The simplest definition of the middle class is a group of people in a society who are neither rich nor poor. The middle class has always been considered vital to a country's stability and growth. The rich and the poor simply distrust each other too much to let the other govern. Nations with large middle class populations find it easier to sustain good, democratic governance.
Unfortunately for Pakistan, the size of the middle class was very small when it came into existence, and the country was dominated by a small powerful feudal elite created by the British rulers to sustain their colonial rule. And the urban middle class remained small for decades. The situation has, however, finally begun to change in the the last decade of 1999-2009 with a combination of increasing urbanization and faster economic expansion that fueled significant job creation in the industrial and services sectors to enable middle class growth.
Pakistan is now more urbanized with a larger middle class than India as percentage of the population. In 2007, Standard Chartered Bank analysts and State Bank governor Dr. Ishrat Husain estimated there were 30 to 35 million Pakistanis earning an average of $10,000 a year. Of these, about 17 million are in the upper and upper middle class, according to a recent report.
Urbanization is not just a side effect of economic growth; it is an integral part of the process, according to the World Bank. With the robust economic growth averaging 7 percent and availability of millions of new jobs created between 2000 and 2008, there has been increased rural to urban migration in Pakistan to fill the jobs in growing manufacturing and service sectors. The level of urbanization in Pakistan is now the highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’, released by the United Nations Population Fund. Pakistan ranks 163 and India at 174 on a list of over 200 countries compiled by Nationmaster.
Pakistan has and continues to urbanize at a faster pace than India. From 1975-1995, Pakistan grew 10% from 25% to 35% urbanized, while India grew 6% from 20% to 26%. From 1995-2025, the UN forecast says Pakistan urbanizing from 35% to 60%, while India's forecast is 26% to 45%. For this year, a little over 40% of Pakistan's population lives in the cities.
The urban population now contributes about three quarters of Pakistan's gross domestic product and almost all of the government revenue. The industrial sector contributes over 27% of the GDP, higher than the 19% contributed by agriculture, with services accounting for the rest of the GDP.
A 2008 report by UN Population Fund says the share of the urban population in Pakistan almost doubled from 17.4 percent in 1951 to 32.5 percent in 1998. The estimated data for 2005 shows the level of urbanization as 35 per cent, and CIA Factbook puts it at 36% in 2008, and it is increasing with 3% of the nation's population migrating to cities every year. With over 5 million rural migrants each year, the population of Pakistani cities in exploding, and Karachi has now become the world's largest city, according to Citymayors.com.
India's urban residents in 2008 residents accounts for 29% of its population, and the CIA Fact Book estimates it growing at 2.4% of the total population every year.
As to India's much hyped middle class, a new report by Nancy Birdsall of Center for Global Development says it is a myth. She has proposed a new definition of the middle class for developing countries in a forthcoming World Bank publication, Equity in a Globalizing World. Birdsall defines the middle class in the developing world to include people with an income above $10 day or $3,650 a year, but excluding the top 5% of that country. By this definition, India, even urban India alone, has no middle class; everyone at over $10 a day is in the top 5% of the country.
India Poverty Estimates
Unlike poverty which is defined by the World Bank as people living on less than $1.25 or $2 a day, there is no widely accepted definition of who counts as a member of the middle class in the developing world.
In India, for example, a scooter company aims ads at a schoolteacher who earns $2,500 a year and lives in a tiny brick house with no running water. Why? Because that teacher is counted as middle class by Indian marketers, according to MSN Money.
Economist Nancy Birdsall of the Center for Global Development (CDG) is attempting to establish a $10 a day minimum limit in terms of purchasing power parity (PPP) as the low end of the middle class, while excluding the top 5% of the population in a country from the middle class. "An upper limit of the 95th percentile, while on the high side, is just about sufficient to exclude the country's richest," Birdsall adds.
In India's case, everyone who makes $3,650 a year is in the top 5% (about 55 million people) of the nation's population. It is on this basis that economist Birdsall concludes that India has no middle class. Over 75% of India's population (versus 60% in Pakistan) lives on less than $2 a day, or $750 a year, according to Human Development Report 2009. The rest of about 20% of India's people falls between $2 and $10 a day.
