Social inclusion

February 9, 2018April 26, 2023

Pakistan’s unsafe water

By Hina Shaikh and Ijaz Nabi

Safe drinking water is a central plank of a country’s health strategy as it affects nutrition intake and therefore infant mortality, child growth, and the ability of adults to be productive. Exposure to unsafe water also leads to skin-related disease. For these reasons, access to safe drinking water is a right enshrined in the constitution and is a critical Sustainable Development Goal.

The Consortium for Development Policy Research (CDPR) recently brought together a panel of experts to discuss the current status of drinking water in Pakistan and what is being done to ensure that citizens enjoy this constitutional right.

Pakistan’s “water stress”

The panel distinguished between “water scarcity” and “water stress”. With the world’s fourth highest rate of water use, Pakistan’s economy is one of the most water-intensive in terms of cubic meters consumed per unit of GDP. Subsequently, water availability per capita has shrunk to under one thousand cubic meters by 2017 from over five thousand in 1951. Pakistan crossed the “water scarcity line’” in 2005, indicating a shortage of overall supply. With higher than expected population growth, this is likely to get worse.

The focus of the discussion was primarily on “water stress”, or the prevalence of polluted water that is unsafe to drink. Panelist Syed Hasan, Assistant Professor of Economics at the Lahore University of Management Sciences, noted that Pakistan became a water-stressed country in 1990 and is expected to be among the most water-stressed countries in the world by 2040.

Panelist Hammad Khan, Director General of World Wild Fund for Nature (WWF) Pakistan, pointed out that the level of arsenic in the water supply far exceeds the government’s own thresholds for contamination, which are in fact less conservative the World Health Organization’s (WHO) standards. A 2015-16 nation-wide survey by the Pakistan Council of Research in Water Resources (PCRWR) found that only a third of the 369 samples tested for water quality were safe for consumption. A separate PCRWR study conducted in 2011 found 100 percent of water samples in Lahore were polluted with arsenic. A study led by Joel Podgorski, a scientist at the Swiss Federal Institute of Aquatic Science and Technology, found that water in two-thirds of the 1200 wells sampled across Pakistan exceeded the WHO-recommended threshold of arsenic. Based on this data, nearly 60 million citizens are estimated to be consuming toxic ground water.

Microbial pollution is also common. In cities, water becomes contaminated due to improper disposal of solid waste and continued usage of outdated water and sewage networks. Chemical pollutants from industrial waste also infect water. In rural areas, open defecation and animal waste are the leading sources of contamination.

Poor quality of water burdens the health sector, increases missed days of work, and reduces labor productivity. High levels of arsenic in water contributes to underweight birth, skin defects and miscarriages. Syed Hasan mentioned the burden of poor health outcomes in the form of waterborne diseases costs Pakistan 1.6 million disability-adjusted life years – and almost four percent of GDP.

Poor governance

Pakistan has been unable to incentivize conservation and efficient usage of water. Syed Hasan commented on the pricing mechanism and its failure to reflect the true market value of this critical resource. The tariff for water used for household consumption in urban Pakistan was last revised in 2004. Operation and maintenance costs incurred by water authorities continue to exceed the revenue they collect, while water metering covers only eight percent of the households.

Hammad Khan explained that if sources of water remain unprotected, the availability of drinking water will keep dwindling. Ground water once contaminated cannot be treated. The installation of filtration plants by Punjab’s Saaf Pani Company (see below), meant to cover all union councils in Punjab, are remedial measures – not sustainable solutions. The unrelenting adulteration of water sources despite decades of several dedicated water authorities in operation reflects a serious governance failure.

The government response in Punjab

Following devolution, water became a purely provincial subject. Punjab set up the Saaf Pani Company three years ago to ensure provision of drinking water in rural Punjab. The company’s progress is personally overseen by the chief minister.

Panelist Tahir Majid, Chief Technical Officer, Punjab Saaf Pani Company, agreed that despite being the Punjab government’s flagship initiative and substantial public expenditure, progress has been slow. A third of the water schemes in the province remain non-functional while 79 percent provide water that is unsafe for consumption.

The problem with Saaf Pani Company reflects a deeper problem of governance pervasive across several other sectors. When parallel governance structures are set up in the presence of existing departments, such as the Punjab Health and Engineering Department, inefficiencies slide in. The company saw several quick changes in senior management (some resulting in criminal inquires) and frequent changes in the operational design. This has resulted in delays and has not encouraged strong private sector engagement in the delivery of safe drinking water to the citizens.

After being heavily scrutinized for its performance, the company is now restructuring itself to improve delivery and remains committed to providing clean drinking water to Punjab’s entire unserved population of 60 million by 2025.

What can be done?

It is encouraging that “water-stress” can be overcome. Singapore’s example, cited by Syed Hasan, shows how the risk of extreme water stress can be countered by efficient regulation and management. Inaction, however, may result in a crisis similar to the one in Cape Town, a city that is now on the verge of rationing clean drinking water.

