Relief organizations have calculated that as much as 75% of foreign aid by industrialized nations is directly tied to promoting exports of goods and services that support jobs in donor nations, achieving greater trade access in receiving countries or other economic and political strategies. Some of the aid comes with so many strings attached, including preferential tendering on contracts and the hiring of expensive consultants, that only 30-40% of dollar value is ever realized for the intended recipients. Then the rampant official corruption in the developing world further eats away at a big chunk of what is left. To make matters worse, the increasing percentages of budgets and GDP claimed by debt repayments take away money needed for basic human development needs, such as education and healthcare, in the developing world.
In the United States for example, most of the food aid, including the additional $770m food aid last year, for the poor countries requires the aid recipients to purchase food from the US agribusiness. These funds do not help the farmers in the poor nations grow food for the countries to become less dependent on foreign help. The US farm lobby continues to flex its muscle and enrich itself, without regard for the severity of the hunger crisis in the poor nations resulting from sharp increase in food prices. Three years ago, farmers and their allies in Congress effectively destroyed an effort by the Bush administration to begin the switch to untied food aid. The current composition of US Congress is no different, as far as the overwhelming power of the farm lobby is concerned.
European governments switched to giving all-cash donations for food in the mid-1990s, arguing that cash allows more flexibility in responding to crises and that the U.S. uses its food aid as a form of farm subsidy. But the Europeans also continue to erect various barriers to food imports from poor nations that could improve the viability of agriculture in many Asian and African countries.
Private donations abroad by Americans, including pledges to charities and churches and disbursements from corporate foundations, now are three times as large as America's official development assistance of $20 billion, and there is every indication this trend will continue. Washington's contribution looks even more miserly when the ODA data are broken down. Here are some basic facts about US foreign assistance:
1. Less than half of aid from the United States goes to the poorest countries.
2. The largest recipients are strategic allies such as Egypt, Israel, Russia, Pakistan, Afghanistan and Iraq.
3. Israel is the richest country to receive the highest per capita U.S. assistance ($77 per Israeli compared to $3 per person in poor countries).
4. Even after the planned tripling of the US aid to $1.5 billion a year to Pakistan, it still amounts to about $8 per Pakistani.
According to Asia Times, last year only five of the 22 countries considered industrialized - Norway, Denmark, the Netherlands, Luxembourg and Sweden - achieved the donor benchmark of allocating 0.7% of GNP to ODA. The benchmark was adopted at the Earth Summit in Rio de Janeiro in 1992 under the UN Agenda 21 program for eradicating poverty through development assistance. No other countries have even come close to meeting the target.
France managed 0.41% of GNP last year, the United Kingdom 0.34%, Germany 0.28%, Canada 0.26%, Spain 0.25% and Australia 0.25%. Japan, the only Asian participant, came in a lowly 19th with a paltry 0.2%, maintaining a reduced ODA commitment that dates back to 2001.
Dambisa Moyo, a former economist at Goldman Sachs, and the author of "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.", recently argued in a Wall Street Journal OpEd that "money from rich countries has trapped many African nations in a cycle of corruption, slower economic growth and poverty. Cutting off the flow would be far more beneficial."
She goes on to say, "Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year.
Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster."
Last year, remittances to developing nations grew by 8.8% to $305 billion, more than three times the official development aid, according to World Bank.
Official development assistance received by Pakistan has not been particularly effective, according to media reports attributed to UN findings. A United Nations report titled "U.N. reforms and civil society engagements" in 2008 claimed that Pakistan has received 58 billion dollars in foreign aid from 1950 to 1999, however it systematically underperformed on most of the social and political indicators. The report further added, "If Pakistan had invested all the ODA (official development assistance) during this period at a real rate of six percent, it would have a stock of assets equal to 239 billion dollars in 1998, many times the current external debt."
At the end of calender year 2008 in Pakistan, remittances topped 7 billion dollars, an increase of 17 per cent year over year, led by higher remittances from oil-rich GCC countries, which grew by 30 per cent year on year. Similarly, FDI inflows jumped 100 per cent year over year to 708 million dollars in December, 2008, as the telecom, oil and gas, and financial-services sectors continued to attract foreign inventors, according a report in the Nation newspaper. Annual cash remittances from overseas Pakistanis and foreign direct investments (FDI) in Pakistan earlier this decade have been far larger and much more significant in its rapid growth than all of the foreign aid put together.
Last year, remittances to various other Asian countries were as follows: $8.9 billion for Bangladesh, $27 billion for China, $30 billion for India, $6.5 billion for Indonesia, $2.2 billion for Nepal, $1.8 billion for Malaysia, $16.4 billion for the Philippines, $2.7 billion for Sri Lanka, $5.5 billion for Vietnam and $1.8 billion for Thailand, according to International Labour Organization estimates.
While recognizing that there is no one silver bullet to alleviate poverty, microfinancing, along with social entrepreneurship, is becoming an essential component of non-government efforts in Pakistan and other developing nations to empower ordinary people toward self-reliance by lifting them out of poverty and teaching them the right skills to help themselves. “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” This proverb has guided the efforts of late Dr. Akhtar Hameed Khan, acclaimed Pakistani social scientist and founder of Orangi Pilot Project. Supported by private foundations working in Pakistan, all efforts at alleviating poverty should be guided by this proverb that captures the essence of self-reliance.
While government and multilateral financial institutional programs do help to some extent, it is the privatization of aid, trade, remittances and investments for the poor through various investors and donors, such as private corporation, foundations and the immigrants working in the rich countries, that provides the best hope to ensure that the funds and the practical benefits reach the intended recipients. Such a strategy minimizes the role of the politicians and the corrupt officials in both the donor and the recipient nations.
Microfinance in Pakistan
PIDE Report on FDI in Pakistan
Foreign Remittances Help Developing World
Foreign Aid Continues to Pour in Resurgent India
US Food Aid and the Farm Lobby
Dambisa Moyo: Aid to Africa
Rampant Corruption in Construction Industry
Obama's Farm Subsidy Cuts Meet Stiff Resistance
Global Slowdown Hits Foreign Workers
Business Recorder reported that Pakistan’s Foreign Direct Investment has declined by 8% during the first eight months of current fiscal to USD 3.0421 billion against USD 3.306 billion in the same period of 2008.
The Review of Economic Situation released here on last Monday for July to March 2008-09 showed that FDI declined in Chemical and Petro-Chemicals by 15.4% to USD 72.3 million from USD 85.5 million during the period under review. The cement sector received 64.9% less FDI during the period under review against the same period of last year. The FDI inflow in cement sector squeezed to hardly USD 31.3 million this year against USD 89.1 million a year ago.
Automobile sector received 64.5 million FDI during July & March of current fiscal which is 12.2% less from USD 73.4 million a year ago while FDI in power sector declined by 5.7% to USD 140.4 million from USD 149 million in the same period of 2008.
The FDI in communication sector declined by 12.7% and shrank to USD 806.1 million against USD 922.2 million a year ago. In financial business, the FDI dwindled by 28.7% during the ongoing year to USD 672 million against USD 942.7 million in the same period of 2008 while in personal service it declined by 3.2%.
According to the economic outlook, Pakistan External Debt and Liabilities have risen to USD 49.7 billion during at the end of March 2009 against USD 46.3 billion at the end of June 2008.
The EDL recovered in the Q3 and actually fell in absolute as well as relative terms between end December 2008 and end March 2009, mainly because of lower than anticipated net disbursements and positive translation impact of appreciation of dollar versus Yen, SDR and Euro. External debt stood at USD 49.7 billion or 30.7% of the projected GDP for the 2008-09 at the end of March 2009 which is higher than end June 2008 stock of USD 46.3 billion or 27.6% of GDP.
It implies that EDL grew both in absolute and relative terms during July to December period but witnessed some correction in the Q3. Almost all categories of EDL barring Paris Club, Eurobond and military, have witnessed increase; however, highest increase in absolute term was recorded in debt stock owed to the IMF as a result of inflow of USD 3.1 billion on account of Stand by Arrangements signed with the IMF in end November 2008. On the liabilities side USD 500 million are added by Bank of China.
(Sourced from Business Recorder)
Thank you for your kind interest in the work of OPP Institutions. Details and updates can be found on our website www.oppinstitutions.org .
Low cost sanitation program of the OPP - Research and Training Institute has expanded thru partners (both govt. and NGOs/CBOs) in all of Karachi as well as in more then 20 cities/towns and about 100 villages, benefiting more then 2.5 million people. The credit program of the OPP - Orangi Charitable Trust has extended to many Urban and Rural areas covering 42 towns in Sindh and Punjab with Rs. 1.134 billion revolving and 97,150 borrowers.
Take care. Kind regards
N.B for the Wind Turbine. Just go on the net and search for Karachi wind turbine. You will get the information.
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
One of the ways Pakistani economy manages to stay afloat is by increasing remittances coming from overseas Pakistanis.
According to the Nation newspaper, Pakistan received the highest-ever amount of over $7.811 billion as expatriate’s remittances in the recently concluded 2008-09 fiscal year (FY09), beating the previous record of $6.451 billion received in the preceding 2007-08 fiscal year (FY08).
In FY09 workers’ remittances showed an increase of 21.08 percent, or $1.36 billion, when compared with FY08. The amount of $7.811 billion includes $0.48 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).
The monthly average remittances in the period from July 2008 to June 2009 comes out to $650.95 million as compared to $537.60 million during the same corresponding period of the 2007-08 fiscal year, registering an increase of 21.08 percent.
The inflow of remittances in the July 2008 to June 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,735.87 million, $1,688.59 million, $1,559.56 million, $1,202.65 million, $605.69 million and $247.66 million respectively, as compared to $1,762.03 million, $1,090.30 million, $1,251.32 million, $983.39 million, $458.87 million and $176.64 million respectively, in the July 2007 to June 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during FY09 amounted to $771.03 million as against $726.29 million in FY08.
During the last month (June 2009), Pakistani workers remitted an amount of $735.17 million, up $187.76 million or 34.30 percent when compared with an amount of $547.41 million sent home in June 2008. The amount remitted in June 2009 is the second-highest received in a single month after $739.43 million sent home in March 2009.
The inflow of remittances into Pakistan from most of the countries of the world increased last month as compared to June, 2008. According to the break up, remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $164.70 million, $154.39 million, $152.33 million, $108.11 million, $68.48 million and $22.95m respectively, as compared to corresponding receipts from the respective countries during June, 2008 i.e. $88.29m, $143.57m, $123.67 million, $90.98m, $38.08m and $13.98m. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during June 2009 amounted to $64.19m compared to $48.80m during June 2008.
Here's a ranking of ease of doing business in South Asia that puts Pakistan well ahead of India:
Bangalore: The business environment in Pakistan and Bangladesh is far better than in India. According to the latest 'Doing Business Index', India's business environment has become tougher during the years compared to other nations.
Economies are ranked from one to 183 on the basis of their regulatory environment being conducive to business operations. All of India's neighbors except Afghanistan have been ranked better. While India is ranked 133, Pakistan is ranked 85th followed by Sri Lanka (105), Bangladesh (119) and Nepal (123).
"India is a consistent reformer for the past many years. A country's rank in the index is an average of 10 indicators, each with 10 percent weight in the index. India increased the number of judges in the specialized debt recovery tribunals, which led to a major removal of blockages. While India reformed in the area of insolvency, other countries reformed in more than one area," World Bank's Senior Strategy Advisor, Dahlia Khalifa told Economic Times explaining why India has been overtaken by other nations.
The 2010 Doing Business Report prepared by World Bank and the International Finance Corporation averages a country's percentile ranking on 10 topics, made up of a variety of indicators. This includes examining a country's business environment in terms of starting a business, dealing with construction permit, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.
The first place is occupied by Singapore, which is followed by New Zealand, Hong Kong and the U.S.
To see complete rankings and report, click here: http://www.doingbusiness.org/EconomyRankings/"
Here's a news brief from the BBC about honors for the founder of BRAC, which also operates in Pakistan:
The founder of one of the world's largest non governmental organisations, the Bangladesh Rural Advancement Committee, has been honoured in the UK.
Fazle Hasan Abed - who holds dual British and Bangladesh citizenship - will be knighted by Queen Elizabeth in 2010 for services in tackling poverty.
He has also been awarded for empowering the poor in Bangladesh and globally.
Mr Abed's name was included in the Queen's New Year's Honours List released on Thursday.
"I feel very humbled to receive this award," he told the BBC from his office in Dhaka, "which I am delighted to accept on behalf of all Bangladesh Rural Advancement Committee (Brac) workers across the world.
"I now want to build on this success to continue Brac's fight against poverty not only in Bangladesh but in eight other countries in the world where we are involved - Afghanistan, Uganda, Tanzania, Southern Sudan, Pakistan, Sierra Leone, Liberia, and Sri Lanka."
Brac also has plans to expand into Haiti.
Mr Abed says that Brac's success was because of a "multi-dimensional approach" to fighting poverty such as improving education, healthcare and financial services.
To answer the oft-repeated question of the difference between aid and soft loans, the answer is that most of what is called foreign aid comes in the form of soft loans from donor nations and IFIs such a WB and IMF.
Here is an example of Japan's $5 billion in aid, bulk of it as soft loans, to post-war Iraq:
[QUOTE]Japan has pledged $5 billion in total aid - $1.5 billion in grants-in-aid, with the rest being soft loans - for postwar Iraq, the largest amount committed by any single nation, bar the US. The $1.5 billion portion has already been disbursed, and the $3.5 billion soft loan is to be fully allocated by the end of 2007. Japan, the world's second-largest donor of official development assistance (ODA) after the US, is also considering becoming actively involved in an international project to create a new framework for Iraq's reconstruction. [/QUOTE]
Here's another example of Japanese ODA (official development assistance, aka aid) to India:
[QUOTE]New Delhi, March 10 Japan on Monday agreed to extend soft loans amounting to Rs 7,074 crore for seven large-scale projects including the Delhi MRTS Project (Phase-II), Hyderabad Outer Ring Road project and the Hogenakkal Water Supply project in Tamil Nadu.
The concessional loans under the Official Development Assistance (ODA) package would be made available through the Japan Bank for International Cooperation (JBIC). The total soft loan committed by Japan for financial year 2007-08 stood at Rs 8,582 crore if the Rs 1,345 crore loan package committed in August 2007 was also counted.
The Exchange of Notes were signed and exchanged between Mr Hideaki Domichi, Ambassador of Japan to India, and Mr Kumar Sanjay Krishna, Joint Secretary in Finance Ministry, on behalf of their respective Governments, in the presence of the Union Finance Minister, Mr P. Chidambaram, here today.
Here's another example of US aid to Pakistan as loans:
[QUOTE]The major American aid to Pakistan has come in form of loans with varying rates and conditions. The loan dealing with ...
The Development Set
By Ross Coggins
Excuse me friends, I must catch my jet,
I’m off to join the Development Set.
My bags are packed and I’ve had all my shots;
I have travelers checks and pills for the trots.
The Development Set is bright and noble.
Our thoughts are deep and our vision global.
