Category: Blog

Pakistan’s trade with Taliban-controlled Afghanistan during the late 90s and the early 2000s was negligible. Since the deployment of NATO forces in Afghanistan, Pakistan’s exports to its neighbor spiked, peaking in 2011 at 2.6 billion dollars. Unfortunately, since then exports have registered a consistent decline, falling to 1.37 billion dollars in 2016.

The recent decline can partly be explained by the drawdown of NATO forces from the region, and partly by Pakistan’s own policies with regards to its neighbor. A look at Afghanistan’s trade with its regional partners in the figure below provides evidence for this trend:

The graph shows that as Afghanistan’s imports from the Central Asian Republics (CARs) decreased from their peak in 2009, imports from Pakistan and Iran started increasing. Then after 2012, imports from Pakistan also started decreasing, while those from Iran continued to rise. Afghanistan’s imports from China have gone up in that period as well. The increase from other regional trading partners has occurred despite the fact that, Pakistan’s trade route is the most direct and cheapest to Afghanistan. Furthermore, a large segment of Pakistan’s population shares a common language with Afghanistan, and most of the traders and transporters going to Afghanistan belong to bordering tribes who carry shared cultural practices and a deep understanding of the regional market. A recent study conducted by Salamat Ali in the context of Pakistan, shows that having a common language with a trading partner helps promote trade with that country.

The key message here is that despite these favorable circumstances, Pakistan’s exports to Afghanistan have started declining. The bulk of this fall was in export of petroleum products. In 2011 Pakistan’s petroleum products exports to Afghanistan stood at over USD 760 million. In 2015 these figures fell to USD 54 million. On the other hand Iran’s petroleum products exports to Afghanistan that year stood at USD 102 million but then rose to USD 821 million by 2015. While Pakistan continues to be a major source of edibles for Afghanistan, there are a number of other commodities that can be exported. However, that space is largely filled by Iran or China at the moment. For example, goods produced in Pakistan such as construction materials including cement, plastics, iron and steel are increasingly imported from Iran while textiles are being imported from China.

On the Afghan side, Pakistan continues to be Afghanistan’s largest export destination, but is increasingly facing stiff competition from India. The graph below shows Afghanistan’s exports to partners in the region:

The graph above shows that although Pakistan remains the main destination for Afghan exports, its share has fallen from about 50 percent to 40 percent from 2008 to 2015. On the other hand, India’s share in Afghan exports stood at about 25 percent in 2008 and has gone on to rise to about 35 percent by 2015.

Overall Afghanistan’s pattern of trade summarized above suggests that Pakistan is losing out on key export opportunities with its neighbor, and that Afghanistan as a whole is becoming less dependent on Pakistan for trade. Pakistan has long seen Afghanistan through the prism of national security and that alone has dictated relations between the two countries. This has often meant that Pakistan’s first response to increased tensions with Afghanistan has been to close the border with little regard for the damage it does to economic relations. Similarly, there is a very strict and excessive checking regime for goods entering and leaving Pakistan from Afghanistan or for transit trade purposes at the Karachi port. This has made Pakistan an unreliable trading partner. This is especially problematic since the main commodities being exported from both sides of the border are perishable goods mostly being transported by an unrefrigerated trucking fleet. This has not only taken a toll on goods being exported directly from Pakistan but even on transit trade coming through Pakistan. According to transporters in Pakistan, Iran is increasingly being used as a preferred option for transit trade to Afghanistan as well.

In recent months, some encouraging steps have taken place in the shape of improved customs facilities at Pak-Afghan borders in Torkham and Chamman. However, in order to reverse the trend and expand its exports, Pakistan needs a paradigm shift in how it perceives its neighbor. Increasing commerce, which will benefit producers and consumers in both countries, can lay the groundwork for stable bilateral relations, and help in increased cooperation on other issues as well.

Ghazan Jamal is a Country Economist at the International Growth Centre (IGC).

The lack of women’s participation in Pakistan’s economy is both a gender equity and a developmental concern. Estimates have suggested that if women’s economic participation is at par with men, the country’s GDP can increase by 30 percent. Improving women’s economic participation is critical to fulfilling the global agenda of inclusiveness and women empowerment – now a Sustainable Development Goal. The right to equal economic opportunity is also enshrined in Pakistan’s constitution. However, only 22 percent of working-age women are currently employed in the labour force.