The panel suggested immediate steps Pakistan can take to tackle the water crisis and avoid the Cape Town outcome:

Set the right priorities: An over-arching water policy framework is critical. The National Water Policy, in circulation since 2004, should be updated in light of changes and approved.

Set water classification standards: Every country (including India, Bangladesh, and China) has water classification standards where all the water bodies are categorized according to their usage. This should also be done in Pakistan. WWF has offered to use remote sensing and GIS mapping to help government conduct this exercise. Authorities will then be able to ensure more effectively that water bodies classified for drinking purposes are kept clean and used for that purpose alone. Water classification will also help avoid disputes between different stakeholders (agriculture vs. industrial vs. household consumption).

Let prices work: Even though water is a basic right, it is a limited resource and hence water pricing is important. The fact that people pay for bottled water indicates that there is willingness to pay.

Mobilize community ownership: Community ownership is key to ensuring that water schemes remain functional and well-maintained. The WWF for example signs a legal contract with the community for joint ownership of the filtration plants it has provided.

Hina Shaikh is a Pakistan country economist at the International Growth Centre.

February 3, 2018April 26, 2023

Drive cautiously down China’s Belt and Road

By Shahid Yusuf

China’s Belt and Road Initiative (BRI) aims to create a Eurasian economic corridor and a string of economic hubs anchored to Chinese cities, thereby generating a development dynamic that is advantageous to China’s growth. The investment and trade generated by BRI could enable China to sustain a growth rate of 6 to 7 percent and double its GDP between 2010 and 2021. As of end 2016, $900 billion worth of BRI-related projects were planned or under implementation – with loans and credits from Chinese banks amounting to $1.2 trillion (not all for BRI projects). Chinese agencies claim that the BRI will eventually absorb between $4 trillion and $8 trillion.

But what are the benefits and risks for countries accepting BRI-linked financing to build transport and energy infrastructure?

To this day, the BRI remains a patchwork of projects without a well-articulated strategy backed by solid analysis of the potential benefits for China and countries that will borrow from Chinese entities to finance large infrastructure projects. This is critical if the politically less-than-stable countries in Central and South Asia with a poor track record of sound policymaking are to benefit from BRI. In order to service BRI loans, the investment in transport and energy infrastructures plus any associated technology transfer must attract private investment in tradable goods and services and increase export earnings from exports.[1] Whether such a virtuous spiral of investment and exports will ensue, is far from certain. Moreover, infrastructure building and mining on the scale envisaged could lead to severe environmental degradation absent the enforcement of strict regulations, which are either not in place or enforced with a light touch.

There are other reasons for proceeding cautiously down the Belt and Road. The terms and conditions of loans extended by Chinese entities are less than transparent. Furthermore, the governance and finances of the more than 50 Chinese state-owned enterprises that are responsible for major BRI projects are opaque, and their capacity to manage and implement complex transnational projects is untested. Contractual relations with such entities could prove to be tendentious if projects fail, the quality of work and materials is poor, or if lax environmental standards cause damage. The Tharparkar project in Pakistan is a case in point.

This context elicits the following questions and concerns that deserve closer attention and more systematic study.

Can China finance BRI projects to the tune of several trillion dollars from its own resources? And if not, will China need to tap the international bond market for the bulk of the financing? By doing so, its indebtedness would increase and it would absorb considerable risk associated with lending for long-term projects in countries such as Uzbekistan, Pakistan, Sri Lanka, and Laos. In the end, given the current state of China’s forex reserves, will the outlay on BRI be an affordable but not game changing $25 billion per year?

China’s neighbors worry that the purpose of BRI infrastructure and connectivity is to further Chinese exports and geopolitical ambitions. Many are already on the slippery slope to deindustrialization and BRI could accelerate the process. Existing light consumer manufacturing would be imperiled and the likelihood of diversifying into more complex products would be greatly diminished because of China’s competitive advantage in a wide range of manufactures.

European experience suggests that cross-border transport infrastructure has not led to regional convergence. If anything, it has tended to increase regional disparities by making existing hubs more dominant and disadvantaging nearby regions in the hubs’ shadow. Rail links between Milan and Naples have strengthened hub economies while contributing little to the development of Southern Italy. A study of road infrastructure building in Portugal came to similar negative conclusions: greater accessibility did not improve the cohesion and purchasing power of less developed parts of the country.

To service loans from China and other borrowers, countries on the receiving end of infrastructure investment will need to greatly expand their exports and run trade and current account surpluses. Given recent trends in manufacturing and slower growth of world merchandise trade, is that likely? In 2016, China ran a trade surplus amounting to $250 billion with participants in the BRI. Could countries such as Pakistan (which runs a $13 billion trade deficit with China) possibly narrow and reverse the trade gap and run surpluses with its hyper competitive neighbor?[2] If they do not, what is the return to these countries in the form of long term gains from infrastructure? In other words, how much growth could BRI projects unlock by way of tradable goods and services? Furthermore, if highly indebted countries are unable to repay these loans, what are the consequences for Chinese firms and for their bankers?[3] Taking over assets that will need to be marked down would involve absorbing large losses.