It is interesting to note, however, that India has been much more successful in sustaining democracy than Pakistan. Perhaps it is attributable to early land reform in India that significantly tamed the power of the feudal class.
Using Birdsall's proposed definition, Pakistan now does have a middle class of tens of millions (at least 10% of the population), as its 30 to 35 million people earning an average of $10,000 a year (well above Birdsall's lower limit of $3,650.00 a year) account for about 17% of Pakistan's population. Another 60% of Pakistanis (vs 75% of Indians) live on less than $2 a day, according to UN Human Development Report 2009. The rest of 23% of the people have incomes between $730 a year ($2 a day) and $10,000 a year, and a significant percentage of them could be classified as lower middle class.
India's official poverty measure has long been based solely upon the ability to purchase a minimum recommended daily diet of 2,400 kilocalories (kcal) in rural areas where about 70 percent of people live, and 2,100 kcal in urban areas. Rural areas usually have higher kcal requirements because of greater physical activity among rural residents. The National Planning Commission, which is responsible for the estimate, currently estimates that a monthly income of about Rs. 356 (about US$7.74) per person is needed to provide the required diet in rural areas and Rs. 539 in urban areas. Factors such as housing, health care, and transportation are not taken into account in the poverty estimates, according to demographers Carl Haub and O.P Sharma.
According to development economist Lant Pritchett, fewer than 25% of the people in the richest quintile in India complete 9 grades of school.
This is a combination both of the depth of India's p overty and its inequality. China had no middle class in 1990, but by 2005, had a small urban middle class (3% of the population). South Africa (7%), Russia (30%) and Brazil (19%) all had sizable middle classes in 2005.
Contrary to popular myths about rich-poor gap often expressed in Pakistani and Western media, Pakistan is more egalitarian than most countries of the world, including nations of South Asia region. According to UNDP HDR report 2009, Pakistan's ratio of expenditures of the top and bottom 10% of the population is 6.7 versus India's 8.6 and China's 13.2. The resource consumption by the lowest 10% of the Pakistani population is 3.9% and highest 10% consumes 26.5%. This compares favorably with 3.6% consumption by the bottom 10% in India and 31.1% by the top 10%.
In spite of the recent growth in Pakistan's middle class, it is still not strong enough to seize power. However, with the recent growth of independent mass media and greater political activism, the Pakistani middle class has begun to exert more influence on how the nation is governed. And the power of the current ruling feudal zamindars' party, the Pakistan Peoples Party, appears to be waning in the face of the new assertive middle class.
Unlike the more urban and middle class voters of the Pakistan Muslim League (PML) and the Muttahida Qaumi Movement (MQM), the PPP's voter lives in a different world, a world that has been dominant for decades. It is a feudal world controlled by the rural elite that is much more rural, more deferential, more rooted in tradition. Its nationalism is less marked and its Islam less influenced by the international trends of the last 30 years and thus much less politicized and much more based in centuries-old Sufi traditions. Describing this situation, Jason Burke of the Guardian has argued that "This is a Pakistan that is disappearing". Burke has quoted an unnamed 2008 PPP electoral candidate in rural Punjab who recognized and reportedly said that his party needed to "re-invent itself".
While many rural residents in Sindh and Southern Punjab who voted for the PPP have remained relatively isolated from major developments in Pakistan in the last decade, the urban middle class has grown dramatically in numbers and influence during the military rule of President Musharraf. The New York Times reported on this expansion of Pakistani middle class in November 2007 in these words: "As he fights to hold on to power, General Musharraf finds himself opposed by the expanded middle class that is among his greatest achievements, and using his emergency powers to rein in another major advance he set in motion, a vibrant, independent news media". Acknowledging this fact, William Dalrymple, a British journalist/author considered knowledgeable about India and Pakistan, recently wrote as follows: "It was this newly enriched and empowered urban middle class that showed its political muscle for the first time with the organization of a lawyers' movement, whose protests against the dismissal of the chief justice soon swelled into a full-scale pro-democracy campaign, despite Musharraf's harassment and arrest of many lawyers. The movement represented a huge shift in Pakistani civil society's participation in politics. The middle class were at last moving from their living rooms onto the streets, from dinner parties into political parties."
