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.
Related Links:
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
Threre are more reasons to migrate to Canada
1 year ago
29 comments:
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
Perween
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.
Margaret
http://grantfoundation.net
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.
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/11-Jul-2009/Pakistan-received-record-7811b-remittances--in-FY09
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.
'Multi-dimensional approach'
"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]
http://www.atimes.com/atimes/Japan/HG26Dh01.html
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.
[/QUOTE]
http://www.thehindubusinessline.com/2008/03/11/stories/2008031151801000.htm
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 ...
[/QUOTE]
http://www.cdrb.org/journal/current/2/2.pdf
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.
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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.
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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.
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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.
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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 is SKS Microfinance IPO analysis by Xavier Reille of World Bank's CGAP published Wednesday, August 11, 2010:
By market standards, the SKS IPO is a great success. Institutional investors have over-subscribed their allocations by 13 times, and the company’s valuation of USD 1.5 billion came in at the top end of the offer band price.
This sky high valuation represents 6.7 times the company’s post issue book value, and about 40 times the company’s fiscal year 2010 earnings.
Such multiples are not in line with market peers. In emerging markets, banks are valued at 3 times the book value, while finance institutions serving low-income customers are trading at 2.6 times the book value. The SKS valuation is even higher – by a margin — than Compartamos’s valuation in its landmark 2007 IPO. At listing, Compartamos was valued at 27 times the company’s historical earnings although its 2006 return on equity (ROE) at 55% was more than double the ROE of SKS today.
Earning prospects at SKS are attractive, but on their own don’t justify such a high valuation. On the positive side, SKS still has a lot of room for growth. It has ambitious plans including offering new financial products, distributing goods and services beyond microfinance at the bottom of the pyramid, and transforming into a universal bank. But there are clouds on the horizon. Portfolio yield might stagnate as increased competition and political scrutiny put pressure on interest rates. The cost of risk will likely go up in the absence of a well-functioning credit bureau. Transaction costs for group lending will also increase as SKS focuses its growth on underserved, harder-to-reach clients and states.
So what might explain the unrealistically high valuation? This “irrational exuberance” in the SKS IPO price is probably due in part to excess capital flow. It reflects strong institutional investor interest in microfinance combined with the dearth of publicly-traded microfinance securities. Investors are seeking more exposure to emerging markets and to alternative assets. They are eager to buy into the microfinance story and with only two pure microfinance institutions listed, prices are getting ahead of fundamentals.
One of my concerns is that investors buying at such a high level may pressure management to increase profitability, at the expense of clients’ interests and long-term company sustainability. There is indeed a risk that a focus on short-term profit and quarterly earnings might overshadow—if not clash—with the social mission of SKS. True, this did not happen in the Compartamos case (the company did not become more “commercial” after its IPO) but there is still a risk.
What does appear likely is that someone is going to lose as, over time, the SKS valuation should come in line with global standards. Will it be the latecomer investors who bought too high? Or will it be clients as the institution prioritizes profit maximization? And what about possible broader ripple effects? Unmet expectations might make it harder for other MFIs to go gain the confidence of the public markets.
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.
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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.
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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.’
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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.
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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.
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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.
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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....
http://www.thenational.ae/news/worldwide/south-asia/foreign-aid-to-pakistan-is-a-victim-of-nepotism
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.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=61681&Cat=2
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.
http://tribune.com.pk/story/273178/pakistan-is-among-fastest-developing-market-for-branchless-banking-report/
http://propakistani.pk/wp-content/uploads/2011/10/Mobile_Banking_Brief_Pakistan.pdf
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.
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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.
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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.
http://www.dawn.com/2011/11/04/pakistan-us-relationship-dogged-by-history-munter.html
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.
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