Economic revival: Can ‘Uraan Pakistan’ and WB’s partnership framework deliver?

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The past few weeks have been quite significant on the economic front. Pakistan launched the “Iran Pakistan” program, an ambitious initiative that promises to spark growth and change the country’s destiny. The World Bank has announced that it has formulated a long-term partnership program with Pakistan. The program aims to help Pakistan overcome the challenges of underdevelopment and low human capital development, build resilience against climate change, ensure a resilient food security system and pave the way for digitalisation.

Both these programs rekindled the debate on Pakistan’s economic recovery. The government claims that it has developed a recipe for long-lasting growth and prosperity in the country. However, the facts on the ground suggest that this will be a huge task. Pakistan will have to overcome several problems to resume growth. The World Bank also cautioned against some issues that need attention from policy makers.

First, institutional arrangements are quite complex, which hinders the smooth implementation of policies and plans. The 18th Amendment has further complicated the system. It created duplicate institutional layers and involved players in policy formulation and implementation. The rulers never implemented it. The distribution process stopped at the provincial level. Local governments, the main pillars of democracy, governance and devolution, have never been empowered. Local governments are under-resourced, lack autonomy and have limited or no capacity to deliver.

Local governments play a very important role in a democratic system. They ensure the provision of services like health, education, transport etc. They accelerate economic growth by providing basic services and infrastructure at ground level. The example of Shenzhen in China shows how local government plays an important role in implementing the economic agenda. They ensure the participation of ordinary citizens in policy making and implementation.

Second, the system of governance is highly inefficient and biased in favor of the few. The governance system is extremely complex. It does not follow merit or rules; It understands only the language of power and money. This has given rise to corruption and rent-seeking behaviour. It works only for the powerful or those who can afford bribes.

Moreover, civil servants, the main pillars of governance, are not interested in serving the people. They are more interested in enjoying the lucrative perks and power of the seat. The World Bank also highlighted that the system is too generous for government employees.

Third, the business environment is one of discouragement and distortion. International institutions and organizations have termed it as a major obstacle to economic growth and development. Unfortunately, powerful people have created a vicious circle to control the business environment and dictate the system. Thus they are misusing the system to gain maximum benefits and capture the economic and productive resources of the country.

The powerful keep blaming each other to fool the people (the bureaucracy blames the politicians, the politicians blame the establishment). blame). However, they don’t want to change it, because the system favors them and protects their interests and power.

Fourth, Pakistan’s human capital status is alarming. Its human capital development system is very weak and lags behind in all human development indicators. It has high rates of stunting (38 percent) and food insecurity (58.8 percent). The education system further discourages the development of human capital. Pakistan has the highest learning poverty in the world. Unfortunately, the state failed to fulfill its constitutional obligations. Instead of fulfilling his responsibility, he paved the way for private education business.

Since the 1980s, private education has flourished at the expense of public educational institutions. According to the Pakistan Education Statistics Report, private institutions now constitute 38 percent of the total educational institutions and cater to 44 percent of children. Most of the private educational institutions teach the foreign curriculum completely different from the national curriculum. A weak health system and underfunding further complicate the situation. These factors resulted in a low score on the Human Capital Index (41 out of 100).

Against this background, one wonders how Pakistan will achieve the goals of “Iran Pakistan” and implement the Country Partnership Framework. This would be extremely difficult if not impossible. Therefore, there is a need to reform the system. A few suggestions are made for consideration.

There is a need to find a way to break the dominance and hegemony of the ruling class over the system. This will be difficult, as they have developed a comprehensive nexus of all power players, including politicians, bureaucrats and big business groups. But, it is important because they use their power to block any reform efforts. They just do patchwork. Rather, they tighten their control with each reformation effort.

The 18th Amendment is a perfect example of understanding the dynamics of reform and the control of the powerful. Thus, to make any meaningful reforms, Pakistan will have to break their nexus. Otherwise the reforms will fail again.

Pakistan cannot attract FDI or domestic investment without improving the business environment. There is a need to reduce the role of multiple layers of institutions and consolidate the function of service delivery and execution of business plans. For example, to register a business company, there should be only one office, and for tax services, there should be a single central body. Make the system punctual. There should be a penalty for exceeding the time limit. For example, electricity connection must be provided within seven days.

Pakistan will have to decide whether to implement the 18th Amendment in its true spirit or scrap it. If the 18th Amendment is serious, it will have to strengthen the local government system. Local governments should be autonomous in terms of financial resources and implementation.

Pakistan will have to restructure its entire human capital development system. Right now, it’s falling apart. For example, public spending and investment in the education sector is well below desired levels. Moreover, the poor state of skills and capacity of the teaching staff further complicates the situation. The same is the case with the health sector.

Thus, a holistic approach is needed to address issues in human capital development. Government should increase investment in education and health sectors. It should invest in enhancing the capacity and skills of teaching staff. Entrepreneurial approach to developing education and health sectors should be discouraged.

It is good that the World Bank has highlighted the education and health sectors as priority sectors in the country partnership document. Under the partnership framework, the World Bank will invest in these sectors. It is advisable to invest in public institutions, not private sector development.

Finally, “Uran Pakistan” and the Country Partnership Framework Agreement with the World Bank seem to be good steps. However, to make them successful, Pakistan will have to reform rather than improve its entire governance and business environment. The government has to create a framework for cooperation and an enabling environment for the successful implementation of the “Iran Pakistan” programme.