What is the risk of BRI exacerbating the resource curse in countries such as Kazakhstan, Turkmenistan, and Afghanistan? Could the creation of the BRI trade corridor render them even more resource dependent and stunt their non-resource based tradable sectors?

So far, China’s projects in its own Western provinces have at best yielded modest returns. The profitability of China’s foreign direct investment in developing countries has also been low. This suggests that the cross-national infrastructure projects intrinsic to BRI will be costly to build and the financial returns are likely to be meager, at least in the medium term. Political changes in destination countries could easily affect project outcomes. Political risk could discourage participation by investors from developed countries.

Geopolitical issues need to be factored in. China’s actions have alarmed some of its neighbors – India in particular.[4] Chinese closeness to and support for Pakistan could contribute to continuing friction between Pakistan and India. Political tensions within and among countries, sporadic violence (as in Pakistan’s Baluchistan Province), and arms races in South, Southeast, and East Asia may undermine the BRI – as will continuing discord in the Middle East. How might these developments and others affect growth prospects is a key question.

Shahid Yusuf is Chief Economist of the Growth Dialogue at George Washington University and an adjunct professor at Johns Hopkins University.

Note: The views expressed in this article are the author’s and do not necessarily represent those of Pakistan’s Growth Story.

[1] Premier Li Keqiang referred to technology transfer as China’s, “golden business card”. Financial Times (2017, July 18th p.9).
[2] Between 2006/7 and 2015/16, Pakistan’s exports to China went from $575 billion to $1.63 billion. Meanwhile China’s exports to Pakistan increased from $3.5 billion to $12.1 billion (Source: http://fp.brecorder.com/2017/03/20170314153866/). Figures in the Financial Times indicate that China’s exports amounted to $16.5 billion in 2015.
[3] Down the road, servicing the loans from China will be burdensome for many countries. Chinese firms have already encountered problems with projects in Myanmar, Sri Lanka and Indonesia. Chinese SOEs that are spearheading BRI, such as the China Railway Corporation, are themselves increasingly in debt to Chinese banks – CRC’s debts amount to $558 billion and these are rising largely because much of China’s 22,000 high-speed rail network runs at a loss (Source: https://www.ft.com/content/9a4aab54-624d-11e7-8814-0ac7eb84e5f1?mhq5j=e3, https://www.ft.com/content/156da902-354f-11e7-bce4-9023f8c0fd2e?mhq5j=e3).
[4] In response to BRI and disputes along its northern border with China have induced India to launch its own initiative extending from Africa to Southeast Asia variously called the “Spice Route” the “Blue Revolution” and SAGAR – “Security and Growth for all in the Region”. India is also investing $300 million to lease the 2,000 acre tract of land which is the site of the largely deserted Mattala Rajapaksa Airport adjacent to Hambantota Port in Sri Lanka in order to prevent a Chinese takeover of the facility and to control China’s access to the port that it has leased for 99 years (Source: http://www.businessinsider.com/india-and-china-are-fighting-for-control-in-sri-lanka-2017-12, https://www.reuters.com/article/us-sri-lanka-port-india/india-eyes-airport-in-sri-lanka-near-chinese-belt-and-road-outpost-idUSKBN1CI0KI).

June 29, 2017

How understanding women’s saving needs can improve micro-lending

By Rachel Cassidy, Fatima Habib, Shehryar Nabi, and Simon Quinn

There is growing evidence that increasing women’s income not only empowers them as individuals, but also improves the welfare of their families. This is because women tend to spend more than men on education and the physical well-being of children. Investments in children have important implications for social development outcomes such as stunting and education, both of which Pakistan performs poorly on compared to other countries in the region.

Many development interventions are hence increasingly focused on improving women’s access to finance. Pakistani organizations such as Kashf Foundation and the National Rural Support Program have given microloans to women for expanding their businesses and providing education and nutrition to their children.

Key to designing effective micro-lending schemes is understanding how women save money. Studies suggest that both men and women are tempted to spend money instantly even if they desire to save for the future. This is also known as having a “present-bias” or “self-control” problem. If present-biased business owners direct more money to consumption rather than saving and investment, they do not accumulate the capital necessary for their businesses to flourish.

“Commitment savings” products attempt to solve this problem by committing users to saving small amounts of money overtime to build long-term capital. Such products can be implemented in different ways. For example, regular deposits can be made into a savings account, or money can be withdrawn from the account only after a specified date. Uptake of commitment savings products has been high among women. However, research shows the impact of commitment savings is mixed: Some recipients experience large benefits, but usage and re-adoption rates are low, and some recipients even lose money.

Why would commitment savings – a product now popular with banks and NGOs – be inappropriate for some individuals? A study supported by the International Growth Centre (IGC) suggests that the “self-control” problem commitment savings products try to correct for may have been overstated among low-income women.

Researchers (Rachel Cassidy and Simon Quinn) tested this idea by interviewing 530 female microfinance borrowers in Punjab’s Sargodha district twice, with each interview spaced two weeks apart. The women were asked to indicate their demand for commitment savings products, report how much income they expected to earn and how much they actually earned, and perform activities designed to measure self-control. A participation fee was paid randomly to see how an influx of cash affected women’s savings overtime and performance on self-control tests. Half of the women were also interviewed before the wheat harvest, and the other half after the harvest, to understand how women’s responses were affected by the profits made during the harvest.