To discuss the constraints that keep women away from the workplace, and brainstorm solutions to empower them, the Consortium for Development Policy Research (CDPR) brought together a panel of experts, each working in their own capacity to remove barriers to women’s economic empowerment.

Policy environment

Pakistan is a legislation and commitment rich country, having signed an array of gender-related conventions and treaties, including CEDAW and UDHR. However, Nida Usman, a lawyer and founder of the Women in Law initiative, points out that a selective enforcement of policies, presence of obsolete laws and lack of specific legislation that actively prohibits gender discrimination has resulted in the absence of an overarching legal framework to support women’s economic participation.

So far the government has been unable to ensure equal pay, while the provision of maternity benefits remains ambiguous. Even though the constitution guarantees maternity leave, Punjab’s maternity law (which offers a 12-week leave compared to 36 weeks in India) is only applicable after 4 months of employment. Unlike in India, Pakistan has no provision for flexible work arrangements, and a considerably shorter 7-day paternity leave (compared to 15 days in India) helps reinforce adverse gender stereotypes.

Similarly, finance and banking laws also make it harder for women to access credit, a key resource for economic empowerment. While microfinance is targeted mainly at women, the amount offered is too low to allow setting-up of sustainable businesses. To apply for a larger, more sizeable loan women often need unrelated male guarantors.

Where suitable legislation does exist, implementation remains a challenge. For example, the Punjab Fair Representation of Women Act 2014 requires that a third of all representative of boards of statutory organizations, public sector companies, and special committees are women. Without an adequate enabling environment that offers men and women equal opportunities to work, government is struggling to enforce this. Men are often unwilling to share this space with women. Where women do take up such posts they lack the tools to participate effectively.

Why are women not willing to work

While there is a complex web of constraints, the policy talk focused on a few key ones

1. Patriarchal mind-sets

Pervasive discrimination and regressive social norms remain prominent barriers to achieving gender parity within the economic space. Nida Usman elaborated that anachronistic attitudes are most pronounced amongst the middle strata of the society and that the relationship between the choice to work and income is not linear.

Social norms about appropriate behaviour for women and the enforcement of these norms by family and society dictates their ability to seek employment. Women belonging to the poorest segment of the population often have to work, while the those amongst the educated elite class choose to work. Hence, the constraints to women entering the workforce are experienced most within the urban middle-income segment.

2. Access to mobility

Getting to work remains a major challenge for most Pakistani women. In fact, when women can’t leave their homes, it is difficult to find a job in the first place. Female economic participation can double if women are able to find a suitable job, especially as home-based work offers limited returns to education.

Kate Vyborny, researcher from Duke University and currently at the Centre for Economic Research Pakistan, presented findings of an IGC funded study that is looking at the impact of women’s mobility on their labour market integration. Transport options can influence women’s options for work. Women also need to feel and be safe in public spaces – getting to and from stops. Kate finds that in a fourth of the thousand households surveyed women used buses without women-only compartments. Women-only buses operate only on select routes. Industries relying heavily on women or wanting a diverse workforce are more inclined to offer women-only transport.

The research scope is further extended by introducing a job-matching service to find that a fourth of the recruitments happen by word of mouth. Since women don’t have access to the same kind of social network as men, they are further disadvantaged in finding the right job.

3. Burden of unpaid care and domestic work

Family and responsibility for household work also constrain women’s mobility and time. Accounting for both unpaid care and paid work, Pakistani women work up to 10 times more than men. According to the last Time Use Survey covering around 8,000 households not only do women spend more time than men on housework, unemployed men do not end up taking a greater burden of these activities. Excessive workload impedes their access to skills development and financial services, eventually disabling them from participating effectively in economic spaces.

Addressing constraints

Recent policy initiatives by the Punjab Government have attempted to address these binding constraints. The Strategic Reforms Unit (SRU) at the Chief Minister’s office is actively pursuing solutions to open up the labor market for women. The Unit reports directly to the political leadership and works with multiple partners that include politicians, law makers and the media. Fatima Khalid, a junior associate at SRU, discussed the on-going and future initiatives of the Punjab government aimed at enhancing public space for women, such as the Women on Wheels (WoW) initiative.

The campaign – a motorbike subsidy scheme – was launched in collaboration with the transport department and the respective city traffic police in five cities across Punjab. This initiative has a dual objective – to enable women’s participation in the economic space, and to promote social change. It aims to provide over 3,000 customised motorbikes at a subsidised rate through transparent balloting. The campaign has thus far been a success despite the patriarchal notions that discourage the acceptability of women riding motorbikes. The SRU has so far trained over 3500 women.