Although we move with the better classes,
Our thoughts are always with the masses.
In Sheraton Hotels in scattered nations,
We damn multi-national corporations.
Injustice seems easy to protest,
In such seething hotbeds of social unrest.
We discuss malnutrition over steaks
And plan hunger talks over coffee breaks.
Whether Asian flood or African drought
We face each issue with open mouth.
We bring in consultants whose circumlocution
Raises difficulties for every solution,
Thus guaranteeing good eating
By showing the need for another meeting.
The language of the Development Set
Stretches the English alphabet.
We use swell words like “epigenetic”
“Micro”, macro and logarithmatic.
It pleasures us to be esoteric—
It’s so intellectually atmospheric!
And though establishments may be unmoved,
Our vocabularies are much improved.
When the talk gets deep and you’re feeling dumb,
You can keep your shame to a minimum.
To show that you, too, are intelligent,
Simply ask, “Is it really development?”
Or say, “That’s fine in practice, but don’t you see,
It doesn’t really work in theory.”
A few may find this incomprehensible,
But most will admire you as deep and sensible.
Development Set homes are extremely chic,
Full of carvings, curios and draped with batik.
Eye-level photos subtly assure
That your host is at home with the great and the poor.
Enough of these verses—on with the mission!
Our task is as broad as the human condition.
Just pray God the biblical promise is true,
The poor ye shall always have with you.
Here's a case for "Developmental Realism" by Anatol Lieven and John Hulsman:
..... The North African ones are clearly Europe's responsibility. The remainder include Jordan, a Syria which demonstrates some commitment to reform and international responsibility, Bangladesh, a few of the Muslim states of West Africa and the Sahel, and Pakistan. Pakistan is in fact a perfect case for ethical and developmental realism. As repeated democratic failures have shown, this country's dreadful problems are not amenable to solution by the shallow, short-term, and inexpensive nostrums of Democratism; they require profound, and very expensive, long-term commitments on the part of the U.S..1
However, as recent growth figures (in 2005 Pakistan had the second-highest growth rates in all Asia) and infrastructural developments have shown, the Pakistani state, though deeply flawed, is nonetheless reasonably effective - at least as effective, for example, as was South Korea in the 1950s. Despite considerable barriers to Pakistani exports to the U.S., these have grown over the past three years by between 10 and 15 per cent a year. As to Pakistan's own protectionist measures, the U.S. government in early 2006 criticized these, but also praised Pakistan for having "progressively and substantially reduced tariffs and liberalized imports" since 1998. As a result, U.S. exports to Pakistan have also increased steeply. In other words, this is a troubled country with a corrupt bureaucracy, but by no means a basket case.1
So far, however, U.S. assistance to this vital ally has once again been frankly inadequate. By the end of 2006, Pakistan will have received about $3.4 billion in U.S. aid since 9/11. This sounds like a lot but is, in fact, very small in comparison to Pakistan's needs and the size of its population. Moreover, almost half of this aid is not for economic development, but is security-related.1
The biggest single focus of new U.S. aid should be the improvement of Pakistan's water infrastructure, especially in the area of conservation and reducing the appalling degree of waste. As documented by the International Water Management Institute in August 2006, water shortages present the greatest future threat to the viability of Pakistan and other key Muslim countries as states and societies.1
The second focus of U.S. aid to Pakistan should be helping to provide jobs. Improving Pakistan's educational system, especially for women, is important, but if this only produces unemployed and embittered graduates, the effect will be only to increase Islamist radicalism. Because the ultimate motivation for U.S. aid to Pakistan is not charitable but political, it must bring visible benefits to ordinary Pakistanis.
Here are some excerpts from a Businessweek story on microfinance in India:
Savita Ramesh Rathore stands at the door of her dimly lit workshop in Mumbai's Dharavi slum, filled floor to ceiling with bundles of old clothes, and talks about the cost of her son's wedding last year. "Jewels, clothes, food, the town hall," says Rathore, 50, who makes towels from discarded clothes. She borrowed 30,000 rupees ($647) from moneylenders charging 60 percent interest and took additional loans from friends. Three months ago she got a 10,000-rupee loan from urban lender Hindusthan Microfinance at an interest rate of just over 20 percent to repay some of that debt.
Rathore is one of 25 million Indians who have taken so-called microfinance loans, often without adequate documentation or collateral, according to research firm Micro-Credit Ratings International. As Hyderabad-based SKS Microfinance plans to become the first microlender in the country to go public, an industry credited with helping alleviate poverty is suddenly provoking comparisons to subprime lenders in the U.S.
"Globally, microfinance is showing characteristics of the Western financial markets before the collapse," says Sanjay Sinha, managing director at Micro-Credit Ratings in Gurgaon. "In the U.S., homeowners were given loans at 120 percent of the value of their properties. In rural India, people are being lent to at 150 percent of the value of their enterprises."
Microfinance firms make loans in poor areas largely shut off from traditional banking services. The past two years have been marked by surging defaults in some countries. Microfinance markets in Nicaragua, Morocco, and Pakistan have seen default levels climb to more than 10 percent, the threshold that marks a "serious repayment crisis," according to a February report from policy and research firm Consultative Group to Assist the Poor.
India, where more than 600 million people live on less than $1.50 a day, is the world's largest microfinance market. Most microfinance loans in India range from 5,000 to 20,000 rupees ($108 to $431), with interest rates ranging from 18 percent to 33 percent. Although Indian microfinance firms have reported bad-loan ratios of about 2.5 percent on average, levels may be higher because some lenders roll over loans to struggling borrowers to avoid defaults, says Micro-Credit's Sinha.
Microfinance lending in India may surge by about 40 percent annually over the next few years, says Sinha. SKS, betting the potential for growth will attract investors, is seeking regulatory approval for an initial public offering. Basix Group, which focuses on poor households in rural areas and provides loans averaging about 3,000 rupees, may sell shares in an IPO next year, says Chairman Vijay Mahajan. Others are likely to follow. Until now, microfinance companies have relied on loans and grants from banks, insurers, and foundations for funding, he says.
Micro-Credit's Sinha worries that growth in the microfinance market is masking an erosion of lending standards that may spark rising defaults. India doesn't have a nationwide system for tracking borrowers' credit histories, making it hard for lenders to check whether clients have multiple loans. "There is significant investor interest in microfinance companies' public issues, but it's being driven by irrational exuberance," says Sinha.
CK Prahalad's theory on the purchasing power at the 'bottom of the pyramid' (BOP) has set the MBA circles buzzing about the big corp making money off the poor people in India by selling products to them.
Recently, Indian govt tried giving away cell phones to the poor in India who wondered out loud what they'd do with them. They'd rather have food rotting in govt warehouses given away to them so they can fill their hungry stomachs to survive.
Michigan professor Aneel Karnani calls Pralahad's BOP theory "at best a harmless illusion and potentially a dangerous delusion".
His new working paper, Fortune at the bottom of the pyramid: a mirage, really takes late Professor Pralahad to task.
Karnani argues that "the best way for private firms to help eradicate poverty is to invest in upgrading the skills and productivity of the poor, and to help create more employment opportunities for the poor".
Here's a BBC report on Indians banks committing to work with microfinance industry in the wake of borrowers' suicides:
India's banking industry has thrown its support behind microfinance lenders after weeks of upheaval and confusion.
Major banks like the State Bank of India, Standard Chartered and Citi have all agreed to continue lending to microfinance firms.
The multi-billion dollar industry was on the brink of a mass default.
The banks' support has hung in the balance since lenders became embroiled in controversy in the southern state of Andhra Pradesh.
About four weeks ago, authorities started blaming microfinance firms for a string of suicides in rural villages.
They claim the suicides have been caused by company malpractice, heavy handed debt recovery methods and high interest rates.
Lenders deny the accusations.
Microfinance is designed to offer small, cheap loans to poorer borrowers, often in rural areas, who have difficulty accessing funds from banks.
Here's a Dawn news report on US bipartisan panel recommending Pakistan's membership of G20:
WASHINGTON: The United States should seek Pakistan’s membership or at least observer status in major international forums, such as the Group of Twenty, a US task force recommended on Friday.
The panel – led by Richard Armitage and Samuel Berger, top aides to former presidents George W. Bush and Bill Clinton – notes that Pakistan’s presence in such groups would enable it “to connect with new power structures and familiarise it with emerging norms and responsible international behaviour”.
In a report released on Friday, the task force, which enjoys support of the administration, endorses the Obama administration’s effort to cultivate cooperation with Pakistan as the best way to “secure vital US interests in the short, medium, and long run”.
It recommends that this approach should include significant investments in Pakistan’s own stability, particularly after this summer’s floods. But in order for US assistance to be effective over the long-term, Washington must make clear that it “expects Pakistan to make a sustained effort to undermine Pakistan-based terrorist organisations and their sympathisers.” The task force warns that “two realistic scenarios” could force a fundamental reassessment of US strategy and policy.
First, it is possible that Pakistan-based terrorists conduct a large-scale attack on the United States and that the Pakistani government – for any number of reasons – refuses to take adequate action against the perpetrators. In the aftermath of a traumatic terrorist attack, it would be impossible for US leaders to accept Pakistani inaction.
The United States most likely would launch a targeted strike on Pakistani territory led by Special Forces raids or aerial attacks on suspected terrorist compounds. Even limited US military action would provoke a strong backlash among Pakistanis. Public anger in both countries would open a rift between Washington and Islamabad.
In a second scenario, Washington could reach the conclusion that Pakistan is unwilling to improve its cooperation on US counter-terrorism priorities. The panel warns that frustration over Pakistan’s persistent relationships with groups like Lashkar-e-Taiba and the Afghan Taliban at some point could cause the United States to shift its approach towards Pakistan.
In this case, Washington will have a number of points of leverage with Pakistan. It could curtail civilian and military assistance. It could also work bilaterally and through international institutions, such as the International Monetary Fund and the UN, to sanction and isolate Pakistan.
US operations against Pakistan-based terrorist groups could be expanded and intensified.
In the region, the United States could pursue closer ties with India at Pakistan’s expense.
“Sticks would be directed against Pakistan-based terrorists, but also against the Pakistani state, in an effort to alter its policies. The US-Pakistan relationship would become openly adversarial.”
But the panel warns that “Americans and Pakistanis must understand that these options carry heavy risks and costs. Both sides have a great deal to lose”.
Rumors of the death of microfinance in India have been greatly exaggerated, says Lindsay Clinton is the editor of Beyond Profit.
Here's what's really happening.
Until recently, microfinance was the darling of poverty alleviation. A foolproof way to pull people out of $2-a-day poverty. But, now, the microfinance sector in India is in crisis, so much so, The New York Times announced last week that “Indian Microcredit Faces Collapse from Defaults.” Is this another sub-prime fiasco? What happened to take us from “putting poverty in a museum” to putting the kibosh on the whole model?
Well, we got a little ahead of ourselves for several reasons. But, before we go there, here’s a brief recap on what’s happening in Indian microfinance: Last month, the government of the state of Andhra Pradesh, India’s most saturated microfinance market, ordered microfinance institutions to stop lending, and told borrowers to stop repaying. A spate of suicides by men and women who were microfinance borrowers alarmed many, and the government felt that microlenders were to blame. Were they?
In AP, two dueling parties provide a financial service to the poor. It gets a little complicated, but in essence, there are two ways to get a microloan, from the government or from a microfinance institution. Through banks, the government lends to groups of 11 to 20 women in so-called self-help groups or SHGs. The government has a mandate to disperse $22 billion to SHGs by 2014. The other option is a commercial, for-profit microfinance lender. They are shooting to use profits to scale up and reach even more borrowers. To get commercial microfinance money you become a member of a "joint-liability group" for a loan supported by group collateral. Some choose the SHG, others the standard microfinance institutions, and some take advantage of both, receiving multiple loans from multiple sources.
Microcredit is only impactful if we create a deep connection to a borrower by offering a suite of services: microinsurance, financial literacy, business development training, etc. Some MFIs are already offering these services, and doing it well (see BASIX, for one great example), accepting that they may not grow as fast. The sooner MFIs evolve beyond the growth mantra and commit to making a real impact, the sooner we’ll be on the right track.
Here are a few excerpts from a recent NPR discusion of microfinane:
In 2006, Muhammad Yunus was awarded the Nobel Peace Prize for his work lending very small amounts of money to very poor people. Since then, microfinance institutions have popped up all over the world. Some organizations are using investors to make significant profits from this work, drawing criticism from traditional non-profit organizations. Host Neal Conan talks with Vikram Akula, the founder of SKS Microfinance, a for-profit microfinance organization in India, and Grameen Foundation president and CEO Alex Counts, about the pros and cons of fighting poverty for a profit.
CONAN: I just wanted to bring Alex in on that point. From what you understand about the regulatory system in India, is are the rates being charged by SKS out of line, do you think?
Mr. COUNTS: Actually, no. In fact, SKS, we have some disagreements with their approach, but I would say that by global standards they are quite an efficient organization, pass many of those efficiencies on to the poor, and the trend is in the right direction. I think people are can afford those, running certain types of businesses.
But I do think there's a larger point, which is that, you know, there's in microfinance and outside of it, there's a lot of wishful thinking about people being able to make a lot of money and do a lot of good for the poor, and yet in reality there are not the accountabilities in terms of doing right by the poor, that there are in terms of making money.
And this is why we've, through Grameen Foundation, have been trying to take a model developed by the Grameen Bank, which we call the Progress out of Poverty Index, a kind of self-accountability tool for how the poor moving out of poverty. It is now the most widely used tool in the industry. We've long hoped that SKS would adopt it or any other tool that does the same purpose, and they've not elected to do that.
And in case of Vikram, according to analysis that I've seen, his own personal stock options, there something in the range of $60 million. And I don't begrudge him that - those resources at all, but it does provoke a kind of a backlash. And that backlash is right now threatening the microfinance sector throughout India. And it's something a lot of us are worried about. And we think it didn't need to happen if people had been a little more thoughtful about how they rolled out this model.
CONAN: The concern, and I don't again, would not put words in Alex Counts's mouth. But the concern is that sometimes profits become the goal, as opposed to the goal of eradication of poverty.
Mr. AKULA: Well, I think there's a distinction that one has to make between sort of what happens in theory and what's actually happening in fact.
You know, Neal, you had started with the question of, you know, wouldn't competition bring down prices over time. And in fact, that's exactly what we're seeing in India.
If you look at SKS, we were, at one point, as high as 40 percent interest when we started out, because we needed to charge that much to break even. We've lowered it to 31, 27 and now 24.5 percent. And what's interesting is at the same time, our return on equity went up from five to 12 to 18 to 21 percent, where it stands now.
So the actual history, the actual facts that suggest that competition does lower price over time, you know, as you get more and more, you know, players in, and simultaneously because of our volumes and our efficiency, you can actually provide even greater, you know, shareholder return.
I think the real question to ask is: Look, if the market works forthe middle class, it works for the wealthy, if competition gives choice and, you know, better pricing, why should the poor have anything less?