The future of Pakistan clearly belongs to its urban middle class. The behavior of the members of this rising urban middle class will largely determine if and when Pakistan grows out of the current crises to face the future with greater confidence.
Here's a video clip on Pakistan's middle class:
Here's a video titled "I Am Pakistan":
Comparing India and Pakistan in 2010
Pakistan Wage Structure 1990-2007
Middle Class Clout Rising in Pakistan
Urbanization in Pakistan
The Rise of Mehran Man
Industr ial Sector of Pakistan
India Has No Middle Class
Pakistan's Foreign Visitors Pleasantly Surprised
Escape From India
Reflections on India
After Partition: India, Pakistan and Bangladesh
The "Poor" Neighbor by William Dalrymple
Pakistan's Modern Infrastructure
Video: Who Says Pakistan Is a Failed State?
India Worse Than Pakistan, Bangladesh on Nutrition
UNDP Reports Pakistan Poverty Declined to 17 Percent
Pakistan's Choice: Talibanization or Globalization
Pakistan's Financial Services Sector
Pakistan's Decade 1999-2009
South Asia Slipping in Human Development
Asia Gains in Top Asian Universities
Pakistan's Industrial Sector
Pakistan's Multi-Billion Dollar IT Industry
India -Pakistan Military Comparison
Food, Clothing and Shelter in India and Pakistan
Pakistan Energy Crisis
Let's do some maths here Mr. Riaz....
You say that 75% of Indians live on less than 2 dollars a day.
Therefor about 800 million Indians earn less than $800 billion every year.
Now with remaining 300 million we count their Per-capita. As India's GDP is $3.5 trillion so 300 million Indians earn about $2.7 trillion, thats more than $9000/year. Well I hope this satisfies you....
Rahul: "so 300 million Indians earn about $2.7 trillion, thats more than $9000/year. Well I hope this satisfies you.... "
If the $2.7 trillion was distributed evenly among the 300 million Indians above $2 a day, then your argument would be valid. Nancy Birdsall's data says that the vast chunk of it goes to the top 5% of Indians which she excludes from the definition of middle class.
You are missing the whole point of Birdsall's paper. It is the depth of India's poverty and its inequality that leaves India with no middle class by her definition.
Riaz, there is no arguing India's poverty and inequality, but I feel that both you and Nancy are reading too much into income estimates, which at the end of the day are statistical quantities.
A better feel for the middle class of India and what Indians mean when they say middle class can come from looking at Internet Use and graduate students abroad. They are not complete measures, but do give us some idea.
Both internet use and graduate study abroad are mainly done by people who would identify themselves as middle class, regardless of statistics. The point is their behaviour is very different from those who would be called elites.
And on both counts, it seems that India does have a substantial middle class, atleast in absolute numbers. For example, the usage stats for the website blogger show that India has about half the hits the US has, and about 7 times more than Pakistan. http://www.alexa.com/siteinfo/blogger.com#
This would indicate to me that India has about the same proportion of middle class people as Pakistan. And that there are about half as many Indian middle class people than the US in absolute terms, although their purchasing power may be less.
If we look at grad student stats, again, we see that there are about 103000 Indian students in the US, 70 % of whom are graduate students. There are only 5300 Pakistani students, of which only 42 % are graduate students. If we take these numbers as an indicator of what proportion of students are getting a decent undergrad education, this would actually indicate that the middle class in India will be or already is a lot larger than Pakistan's.
india sells more cars in a month than pakistan sells in entire year.
May be that's a better indication of whose economy is faring better.
India: sale in Apr 2010 143,976
now see how much pak sells in a year
"Car sales soared by 41.3 per cent in July-March 2009-2010 to 86,483 units as compared to 61,185 units in the same period of last fiscal year. "
anon: "india sells more cars in a month than pakistan sells in entire year.
May be that's a better indication of whose economy is faring better."
There is no question that Indian economy is doing well now and Pakistani economy is currently stagnant.
But it does not mean that India has a bigger middle class than Pakistan as percent of population.