The province is also taking steps towards combating gender-based violence, which is often linked to recalibration of gender roles and power dynamics.  To this end, the Punjab Government is setting up district-level Violence Against Women Centers (VAWC) across the province to ensure implementation of the recently promulgated VAW legislation. These centers will be overlooked by a proposed Women Protection Authority. At the same time the government is also including a gender sensitization component to the high-school curriculum in grades 9 and 10.

Looking ahead

While we continue to celebrate recent gains in advancing women’s economic empowerment, we must not lose sight of the challenges that remain. Efforts to encourage more women in the workspace should also focus on creating an environment that allows for practical enforcement of gender-responsive policies.

Gender stereotypes operate into the policy sphere and influence the design of gender-specific laws. However, equality before the law and gender sensitization in the design of programs is essential in creating the right policy environment. Governments therefore need to formulate policies that consistently facilitate a transformation of deep-rooted social norms

Kate’s research findings provide a substantive policymaking direction. Government should continue the expansion of high quality transport to suburban and peri-urban areas in and around major cities, which still lack mobility solutions. More specifically, to improve women’s mobility and at the same time encourage a more efficient use of resources, introducing women only compartments (as opposed to entire buses) is more sustainable. Other interventions such as announcement of fixed schedules and provision of secure bus stops can allow women to pre-plan their travels.

Finally, the strength of these and other emancipatory policies has to be supported by a concerted focus on implementation mechanisms. Without clear roadmaps for responsibilities, effective allocation of resources, and ownership by public officials, the goal of increased empowerment will remain unfulfilled.

Hina Shaikh is a Country Economist at the International Growth Centre (IGC).

There is a pressing need to distinguish between causes and outcomes in Pakistan’s ongoing power crisis. Power shortages (i.e., a shortfall between peak demand and supply) remain a headline outcome, and one determined by several causes. However, these causes have not received sufficient attention from policymakers, who, in turn, continue to focus on the outcome itself. This has created a situation in which interventions are misplaced, and the structural roots of the crisis stand unaddressed.

Let us briefly look at the causes.

I would envision any well-functioning sector to have an appropriate policy framework as its foundation, adequate funding to build on that foundation, and strong governance to implement and manage its prescriptions. Sadly, Pakistan’s power sector has lacked all three elements, as a result of which the sector has suffered through decades of ad hoc and crisis-driven policy making.

High dependence on imported oil has raised generation costs for power utilities, rendering them unable to recover costs through tariffs. This is partly because the government refused to raise tariffs during 2003 and 2008 when generation costs were rising sharply. Issues of high Transmission and Distribution (T&D) losses, non-payment of bills by consumers and delays in payment (or non-payment) of allocated subsidies have added to the financial fragility of utilities. All of this has resulted in insufficient investments in power infrastructure because of which existing plants have been forced to operate beyond their capacity, thus making them age faster and risking frequent breakdowns. Matters have also been made worse by government’s reluctance to move aggressively with sector reforms, including privatization. Consequently, power shortage has gone up, imposing prolonged power cuts across different types of customers.

But is there a cure-all solution?

Just as multiple issues have caused the problem of power shortage, only multiple solutions can address these issues. One of these solutions can be net metering.

What is net metering?

Usually, electricity flows the grid to the consumer. But this does not mean that it cannot flow in the opposite direction, i.e., from the consumer to the grid. Let me explain how. A consumer can produce her own electricity, typically from rooftop solar installations, and feed it back to the grid. This technical innovation will require that the flow of electricity from the grid to the consumer and from the consumer to the grid are both measured separately and the consumer is billed according to a net tariff, representing the difference between the cost of electricity purchased from the grid and the price of electricity sold back to the grid. Thus net metering represents the net bill for the electricity taken from the grid. In extreme cases, consumers can feed more electricity to the grid than what they take from it, in which case they will be paid by the distribution company for the surplus electricity produced.

Figure 1: How net metering works

Source: raftaar, 2016

National Electric Power Regulatory Authority (NEPRA), which is the national regulator, passed the “Distributed Generation and Net Metering Regulations 2015” in September 2015. This was a significant breakthrough, as today Pakistan is among the 110 countries in the world that have policies for net metering.