Here's Newsweek on India's Microfinance Blues:
Small borrowing has big problems. Last month’s $221 million rescue loan to a group of troubled Indian microfinance companies—with some $2 billion on the line, nearly eight of 10 borrowers were in default—has stirred a crisis of faith in development circles. Critics complain that private banks, lured by the sizzling market in making small loans to the poor, betrayed the neediest by creating a mutant, developing-world subprime monster with 20 to 30 percent interest rates. Now there are fears it could spread.
Microcredit has ballooned into a $38 billion industry, but there’s less and less consensus over its efficacy. Abhijit Banerjee of MIT discovered that only about 5 percent of the 7,200 households that took money from Indian firm Spandana Sphoorty Innovative Financial Services managed to launch a business. Studies have reached similar conclusions in Morocco, the Philippines, and Bangladesh. “Most poor people do not have the basic education or experience to understand and manage even low-level business activities,” writes U.N. economist Anis Chowdhury. “They are mostly risk-averse, often fearful of losing whatever little they have.”
Much of Haiti still looks like the earthquake struck yesterday, according to the Daily Mail. Here's what happened with all of the aid and NGOs:
Many of them quickly ran into trouble - and then went to the UN for help. Often those without experience found the environment too tough to manage, so they became 'part of the caseload' and had to be shipped home. Harassed UN officials were forced to direct their energies towards rescuing those who were supposed to be helping.
This was an extreme example of a wider problem identified by Linda Polman, the author of The Crisis Caravan: What's Wrong With Humanitarian Aid.
She describes a new phenomenon flourishing in the market free-for-all of the aid sector which she calls MONGOs, or My Own NGOs. She cites cases of doctors who arrive on their own in countries such as Sierra Leone, inspired by the scenes of suffering they have watched on television, only to pull out when they run out of money.
Patients are abandoned with no aftercare, sometimes with infected post-operative wounds.
In the aftermath of the Asian tsunami in 2004, the UN tried to develop what is known as its 'cluster system' to co-ordinate the efforts of individual agencies. It has certainly resulted in some significant improvements, but in Haiti the system has been creaking at the seams.
Imogen Wall says coordination there often comes down to 'hundreds of organisations, not all of whom speak English, meeting in a shack with a tin roof down by the airport . . . and then it starts raining', so no one can hear anything anyway.
She says that at one stage the 'health cluster' included no fewer than 600 different NGOs. And the UN has no power at all to compel aid agencies to join the cluster system. In theory, NGOs have to register with the Haitian government, but in practice that does not always happen - not least because the government has itself been in such a mess since the earthquake.
The result is a very patchy provision of assistance. The good camps work well. Actor Sean Penn, who has earned widespread admiration for his dedication to Haiti's cause, has established a well-run camp in the old Portau-Prince golf club; it has good security, professional camp manage-ment and an efficient water and sanitation system provided by Oxfam. But it is known as 'the VIP camp' because it is so atypical of the way most earthquake victims live.
On the outskirts of the desperately poor Cite Soleil district of Port-au-Prince I visited an informal camp that is home to 300 families. They receive a weekly delivery of water from a Norwegian NGO and they have access to just three latrines between them.
That is pretty much it. There is no real security, and in camps like this rape and violent crime are a constant threat. I asked a group of women at the camp water tank what they thought of the foreign aid agencies. 'We have no opinion,' said one woman, 'because we haven't had any aid.'
The Haiti experience has been an object lesson in the limits to what aid can achieve.
Here are some excerpts from a Daily Mail story on cash-strapped UK's decision to extend $1.5 billion in aid to India:
So why has the Government just changed its mind, and decided to give £1 billion in aid to India over the next three years, making in the largest single recipient of our largesse?
At a time of cutbacks I struggle to understand the case for increasing aid even to the poorest countries. In the case of India, I find it impossible to grasp why we should think it desirable to shell out £1 billion to the fourth- largest economy in the world.
Could it be post-colonial guilt? If so, it is misplaced. When Britain left the country in 1947, India was the 12th-largest industrial power in the world, and had the most extensive railway system in Asia. It was the semi-socialist policies applied for the next 40 years that held India back until free market reforms began to transform it.
Perhaps Mr Obama knows something I don’t, but I wasn’t aware that in the Twenties and Thirties the Raj employed a huge secret police force and used widespread torture.
Andrew Mitchell, the International Development Secretary, denied this was a motive during an interview yesterday morning on Radio 4’s Today Programme. I hope he meant it. India will trade with us if we are able to produce goods and services which its people want to buy.
More likely, there is an outdated sense that it is our duty to disburse funds to the supposedly less fortunate — rather like an impoverished parent continuing to subsidise children who have grown much wealthier, and are more than capable of getting by on their own. I suspect that giving so much money makes us feel more important than we really are.
The decision is so apparently senseless that it is almost impossible to unravel. What makes it more senseless still is that the Indian government has signalled that it would not object if British aid were ended. There would be no hard feelings. India can look after itself. One of its senior diplomats is reported by The Times as saying: ‘We will help if you want to withdraw.’
No one disputes that, despite its phenomenal growth, India still has countless millions of poor people, though many fewer than it used to have. Its population, after all, is many times greater than ours. But despite its challenges with poverty, it spends some £20 billion a year on defence, not much less than Britain, and is a nuclear power. It also splashes out about £1.5 billion a year on its space programme, a luxury which this country cannot afford.
Arguably India should be spending less on defence, and nothing on its space programme, and be diverting more funds to the alleviation of poverty. But the country is a democracy, and its government will be held to account for the decisions it makes. It is hardly our business if India wants to spend so much money on a space programme.
But surely it is madness for us to be channelling precious funds to a country which chooses to have prestige projects that are beyond our own means.
It was the Tories, not the Lib Dems, who decided that international aid should not only be ‘ring-fenced’ but increased by a third to £11.5 billion by 2015 while domestic budgets, apart from the NHS, are being slashed. This was a controversial decision in view of the ineffectiveness of much development aid, not to mention the corruption that sometimes surrounds it.
India, although a democracy, is by no means corruption-free. A report by the country’s auditor general, seen by the Mail last September, revealed widespread aid abuses, including wasting money on thousands of colour televisions and computers that were never used, and several instances of fraud amounting to millions of pounds.
US and EU farm subsidies to their cotton growers are hurting Africa's poor. Here's a report on it:
West Africa rises up to end $31.4 bn rich world cotton subsidies
Dakar, 10 February 2011 – High-level West African political leaders are joining forces with a broad coalition of African and South American smallholder and global farmer organisations to launch a huge new offensive demanding the phasing out and elimination of rich world trade distorting subsidies in cotton.
The release this week (Wednesday 9th February) at the World Social Forum of a new updated version of the Great Cotton Stitch-Up report by Fairtrade reveals that in the nine years since the Doha Development Round was launched in 2001, the United States and the European Union paid out a staggering USD 31.4 BILLION in subsidies to its farmers so squeezing out 10 million West African cotton farmers from trading their way out of poverty.
In addition, the West African Economic and Monetary Union (UEMOA) is also prioritising and upgrading the cotton subsidy issue and will shortly be unveiling its own offensive in Brussels as the European Parliament prepare to vote on the €55 billion Common Agricultural Policy reform in June.
2011 is a crucial year for the global trading system. This summer the European Parliament will begin reform of the €55 billion Common Agricultural Policy subsidy regime, the US Congress begin work in framing a new Farm Bill while attempts to revive the stalled Doha Development Round culminate in a World Trade Organisation Ministerial, expected in November.
Kwame Banson, Fairtrade Africa Regional Coordinator for West Africa, comments:
‘This is the crunch year for rich-world subsidies, with the EU and US at a genuine crossroad. One way leads to more misery for African farmers, the other to fairer way of doing trade. This coalition demands that they take the right path because African farmers can no longer be the casualties of the politics of the North.’
Moussa Doubia, Small-hold Malian Cotton Farmer, speaking of the impact of competing against subsidised cotton, adds:
‘Sometimes I can’t sleep. Sometimes it’s hard and unbearable… The cotton price is not enough for farmers to cover our needs including school fees and health.’
The report’s launch comes as Mali Minister of Industry, Investment and Commerce, Ahmadou Abdoulaye Diallo confirmed his country is seriously considering taking the US to the WTO Disputes Panel Settlement over its USD 24.45 billion subsidies, potentially leading to retaliatory action against the US by suspending protection of US intellectual property. He also states Mali will veto the entire Doha Trade deal over the issue so further reigniting what is the most vivid example of trade injustice.
Here's Maplecroft risk warning for investing in India, according to Times of India:
LONDON: The United Kingdom-based Global Risks Atlas 2011 on Friday described India as the 16th riskiest country to invest in for the security hazards it poses and rather embarrassingly clubs it with Niger, Bangladesh and Mali. The Atlas is published by Maplecroft, a consultancy founded by Alyson Warhurst, chair of strategy and international development at Warwick Business School.
The evaluation is structured on seven key global risks including macroeconomic risk and threats around security, governance, resource security, climate change, social resilience and illicit economies.
Maplecroft assessed India faces simultaneous threats of terrorist attacks from Islamists and Maoists. It also points at India's lack of social resilience despite a robust economic growth and cites its poor human rights record. It says large sections of the population lack access to basic services such as education, healthcare and sanitation, and highlights its less productive workforce, greater susceptibility to pandemics and susceptible to social unrest.
A press release by Maplecroft lumps Pakistan with Russia on investment risk:
Dynamic political risks constitute immediate threats to business and Maplecroft rates 11 countries as ‘extreme risk.’ Most significantly, the emerging economy of Russia has moved up five places from 15th to enter the top ten for the first time, whilst Pakistan has also moved two places up the ranking to 9th.
The ‘extreme risk’ countries now include: Somalia (1), DR Congo (2), Sudan (3), Myanmar (4), Afghanistan (5), Iraq (6), Zimbabwe (7), North Korea (8), Pakistan (9), Russia (10) and Central African Republic (11).
Russia’s increased risk profile reflects both the heightened activity of militant Islamist separatists in the Northern Caucasus and their ambition to strike targets elsewhere in the country. Russia has suffered a number of devastating terrorist attacks during 2010, including the March 2010 Moscow Metro bombing, which killed 40 people. Such attacks have raised Russia’s risk profile in the Terrorism Risk Index and Conflict and Political Violence Index. The country’s poor performance is compounded by its ‘extreme risk’ ratings for its business environment, corporate governance and the endemic nature of corruption, which is prevalent throughout all tiers of government.
Jim O’Neil, Chairman of Goldman Sachs Asset Management, states: "Growth is happening where political risk is most challenging. So, meticulous monitoring and mitigation now will enable business to flourish and benefit from the opportunities presented by the future growth economies of the BRICs and Next 11".
Looking to the longer term, the BRICs countries are witnessing increasingly worse structural political risk trends for 2011. China (25), India (32) and Russia (51), rated ‘high risk’ and Brazil (97) medium risk, have all seen risks increase compared to scores from last year’s Atlas.
British Prime Minister David Cameron, now on a visit to Pakistan, has offered about $1 billion in aid for education, according to Financial Times:
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David Cameron offered Pakistan’s leaders up to £650m ($1,055m) of aid for schools and heaped praise on their “huge fight” against terrorism in a diplomatic gamble to end years of mutual mistrust with a gesture of goodwill.
During a confidence-building visit to Islamabad with an entourage of his most senior security advisers, Mr Cameron jettisoned the usual list of UK demands and instead gave Pakistan the benefit of the doubt over Afghanistan and its support for militant groups.
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Such optimism over Islamabad’s intentions marks a big break in British diplomacy, making a stark contrast with Mr Cameron’s description of Pakistan “looking both ways” on terrorism, a remark that triggered a serious diplomatic incident last year.
Rather than regarding Pakistan as a country that “can do more”, particularly on curbing Taliban activities, the British assumption is now that Islamabad’s security agencies have limited control over militant groups they once helped to create.
The big test for Mr Cameron is whether his expression of trust can generate better results than the more transactional approach adopted in the past. British officials say they are already seeing tangible improvements in intelligence co-operation and a greater willingness to discuss a political peace deal in Afghanistan.
Mr Cameron sought to demonstrate the breadth of the new partnership by offering funds for up to 4m school places by 2015. “I struggle to find a country that’s more in our interest to progress and succeed than Pakistan,” Mr Cameron said after a meeting with Yusuf Raza Gilani, Pakistan’s prime minister.
“If Pakistan succeeds then we will have a good story ... if it fails we will have all the problems of migration and extremism, all the problems.”
The package of up to £650m, which more than doubles previous education funding, forms part of an aid programme that is set to become Britain’s biggest.
The centrepiece of Mr Cameron’s visit was a security round-table with Pakistan’s civilian leadership and General Ashfaq Kayani, its military chief. Sir John Sawers, head of the Secret Intelligence Service, MI6, and General Sir David Richards, chief of the defence staff, also attended, in their second visit to Islamabad in less than a month.
Mr Gilani later brushed aside questions over Pakistan’s willingness to combat terrorism. “We’ve the ability and we have the resolve and we are fighting and we’ve paid a very heavy price for that,” he said, citing the 30,000 casualties in Pakistan’s effort to quell an internal insurgency.
One senior Pakistani government official speaking after Mr Cameron’s meetings said closer security ties would take some more time to develop. “Clearly, the UK wants Pakistan to extend help to combat militant plots on British soil,” he said. “But the UK will also need to be much more forthcoming on helping Pakistan to go after members of its own militant groups from places like Baluchistan who have taken refuge in Britain.”
Here's an interesting discussion on channeling foreign aid through government vs non-government orgs in Pakistan:
ISLAMABAD // Growing international aid flows into terrorism-torn Pakistan are vulnerable to widespread abuse because of endemic nepotism within the government and domestic non-government organisations, according to non-profit sector insiders. The threat is exacerbated by negligent management by international donors, whose ability to audit projects is limited both by security-related restrictions on the movement of personnel and their susceptibility to elitist social circles dominated by their clientele, NGO managers and consultants said in a series of interviews.
NGOs emerged as an alternative recipient of foreign aid to Pakistan in the late 1980s, following the withdrawal of Soviet occupation forces from neighbouring Afghanistan and decreasing US funds, and became the preferred recipients as relations between the government and its erstwhile allies deteriorated in the 1990s. The role of the NGOs increased as civil war flared in Afghanistan and more refugees poured into Pakistan. However, many NGOs were formed not by idealists, but "by well-educated people with social and political connections," said Arshed Bhatti, an Islamabad-based consultant to NGOs .
Often, they are relatives and cronies of military officers, politicians, civil servants and judges that "invest in 5-to-9pm socialising [with Pakistani and foreign officials], and execute the agreements the next 9am-to-5pm", he said. Subsequently, a large chunk of funding keeps going to the same people, who take two bites at foreign funding by forming their own NGOs and working as lobbyists for others, Mr Bhatti said.