The top 5% of Indian population adds up to over 55 million people who make up a fairly large consumer group.
Here's a report estimating Pakistan's ICT industry at $12 billion in Pakistan:
KARACHI (APP) - The overall size of Information and Communication Technology (ICT) industry in Pakistan has crossed more than $ 12 billion, of which $ 1 billion is foreign direct investment (FDI).
This was stated by the Advisor to PM on Information Technology Sardar Latif Khan Khosa while speaking at the inauguration of 5th Information & Communications Technology Exhibition and Conference - CONNECT 2010 at Karachi Expo Centre here Saturday.
He said Pakistan has one of the fastest growing the tele-density in the world, accelerating at a rate of 63.5 percent, while the neighbouring India is just 37 percent.
Khosa said there are more than 95 million mobile connections in the country and are still growing in numbers. This is exponential growth as mobile telephone market has seen a 14-fold increase since the year 2000, he added.
He said this signifies the importance of ICT sector and the further potential it holds for country’s economy.
He said CONNECT brings to Pakistan a focused event in the dynamic fields of IT and telecom and provides a unique platform to the companies to showcase their products and services.
The Advisor called upon IT professional to reach out entire Pakistan and spread IT in every nook and corner so that the people can take benefit of this dynamic technology.
He also supported the idea for a greater cooperation and interaction between the government, industry and academia to get maximum benefits of information technology. The Advisor pointed out PPP provides a platform for the promotion of IT in the country under its manifesto which envisages support for right of information to the people. This is the vision of Shaheed Mohtarma Benazir Bhutto for IT and other sectors, he added. Later, taking to media, Sardar Khosa said the government has again invited foreign IT companies to restart their business in Khyber-Pukhtunkhawa and Balochistan.
I have asked these companies to identify the quantum of damage to their infrastructure in Khyber-Pukhtunkhawa area due to on-going war on terror. They are also seeking a price differential for broad band expansion, but we have asked them to first start rehabilitation of their infrastructure and we have assured them to look into their demands.
I have received several email messages mainly from Indians which refer to India's NCAER data and argue that "at least 75.30 Million households representing about 413 million people in India in 2009-10 are earning at least more than INR 90,000 = USD 2050 Absolute = USD 7200 PPP 2005."
The Indian NCAER data conflicts with the UNDP HDR 2009 data that says 76% of Indians (vs 60% of Pakistanis) live on less than $2 a day. NCAER data suggests that the entire population of about 400 million Indians at or above $2 a day is middle class, a definition that holds no water.
Middle class is defined differently by India than by the UN and the World Bank. Here's something from bihapurkar.com that might help understand the debate on middle class sizing:
"While consultants and companies advise investing in India based on the current and projected size of the “middle class”, the bogey of the definition and sizing of the middle class hasn't gone away yet and adds to the unease. The World Bank defines middle class as having between $10 and $20 purchasing power parity (PPP) per capita per day, which is a lot narrower than the NCAER definition of households income between Rs. 2-10 lakh ($4,000 to $21,000 at 2001-02 prices) annually; which is what McKinsey Global Institute uses in its Bird of Gold book. Chris Butel of IIMS-Dataworks suggests sensibly that the middle class are those that have their own personal transport (car or 2-wheeler), own entertainment as in a TV set, sound system and their own communication (phone). Some of us suggest that the middle class are those who are literally in the middle i.e., have approximately between the 33rd and 66th percentile of income. Expectedly the numbers swing wildly from 50 million to 200 / 230 / 300 million. What's more, the nagging worry persists that the middle class being defined by most of these income bands is actually India's upper class."
Sir Middle class - does not simply sit on income - it consumes as well. Shall we discuss consumption statistics?? Since these are ratios, total volume does not make a difference.
Television per thousand People - India has 3 times compared to Pakistan.
Cars per Capita - India has twice as compared to Pakistan.
Education: India has more than 3 times people going for higher education than Pakistan.
And Pakistan has half the saving rate compared to India. So all these commodities are purchased and still Indians on an average save twice of what Pakistanis do.... What does your common sense say to this??