If self-control problems were a major factor in driving low savings, it was expected that women would show evidence of these problems whether or not they received a payment, and whether they were interviewed before or after the harvest. But the researchers found the opposite was true. Women appeared to have fewer problems with self-control if they were paid at the first interview, or interviewed after the harvest. This suggests that what might look like self-control problems may actually be women’s rational responses to changes in their cash flow over time.

Self-control also had no correlation with women’s demand for commitment savings products. However, demand was much higher after the wheat harvest, indicating that greater financial security may increase uptake of commitment savings. Women also preferred plans with fixed start and end dates over choosing their own timeline. Again, this suggests that women’s saving choices may be more rational than previously thought: When there is less money available, they prefer to keep it to themselves rather than risk committing scarce funds to a savings plan.

The study has important implications for how microfinance can be harnessed to improve social outcomes.

First, it would be unwise to design commitment savings products purely around self-control. Other strategies such as reminders to save and dealing with external constraints – such as spouses or relatives demanding money meant for saving – should be explored further.

Second, varying preferences for how commitment savings products are structured highlights the importance of making them flexible to women’s needs. Time matters a great deal here, as the study shows preferences are sensitive to seasonal changes.

Finally, it would be fruitful to examine other potential drivers of savings problems, particularly for women. More experimentation with different types of savings products is also needed, for example harnessing new technologies to give women greater control over their resources and providing more opportunities to save even for saving products in which money is easily accessible. This increased autonomy may enable female business owners to better allocate their savings towards their businesses as well as their children’s health and education.

Rachel Cassidy is a PhD candidate in Economics at Oxford University.

Fatima Habib is a research associate at the Consortium for Development Policy Research

Shehryar Nabi is a communications associate at the Consortium for Development Policy Research.

Simon Quinn is an associate professor of Economics at Oxford University.

March 28, 2017

What the government is (and isn’t) doing to fix urban issues

(Credit: JimC, CC BY-NC 2.0)

By Ijaz Nabi and Hina Shaikh

What is the government currently doing about Pakistan’s staggering urban challenges? Where is more work needed? Here is an overview per issue:

Housing

Pakistan faces a growing housing shortfall of approximately 4.4 million units. When provided, the quality is often substandard and low income groups receive little benefit. To redress chronic housing problems, Pakistan’s only housing policy was announced in 2002. The government’s attempt in 2005 to update the housing plan with a comprehensive policy framework remains unexecuted. Until a new, official policy is adopted and implemented, the provision of low-cost urban housing will be an elusive goal.

Local governments have a limited role in resolving the urban housing crisis. They have little control over urban land[1], a lack resources to fund schemes and are unable to borrow independently from international donors.

Many announcements of government-sponsored housing projects have made headlines (such as Ashiana [2] and Apna Ghar[3]) but remain uncompleted. The Housing and Works Ministry openly admits its failure to complete various projects. Most face bureaucratic and or administrative delays or are mired by corruption scandals and lack of political will. Where construction has taken place, low income groups have received little attention.[4] To complete one housing project, Punjab is now seeking assistance from TOKI – the Turkish Housing Development Administration. Punjab also plans to sell public land to fund low-cost housing. Several schemes are underway in Khyber Pakhtunkhwa (KP) and Sindh as well but progress is slow.

The House Building Finance Company (HBFC) decided in October to extend housing finance to low and middle-income groups by introducing a new priority lending scheme. The State Bank of Pakistan has issued guidelines for housing finance. Donors like the World Bank are also stepping in to help launch innovative housing products targeting under-served communities. While partial attempts like these have been made to address housing problems,, chronic housing shortages and poor quality remain unaddressed.

Water and Sanitation

In most Pakistani cities, water supply is limited and unsafe for drinking while access to waste management services remains poor.

A National Drinking Water Policy was announced in 2009 that promises safe and sustainable drinking water to all by 2025, and a Sanitation Policy was declared in 2006 aligning goals with the relevant Millennium Development Goal targets. Provincial commitment to ensuring water and sanitation services are formalized is seen in WASH[5] sector plans in Punjab and Baluchistan[6], sectoral roadmaps in Punjab[7] and other policy initiatives[8].

Initiatives have also been announced to improve waste disposal in urban centers. Karachi and Lahore, the two largest cities of Pakistan, have privatized garbage collection[9] with varying degrees of control at the local level[10]. Punjab plans to establish solid waste management companies across seven cities as part of its sanitation roadmap and commence a district-level survey to earmark sites for waste disposal.

Provinces are also improving access to clean water. The Saaf Paani company is restoring non-functional water schemes in 37 rural tehsils of South Punjab and is keen to scale-up the program across all districts (rural and urban). Water quality testing is also routinely conducted in most cities by the Pakistan Council of Research on Water Resources (PCRWR). Its most recent report estimates that 10 to 15 percent of bottled water is contaminated with excessive levels of either arsenic or sodium.[11] Most filtration plants in cities are only capable of cleaning arsenic.

