketing campaign expenses were paid for in dollars, but now “they are making these payments in rupee,” he stated.

Foodpanda, a startup that set a goal of becoming profitable by 2023, has not yet achieved the objective, but the CEO claims that the business is on track and will become profitable this year.

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Due to the effects of the Covid-19 outbreak and the economic collapse, many startups in Pakistan, like Airlift, have shut down during the previous two years. Contrarily, businesses like Foodpanda depend on the nation’s sizable and expanding population to progress their operations.

People will continue to order groceries and food because they are not at all luxurious, the CEO said.

The current Foodpanda platform has its roots in 2011, when Nauman Sikandar Mirza founded the online cuisine review site cuisine Connection Pakistan. 2013 saw the launch of EatOye thanks to a $250,000 fundraising effort by Mirza and his colleagues. Foodpanda noticed EatOye in 2015 and bought it, enhancing its footprint in Pakistan. Mirza served as the combined company’s CEO until the beginning of 2022.

Digital businesses are assisting Pakistan in transforming its economy from a brick-and-mortar model to a gig economy, where “every single transaction is tax-paid,” according to Peracha.

Foodpanda asserts that collaborating with the government is the key to their success.On the one hand, the government creates jobs for its citizens, while on the other, the business benefits from policy and tax breaks, such as tax breaks for home-based businesses that are primarily led by women.

In regions where it is not practical for the state to directly deliver services, private enterprises supplement the government.

Following a recent trial delivery of four containers of fresh veggies to the United Arab Emirates (UAE) in a partnership with Talabat, another Delivery Hero affiliate, Foodpanda is considering going into the export sector.

It is now thinking about partnering with Middle Eastern players to penetrate the poultry and grocery export industries.

The CEO explained that it was one of the options under consideration for expanding operations. “Since it’s closer and simpler, we’re going to start in the Middle East.”

Exports will not only assist the business in quickly achieving its profitability target but will also aid in generating foreign money for the nation.

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