Research by The National revealed numerous examples of human rights NGOs with trustees who are senior government functionaries, including serving federal and provincial ministers, all of whom are in a position to lobby for and secure funding from both international donors and the Pakistani government. Baber Javed, programme manager for the Pakistan Centre for Philanthropy, which certifies corporate social responsibility initiatives for the government, said problems within the non-profit sector were largely attributable to the restrictive practices of major international NGOs, including the humanitarian arms of the United Nations.
He said those big players had each developed pools of four or five local NGOs, and worked exclusively with them, leading to an elite grouping of some 40 to 50 organisations. That compares to 95,000 total NGOs in Pakistan, of which 65,000 were officially registered, according to a 2001 study published by Johns Hopkins University. Asma Jehangir, chairperson of the Human Rights Commission of Pakistan, a Lahore-based NGO, said the Pakistani government's funding of NGOs was particularly questionable....
Here's an excerpt from a Time magazine story on NGO spending in India:
With 3.3 million registered NGOs, India's nonprofit sector raises between $8 billion and $16 billion in funding every year. According to Home Ministry statistics, foreign funding to Indian NGOs saw a 56% increase in the 2005-06 and 2006-07 fiscal years. In 2008, the latest available data, the total official foreign aid to India was $2.15 billion.
Read more: http://www.time.com/time/world/article/0,8599,2036307,00.html#ixzz1SfGSmZ8T
Here's an interesting News International story on Pakistan as an international aid donor:
Pakistan’s contributions to mitigate the suffering of the countries hit by natural calamities are not only commendable but also helped Islamabad a lot to safeguard its economic interests. Sri Lanka, China, Iran, Nepal, Maldives and Afghanistan are the countries where Pakistan did a lot on humanitarian front and also managed to keep its say in the said countries.
As far as Afghanistan is concerned, Pakistan during the Musharraf regime announced the $300 million (over Rs 25.5 billion) grant for various projects out of which Pakistan has so far doled out $ 175 million (Rs 12 billion) since the announcement of the then President Pervez Musharraf during his visit to Kabul.
However, in 2009-10, according to Additional Secretary at Finance Ministry Mr Rana Asad Amin, Pakistan provided Rs 2 billion to Afghanistan to complete the various projects. Likewise, Rs 2.5 billion each allocated to Afghanistan in 2010-11 and current financial year 2011-12.
And in the future Pakistan will keep on doling out the amount to Afghanistan under the pledged $ 300 million grant. The Emergency Relief Fund Data is an eye opener for those who deem Pakistan did not play its role on the humanitarian front which is vital to keep its economic interests intact.
According to Emergency Relief Fund data, Pakistan in 2003 donated Rs 53.9 million in the shape of kind in to to to four countries that include Rs 1.72 million to Sri Lanka for flood victims, Rs 10.9 million to Algeria for earthquake victims and Rs 2.6 million to China for fight against sars and Rs 38.7 million to Iraq for war victims.
In 2004, Pakistan again donated Rs 171 million in kinds to four countries that include Rs 140.8 million go Iran for earthquake victims, Rs 3 million for Sri Lanka for drought victims, Rs 9.8 million to Afghanistan for food shortage and Rs 18.2 million to Bangladesh for flood victims.
However, when catastrophic tsunami badly hit Sri Lanka, Indonesia and Maldives in 2005, Pakistan came up with a bang and helped the said countries on big way and donated Rs 668 million for the said three countries. In addition Pakistan also extended the donation of Rs 26.3 million in kind to Comoros in the head od food assistance.
In 2006, Pakistan bequeathed Rs197.8 million to three countries including Rs 7.7 million in kind to Iran for earthquake victims, Rs 92.2 million to Indonesia also for earthquake victims and Rs 97.9 million to Lebanon for war affected people.
In 2007, China was provided Rs 1.875 million in kind for flood affected people, Bangladesh given Rs 72.19 million for cyclone affected people. However, Pakistan in 2008 donated Rs 5 million to Myanmar for cyclone affected people, and Rs 160.503 million to China for earthquake affected people and Rs 1.153 million to Nepal for flood victims.
And in 2009, Pakistan provided Rs 33.338 million in kind to Palestinians of Gaza. In addition, in 2008, Pakistan also provided Rs 81 million in kind to Cuba for hurricane affected people. As far as Pakistan’s authorities are concerned, they managed to ink trade deals with China and Sri Lanka with which Pakistan also possess the in-depth strategic relations.
Here's an Express Tribune story on rapid growth of branchless banking in Pakistan:
With State Bank of Pakistan demoing a constructive regulatory approach for branchless banking, a number of players are now evolving to offer branchless banking in Pakistan as a viable business model, said a report published by CGAP.
CGAP says that Pakistan has become one of the fastest developing markets for branchless banking in the world.
According to the report, SBP has issued four branchless banking licenses and is considering several others. Meanwhile, the government is planning to further encourage the mobile banking by planning to distribute the government payments through branchless banking.
There are currently two major operators in the market with several to jump in during the next couple of years.
Easypaisa, a joint venture of Tameer Microfinance and it’s parent company Telenor, claims to have over half a million mobile accounts. Easypaisa claims to have processed bill payments and domestic money transfers of worth Rs. 43 billion (US$500 million), unveils the report.
UBL Omni, another branchless banking service launched in April 2010, has reportedly won several contracts to disburse payments for nongovernment organizations and government schemes.
UBL claims to have 5,000 agents, countrywide, disbursing payments to around 2 million recipients.
New players including Mobilink, TCS, Bank Alfalah, Askari Bank and MCB are expected to enter the branchless banking market.
CGAP says that next 12 months will be critical for the newly emerging branchless banking sector in Pakistan. The evolution of the sector will likely yield important lessons for the rest of the world.
You can download the complete report by clicking this link.
Here are some excerpts from an AP story on the impact Punjab govt's spurning of US aid:
......Like many government-run hospitals in Pakistan, Lady Willingdon struggles to provide even basic care. The hospital, built by the British in the 1930s before Pakistan's independence, was meant to house 80 patients. The country's population has since boomed, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings.
There are only three working infant incubators, which were donated by NGOs, said Mohammed Athar, the doctor who runs the nursery for premature babies. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease, he said.
"Without incubators, it's useless," said Athar.
The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities, said Sharif, the hospital administrator.
The U.S. has financed similar efforts to transform two hospitals in southern Sindh province that treat tens of thousands of patients every year.
The head of the Punjab government, Shahbaz Sharif, tried to justify his decision to spurn American aid following the May 2 raid that killed the al-Qaida chief not far from Pakistan's equivalent of West Point. He said at the time that Pakistan needed "to break the begging bowl" and "get rid of the foreign shackles."
The U.S. operation outraged Pakistani officials because they were not told about it beforehand.
Sharif is a leading member of the main opposition party in the country, and many viewed his decision as a way to siphon votes away from the Pakistan People's Party, which controls the federal government. The Punjab government spokesman declined to comment on this interpretation.
Sharif and other members of his government are unlikely to feel much personal impact from the move to turn down U.S. aid.
Free government-run hospitals like Lady Willingdon are mainly used by the poor, who are already suffering from Pakistan's weak economy and surging inflation. Wealthier citizens opt for more expensive private institutions in Pakistan or abroad.
A large chunk of the American assistance, $100 million, was to be used to rebuild schools in southern Punjab destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.
The money will now be redirected to other areas of the country, said the U.S. Embassy.
Washington has continued several programs in Punjab that don't run directly through the provincial government, such as rehabilitation of power plants and small grants to female entrepreneurs in flood-affected areas, said the embassy.
The loss of aid for schools, water and sanitation also won't be felt acutely by the elite. Most send their children to private schools and live in leafy parts of Lahore dotted with Western restaurant chains, polo grounds and cosmetic surgery centers. The Sharifs own property in London worth millions of dollars.
Life is very different for Pakistanis who live in Shamaspura, a dirt-poor part of Lahore filled with ramshackle brick houses separated by a narrow mud lane coursing with sewage. Most of the roughly 15,000 residents are fruit and vegetable vendors who make about $2 per day. They are forced to tie pieces of cloth across their faucets to filter out dirt and insects in the water.
"We have asked the government to pave our road and build us a sewer system, but they said they don't have any money," said Jumma Khan, a 55-year-old vegetable vendor......
Here's an excerpt from a Dawn report on Ambassador Munter recounting how US AID has helped Pakistan over 50 years:
The US Ambassador further said Pakistanis who doubt that US assistance has borne fruit in Pakistan would be surprised to know that they have tasted it, adding, “Pakistan’s most popular citrus fruit, the kinoo, comes from California. USAID brought kinoo seeds to Pakistan in the 1960s. Today, we are helping export Pakistan’s sweetest fruit, the mango, in the other direction.”
“In the 1950s, we brought together the University of Karachi, the University of Pennsylvania’s Wharton School of Business, and the University of Southern California to establish a campus in Karachi to meet the demand for business managers in the bustling port city.”
“USAID sponsored the project and the Institute of Business Administration became Pakistan’s first business school and one of the first outside of North America. IBA is recognized today as one of South Asia’s leading institutions,” he maintained.
Ambassador Munter said in 1965, Dr. Norman Borlaug, who later won the Nobel Prize for his contribution to agricultural research, came to Pakistan to introduce his new high-yielding variety of wheat.
“We worked with the Lyallpur Rotary Club to support a program that gave individual farmers a bushel of the new generation of seed if, when the harvest came in, they returned the bushel so we could give it to someone else. While modest in scope, this small project brought Lyallpur into the Green Revolution that in turn converted a food deficit region into an exporter of grains,” he added.
In the 1960s and ’70s, a consortium of U.S. construction firms employing Pakistanis, Americans, Brits, Canadians, Germans, and Irish built the two mighty dams of Tarbela and Mangla with USAID and World Bank financing, US Ambassador said, adding, “Those engineering feats – more complex than anywhere in the world at that time – soon accounted for 70 per cent of the country’s power output and made Pakistan a leading provider of clean energy.”
In the 1980s, the US Ambassador said, with USAID’s assistance, Pakistan’s private industry founded the Lahore University of Management Sciences.
“Pakistanis approached us with the idea for the new institution and we agreed to support it with a contribution of $ 10 million. Today, LUMS incubates the ideas and nurtures the leaders who are critical to Pakistan’s future,” he remarked.
Ambassador Munter said, since the inception of the Fulbright scholarship program, nearly 3,000 Pakistanis have studied in the United States and close to 1,000 Americans have studied in Pakistan, adding, today, the U.S. Fulbright program in Pakistan is the largest in the world.
Key to all these successes was that Pakistanis owned them.
We may have helped sow the seeds but Pakistanis made sure the flowers blossomed, he said, adding, “aid is a catalyst and its success depends on those who receive it.”
“So today, while we help complete dams in Gomal Zam and Satpara and rehabilitate power plants in Muzaffargarh and Jamshoro, only Pakistanis can put an end to circular debt by paying their bills and holding the system accountable.”
“While we work to cultivate international markets for Pakistan’s fruit and fashion, only Pakistanis can deliver quality products that can compete. While we pay for road construction in South Waziristan, only Pakistanis can provide the local population with economic opportunities to make use of those roads.
While we build schools in Azad Jammu and Kashmir and Khyber Pakhtunkhwa, only Pakistanis can ensure that qualified teachers show up to teach in them,” the US Ambassador maintained.
Here's a WAM story on UAE assistance program for Pakistan:
..The KPK governor, the UAE Ambassador and other diplomats cut a special cake. The national anthems of the two countries were also played on the occasion.
Paying tribute to the armed forces for their role in the rehabilitation of Swat and thanking the UAE government for its generous assistance, Kausar hoped that the both countries would improve trade, diplomatic, and cultural ties.
Major General Zahir Shah, Commander of the GOC 45th Engineers Division of the Pakistani Armed Forces, said 124 projects have been implemented by the Programme in Swat and the tribal areas, thanks to the strength of the UAE- Pak relations. He added that the achievements will further develop the local educational and health sector to contribute positively in overall national development.
Pakistani people expressed their gratitude toward the President His Highness Sheikh Khalifa bin Zayed Al Nahyan for the UAE humanitarian programme and assistance projects to Pakistan.
UAE will support water supply projects in Khyber Pakhtunkhwa region, Bajaur district and South Waziristan district of the country for supplying clean drinking water to the villages and urban residential areas.
The regions hit by war and natural calamities would see better water supply through 26 projects supported by the UAE authorities.
The Programme comes within the framework of the good efforts by the UAE to help Arab and Islamic countries as one of the leading donors in the field of humanitarian aid and international development around the world.
The UAE and Pakistan maintain long-standing and close friendly relations since the founding of UAE by late Sheikh Zayed bin Sultan Al Nahyan. It has been an integral part of the UAE leadership's vision to support Pakistan. UAE does not only provide support to Pakistan in the times of crises i.e. natural calamities, earthquakes and floods but also work towards maintaining Pakistan's comprehensive security, stability, economic progress and prosperity.
In line with a recently signed Memorandum of Understanding (MoU) between the two countries UAE will execute a comprehensive development plan costing an estimated amount of US$110 million to create job opportunities and develop flood-hit areas of Pakistan.
Addressing the launching ceremony, Abdullah Al Ghafli, Director of the Project, said the UAE had played a significant role in mobilising international humanitarian cooperation in support of the Pakistani brethren based on strategic and humanitarian considerations enshrined in 'our foreign policy'.
According to him, the UAE aid aims to help the Pakistani people survive calamities they face and its government to address and overcome economic woes in order to achieve sustainable development.
'Built on an integrated field study on Khyber Pakhtunkhwa Region and Tribal Areas near Waziristan, the assistance programme will be implemented in coordination with the Pakistan Army Command and other relevant government bodies,' he added.
The project calls for building and rebuilding of a number of hospitals and health clinics, establishing a new nursing institute, commissioning of water purification, water resources management stations, and extending drinking water networks. Two devastated bridges will be rehabilitated and new roads will be built by the Khalifa bin Zayed Charity Foundation.
Here's an APP report on Japanese assistance to Pakistan:
Ambassador of Japan to Pakistan Hiroshi Oe on Sunday said "National Transmission Lines and Grid Stations Strengthening Project" of Japan worth Rs30 billion, will help Pakistan save electricity used in about 2 million average households.
In an interview with APP, he said Pak-Japan project, soon after its completion, will help Pakistan in overcoming its growing energy demand.
About the major projects initiated by the Japan government, he said that Japan has been a major contributor to the development of social sectors in Pakistan.
Japan's assistance to Pakistan has added up to 1.3 trillion yen (approx. 1.5 trillion rupees) since 1954, the ambassador said.
Japan has provided technical assistance to Pakistan by receiving trainees under the Colombo Plan and provided technical training or study opportunities to over five thousand Pakistanis in Japan, he added.
He said Japan has built up about 530 schools and 130 hospitals, clinics and provided medical equipment under various Japanese assistance programmes.
To a question, he said about 30 Japanese companies are operating in Pakistan including joint ventures with Pakistani companies related to automobiles, motorcycles and service industries such as constructors, IPPs, financial institutions and trading houses.
Considering the vast potentials in Pak-Japan bilateral relationship, he said there is much more work to be done, and therefore, he cannot be complacent about the current status of ties.