Untreated industrial and municipal waste water remains a major health hazard in cities.[12] In smaller cities, sewage treatment facilities are virtually non-existent. The situation is not much different in larger urban centers.[13]

Health

As use of basic public health services remains low in both rural and urban areas, key health indicators among Pakistan’s urban poor are only marginally better than the rural poor.

After a hiatus of several years following the 18^th amendment, Pakistan finally has a National Health Vision (NHV) 2016-2025 to help prioritize health interventions post-devolution. All four provinces have a Health Sector Strategy. Healthcare commissions are functional in each province, regulating public and private health facilities while ensuring their compliance to minimum standards.

Technology and improved data collection at both the federal and provincial levels are significantly changing health service delivery. Islamabad has a Health Policy Strengthening and Information Analysis Unit[14] to collect health data while health information systems are functional across all provinces. The use of internet communications technology, particularly supported by the Punjab Information Technology Board (PITB), is helping improve healthcare in the province especially for controlling dengue[15] and enhancing immunization[16]. Polio cases are declining steadily as both KP Punjab have launched successful inactivated polio vaccination (IPV) campaigns.

Health insurance is big on the cards as the Prime Minister launched the first ever national health insurance scheme in Pakistan last year while KP has introduced its own program via the Sehat Insaf Card [17].

Efforts to improve tertiary healthcare, however, remain inadequate as several large-scale projects remain incomplete.[18] Provinces are now engaging with the private sector to establish modern hospitals just as several primary health care services are also being outsourced.

Transport

Pakistan’s mega urban centers like Karachi are without a mass public transport system and investments in roads in place of public transport have led to an unregulated rise in private vehicles with fewer options of public transport for the poor.[19]

The federal government has only recently signed a two-year project to formulate the first National Transport Policy with support from the United Kingdom’s Department for International Development (DFID) and the Asian Development Bank (ADB) for a safe, efficient and sustainable transport system. Provincial governments are making significant investments in low-cost public transport. These include mass transit projects in Islamabad, Lahore, Multan, Karachi and Peshawar.[20] Specialized transport bodies such as the Lahore Transport Company, Karachi Urban Transport Corporation and Punjab Metrobus Authority are helping manage city travel. But given the transportation needs of megacities, further investment in feeder or connecting routes is required. Currently, the construction of feeder-route networks to connect to Islamabad and Lahore are in the pipeline but facing administrative delays.

Inadequate public transport has fueled a rise in private taxi services (Albayrak, Uber and Careem). New provincial regulations in Sindh and Punjab will require these services to acquire route permits, fitness certificates and be subject to taxes. Vehicle inspection regime remains weak. Punjab has taken the lead by setting up vehicle inspection and certification system centers across the province.

Pakistan’s transport sector needs to prepare for the rise in economic activity expected in urban centers following investments under CPEC. Introducing the right land-use policies and investing in low-cost public transport can help meet the likely increase in demand.

Education

Although urban areas have better enrolment and learning outcomes, a significant number of children remain out of school.[21] The preference for private schools remains high, reflecting in part the low quality of public schooling.

The National Education Policy was announced in 2009 and provides broad goals. Provinces, responsible for education after the 18^th amendment, have failed to reach a consensus on a revised policy. There are four education plans, one for each province.[22] Punjab’s expires this year and Sindh’s next year. The status of Article 25-A of the constitution that ensures the right to free and compulsory education post-18^th amendment is still pending in KP, Gilgit-Baltistan and Azad-Jammu and Kashmir (AJK).

Provincial education departments are embedding education reforms within broader provincial plans. Punjab has adopted the roadmap approach for improving public schools. [23] The Schools Reforms Roadmap is based on “stock-takes” that track progress on education outcomes. Sindh and KP are implementing a similar model. The approach however varies across provinces in terms of leadership and management style. For example, progress in Punjab, unlike KP, is managed personally by the Chief Minister. This raises the question of whether centralized control is the right way to achieve outcomes as opposed to granting more responsibility at the local level.

All four provinces are now relying on technology-driven, “smart” monitoring techniques to manage the performance of public schools.[24] Provinces are also moving towards the merit-based hiring of teachers, now being recruited through rigorous testing conducted by a third-party service.

While the overall impact of these reforms is yet to be seen in terms of increased enrollment and learning outcomes, education roadmaps are helping to create a culture of evidence-based policymaking.

Land Management

Unregulated land use remains one of the top causes of ill-planned urbanization.

A policy mandate to manage urbanization has been slow to emerge at the federal and provincial levels. The need for smarter urban development first appeared at the heart of Planning Commission’s New Framework for Economic Growth in 2012. The incumbent government’s “Vision 2025” and 11^th Five Year Plan (2013-18) roll out a similar agenda. Vision 2025 particularly emphasizes legal reforms for zoning, commercialization, taxation and improving urban infrastructure.

