Pakistan has a huge potential due to its diverse demographic and geographical resources. Around 70 percent population is under 30, its geography and location at the crossroads of Asia and the private sector eager to grow. But its youth is a liability due to unemployment which could become an asset. Geographical location without capacity and infrastructure is meaningless. The private sector captured by elites and unnecessary taxes, regulations, the culture of red-tapism is impeding the growth. Threats of climate change are adding fuel to the fire
Government has minimum resources; the major portion of the revenues go to debt servicing, pensions and defense. The private sector could prove to be the best solution. For middle-income states, private investments should be at least 25% of the GDP which is 10% here. The private sector could be encouraged by improving economic competitiveness, access to finances, and developing sustainable infrastructure. Focus on SMEs is very important for the private sector.
There are over 1500 rules and taxes to add complexities and impede economic competitiveness. In global competitiveness, Pakistan is at 110 out of 141 countries. Integrating the solutions with IT in the regulatory process will simplify and make it transparent for individuals. Moreover, this will reduce unnecessary delays and corruption.
Integrating everyone in the economy is also very important, the female labor force is 25% here, sustainable growth is not possible keeping half of the population at home. By limiting the protectionist policies and reducing tariffs will diversify the business activities and will improve the competitiveness and eventually lead to more exports and fewer imports.
Access to finance is also resisting the business culture. Currently, 72% population is employed in the informal sector, only 21% of the country is banked and 97% of the SMEs are unregistered and only 8% have access to credit. Banks only credit big businesses and buy govt. papers.
A futuristic approach is needed for sustainable growth. Private Banks should expand their base and attract small enterprises and SMEs in undermined sectors like agriculture, businesses for females, etc. more public-private partnerships could prove beneficial in solving socio-economic issues, many private organizations could be approached in this domain i.e. IFC, etc.
Digital disruption in fintech — like mobile wallets- could help in building the even infrastructure and regulating the economy.
The actual issue is of infrastructure. In both urban and rural centers, Pakistan would be facing an investment gap of $100B in physical infrastructure in the next 10 years. Whatever infrastructure would be going to build should be climate-resilient, friendly, and inclusive.
Sustainable solutions are required, and public money is not enough to fill these large gaps. But the public-private partnership is possible with clear development goals and guidelines to increase the govt. capacity.
Private organizations like IFC have demonstrated in renewable energy, transport, and sanitation, etc. that the private sector could actually solve the real socio-economic issues. IFC is willing to help Pakistan in getting maximum of its potential resources by building resilient infrastructure, SMEs, and beyond. Private investments are needed to achieve real economic goals and policy reorientation is needed to encourage and lure the private sector.
This article is a summarized and reproduced version of Pakistan’s Potentials from DAWN.