Highlighting the need to enhance the potential of manpower in Japan for Pakistani youth, he said trade opportunities with Japan must expand and interactions with Japan will surely provide vast opportunities to the youth of Pakistan.
To a question, he said Pakistan is an important partner in the area of parliamentarians' exchanges.
Both the countries have Japan-Pakistan friendship groups respectively, consisting of parliamentarians from each country, working to enhance their regular interactions.
In September 2011, when the Japanese Parliamentary League for Polio Eradication visited Pakistan, they discussed the need for promoting interactions between parliamentarians of the two countries during their meeting with Pakistani parliamentarians, he said.
The ambassador expressed his determination to make utmost efforts to further strengthen bilateral relations between the two countries, focusing on the promotion of parliamentarians' exchanges of our two countries.
About the Pak-Japan cultural ties, Hiroshi Oe said Japan Embassy holds cultural events such as Ikebana workshop and demonstration, children's art and speech competition and Japan film festival throughout the year across the Pakistan.
The ambassador said JICA has been helping National Institute of Science and Technological Education (NISTE) to train science teachers who will surely play a vital role in utilizing Japanese technology in Pakistan in the future.
He said that he visited Sialkot last year and found the world's top-class manufacturing industries there. He hoped that with proper quality control and marketing, Pakistan will develop even more industries of such standard.
The year 2012 is the 60th anniversary of the establishment of the diplomatic relations between Japan and Pakistan,the Ambassador added.
Hiroshi Oe emphasized on promoting human and cultural exchanges to deepen mutual understanding between the two countries and expressed wish to work with the Pakistani government to further deepen the bilateral cooperative relations.
Here's Pak Observer report on South Korean investment in Pakistan:
Ambassador of South Korea, Choong Joo Choihas has said that Tuwairqi Steel Mill (TSML) potentially rich to serve as a catalyst for industrial growth in Pakistan.
During a visit to TSML, the Korean diplomat said “South Korean steel giant POSCO, has so far invested US$ 15 million in this project, and contemplating to invest more. Owing to the strategic geographical location of Pakistan, in central and south Asia, this joint venture appears to be vital initiative in the global business operations of POSCO,” he said.
Choong Joo also said that South Korea is willing to invest in different sectors, particularly steel sector, which offers huge growth opportunities spurred by government’s investment-friendly policies
He said, that scores of South Korean companies are operating in energy, petrochemical and infrastructure industries, while many more have plans to invest in future, provided law and order situation improves in Pakistan. He further informed, that around 10,000 workers from Pakistan are currently serving in Korea.
Young-Ho Yoo, the Resident Director of POSCO said that the new plant is now on the verge of completion and is expected to commence operations by the end of the second half of the current year. “After completion of the first phase, we are looking forward to examine the feasibility for the second and third phase of the project, as its forward and backward integration,” he remarked.
Earlier, Zaigham Adil Rizvi, Director (Projects), TSML gave a detailed presentation about the project and shared statistics about the global steel industry. “There is a consistent growth in the production of DRI over the years, owing to environment-friendly production process and consistent quality of the product,” he said.
He was of the view that currently, Pakistan was among the countries that relied mostly on imports, when it comes to heavy mechanical structures and engineering goods. “By producing high-quality steel within Pakistan, we can manufacture such equipment locally by value addition, with the help of downstream industries,” he concluded.
Tuwairqi Steel Mills Limited (TSML) is Pakistan’s first private sector integrated environment-friendly steel manufacturing project of Al Tuwairqi Holding.
The plant spreads over an area of 220 acres at Port Qasim, Karachi and employs the world’s most advanced DRI (Direct Reduction of Iron) technology of the MIDREX process, owned by Kobe Steel of Japan. The first phase of the project, that constitutes a DRI plant, to produce 1. 28 million tons of high-quality DRI, is now on the verge of completion.
POSCO is the world’s third-largest steel maker, by market value, and Asia’s most profitable steelmaker. It has been the bedrock of Korea’s industrial development over the past 40 years. The Korean shipbuilding and automobile industries primarily are dependent on POSCO for their steel requirements. POSCO produces some 33.7 million tons of steel products each year. Currently, POSCO ships those products to over 60 countries around the globe, satisfying some of the world’s most quality-sensitive manufactures.
Here's a BR story on FDI plummeting in Pakistan:
According to the latest data released by the State Bank of Pakistan on 15th May, foreign private investment in the country dropped to only dollar 595 million in July-April, 2012 as compared to dollar 1.622 billion in the corresponding period last year, showing a huge fall of over 63 percent.
Out of this, foreign direct investment (FDI) fell to dollar 667 million as against dollar 1292.8 million in the comparable period of 2011-12, while portfolio investment showed an outflow of dollar 71 million in sharp contrast to an inflow of dollar 329 million in the corresponding period last year.
Sector-wise, the most discouraging news was in the telecommunication sector which used to be the favourite area of investment of foreigners but witnessed a profoundly high net outflow of dollar 327 million of investment during the first ten months of the current fiscal as against an inflow of dollar 73 million in July-April, 2011.
The power sector also recorded a net outflow of dollar 25 million compared to a net inflow of dollar 129 million in the same period of last year.
FDI in financial business declined to only dollar 54 million compared to dollar 223 million in the corresponding period of 2010-11.
Transport and trade sectors also witnessed massive declines of 83 percent and 55 percent, respectively, in FDI during the year.
However, investment in the oil and gas exploration sector at dollar 466 million witnessed an increase of 12 percent during July-April, 2012.
Country-wise, FDI from the US was the highest at dollar 196 million followed by the UK at dollar 171 million, Italy at dollar 162 million and China at dollar 113 million.
A steep fall in FDI during the first 10 months of 2011-12 is definitely disturbing news for the country, especially at a time when the economy is in dire need of liquidity to revive its growth prospects to create job opportunities and reduce poverty.
Also, foreign investment is crucial for technological upgradation, innovative improvements and overall modernisation of the industrial base to allow it to be competitive at the international level and enhance exports to narrow the widening trade gap.
Of course, the compulsion to attract FDI would have been less severe if the country was able to generate the required level of domestic resources to finance the needed investment, but obviously this is not the case as indicated by a huge gap in these two variables.
The most worrying aspect of the situation is that foreign investors have, over the years, changed their perception about the country as a favourable destination of investment and shifted their attention to other countries.
This is indicated by a steady decline in FDI in the country from dollar 5.4 billion in FY08 to dollar 3.7 billion in FY09, dollar 2.2 billion in FY10 and dollar 1.7 billion in FY11.
If the present trend continues which we have no reason to contest, the inflow of FDI during 2011-12 could be less than dollar one billion or highly inadequate to make any meaningful contribution to the country's economic prospects.
The reasons for a rapid decline in FDI in the recent years are not difficult to understand.
Although, there are ample opportunities for investment in various sectors of the economy and Pakistan has one of the most conducive policy framework to attract FDI, the inhibiting factors are so dominant and pervasive that foreign investors seem to avoid the country without giving much thought to the positive gestures of the government.
Some of the deterrents to foreign investment include poor infrastructure, energy crisis, very poor law and order situation, corruption, political instability, lack of good governance and increasing militancy......
Here's Dambisa Moyo's interview on China's relationship with Africa:
A: There’s nothing wrong about China going around the world making resource deals to support its growing population. What it’s doing makes a lot of sense. Yes, my concern is that other countries will not catch on until it is too late. In a zero-sum world, what will happen if China wins the race for resources? Other countries seem to be asleep while China is making a concerted effort. Some 24 ongoing wars and violent conflicts have their origins in commodities, and this trend is poised to continue. China is befriending what I call “the Axis of the Unloved”—countries and regions such as Africa, Brazil, Colombia, Argentina and parts of Eastern Europe that have been basically ignored by the Western economies. China is the leading trading partner and foreign investor in many of these countries—a very different approach to the West’s largely aid-based model.
Q: The Chinese economic edge in this is that its state capitalism offers advantages that the Western laissez-faire model does not.
A: Favoured Chinese companies have a zero or near-zero cost of capital. State-owned banks provide highly concessional credit lines, in the form of government grants or low-interest loans. Favoured companies also benefit from tax breaks and the preferential allocation of key contracts. Like the US$12-billion credit line extended to Wuhan Iron and Steel, a major steel producer, by the state-owned China Development Bank, for ﬁnancing “overseas resource base construction.” And of course it helps to have a war chest of over US$3 trillion, while Western economies are struggling with cash constraints.
Q: The Chinese political edge is that it’s famously untroubled by governance issues in the countries it deals with.
A: Well frankly, in practice there is little to distinguish between the commodity counterparts of Western nations and those of China. U.S. and European countries are just as happy as China to strike deals with countries with less than pristine reputations—whether it’s Saudi Arabia, Venezuela or Russia. Two wrongs don’t make a right, but in this narrow sense, it’s unfair to constantly point fingers at China.
Q: So you think that criticism of China on both scores—cheating, so to speak, economically and being too comfortable with dictators politically—is often unfair and wrong?
A: Cheating is one thing, meddling in the markets is a whole other thing. Virtually all governments meddle in the commodities markets. Western governments are particularly egregious in this respect. The United States paid US$6 billion in commodity subsidies in 2010. OECD countries spend a total of US$226 billion on agricultural subsidies yearly. And in the EU, the Common Agricultural Policy sees some 40 billion euros spent on direct farm subsidies. So if meddling in the market is “cheating,” China has a lot of company. And the West has never had much of a problem dealing with despots and dictators if there is a benefit to be gained.
A: I think the reasons are quite clear. China pursues strictly business, symbiotic relationships, trading access to commodities for infrastructure, employment and other economic benefits. Take employment. The construction of the Imboulou Dam in [the Republic of the] Congo in 2010 employed 2,000 locals (compared to 400 Chinese). Survey results indicate that Africans much prefer to deal with the Chinese than with Westerners. In Ivory Coast, Mali, and Kenya, more than 90 per cent of respondents see China’s economic growth as “a good thing.” In Tanzania, 78 per cent agree, but only 36 per cent feel the same way about American influence. The difference is stark. Across the developing world, people want jobs, infrastructure and investment and the Chinese engagement does exactly that. ....
Here's an ET report on record high remittances from Pakistani diaspora:
With an impressive 17.7% annual growth, remittances sent home by overseas Pakistanis surged to a record high and crossed the psychological mark of $13 billion in the previous fiscal year 2011-12, the State Bank of Pakistan (SBP) announced on Tuesday.
Continuous growth in remittances is being billed as a lifeline for Pakistan’s economy, especially when energy shortages and high inflation have hurt gross domestic product (GDP) growth.
“Remittances have been playing a key role in the country’s economic performance,” said Muzammil Aslam, Managing Director of Emerging Economics Consultancy.
“One can safely say that the continuous rise in remittances in the last few years has saved Pakistan from serious economic problems including default on debt repayments.”
Aslam suggested that the government can further increase the flow of remittances if it reduces the difference between interbank and open market exchange rates for the US dollar from the present one rupee to 10 to 15 paisa. “This will encourage overseas workers to send more and more dollars through banking channels instead of illegal means.”
Invest Capital Markets analyst Khurram Schehzad commented that the continuous rise in remittances is significantly positive for the country as the money supported the economy in different forms. Overseas Pakistani workers remitted a record amount of $13.186 billion in the last fiscal year ended June 30, 2012, compared with $11.201 billion received a year earlier, the SBP said.
Except for September ($890.42 million) and November ($924.92 million), Pakistanis remitted more than $1 billion in each of the remaining 10 months.
Monthly average of remittances rose 17.73% to $1.099 billion compared with $933.41 million a year earlier.
In June overseas Pakistanis sent home $1.117 billion compared to $1.104 billion received in the same month of 2010-11.
In the same month, remittances from Saudi Arabia, UAE, USA, UK, GCC countries and EU countries amounted to $333.68 million, $219.14 million, $206.60 million, $128.12 million, $126.72 million and $29.24 million respectively. In comparison, remittances from these countries were $291.55 million, $270.04 million, $204.64 million, $121.35 million, $106.20 million and $33.83 million respectively in June 2011.
Analysts believe that the SBP’s initiative for facilitation of remittances, called the Pakistan Remittance Initiative (PRI), has significantly contributed to the growth of remittances.
Since its inception in April 2009, PRI has taken a number of steps to enhance the flow of remittances through legal channels. These include preparation of strategies on remittances, taking all necessary steps to implement the overall strategy, playing an advisory role for the financial sector in terms of preparing a business case, relationship building with overseas correspondents, creating separate and efficient remittance payment highways and becoming a national focal point for overseas Pakistanis through a round-the-clock call centre.
Here's a BR story on inflow of foreign loans and grants in 2011-12:
Rupees 114 billion ($1.3 billion) were disbursed to Pakistan in 2011-12 according to the Economic Affairs Division data, however, budget documents reveal Rs 226.1 billion ($2.6 billion) as revised foreign inflows for the year. The rupee-dollar parity taken for the budget 2011-12 stood at Rs88.
The economic managers budgeted Rs 413.9 billion as foreign inflows for 2011-12 but were compelled to revise the amount downward to Rs 226.1 billion due to three major factors. First, the International Monetary Fund (IMF) did not extend a Letter of Comfort which is a prerequisite for programme lending (budgetary support) by other multilaterals (World Bank and ADB).
This resulted in the non-materialisation of Rs 118 billion budgeted for the year under programme loans. Second, Pakistan had estimated Rs 44 billion under Euro Bonds but this also did not materialise due to international financial crisis as well as Pakistan's domestic economic crunch. And finally, the tensions between Pakistan and the US post-Salala led to considerable reduction in releases under Coalition Support Fund as well as under Kerry Lugar package.
Documents available with Business Recorder reveal that the country received Rs 89 billion ($1.01 billion) from multilaterals; $497.2 million from the Asian Development Bank (ADB), $479 million from the World Bank and $35.4 million from the Islamic Development Bank (IDB) while the amount received from bilaterals stood at Rs 23.9 billion ($271 million).
The US remained the major grant provider to Pakistan during last fiscal year despite the fact that relations remained tense between the two for the latter part of the year. The US released $114 million to Pakistan with $2.7 million released by Bureau for Population, Refugees and Migration (BPRM), $0.4 million by the US government, $1.8 million from Office of US Foreign Disaster Assistance USA OFDA, $108 million from USAID, and $0.5 million released by then United States Department for Agriculture.
During the last fiscal year, Australia released $23 million to Pakistan, Belgium $8.8 million, Canada $13.3 million, China $0.5 million, Denmark $1.6 million, UN $50 million, European Union $13.5 million, Netherlands released $18 million and $86 million from other bilateral donors such as UK, Germany, Switzerland, international private donors and France, etc.
Here's a Bloomberg story on Pakistan seeking US investments:
The American Business Council, that includes the Pakistan units of Coca-Cola Co. and Cisco Systems Inc., plans to invite 10 U.S. companies a year to invest in the South Asian nation and take advantage of rising consumer demand.