The Planning Commission recently established the Urban Planning & Policy Center to pursue smart, sustainable urban development in Pakistan. Provinces are also gearing up. The Punjab Growth Strategy endorses support for dense urban centers to attract investment and boost productivity while urban policy units in KP and Punjab are conducting research to inform urban policies. Provinces are also digitizing land records to facilitate administrative and economic decision-making and improve land allocation in urban centers.[25]

However, provinces have not designed industrial policy that looks at land usage and development of new cities[26], especially as industrial investments under CPEC are already being made[27]. While Punjab is currently identifying areas with the best potential to develop into cities and industrial estates, other provinces need to follow suit to align economically with CPEC.

What Next?

While there are many real and headline-grabbing urban initiatives (some are successful, many are not), they are not being pursued in a systematic framework for urban development. This has led to the poor prioritization of initiatives. Sensible urban development strategies are thus now essential for all provinces.

Pakistan will launch “The State of Pakistan Cities Report 2016”[28] this year to provide updated data on key urban indicators. The rollout of the population census, after a gap of 19 years, will also be very helpful. A fresh census will depict the true extent of urbanization and the size of the urban vote bank[29].

Given the size of the urban vote bank, there are political incentives to bring about sustained change. Responding to these incentives will require being guided by evidence to pursue the right development path – and learning from best local and international experience. This makes for excellent opportunities for collaboration between researchers and policy makers and will be taken up in the final blog in this series.

Ijaz Nabi is the Pakistan country director at the International Growth Centre.

Hina Shaikh is a Pakistan country economist at the International Growth Centre.

[1] Urban land in Lahore remains under the control of the Lahore Development Authority while only a third of Karachi’s land is under the city government.

[2] Aims to provide 50,000 low-cost housing units in the next 2 years. If completed the scheme will meet no more than 0.6 percent of Pakistan’s housing shortage. The government launched a similar housing scheme back in 2010 as well. Original target was to build 50,000 housing units in 21 cities of the province but in the past 5 years the government built just 370 units in only 3 cities.

[3] The Rs 500 million Apna Ghar Scheme announced in Punjab in 2013 remains limited to files. Under this scheme, the federal government was to construct 500,000 housing units in five years, under a PPP-mode, on land to be provided free of charge by the province.

[4] Pakistan Housing Authority (under the Ministry of Housing and Works) has over the past 15 years constructed only a few thousand housing units with none for low income groups. While the federal ministry is responsible for acquisition and development of sites as well as construction and maintenance of federal government buildings it bears no direct responsibility for provision of shelter to the poor.

[5] Water, Sanitation and Hygiene services

[6] Punjab WASH sector Development Plan 2014-2024, Baluchistan has also developed a 10-year WASH sector plan undergoing approval

[7] Punjab has launched a separate road map for water and solid waste management

[8] Sindh has a drinking water and sanitation policy 2016 awaiting approval while KP’s drinking water policy 2015 stands approved. Punjab has a drinking policy 2011.

[9] In Lahore, two Turkish companies were awarded a seven-year contract, by the Lahore Solid Waste Management Company valuing USD320 mn for solid waste collection, disposal and washing, back in 2012. After five years, the Sindh Solid Waste Management Board followed suit by awarding a Chinese company a USD25 mn contract for garbage collection in 2 districts of Karachi.

[10] By appointing political leaders from Lahore on the board of the waste management company, mayor of Lahore is directly engaged in supervising efforts to keep the city clean. Sindh however is centralizing the function of waste collection at the provincial level.

[11] The water quality control cell of the civic agency in Islamabad also found 53% of the water samples collected from various parts of the city unfit for human consumption.

[12] In Karachi, only two of its three waste water treatment plants are working, processing around 11% of the city’s sewage with more than 400 million gallons of waste water being dumped untreated into the rivers and, ultimately, into the ocean every day. A survey conducted by the AJK environmental protection agency has said that more than 70% spring water is being contaminated by sewerage lines running close to springs.

[13] After about seven years in operation, the only sewage treatment plant in the federal capital was closed down due to the faulty equipment and insufficient inflow of sewage. AJK government also claims to spend millions of rupees on water supply schemes but there has no visible change. Karachi has only recently launched a Sewage Treatment project, to be completed by 2018, for treating 460 mn gallons of sewage per day

[14] Established in 2015, it is equipped with a dashboard to collect credible data related to healthcare with support from USAID.

[15] A specialised Dengue Tracking System, based on an Android phone application given to field workers helps them keep records of dengue-related spraying activities by uploading geo-tagged photos of the spraying through the application.

[16] A digital system, E-Vaccs, launched in 2014 is monitoring the attendance of all vaccinators sent out into the field making immunization campaigns especially effective leading to rapid rise in coverage and increasing attendance of vaccinators from 36 to 94%.

[17] Plans to provide 1.8 million families across the province free treatment facility in public and private sector hospitals.

[18] A maternity healthcare project the Mother and Child Hospital, much needed for Rawalpindi, was started in 2005 at a cost of Rs2.5bn by the federal government remains unfinished to date. Other projects that remain incomplete include the construction of Surgical Tower at Mayo Hospital and extension of Services Hospital OPD in Lahore.