Figure 2: Net metering licenses given out by all Distribution Companies (DISCO’s) in Pakistan (2016-2018)

Source: NEPRA

How does it speak to the issues mentioned above?

Net metering is a cost-effective solution because it 1) has low set-up costs and 2) it uses free sunlight for generation. Centralized power plants, on the other hand, require huge investments to set up and depend on expensive oil for power generation. According to recent research by the University of Punjab, the rooftop space available at the Punjab Government Servants Housing Society in Lahore was able to accommodate enough solar panels to produce nine times the amount of electricity needed by the entire housing society. Domestic consumers are about 86 percent of the total electricity consumers in Pakistan, so one could imagine the kind of savings that can be made if net metering was scaled up.

The recent use of smart meters in Pakistan has revealed that longer feeders – wires that transmit electricity from grid stations to consumers – result in higher T&D losses. This is primarily because of bad equipment, poor maintenance and energy theft. Net metering can revolutionize existing power distribution by bringing electricity generation on-site or near-site for consumers. This would drastically reduce T&D losses.

Although net metering may not fully resolve the issue of low recovery rate, it may still be able to yield some improvement. Net metering reduces a consumer’s bill because 1) she uses less electricity from the grid as she is now producing her own and 2) she sells surplus production back to the grid. Reduced bills mean that these consumers are more likely to pay their monthly bills, especially because they are now also expecting payments from the distribution companies (DISCOs).

Way forward

In order to tap the full potential of this technological innovation, there is a need for it to be scaled up across domestic and commercial segments. For this, a partnership will be required between DISCOs (for their on-bill payment network) and commercial banks (for financing for upfront equipment costs). This suggestion is both practical and realizable in Pakistan’s context, e.g., in the gas sector, the Oil and Gas Regulatory Authority (OGRA) has allowed the Sui Northern Gas Pipelines Limited (SNGPL) to finance Solar Water Heaters (SWH’s) utilising its on-bill payment network. Therefore, following its disruptive, positive policy regulation that has allowed net-metering in the country, perhaps NEPRA should next also allow on-bill payment financing schemes for net-metering. The State Bank of Pakistan (SBP) has already set the wheels in motion by announcing a credit facility to finance renewables through commercial banks, so NEPRA will be adding to the momentum. While this will be a good step forward, it will be critical to ensure that only high quality, verified solutions are allowed once a market for this promising technology has been created.

Usman Naeem is a Country Economist at the International Growth Centre (IGC).

Countries across the world are relying on ever-larger amounts of data to inform policy design. Efforts for improving policymaking however call for rethinking the types of data collected, process of collating and organizing it, and eventually integrating it with existing information.

Big data in Pakistan

As Pakistan transitions towards e-governance and evidence-based policymaking, the government is focusing not only on generating new data but also overhauling existing data collection and management systems across the entire spectrum of the government machinery. Some success stories include the National Database and Registration Authority (NADRA) that now maintains one of the world’s largest citizen’s database based on facial recognition and biometric data. Benazir Income Support Programme (BISP), Pakistan’s flagship social protection initiative also boasts the country’s most extensive poverty database – an output of the largest and first ever door to door poverty survey. Pakistan has also just concluded its sixth Housing and Population census, which shows the total population exceeding 207 million!

Sub-national governments are also making some progress on this front. The Punjab Board of Information and Technology (PITB) has introduced the use of technology-based interventions to generate real-time data, which help monitor service delivery and inform appropriate policy and its implementation. PBIT is now extending its services to other provinces.

Data for Research

The availability of new information is catalyzing data-driven solutions in the policy realm, while simultaneously helping researchers track progress and gaps in policies and programs. In this process, researchers are assisting in both creating new data and demonstrating efficient ways of using it. Examples of IGC’s initiatives in this regard include its collaboration with the State Bank of Pakistan and Pakistan Bureau of Statistics in the roll-out of the Management of Organisational Practices survey (MOPS), appended to the latest round of the Census of Manufacturing Industries (CMI). This is the first extension of MOPs outside of the US. IGC has also supported the digitisation of the census on small and cottage industry in Punjab conducted by Punjab Small Industries Corporation (PSIC), which can now be used for an unprecedented analysis of non-farm economic activity in rural Punjab.

Gaps and Issues in data

Ability to generate and use data effectively, especially in the form of evidence, requires defining what to measure and ensuring quality of what is being measured.