“Branded product penetration in Pakistan is so low that the potential for growth is immense,” Saad Amanullah Khan, president of the council, said in an interview in Karachi today. Up to 80 percent of American companies operating in Pakistan, especially technology and consumer goods companies, had a “good year” in 2011.
Pakistan needs to increase overseas investment to help meet an economic growth target of 4.3 percent in the year that began July 1. Foreign direct investment declined 50 percent to $813 million in the year ended June 30, according to the central bank.
The council plans to double its membership of U.S. companies from 63 in the next five years and increase the total investment to $1 billion from $663 million, said Khan, 51, who is also chief executive officer of Gillette Pakistan Ltd.
Pakistan agreed this month to end a seven-month ban on North Atlantic Treaty Organization trucks crossing its territory on the way to Afghanistan, easing tensions with the U.S., its biggest trading partner. The routes were reopened after U.S. Secretary of State Hillary Clinton apologized for the killing of 24 Pakistani soldiers in a November border strike by American helicopters.
Pakistan’s credit rating was lowered deeper into junk status by Moody’s Investors Service on July 13, which cited dwindling currency reserves and political instability. The $200 billion economy faces the fastest inflation in Asia, lingering power blackouts, an insurgency on the Afghan border and reduced aid flows.
Here's a report on US civilian economic aid disbursed to Pakistan since 2009:
The United States has disbursed $ 2.8 billion in civilian assistance to Pakistan since the passage of the Kerry-Lugar Berman Bill in 2009, according to the State Department.
“While figures for this fiscal are not yet available, since the passage of the Kerry-Lugar-Berman legislation in October 2009, the US government has disbursed $ 2.8 billion in civilian assistance, including approximately USD 1 billion in emergency humanitarian assistance,” the State Department said in a statement.
The non-humanitarian civilian assistance funds are spent in five priority sectors: energy, economic growth, stabilization of vulnerable areas, education, and health.
In 2011, the US supported construction of 210 kilometers of road in FATA and Khyber-Pakhtunkhwa, funded the world’s largest Fulbright exchange program, and sponsored initiatives promoting private sector growth and civil society development in Pakistan.
“The US remains committed to a strong, mutually respectful relationship with Pakistan. We consider bilateral US civilian assistance to be an important component of that relationship and believe it can help Pakistan become a more
prosperous, stable, and democratic state, which serves the national interests of both the United States and Pakistan,” the statement said yesterday.
“Civilian assistance to Pakistan has been ongoing throughout the closure of the Nato supply lines and has continued after their opening,” the statement said.
Here's an NPR report on Chinese investments raising suspicions among Sindhi nationalists in Pakistan:
...Boost in Chinese investment has sparked resentment in southern Pakistan, where activists accuse China of trying to be a new colonial power. A bomb blast recently hit near the Chinese Consulate in Karachi — an ominous sign of the rising tensions.
When Bashir Qureshi, a politician in his late 40s, died unexpectedly last month, the medical examiner said it was a heart attack. But Qureshi's friends and family don't believe that. Instead they claim there's been a conspiracy, and that Qureshi was murdered. Poisoned, in fact — by China.
China and Pakistan have been allies for decades, and China recently pledged to greatly increase its investment in Pakistan, from $7 billion to $30 billion a year.
Maleeha Lodhi, a former Pakistani ambassador to the U.S. and Britain, says that money couldn't come at a better time. "Let's face it: Foreign direct investment into Pakistan has plunged to a historic low," she says. "In this environment, when you have China — the second-largest economy in the world — stepping up to the plate and saying, 'We're prepared to help you,' at a time when others are shy of coming into Pakistan, I think that more than offsets the fears that some may have."
The late Qureshi complained that China's big construction projects rely on Chinese workers and Pakistani migrants.
In recent years, China has faced similar criticisms when it has made large investments in other developing nations, including a number of African states...
Here's a Nation report on total loans and grants for Pakistan since 1985:
Pakistan received over $72.26 billion in the shape of grants and loans from different countries and international financial institutions during 1985 to June 2012.
During this period, 24 countries and 13 different global lending agencies gave loans of over $59.24 billion to Pakistan while 32 states and 13 financial organisations lent country over $13.02 billion in the shape of grants. Cash received against IMF stand-by programme is not included in these figures, it has been learnt.
According to figures released by Financial Division, from 1985 to June 2012, Pakistan received $15,937 million from Asian Development Bank (ADB), $11,076 million from IDA, $5,842 million from IBRD, $5,717 million from Japan, $6,457 million from IDB, $3,666 million from USA and $3,400 million from China.
The report further revealed that Pakistan received $6.37 billion during former Prime Minister Muhammad Khan Junejo’s regime while $23.01 billion in Musharraf era whereas the incumbent government received $14 billion until June 2012 from different countries and global financial institutions.
Here's a BR story on Pak debt repayments since Year 2000:
Pakistan repaid $10.3 billion to lenders till 2011-12
September 20, 2012
Pakistan has repaid $10.3 billion between 2000 and 2011-12 to various bilateral and multilateral donors, excluding the International Monetary Fund (IMF). Data obtained by Business Recorder showed that actual payments from 2000-01 till 2011-12 pertaining to loans that were signed after July 2000 stood at $10.37 billion: total loans amounted to $5.7 billion, $4.45 billion was interest and commitment charges were $157 million.
Data also showed that the Islamic Development Bank (IDB) was repaid $3.08 billion with $2.9 billion as actual amount of loan while $199 billion was paid as interest. Asian Development Bank (ADB) has been repaid $1.8 billion, including $1.3 billion actual loan with $461 million interest while $32 million was paid as commitment charges.
France has been repaid $1.02 billion, including $218.3 million actual loan amount and $809 million interest while commitment charges were $470,000. The US, one of the major financial assistance providers to Pakistan, was repaid $336.2 million, including $59.1 million actual loan amount and interest of $277 million.
The UAE was repaid $13.6 million ($1 million actual loan plus $12.5 million interest), Turk Exim Bank was repaid $64.5 million ($51.6 actual loan plus $12.9 interest), Switzerland $27.9 million, including $11.1 million actual loan and $16.8 million interest, Sweden was repaid $62.7 million ($19.6 million actual loan plus $43.1 million interest) and Saudi Arabia was repaid $390 million from 2000-2001 till 2011-12.
Documents also showed that Russia received $77.5 million as repayment, including $19.7 million actual loan with $57.8 million interest. Japan received $1.1 billion against actual loan of $185.8 million, Italy was repaid $18.6 million, Austria $53.5 million against actual loan of $18.2 million and Canada was repaid $38.7 million while the actual loan amount was $12 million. Germany was repaid $314.2 million while International Bank of Reconstruction and Development (IBRD) and International Development Association (IDA) have been repaid $422.2 million against the actual loan amount of $33 million.
US AID promoting private equity investment in Pakistan's SME sector, reports Express Trib:
..$80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative
Crowding-out of the private sector from credit channels due to reckless government borrowing has provided a unique public relations opportunity to the US. The US has said it will offer loans ranging from $500,000 to $5 million to small and medium sized business in Pakistan, to help the latter expand and create jobs.
In total, $80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative, will go towards providing cheaper financing and equity to small and medium enterprises (SMEs) in Pakistan.
“The United States Agency for International Development (USAID) will provide up to $24 million for an equity fund, and fund managers will be required to match the requested funding to take the size of each equity fund to at least $45 million,” said Theodore Heisler, the project manager and senior economic growth advisor to USAID.
Heisler said that co-investment was essential in bringing the size of each fund to a level where it can cover operating expenses. The US intends to create at least three funds, but is, as yet, noncommittal to the total number. US authorities are on the lookout for good fund managers, and the availability of quality managers will determine the numbers of the funds, officials have said. During the last fiscal year, the federal government borrowed Rs1.77 trillion to finance the budget deficit. The State Bank of Pakistan has already warned that due to increasing government borrowing, there is little credit available for the private sector to grow.
“Having access to finances is a challenge for SMEs, as there is little equity and debt available for the sector,” said Heisler. “The longer term goal is to help expand the market for private equity investment and provide money that is not available through banks and other international lending agencies,” he added. He said the real job growth potential lies in the SME sector, as the corporate and public sectors cannot create unlimited jobs.
Heisler said each fund will have a 10-12 year lifespan. Individual investment sizes will range from $500,000 to $5 million, but could vary depending upon requirements. The initiative has been modelled on the Polish American Enterprise Fund, which was started with $140 million and has now grown to a multi-billion dollar fund.
Heisler said the US is looking to create a private equity industry in line with global standards, as there is hardly any private equity investment fund in Pakistan. He said the other purpose was fetching foreign investment through co-investment, as investment in Pakistan is dwindling.
The US is currently looking for fund managers who have a successful history, and Heisler said that both local and international fund managers have expressed interest in the project.
To a question whether Pakistani fund managers have expressed reluctance due to doubts over long-term commitment issues with the US, the US embassy replied “we believe there will be substantial interest from local, regional and international investors”.
It further said that “the US government designed the Pakistan Private Investment Initiative after a year of research and consultations with numerous stakeholders, including the Pakistani private sector and regulatory authorities.” It added that USAID will structure the funding to ensure that it is sustainable.
Here's a Times of India story on declining private equity in India:
MUMBAI: "We stay away from places that have impossible governments and impossible tax regimes, which means Sayonara to India," TPG Capital founder-partner David Bonderman said recently, tearing into the country's investment attractiveness. Bonderman, among the most influential private equity (PE) investors, said publicly what his peers quipped behind the scenes: India is possibly the least attractive of the emerging markets for PE, right now.
India's recent regulatory moves on retrospective taxes spooked PE funds, which are long-term risk investors. But it's only a part of the story going awry. Big investors into PE firms like global pension funds, university endowments and family offices - piqued with lower growth, poor corporate governance and bad returns - are cutting back capital allocations for investments in India. This leaves more than 500 PE firms in the country struggling for survival, with the sector bracing for a sudden contraction in the number of funds within 12 to 18 months.
The present count of PE firms is a staggering jump considering India had less than 20 just over a decade ago. PE firms invested $3.98 billion in the first six months of 2012 compared to $5.2 billion in the year-ago period, said a JM Financial note on the industry. The 23% decline by value probably tracked the rupee's drop against the US dollar. But the number of deals remained flat at 185, suggesting the shrinking size of investments.
Indian PE play peaked with $19 billion investments in 2007 but fell sharply in subsequent years. Private equity investments totalled a little over $10 billion in 2011. The industry, which offers million-dollar jobs to heavy hitters, has over 1,500 people in its fold riding on the lucrative 2:20 (fund managers charge 2% management fees on committed capital and incentive fee of 20% on capital returned) remuneration formula. But, with fresh capital raise getting harder, some are already settling for lower management fees. "There is a growing discussion that the unfolding scenario could see India private equity managers being forced to accept something less favourable than the 2:20 structure," Chattopadhyay added.
"We see fewer funds competing with us for deals in recent days. PEs without a critical mass and no strong engagement with India's long-term story will get out. One can call it shrinking or maturing of the private equity in India," said a managing director at one of the world's largest private equity firms. "And there are people in my firm who think like Bonderman, that we shouldn't be here," he added, while striking a contrarian mood.
Here's Guardian on effectiveness of British aid for Pak education and health:
..A report by the Independent Commission for Aid Impact (ICAI), assistance....
The watchdog found that the education programme had improved the quality of learning, and had shown promising early results. However, a programme for maternal and newborn health showed "significant shortcomings", and there were concerns that the humanitarian projects had done little to prepare Pakistan for future disasters.
Overall, ICAI, which scrutinises UK aid, rated the country programme green/amber in its traffic light ratings system, which means it performed relatively well and provided value for money, but needed improvements.
Pakistan is set to become the largest recipient of UK bilateral aid. The Department for International Development (DfID) views the country as strategically important and announced an increase in aid after its bilateral aid review last year. UK aid has already trebled from £87m to £267m between 2007-08 and 2011-12, and is expected to reach £446m by 2014-15.
A chunk of the money will be spent on education, including on an ambitious programme in Khyber-Pakhtunkhwa province and another in Punjab, aimed at getting more children into school and delivering a quality education. The department's health and nutrition programmes are expected to total around £160m. The report said DfID "has no track record of delivering programmes on this scale".
The team will be delivering these programmes in a difficult environment. Pakistan ranks low on Transparency International's corruption perceptions index – coming 134th out of 182 countries – and has weak auditing and budgeting procedures. The country has experienced natural and manmade disasters over recent years, including conflict in the Swat valley that displaced around 3 million people, and severe flooding in 2010 and 2011 that affected millions of people and disrupted development programmes. The country is also devolving federal power to the provinces. "This suggests that scaling up of the country programme needs to be approached cautiously and with a very active risk management stance," said the report.
The report welcomed DfID's cash transfer scheme in areas hit by flooding, but "while its humanitarian projects are well conceived, DfID has only limited engagement at present in building capacity for disaster risk reduction or management, to increase resilience to future disasters", despite recommendations in 2008 that more needed to be done in this area.
The design of the health programme, which trained community midwives in rural areas to support women who are not able to give birth in a health centre, was problematic, as it was competing with an existing network of trained community health workers created under another national health programme. Devolution resulted in the abolition of DfID's partner in the programme, the national Ministry of Health, which meant ownership of the project was unclear. The health programme is now being redesigned.
ICAI recommended that DfID encourages more private-sector involvement in delivering health and education services, considers making resilience to natural disasters at household and community level a core part of its programme, and implements agreed standards and procedures to ensure transparency and accountability in budgeting.
"Overall, we found that the DfID Pakistan programme is dynamic and innovative, with a good range of impressive initiatives," said Graham Ward, the ICAI chief commissioner. "DfID has no track record, however, of delivering programmes in Pakistan on the scale that is now contemplated. Delivering aid there also involves considerable challenges, so we believe that the planned programme scale-up needs to be approached carefully."..
Here's a Mail Online story on Kofi Anan calling for aid to India and China:
Former United Nations chief Kofi Annan has backed calls for Britain and the EU to stop giving millions of pounds in aid to wealthy countries.
He said booming nations such as China, Brazil and India should wean themselves off development funding so it could be targeted at ‘weaker’ parts of the world instead.
His comments come after International Development Secretary Justine Greening called for the European Union to stop giving aid to relatively rich nations.
She travelled to Luxembourg last week to say it is wrong that the EU’s aid fund, to which the UK contributes more than £1billion a year, sends money to relatively rich countries such as Barbados, Iceland, China and Brazil.
Britain refuses to fund such countries out of its own aid budget. However, the UK is still sending around £280million a year to India – even though the country can afford its own space programme and its president, Pranab Mukherjee, said in February: ‘We do not require the aid. It is a peanut in our total development expenditure.’
Conservative backbenchers want to see the Coalition drop its pledge to increase spending on foreign aid year-on-year, while cutting funding in every other department apart from the NHS.
In 2014, taxpayers will be forking out £12.6billion a year on foreign aid – more than the £12.1billion it will be spending on the police.
Mr Annan, a Ghanaian who was the UN secretary general from 1997 to 2006, said not all the countries who received aid from British taxpayers needed it.