[19] Overall, inefficiencies in the performance of the transport sector costs Pakistan’s economy 4 to 6 percent of GDP – ADB estimates – Werner E. Liepach, ADB Country Director

[20]Metro Bus projects (orange and green lines) in Lahore, Multan, Islamabad-Rawalpindi and now Peshawar. Under transport infrastructure, these projects are now included within the CPEC framework such as rail based mass transit projects for all provincial capitals under which comes the Peshawar greater circular railway, Quetta circular railway, Karachi Circular Railway (KCR) and Lahore Orange Line train projects

[21] Close to 10 percent of all children in Lahore, Karachi and Peshawar remain out of school. Currently Pakistan has the highest number of out of school children in the world estimated at 12.3 million at primary level.

[22] These plans can be accessed from the provincial education department websites

[23] Sir Michael Barber’s ‘deliverology approach is based on first understanding the service delivery chain from top to bottom and then establishing a small team in a central delivery unit, gathering performance data to set targets and then tracking them periodically

[24] KP has launched the first ever automated management system for schools. Punjab has launched a smart monitoring of school initiative, employing over 900 monitoring and evaluation assistants to make field visits and collect data on android tablets. Sindh’s clustering policy 2016 aims to centralize control of government schools by grouping schools within close proximity to ease coordination and monitoring and developed a directorate of monitoring and evaluation. Balochistan is using its BEMIS cell to engage in software-based monitoring activities.

[25] The Sindh Revenue Board has computerized close to 95 percent of the province’s rural and urban land, while Punjab plans to do the same for urban land following complete digitization of all rural land records. KP, AJK and Balochistan are also computerizing their land records though progress has been slower.

[26] Punjab is looking at the potential to develop a new city to act as an industrial zone[26] along the Lahore-Islamabad motorway

[27] The Planning Commission confirms nine industrial parks, to act as primary hubs of industrial activity in the country, are included in the CPEC framework to be built across four provinces

[28] Report is being spearheaded by the Ministry of Climate Change (MOCC) with technical assistance from the United Nations Human Settlements Program (UN-Habitat) and funded by the Australian Government. This will provide updated information on key urban indicators for first level cities across Pakistan, establish appropriate urban baselines, analyze development trends and challenges to estimate the potential for investment and growth.

[29] Current estimates suggest that about 40% of the total electorate is now urban

February 1, 2017April 26, 2023

What President Trump means for Pakistan

By Shehryar Nabi

What does the Trump administration mean for Pakistan? Here are the key issues to watch:

Relations with the United States

The American foreign policy establishment has held an increasingly critical view of Pakistan. Despite being a U.S. ally in fighting terrorism, Pakistan has been accused of distinguishing between “good and bad” terrorists and supporting militant groups that threaten U.S. interests. Former President Barack Obama even questioned why Pakistan should remain an ally. Pakistan currently relies on the U.S. for $850 million worth of economic and military aid, which has declined over the past few years.

At his confirmation hearing, Secretary of Defense James Mattis said he will incentivize Pakistan to eliminate terrorists within its borders. He also said he would encourage collaboration between Pakistan and Afghanistan to combat terrorism. Mattis has in the past stressed the importance of maintaining an alliance with Pakistan despite frustration with its anti-terror efforts.

National Security Advisor Michael Flynn has taken a tougher position. In his recent book, The Field of Fight, he wrote that Pakistan must choose between helping extremists or receiving harsh treatment from the United States. If this translates into less aid or more trade restrictions, sectors of Pakistan’s economy that depend on American money could suffer.

Pakistan’s tightening geopolitical relationship with China may put it in an awkward position if the U.S.-China relationship starts to deteriorate. Trump talked disparagingly about China’s effect on the American economy during the presidential campaign. Trump’s pick for secretary of state said that he would block China’s access to artificial islands it built in the South China Sea. China responded with aggressive statements. But hostilities could be checked by Trump’s pick for ambassador to China, whom the Chinese government has praised as “an old friend”.

Continued expansion of America’s relationship with India could also strain U.S.-Pakistan relations. In August, the U.S. and India signed an agreement that relaxed institutional impediments to military logistics-sharing between the two countries. In December, the U.S. also officially recognized India as a “Major Defense Partner”, guaranteeing future military collaboration. Secretary of Defense Mattis has said he would continue strengthening U.S.-India ties.

These actions are perceived as an attempt by the U.S. to check China’s influence in Asia. If China takes issue with a militarily empowered India, it might find an even stronger ally in Pakistan, which is likely to be alarmed by the situation. This would only add to the awkwardness of Pakistan’s position with the U.S.

Climate change

Rising sea levels and drought induced by climate change threaten to create tens of millions of climate refugees in Pakistan. But Pakistan alone can’t do much about it beyond trying to adapt, because the main contributors to global warming are the United States, Europe and China.