1. Measuring the right indicators

Information needs to be collected in light of its ultimate application so that it addresses the relevant policy questions. In the case of Pakistan, estimates on health and other socio-economic outcomes are not systematically produced, making it difficult to generate evidence about the effectiveness of existing policy, and further discouraging an already weak culture of data use.

The lack of pertinent data is stark. A 2014 study commissioned by IGC tried to determine key factors impacting public health outcomes in Punjab. The analysis, based on two sets of population-based surveys – the Punjab Demographic and Health Surveys (DHS) of 2006 and 2012 and the Punjab Multiple Indicator Cluster Surveys (MICS) of 2008 and 2011, was unable to answer any questions regarding the correlation between various policy inputs and health conditions. Moreover, these surveys contained no information on water sources that could help determine water quality and, hence, its impact on health.

2. Accuracy of Data

The relevance of data for decision-making is undermined not just by its absence but also by its inaccuracy. For example, in the Punjab Directory of industries 2016, duplicate firms are treated as different firms and assigned distinct serial numbers, increasing the chances of double counting. In other instances, same industry types are named differently at various places, posing a risk of incorrectly categorizing firms by industry type.

IGC researchers took over two months to clean data collected by Punjab Small Industries Corporation (PSIC). However, since the data has not been entered systematically and consistently through a code, a ‘hammer’ is spelt in at least five different manners – hamer, hamr, hamar, hathora, hathori! Eventually researchers found only 24,000 of the 164,000 observations valid for analysis.

Amidst this anguish some of the entries provide comic relief! In the PSIC data annual revenue of one flour mill (atta chaki) in Koth Addu was more than Rs. 8.7 trillion with a working capital of Rs. 100,000 while the The Pakistan Standard of Living Measurement Survey 2015-16 contains households with multiple household heads many of them aged 10 or younger, with the youngest being a four-year-old!

3. Consistency across data sets

There is a lot of data that already ‘exists’ but not in forms that can be merged. For an IGC project on education in Khyber Pakhtunkhwa (KP), researchers had to extract data from multiple sources. The monthly data of Independent Monitoring Unit (IMU) does not coincide with the yearly data from Education Management Information System (EMIS). Across both datasets, schools with the same code are reported against different tehsils and circles. Figures in the published copy of the EMIS report also differed from information in the raw data. With the hope that corrective measures will follow, these observations have been shared with KPs Elementary and School Education Department.

In an earlier work, IGC researchers also highlighted the paucity of an integrated socio-economic dataset at the micro-level especially for urban planning. In the absence of a common spatial identifier (such as a mohalla), various datasets cannot be cross-linked. This has resulted in poorly targeted and short-sighted policies for urban Pakistan.

Looking for solutions

Robust data collection systems are needed to efficiently capture and ensure integrity of data, and to ensure they correspond to government’s capacity to utilize the information effectively. While analysis of data has become sophisticated, most data collection remains paper-based, prone to a variety of slipups.

The use of technology such as computer-assisted personal interviewing (CAPI) can make the entire process of data collection, entry and analysis more cost and time efficient. Through CAPI, the interviewer reads the questions to the respondent from the screen of a handheld android-device (usually a phone or a tablet) preloaded with the questionnaire. The responses are immediately entered into the device. Such applications have checks at the backend to ensure data is accurately captured. This eliminates the need for manual re-entering of data and minimises chances of errors. Moreover, this data, which is crypted, is automatically synced and uploaded to a central server and can be viewed only by authorised persons.

Adopting change

Given the gradual shift towards data-based policymaking and monitoring, technology-driven solutions are now becoming essential. For an on-going education project in KP, IGC researchers have used Census and Surveying Processing System (CSPro) – a software free to download and use and barring the one-time cost of android-based devices, use of this not only saved time and money but also ensured integrity and reliability of data. Encouragingly, government statisticians in Pakistan are gradually catching onto this trend. Pakistan Bureau of Statistics and Bureau of Statistics in Punjab now use CSPro, while the BISP has also made a shift from paper based to computer aided interviewing for updating the country’s poverty database. These nascent trends need to be built upon at both the national and sub-national level in order to improve the knowledge base, and thus efficacy, of policy design and implementation.

Hina Shaikh is the Country Economist at the International Growth Centre (IGC).

Attique-ur-Rehman is a Research Associate at the Consortium for Development Policy Research.