‘The emerging markets and the countries that are doing well should wean themselves off aid,’ he said.
‘Countries like Brazil, China, India, Ghana, Guatemala and Honduras; some of these countries can fend for themselves.
'In fact I have had the chance to suggest to some of them that they should not accept Britain’s aid willingly. They need to say “We are full enough”, so that there will be more money available for the really poor and weaker.’
A sixth of the money spent by the Department for International Development goes to the EU’s aid programme. Half of this £10billion budget is spent on middle and higher income countries, even though many say they are too wealthy to merit support....
Here's a PakistanToday story on US aid for education:
MANSEHRA - Over the next two years, USAID will provide $15 million for the construction and rehabilitation of seven Faculties of Education buildings across Pakistan.
More than 2,000 students and 100 faculty members will use these buildings every year, including the recipients of the new ADE and B.Ed. degrees.
The United States reinforced its long-term commitment to advancing education in Pakistan through the groundbreaking for a new, $1.5 million Faculty of Education building at Hazara University in Mansehra.
“This new faculty of education building will go a long way toward helping Pakistan improve the quality of education in Khyber Pakhtunkhwa”, this was stated by the Vice Chancellor of Hazara University, Prof. Dr. Syed Skhawat Shah while he led the groundbreaking ceremony on Monday in Hazara University.
While addressing the gathering State Minister for Technical and Professional Education Shahjhan Yousaf said that there is need to concentrate more on education. We have educated and results oriented teachers but don’t have strong education policy. “there is a need to work over it and to introduce good policy to facilitate new generation in their further studies,” he added.
Vice Chancellor Prof. Dr. Syed Skhawat Shah awarded degrees to 49 students from the Regional Institute of Teacher Education in Abbottabad who have been awarded Associate Degrees in Education after successfully completing two years of studies. “These two-year degrees were introduced to Pakistan by the Higher Education Commission (HEC) with USAID support, along with a four-year Bachelor’s Degree in Education. USAID helped design and introduce these degrees in order to increase the quality of teacher preparation at universities throughout Pakistan,” he added.
The US Agency for International Development (USAID) Mission Director Jock Conly congratulated the graduates through a special message saying, “The United States government is deeply committed to helping Pakistan develop strong educational institutions. Together with the Government of Pakistan, the United States is working to improve the quality of education throughout the country.”
Chief of Party for the USAID Pakistan Reconstruction Program (PRP) Tarek Selim said that the faculty of education building being constructed at the Hazara University will have 16000 square feet covered area, having six class rooms, multi-purpose hall for hundred people, learning resource center, two laboratories, a seminar room and ten rooms for faculty.
He said that building will also have twenty postgraduate rooms besides a dean office, administration room and faculty lounge. “This building, to be completed by end of the coming year, will accommodate three hundred students and has been designed to resist earthquakes besides being environmentally sustainable and energy efficient.” Tarek told the journalists.
He said that teachers will also receive continuing education in the new, U.S.-funded facilities that will help train teachers working in some of the nearly 500 schools that the U.S. has helped build in Pakistan since October 2009.
Here's a News report on US aid disbursement to non-government entities in Pakistan under Kerry-Lugar Bill:
ISLAMABAD: Around 71 percent of the total amount worth $3.172 billion disbursed by the United States under the Kerry-Lugar-Berman (KLB) Act was off-budget assistance for Pakistan in the last three years, official sources in the Finance Division confirmed to The News. Both Pakistan and the US confirmed that a major chunk of money continued to pour outside the government of Pakistan’s channel.
“The total amount disbursed to Pakistan from October 2009 to September 30, 2012, since the adoption of the KLB legislation, is around $3.2 billion. If you’d like the exact figure, it’s $3.172 billion,” said spokesperson of the US Embassy in an email message.
When contacted, Federal Secretary Economic Affairs Division Javed Iqbal confirmed that so far the United States has disbursed $3.197 billion for development in the last three years. “There are ongoing projects with an estimated cost of $754 million at the moment,” he added. Official data suggests that the on-budget assistance from the US stood around $350 to $375 million per annum – almost the same pattern followed by Washington in the aftermath of 9/11 when Pakistan decided to side by the country in the war against terrorism.
..renowned economist Dr Ashfaque H Khan said that Pakistan received $14.950 billion from US since 2001 till August 1, 2012, of which $9.8 billion was received as Coalition Support Fund (CSF) and the remaining $4.8 billion for economic assistance. On average, cash inflows stood at $437 million per annum in the last 12 years. Against the total losses of $68 billion incurred by Pakistan’s economy, the United States reimbursed just 14 percent or $9.8 billion. However, US spokesperson stated that US assistance to Pakistan has delivered real results for various sectors of the economy.
“US has added over 400 megawatts to the power grid – enough to supply electricity to nearly 900,000 households, or roughly six million people,” she said. In view of the energy sector, key projects funded by the US include power plant renovation at Tarbela dam, modernising generators at Mangla dam, upgrading Guddu, Jamshoro and Muzaffargarh power plants, and building Satpara and Gomal Zam dams.
US funds certain projects that will provide electricity to an estimated two million households in 2013. For the education sector, she added, they were building and renovating 800 schools and providing scholarships to 12,000 students to attend universities in Pakistan. Washington is also helping Pakistan in creating jobs and increasing incomes with programmes that boost agricultural output, build roads, and help entrepreneurs grow their businesses. Furthermore, US has funded the construction and rebuilding of over 650 km of roads in Khyber Pakhtunkhwa (KP) and the Federally Administered Tribal Areas (FATA), while the Peshawar Torkham highway’s reconstruction is underway.
In a statement, US Ambassador Richard Olson said that he was struck by the economic potential Pakistan possessed and the industriousness and vitality of its people. “Washington helped train 14,000 Pakistani farmers to better protect their livestock from diseases,” he said.
“It is also helping Pakistan in building new irrigation canals that will expand the arable land by more than 200,000 acres.”
He further added that US will build more than 1,000 km roads in FATA, KP and Balochistan. “We are also assisting Pakistan in business entrepreneurship,” he maintained. “To promote trade and investment, US is Pakistan’s largest export market. Two way trade between both the countries stood at $6 billion in 2011.”
Here's PakObserver on US help to improve Pak agri productivity:
Tuesday, March 12, 2013 - Islamabad—The U.S. Agency for International Development (USAID), the International Maize and Wheat Improvement Center (CIMMYT), and the Pakistan Agricultural Research Council (PARC) launched a new project to expand the use of modern technologies in Pakistan’s agriculture sector.
“Boosting Pakistan’s economy is one of our top assistance priorities. That’s why this project will work to modernize agricultural practices to increase the production and quality of livestock and horticultural goods. This in turn will enhance economic development in the country,” said USAID Country Director Jonathan M. Conly at the launch of the project in Islamabad on March 8.
Innovative technologies, introduced in Pakistan with support from the U.S. Government, spurred the Green Revolution in the 1960s and 1970s. The adoption of improved rice and wheat varieties, combined with strategic policies and investments, led to a doubling of yields and output in those two decades. With investment in research, Pakistan transformed its agricultural sector into a driver for economic growth.
Currently, Pakistan’s agricultural sector is growing at a much slower pace than other sectors. “Pakistan’s agricultural productivity has fallen behind comparable countries with similar agro-ecologies,” said Thomas Lumpkin, Director General of CIMMYT. “There is a tremendous potential for growth, but we must act now.”
Through its new four-year, $30 million project, USAID will sponsor research to encourage adoption of new technologies in agriculture, such as laser land leveling, zero tillage, residue management, introducing short duration legumes into rice-wheat cropping systems, and custom service systems for machinery.
The project will also offer short and long-term training. The U.S.-funded project will be implemented by CIMMYT and PARC in cooperation with the International Livestock Research Institute, the World Vegetable Center, the International Rice Research Institute, and the University of California, Davis.
Promoting economic growth is one of the many ways that the United States is helping to create a brighter future for the people of Pakistan. The United States funds large-scale energy projects that will provide electricity to two million households by the end of 2013. The U.S. has rebuilt and renovated 800 schools and has provided scholarships to 12,000 students to attend universities in Pakistan.
Here's a Bloomberg report on remittances helping the poor and keeping Pak economy afloat:
Living in poverty in a mud shack in Pakistan, Mazhar Ali dropped out of school, sold the family’s two buffalo and bought a visa to work in Dubai. The money he sends home is paying for a new house.
“We’re going to build three rooms with bricks and cement, plus a courtyard and a washroom,” said his younger brother Azhar in Larkana, home town of the ruling People’s Party about 300 kilometers north of Karachi. “We will then start marrying one by one, starting with Mazhar sometime this year.”
The family’s change in fortunes reflects a rising trend of rich nations with aging workers tapping poorer ones for labor -- total remittances to developing economies will rise 7.9 percent this year, and reach $534 billion by 2015, the World Bank says. For Pakistan, the income offers a source of stability, with the country poised for its first civilian handover of government in May even amid power shortages, bombings and a Taliban insurgency.
“This is our savior for keeping Pakistan out of the oxygen tent,” Farooq Sattar, former Minister for Overseas Pakistanis said in an interview in Karachi last month before his party quit the government alliance. “It has kept us from a complete economic collapse.”
Almost 10 million Pakistanis work overseas and the sum they’ve sent home has doubled in the four years through June, to a record $13 billion.
The rising tide of funds from overseas contrasts with a struggle by President Asif Ali Zardari’s administration to raise enough revenue to fund programs that would boost domestic growth. Pakistan owes the IMF $7.5 billion by 2015 and is evaluating a possible further loan from the fund as a buffer against shocks, Saleem H. Mandviwalla said in December as Finance Minister.
The local currency has fallen on concern loan repayments will erode foreign-exchange reserves, which fell to $7.5 billion in January from $11.8 billion a year earlier, according to the central bank. The rupee traded yesterday at 98.35 per dollar, near a record low, according to data compiled by Bloomberg.
Pakistan was among the 15 lowest revenue-gathering nations in the world as a percentage of GDP, according to the U.S. Central Intelligence Agency’s World Fact Book 2012. The South Asian nation recorded the highest budget deficit in two decades in the fiscal year through June as it missed its tax target.
The nation’s fiscal deficit may be 7.5 percent of gross domestic product this year, wider than the government’s target of 4.7 percent, the IMF said in January.
Among the biggest challenges for the government is the need to add almost 4,000 megawatts of power generation to end a shortage that’s causing blackouts for as long as 18 hours a day, idling factories and swelling unemployment. The government said energy shortages cut economic growth last year by as much as 4 percentage points.
“Extreme poverty has not risen as much as it would have without remittances,” Rashid Amjad, a professor at the Lahore School of Economics said in an e-mail. “Most of the remittances are flowing into consumption, real estate, housing and the stock market, and have played a critical role in keeping Pakistan’s economy afloat.”
Pakistan will hold parliamentary elections on May 11, after the outgoing government, led by Zardari’s Pakistan Peoples Party, became the first democratically elected administration in 65 years of independence to complete its term.
Remittances that fuel a thriving underground economy may rise further in the next few years as more Pakistanis seek employment overseas, said G.M. Arif, an economist at the Pakistan Institute of Development Economics in Islamabad.
Some Pakistanis also use the system to avoid paying tax..
Unilever announces $514 million investment in Pakistan, reports News Tribe:
Karachi: Unilever Plc., through its wholly owned subsidiary, Unilever Overseas Holdings Limited on Tuesday committed to invest circa €400 Million (US$514m Million, Rs.50 Billion) in acquiring the 24.92% of issued shares in its Pakistan subsidiary, Unilever Pakistan Limited, that it does not already own.
This follows price and buyout threshold determined by the Special Committee constituted at the Karachi Stock Exchange as per applicable delisting regulations.
€400 Million is the single largest foreign direct investment in the recent history of Pakistan and underlines Unilever’s commitment to a business established in the country in 1948.
For the last 65 years, Unilever has been working to create a better future every day for millions of Pakistanis, with brands and services that help people make sustainable living a common place. There is hardly a household that does not daily use one of its 27 brands in the home care, personal care, foods, beverages and ice cream categories.
It directly employs 2,000 individuals in addition to generating a further 6,000 jobs in the value chain. Over 95% of what it sells is manufactured in Pakistan. The company ranks as the Most Preferred Employer amongst business graduates.
Under the Unilever Sustainable Living Plan, the company focuses on improving health and well-being, enhancing livelihoods and reducing the environmental impact.
The aforementioned investment is subject to approval by Unilever Pakistan’s shareholders at an Extraordinary General Meeting to be held shortly.
Bill Gates' Annual Letter 2014:
In their annual letter published on Tuesday, Bill and Melinda Gates addressed a number of claims about global poverty often used to argue against giving aid to countries that need it most -- and debunked each and every one.
Read the letter in its entirety here.
Myth No. 1: Poor countries are doomed to remain poor.
Fact: Citizens of countries once said to be "trapped in poverty" are now earning competitive salaries. Since 1960, China’s income per person has increased eightfold and India’s has quadrupled. Even smaller countries are seeing vast improvements. Botswana, for example, has witnessed a 30-fold increase in per capita income, Bill Gates noted.
Myth No. 2: There is no hope for Africa.
Fact: Africa has its share of problems, but the continent has also come a long way on a number of fronts. Since 1960, the life expectancy of women in sub-Saharan Africa has increased from 41 to 57, the chairman of Microsoft said. Whereas an estimated 40 percent of African children were in school in 1970, now more than 75 percent are pursuing education. Also, the number of AIDS-related deaths dropped 38 percent in Eastern and Southern Africa between 2005 and 2011, according to the United Nations.
Myth No. 3: Helping almost every country achieve middle-income status will just make some problems worse.
Fact: It’s true that too much development can put a further strain on the environment, but that’s not reason enough to stop helping struggling countries, Bill Gates wrote. The key is simply to develop cheaper and cleaner sources of energy and to recognize that as more people become educated, they’ll be able to tackle these problems on their own.
Myth No. 4: Foreign aid is a big fat waste.
Fact: We’re not committing as much money to foreign aid as naysayers may have you think. Bill Gates noted that Norway, the most generous nation in the world, allots less than 3 percent of its budget to foreign aid. The U.S. allots less than 1 percent, which comes to about $30 billion a year.
While that certainly isn’t pocket change, the context is key, especially when considering where this money is going. It’s being spent on vaccines, education, family planning and other life-saving tools that keep children alive and empower them to become functioning members of society who can make a difference.
Myth No. 5: Aid holds back normal economic development.
Fact: Simply put, aid gives struggling countries the cushion they need to stand on their own two feet. According to Bill Gates, a number of countries that once heavily relied on aid to survive hardly get any today. Those include Botswana, Morocco, Brazil, Mexico, Chile, Costa Rica, Peru and Thailand, among others.
Myth No. 6: Saving lives leads to overpopulation.
Fact: According to Melinda Gates, parents are actually more inclined to have a lot of kids when they don’t feel certain that their children will survive. In Afghanistan, for example, the child mortality rate is very high, yet Afghan women have an average of 6.2 children each, she noted. So even though more than 10 percent of Afghan children don’t survive, the country’s population is expected to grow to 55 million from 30 million by 2050.