There are clear signs that Donald Trump’s presidency would diminish America’s vital role in upholding global commitments to reduce greenhouse gases. As part of the Paris Agreement, the Obama administration vowed to shut down coal-fired power plants, which would lower U.S. carbon dioxide emissions by up to 28 percent. The Trump administration intends to withdraw the U.S. from the agreement and lift Obama-era regulations that limit the extraction of fossil fuels. He tweeted in the past that climate change was “created by and for the Chinese”, and he picked a climate skeptic to head the U.S. Environmental Protection Agency.

Without America’s cooperation in global pledges to reduce greenhouse gases, the world will move faster towards an atmospheric temperature of 2 degrees Celsius – widely considered the climate “danger zone”.

Remittances

Remittances – money sent by migrants to their countries of origin – make up seven percent of Pakistan’s GDP. 13 percent of those remittances ($1.3 billion) come from the United States. Remittances play a crucial role in making poorer families resilient during natural disasters and periods of economic uncertainty, and they can even spur entrepreneurship.

Pakistan could see a sharp increase in remittances from the United States in the near term if Pakistanis living there fear prejudice and send money back in case they have to return. This is precisely what happened after the September 11^th attacks in 2001 led to a rise in in anti-Muslim sentiment. From 2001 to 2002, remittances to Pakistan from the United States nearly tripled.

Why would Pakistanis fear prejudice? Trump’s campaign was marked by controversial statements about Muslims such as his proposed temporary ban on all Muslim travel to the United States, the notion that Islam hates America and the establishment of a Muslim registry. Hate crimes against Muslims also increased by 67 percent from 2014 to 2015, and there is concern that perpetrators of these crimes are empowered by Trump. However, recent polling data showing that overall American favorability of Muslims increased (mainly driven by members of the Democratic and Independent parties) during Trump’s campaign suggests growing prejudice and support for Muslims are parallel trends.

On Friday, Trump signed an executive order barring all immigration from seven Muslim-majority countries, and the White House hinted that Pakistan could be included in the future. However, there is room in the order for exempting immigrants on a case-by-case basis, and the order won’t apply to green card holders.

If these factors combine to foster anxiety among Pakistanis living in the U.S., remittances could rise in the near term. But if more Pakistanis leave the U.S. and fewer choose to migrate there, there will likely be a long-term slump in remittances.

Human capital

Thousands of Pakistanis go to the United States to study and work every year. Many of them stay in America and find employment in high-skilled jobs. This has contributed to a “brain drain”: Pakistan is missing out on the contribution of highly educated citizens who choose to work abroad.

But at the same time, many Pakistanis come back and make a real impact with the advanced knowledge acquired in other countries. This knowledge makes them great “human capital”.

If the Trump administration fosters the hostile environment described above, would Pakistan benefit from a “reverse brain drain” – when highly educated Pakistanis decide to come back? It might, but those Pakistanis may prefer to work in another country with organizations that reward advanced skills and talent. Pakistan lacks enough of those organizations.

If Trump’s presidency marks a longer-term decline in Pakistani access to American institutions, high-achieving Pakistanis who want to bring back global knowledge and experience will have a harder time doing so.

Exports

Exports are a key driver of economic growth in Pakistan. The United States is Pakistan’s top export destination with $3.7 billion worth of exports in 2015.

86 percent of those exports are from textiles, which dominate Pakistan’s manufacturing sector. Invigorating this currently struggling sector will lead to mass job creation that will reduce poverty and help prevent a future unemployment crisis.

Anger over the loss of manufacturing jobs in America was decisive for Trump’s election victory. He touted protectionist trade policies during his campaign to bring outsourced manufacturing jobs back to the United States.

He pledged to withdraw from the North American Free Trade Agreement (NAFTA) if it isn’t renegotiated in America’s favor, he killed the Trans-Pacific Partnership (TPP) and vowed to impose a 45 percent tariff on goods from China. While it’s unclear whether Trump’s top officials on trade would advocate these exact policies, they hold a similar, skeptical outlook on America’s trade deals.

This protectionism, if applied to Pakistan, will make it more expensive for Americans to buy Pakistani goods and may reduce export earnings from the United States.

Multilateral engagement with Pakistan

Pakistan receives billions of dollars from multilateral organizations such as the World Bank and the International Monetary Fund, both of which receive more funding from the United States than any other country.

The Trump administration has drafted, but not yet implemented, two executive orders that could lower U.S. commitment to these and other international organizations.

The first order cuts funding for any United Nations agency or other international body that, among other criteria, grants membership to the Palestinian Authority or Palestine Liberation Organization, funds abortion or receives money from any state that sponsors terror or violates human rights. The order further mandates a minimum 40 percent decrease in spending toward international organizations.

The second order requires a review of America’s current multilateral treaties and withdraws from those that are not directly related to national security, extradition or international trade.

The fact that the order has been delayed could mean it will be amended. But it signals that the Trump administration is serious about rolling back U.S. global engagements in the development sector. Resources for organizations that support healthcare, education, infrastructure development, energy and other sectors will likely be reduced. Indeed, the effectiveness of international donor money for development is subject to debate. But if the orders result in decreased global support for Pakistan’s development goals, achieving them will be a greater challenge.

Shehryar Nabi works in communications for the Consortium for Development Policy Research and the Institute of Development and Economic Alternatives.