As for your only argument, why dont we look at a country like South Africa with per capita Income of over $10,000(PPP), still about 50% of the population lives below $2 per day. Or for Brazil - Again PCI over 10,000 and 35% of population lives below $2 per day.
Your line of reasoning does not appeal to common sense. If we were to determine number of people over $3650 per year, we need not the average but median atleast to determine the clustering.
anon: "Middle class - does not simply sit on income - it consumes as well. Shall we discuss consumption statistics?? Since these are ratios, total volume does not make a difference."
You are attempting to obscure the definition and size of the middle class in South Asia by bringing in misleading consumption figures.
Relative to their populations, there are so few cars in India and Pakistan that the vast majority of such owners most likely belong to the upper class..not the middle class of these countries.
Let's take households with TV for example. 68% of Pakistani households and 64% of Indian households have televisions, according to data from Asia Ad Television Coalition.
11% of Pakistanis and 7% of Indians have Internet access.
Two-thirds of Pakistanis have cell phones versus less than half of Indian population with mobile phones.
On a trip to Singapore a few years ago, a Singaporean jokingly described to me what he called ABCD of Indian problem solving.
He said he's seen some of his Indian friends and colleagues first AVOID the problem, then try and BYPASS it and if that doesn't work, then try and CONFUSE and finally DENY that the problem exists.
The problem we are talking about here is that there is deepening poverty and widening rich-poor gap in India that leaves little room for a genuine middle class to grow, and most Indian commentators on this forum are DENYing this problem.
Citing consumption figures such as cars or Internet access means nothing for the middle class in India, the top 5% of Indians (about 55 million) who are rich are doing most of this consuming....and it's being incorrectly advertised as middle class consumption.
The issue is really simple: Excluding 76% of Indian people below $2 a day (UNDP HDR 2009) and excluding the top 5% (as suggested by Birdsall), the population in India that could potentially be candidates for middle class description is reduced to less than 19%, most of whom are closer to $2 a day than $10 a day minimum set by World Bank.
In Pakistan's case, if you exclude 60% poor (below $2 a day) and also exclude top 5% (as suggested by Birdsall), the potential pool for middle class is 35% of the population, almost twice as large as India's 19% for India.
Country Below $2 Top 5% Remainder (potential middle class)
India 76% 5% 19%
Pakistan 60% 5% 35%
Given Pakistan's lower rich-poor gap and higher urbanization than India's, there is a greater likelihood that a larger fraction of Pakistan's 35% belong to the middle class than India's 19%
Here's a Seekingalpha report commenting on McKinsey study of Indian urbanization:
... new labor force will also be relatively young compared to other BRIC countries. The median age for the Indian population is 25.3 years—lower than Brazil (28.6 years) and well below China (34.1 years) and Russia (38.4).
In order to meet the needs of this urban class, MGI estimates India will need:
* $1.2 trillion in capital investment
* 2.5 billion square meters of roads to be paved
* 700-900 million square meters of commercial and residential space
* 7,400 kilometers of subways and transportation to be constructed
To put these figures into perspective, the investment amount needed is about one-third of India’s total GDP in 2009. And if 700-900 million square meters of real estate sounds like a lot, that’s because it is. India would need to build a city the size of Chicago every year for the next 20 years in order to create enough commercial/residential space.
While these numbers are staggering, perhaps the most important figure for commodity demand is MGI’s projections on the growth of India’s middle class. MGI estimates that India will have 91 million middle class households by 2030, that’s more than a 300 percent increase from the 22 million they have today.
As we’ve said many times before, the growth of the middle class in the developing world, especially in Asia, is a key driver of demand for oil, steel, copper, cement and countless other resources because the wealthier these people are, the more they will consume.
This mass of people will likely demand better housing, better roads, better goods— in all, a higher quality of life than what’s been available to them in the past. The resulting pressure this could have on commodity demand is the X-factor that we believe makes this cycle different than anything we’ve experienced in the past.
I agree there will be massive migration in India;but, not driven like China. It will be driven by rural failure. There are few jobs in urban India already, where will so many more jobs come from in future, if India doesn't fundamentally change its policies....