Myth No. 7: The world is getting worse.
Fact: Yes, there are still plenty of problems that have to be addressed, but we’ve made an incredible amount of progress and have much more to look forward to. India is on track to be officially rid of polio this year, and the world could be polio-free by 2018. Since 1990, childhood death rates have been cut in half and maternal deaths have dropped by nearly the same share, according to the World Health Organization. Anti-female genital mutilation campaigns are making progress in a number of countries, and more women in the developing world are getting access to family planning resources.
#Pakistan gets remittances of $18.4b from diaspora in 2014-15, yearly increase 16.5%
KARACHI: Overseas Pakistanis sent remittances amounting to $18.4 billion in 2014-15, which translates into a year-on-year increase of 16.5%, according to data released by the State Bank of Pakistan (SBP) on Monday.
Remittances amounted to $15.8 billion in the preceding fiscal year. Pakistanis based in foreign countries sent home $1.8 billion in June, which is 9.5% higher than the remittances received in the preceding month of May.
Inflows from Saudi Arabia were the largest source of remittances in 2014-15. They amounted to over $5.6 billion in July-June, up 19% from the preceding 12 months.
Remittances received in July-June from the United Arab Emirates (UAE) increased 35.3% to $4.2 billion on a year-on-year basis. Inflows from the UAE registered the largest increase from any major remittance-sending country during 2014-15, SBP data shows.
Remittances from the United States and the United Kingdom remained $2.6 billion and $2.3 billion, respectively, in July-June. The year-on-year increase in remittances from the US and the UK has been 4.8% and 4.9%, respectively.
Remittances from Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, clocked up at $2.1 billion in July-June, which is 15.6% higher than the remittances received from these countries in the preceding fiscal year. Remittances from Kuwait in 2014-15 equalled $748.1 million while those from Oman, Bahrain and Qatar amounted to $666.8 million, $389 million and $347.5 million, respectively.
This means the overall share of the oil-rich GCC countries in Pakistan is almost 65%. Many analysts fear remittances from these countries may dwindle going forward as their governments begin to scale back infrastructure spending in the wake of a sharp fall in global oil prices.
Oil and Pakistan
Any major fallout of the oil price slump on the remittance inflows will be detrimental for the Pakistani economy. Absent remittances, a perennial balance of payment crisis would be inescapable, as they cover up usually around 90% of the country’s trade deficit.
“The good news is that despite the oil slump, the GCC is still spending on infrastructure … there are no short-term concerns for remittances inflows into Pakistan from this region,” the SBP said in its second quarterly report.
Saying that the GCC governments’ spending plans have not been affected by declining oil prices due to the large sovereign funds, the SBP noted the status quo may not continue “much longer”.
“A continuous depletion of these reserves would eventually start biting into their fiscal spending if oil prices fail to recover. The pace of Pakistan’s remittance growth cannot remain immune to the oil slump indefinitely,” the SBP said.
Remittances received from Norway, Switzerland, Australia, Canada, Japan and ‘other countries’ during June amounted to $110.53 million, up 7.7% from the remittances received from these countries in the same month of 2013-14. The monthly average of remittances during 2014-15 remained $1.5 billion, up from the monthly average of remittances amounting to $1.3 billion received in July-June of 2013-14.
Remittances in the first six months of the current fiscal year increased regardless of the strong wave of political instability that began in August with sit-ins by opposition parties and fizzled out after the attack on Army Public School in December. Overseas Pakistanis sent remittances amounting to $8.98 billion in the first half of 2014-15, showing a year-on-year increase of 15.26%. Remittances had grown 13.7% in 2013-14, which means the year-on-year increase of 16.5% in 2014-15 was notably higher than preceding year.
Pakistan's remittances of $18.4 billion nearly made up for the trade deficit of $19.8 billion over 11 months ending in May 2015:
Pakistan's trade deficit widened by 11.73 percent to $19.735 billion for the July 2014 to May 2015 period, compared with a deficit of $17.663 billion for the same period last year, according to the Pakistan Bureau of Statistics.
Exports declined to $21.875 billion in the eleven month period from $23.092 billion the previous year. Imports rose to $41.610 billion from $40.755 billion.
The Pakistan financial year begins in July.
On a monthly basis, the trade deficit rose to $1.894 billion in May from $1.795 billion the previous month.
Exports totalled $1.953 billion in May and imports were worth $3.847 billion.
"It sounds kind of crazy to say that foreign aid often hurts, rather than helps, poor people in poor countries. Yet that is what Angus Deaton, the newest winner of the Nobel Prize in economics, has argued.
Deaton, an economist at Princeton University who studied poverty in India and South Africa and spent decades working at the World Bank, won his prize for studying how the poor decide to save or spend money. But his ideas about foreign aid are particularly provocative. Deaton argues that, by trying to help poor people in developing countries, the rich world may actually be corrupting those nations' governments and slowing their growth. According to Deaton, and the economists who agree with him, much of the $135 billion that the world’s most developed countries spent on official aid in 2014 may not have ended up helping the poor."
The idea of wealthier countries giving away aid blossomed in the late 1960s, as the first humanitarian crises reached mass audiences on television. Americans watched through their TV sets as children starved to death in Biafra, an oil-rich area that had seceded from Nigeria and was now being blockaded by the Nigerian government, as Philip Gourevitch recalled in a 2010 story in the New Yorker. Protesters called on the Nixon administration for action so loudly that they ended up galvanizing the largest nonmilitary airlift the world had ever seen. Only a quarter-century after Auschwitz, humanitarian aid seemed to offer the world a new hope for fighting evil without fighting a war.
There was a strong economic and political argument for helping poor countries, too. In the mid-20th century, economists widely believed that the key to triggering growth -- whether in an already well-off country or one hoping to get richer -- was pumping money into a country’s factories, roads and other infrastructure. So in the hopes of spreading the Western model of democracy and market-based economies, the United States and Western European powers encouraged foreign aid to smaller and poorer countries that could fall under the influence of the Soviet Union and China.
The level of foreign aid distributed around the world soared from the 1960s, peaking at the end of the Cold War, then dipping before rising again. Live Aid music concerts raised public awareness about challenges like starvation in Africa, while the United States launched major, multibillion-dollar aid initiatives. And the World Bank and advocates of aid aggressively seized on research that claimed that foreign aid led to economic development.
Deaton wasn’t the first economist to challenge these assumptions, but over the past two decades his arguments began to receive a great deal of attention. And he made them with perhaps a better understanding of the data than anyone had before. Deaton’s skepticism about the benefits of foreign aid grew out of his research, which involved looking in detail at households in the developing world, where he could see the effects of foreign aid intervention.
“I think his understanding of how the world worked at the micro level made him extremely suspicious of these get-rich-quick schemes that some people peddled at the development level,” says Daron Acemoglu, an economist at MIT.
Instead, many of the positive things that are happening in Africa – the huge adoption in cell phones over the past decade, for example – are totally homegrown. He points out that, while the world has made huge strides in reducing poverty in recent decades, almost none of this has been due to aid. Most has been due to development in countries like China, which have received very little aid as a proportion of gross domestic product and have "had to work it out for themselves."
#EU to provide €653m to #Pakistan for uplift projects in rural areas to cut #poverty. http://www.dailytimes.com.pk/business/15-Dec-2015/eu-to-provide-653m-to-pakistan-for-uplift-projects …
European Union will provide assistance of six hundred and fifty three million euros to Pakistan for rural development and reduction of poverty.
A memorandum of understanding for the EU’s Multi Indicative Programme (2014-2020) with a commitment of €653 million was signed between the government of Pakistan and European Union. The signing of the agreement was witnessed by Minister for Finance and Economic Affairs Senator Ishaq Dar and ambassadors and representatives from EU member states.
The minister on this occasion said that the government appreciates the development assistance being given to Pakistan by EU. He appreciated the fact that the new MIP was almost double the amount of the previous programme. He said that building a stable, democratic and economically vibrant Pakistan was the aim of the government.
He said that the government was committed to achieving this objective and called upon the EU and its member countries to support Pakistan in this regard.
EU Ambassador Jean-Francois Cautain said that the €653 million EU multiannual indicative programme for Pakistan set out the EU’s development strategic objectives in support of a stable and democratic Pakistan, in line with the EU-Pakistan five years engagement plan 2012-2017, which framed the relationship between the two sides.
#Pakistan ranks 8th with its 6 million strong diaspora sending $20 billion home in remittances http://www.pakistantoday.com.pk/?p=503292 via @ePakistanToday
Pakistan stands on the eight place among the top 10 recipients of remittances this year at $20.1 billion, according to a report.
According to Khaleej Times, the World Bank estimates that more than 247 million people, or 3.4 per cent of the world population, live outside their countries of birth among which more than six million are Pakistanis.
These Pakistanis, between July 2015 and January 2016, have sent an estimated $11.2 billion a marked increase of about 6 per cent compared with July 2014 to January 2015.
Overseas Pakistanis are remitting more than $1.5 billion a month, making a significant contribution to their families and bringing about a socio-economic change. The State Bank of Pakistan expects remittances to cross $20 billion this financial year, the highest ever and these expectations are in line with the World Bank’s calculations that place Pakistan on the eight rung among the top 10 recipients of remittances this year at $20.1 billion.
“The inflows from remittances (at current levels) now fully cover the country’s petroleum imports. Currently, international remittances are moving six per cent of the total GDP of Pakistan,” says Rizwan Wyne, a Pakistan-based expert on international remittances from Middle East to South Asia. The Migration and Remittance Factbook 2016 produced by the World Bank notes as of 2015 international migrants are expected to have sent $601 billion to their families in their home countries, of which developing countries like Pakistan received $441 billion.
At more than three times the size of development aid, international migrants’ remittances provide a lifeline for millions of households in developing countries. In addition, migrants hold more than $500 billion in annual savings. Together remittances and migrant savings offer a substantial source of financing for development projects that can improve lives and livelihoods in developing countries, says the report.
#UAE #ADFD funds Dh1.5 billion (US $408 million) worth of projects in #Pakistan
Up to Dh1.5 billion worth of sustainable development projects have been financed in Pakistan by the Abu Dhabi Fund for Development (ADFD), a new country report said on Monday.
To date, the ADFD, a national entity for development aid, has supported Pakistan with grants and concessionary loans on behalf of the Abu Dhabi government, valued at Dh1.5 billion across nine sustainable development projects.
The ADFD’s country report issued to mark Pakistan’s Independence Day on August 14, highlighted that the nine development projects have significantly contributed to improving socioeconomic conditions in the country.
The projects spanned diverse sectors, most notably transport, water and agriculture, healthcare.
Mohammad Saif Al Suwaidi, Director-General of ADFD, said ADFD’s role in financing these sustainable development projects across Pakistan underscores the fraternal relations and strong bilateral ties that the UAE and Pakistan share.
Stressing the importance the UAE places on supporting developing countries, Al Suwaidi said: “The comprehensive and wide spanning portfolio of development projects supported by ADFD in Pakistan can certainly be attributed to the strong relations between our countries as well as the wise directives, guidance and support of the Abu Dhabi government.”
Al Suwaidi added that ADFD believes in assisting beneficiary governments in achieving their economic, sustainable and development schemes and goals.
“We are pleased that our support to the Pakistani government has elevated living standards and boosted strategic growth in that country,” he said.
Some of the notable projects funded by ADFD in Pakistan include the Dh227 million construction of the UAE-Pakistani Friendship Road, which has helped link the southern and northern areas of the Waziristan region. The 72-km road serves three major cities and 20 villages and facilitates the movement of people and goods.
In the health sector, ADFD administered an estimated Dh107 million Abu Dhabi government grant to develop two healthcare projects in Pakistan. In 2013, ADFD provided Dh94 million to construct the Emirates Hospital — an integrated speciality medical centre equipped with 1,000 beds.
Furthermore, in 2006, ADFD allocated Dh13 million to fit out the Shaikh Zayed Hospital in Lahore with modern and internationally standardised equipment.
ADFD’s contributions in the education sector include a Dh46 million grant earmarked for training colleges. This project led to the construction of three training colleges for individuals living in remote areas. These include Warsak College in the Khyber Pakhtunkhwa province, and Wana College and Spinkai Cadet College — both located in South Waziristan.
ADFD also allocated Dh7 million to fund expansion works at the Shaikh Zayed International Academy (SZIA).
In order to ensure an adequate and reliable power supply, ADFD provided a Dh66 million loan to rehabilitate the Tarbela Dam in 1981.
ADFD and the Government of Pakistan have enjoyed strong and long-standing ties dating back to 1981. The synergies between the two sides continue to drive sustainable socioeconomic development across key sectors that benefit the citizens of Pakistan.
#Africa-#China Ties 2021: “China still addresses Africa’s hunger for structural transformation in a way that the West does not....Any African country with urgent need for new roads, bridges or ports, then Chinese finance and firms are the obvious option" https://www.economist.com/the-world-ahead/2020/11/17/african-countries-will-remain-best-friends-with-china
VERY THREE years African and Chinese politicians gather at a diplomatic jamboree known as the Forum on China-Africa Co-operation (FOCAC). The summits, which attract more African heads of state than annual UN gatherings, are waypoints in China’s long journey on the continent. Over the past three decades it has become the pre-eminent partner for many African countries. Its importance will be apparent again in 2021 at the next FOCAC meeting, the eighth, which is due to take place in Dakar, the capital of Senegal.
Yet the context for this summit is different from that of the previous seven. During the Trump presidency China’s role in Africa came in for increasing American criticism. In 2020 the secretary of state, Mike Pompeo, accused China of offering African countries little but “empty promises and tired platitudes”. Though the Biden administration is less likely to use provocative rhetoric, scepticism of Chinese intentions on the continent will nevertheless endure. So the coming year could prove a tricky one for African policymakers, who are already grappling with the fallout from the pandemic.
China’s image in Africa was tarnished last year by the ill-treatment of African migrants in Guangzhou, a port city. That brought condemnation on social media and by African politicians. But, broadly speaking, African views of China are nuanced and resilient. Polling of 18 countries by Afrobarometer, a pan-African research group, released in September 2020, found that an average of 59% of respondents had a favourable view of China—marginally higher than of America (58%). No wonder African politicians are careful not to take sides.
Nor will they see much benefit in speaking out against China over issues such as Xinjiang, Hong Kong or Taiwan. China places great value on the 54 African countries’ votes at the UN and other international organisations. (In 1971 African votes ensured that the People’s Republic of China was admitted to the UN and that Taiwan was expelled.) It will reward those who vote with it and punish those who do not. Officials in Kenya are known to have studied China’s punitive response to Australian criticism of its human-rights records—and fear what would happen if their country did anything similar.
Even if African politicians wanted to speak out against China, few believe Western governments would support them if they did. “The West is unwilling to underwrite the cost of antagonising China,” says W. Gyude Moore, a former cabinet minister in Liberia, now at the Centre for Global Development, a think-tank. “The continent is best served by charting its own course.”
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