Most population growth in India is coming in the backward and poor northern states. Will these youth be able to fill the jobs that do open up in urban India?
Some commentators have raised questions about Standard Chartered Bank data about 30-35 million Pakistanis averaging $10,000 a year income, the group that Jason Burke of the Guardian calls "Mehran men" because they typically drive Suzuki Mehran model of cars (rather than European models or big SUVs).
Forget these numbers for the moment and just think about who should count as middle class in South Asia.
HDR 2009 says 76% of Indians and 60% of Pakistanis live on less than $2 a day. These are poor people none of whom can be considered middle class by any stretch of the imagination.
If you exclude the bottom 75% of Indians (versus 60% of Pakistanis) who live on less than $2 a day, and also exclude the top 5% rich, there are 19% of Indians (versus 35% of Pakistanis) who could be candidates for even a very loosely defined middle class status.
Add to the fact that Pakistan is more urbanized and has less inequality (Gini) than India, and the picture becomes clear.
Isn't it basic commonsense?
Here's a WSJ story about middle class's increasing gun ownership in Pakistan:
Since Mr. Afridi's ordeal ended in mid-October, police in his hometown of Peshawar, in northwestern Pakistan, haven't made an arrest in his case. They raided the kidnappers' hide-out, but the captors got away, a senior Peshawar police official says.
So the cops allowed Mr. Afridi to arm himself against future abductions. The 35-year-old journalist now carries an AK-47 to work and back home to his wife and five children. Relatives rotate duty as his bodyguards. If his car is again stopped by armed men on a dark road, Mr. Afridi vows to shoot first.
"I'm not going through that again," he said in an interview in this city in northeastern Pakistan.
Guns have long been part of Pakistan's traditional culture, especially in the rugged northwestern part of the country. Handed down through generations, rifles have been used for hunting and for firing celebratory fusillades. Now, however, modern assault rifles and handguns have come into vogue among middle-class Pakistanis, and gun registration has jumped.
This proliferation reflects many urbanites' dwindling faith that the country's new civilian government can protect them. Over the past year, Pakistan has endured the assassination of popular political leader Benazir Bhutto, a spreading Islamist insurgency and the bombing of Islamabad's Marriott Hotel. November's deadly terror attacks in Mumbai, allegedly carried out by 10 Pakistani militants trained here, further frayed nerves.
But more than heightened terrorist threats, many Pakistanis fear the surge in violent kidnappings, extortions and robberies that target those who look like they might have money. The 11,758 murders recorded in the first 11 months of 2008 were the highest in Pakistan in at least a decade, say Islamabad police, who compile nationwide crime statistics.
"People buy weapons because they're insecure," said a senior Interior Ministry official. "No need denying it."
Arms licenses are issued by numerous Pakistani agencies. Local authorities and police hand out permits for weapons that can be used only within their states. The Interior Ministry licenses nonautomatic weapons that can be carried across borders between Pakistan's states. The prime minister's office gives clearance for automatic assault weapons that can be used throughout the country.
Firearm licenses issued by the Interior Ministry rose sharply in 2008. Licenses for 12-gauge pump-action shotguns, used by private security guards and also duck hunters, more than doubled over 2007, according to ministry figures compiled through year's end. Over the same period, the ministry granted 47% more licenses for 30-bore pistols and 53% more for 9mm handguns.
[Pakistani police in July with arms and ammunitions seized in Karachi. Rising violence has prompted many middle-class families in Pakistan to seek weapons permits.]AFP/Getty Images
Pakistani police in July with arms and ammunitions seized in Karachi. Rising violence has prompted many middle-class families in Pakistan to seek weapons permits.
The ministry's chief spokesman didn't respond to requests for comment about the surge in gun licenses.
Some middle-class Pakistanis have appealed to politicians for help in obtaining licenses. On a recent morning at the Interior Ministry's Arms License Issuance Center in Islamabad, a scrum of applicants waved papers in clerks' impassive faces. One man carried a letter from a member of Pakistan's National Assembly, the country's top lawmaking body, asking that officials facilitate shotgun and pistol licenses for nine of his supporters.
Hello Mr Riaz I just wanted to bring your attention to (if you are already not aware) the latest 'doing business' economy rankings which covers among other things 183 countries ease of doing business. Pakistan is placed at 85 which is the same place it ranked last year in 2009, while india is ranked at 133 dropping 1 place from last year when it was at 132. The information can be found at
Here's an excerpt from a story in the Guardian about growing wealth gap between whites and blacks in America:
"A huge wealth gap has opened up between black and white people in the US over the past quarter of a century – a difference sufficient to put two children through university – because of racial discrimination and economic policies that favour the affluent.
A typical white family is now five times richer than its African-American counterpart of the same class, according to a report released today by Brandeis University in Massachusetts.
White families typically have assets worth $100,000 (£69,000), up from $22,000 in the mid-1980s. African-American families' assets stand at just $5,000, up from around $2,000.
A quarter of black families have no assets at all. The study monitored more than 2,000 families since 1984.
"We walk that through essentially a generation and what we see is that the racial wealth gap has galloped, it's escalated to $95,000," said Tom Shapiro, one of the authors of the report by the university's Institute on Assets and Social Policy.
"That's primarily because the whites in the sample were able to accumulate financial assets from their $22,000 all the way to $100,000 and the African-Americans' wealth essentially flatlined."
The survey does not include housing equity, because it is not readily accessible and is rarely realised as cash. But if property were included it would further widen the wealth divide.
Shapiro says the gap remains wide even between blacks and whites of similar classes and with similar jobs and incomes.
"How do we explain the wealth gap among equally-achieving African-American and white families? The same ratio holds up even among low income groups. Finding ways to accumulate financial resources for all low and moderate income families in the United States has been a huge challenge and that challenge keeps getting steeper and steeper.
"But there are greater opportunities and less challenges for low and moderate income families if they're white in comparison to if they're African-American or Hispanic," he said.
America has long lived with vast inequality, although 40 years ago the disparity was lower than in Britain.
Today, the richest 1% of the US population owns close to 40% of its wealth. The top 25% of US households own 87%.
The rest is divided up among middle and low income Americans. In that competition white people come out far ahead.
Only one in 10 African-Americans owns any shares. A third do not have a pension plan, and among those who do the value is on average a fifth of plans held by whites.
The report shows that a typical white middle income family, earning
about $30,000 a year, has accumulated $74,000 in assets, five times that of a black family in the same class which has only about $14,000
The gap is even wider when it comes to families with an income above $50,000 a year."
Here's an Express Tribune report on philanthropy doubling in Pakistan in the last decade:
KARACHI: Inflation is not the only thing that is on the rise. The amount contributed towards philanthropy in Pakistan has almost doubled over the past decade, said Anjum R Haque, Executive Director, Pakistan Centre for Philanthropy (PCP), an Islamabad-based organisation focussed on streamlining social development.
While a total of Rs70 billion had been donated in 2000, she said that the figure was likely to reach Rs140 billion this year. With donations carrying such a massive potential, she said, there is a growing need to make direct cash flows strategically.
She also spoke about the PCP certification programme under which 162 non-governmental organisations (NGOs) have been certified.
The PCP’s aim, she said, is to create awareness and sensitise society about current issues affecting growth in the social sector and create an enabling environment for the certified NGOs.
“Regularisation of NGOs is a very sensitive issue and the PCP tries to promote this culture through a voluntary approach,” she said.
Certification Manager Malik Babur Javed said that the certification programme was recognised by the government and was the country’s only system that reinforced and promoted internal governance, financial transparency and programme delivery in the non-profit sector.
He said that civil society organisations (CSO) certification not only created sector-wide standards but also promoted the government’s agenda of strengthening the civil society in terms of administration, documentation, disclosure, transparency, accountability and effective service delivery.
With additional information from APP
Here's an interesting opinion by a ferozk at Chowk.com about bad governance being the biggest problem in Pakistan:
In the days ahead, Pakistan's major problem will not be so much as terrorism, or hyper-inflation or a progressively victimized and ignored electorate, but the issues of misgovernance. This issue will compound all the other issues facing and challenging Pakistan and in the process, accelerate the dystopian nature of the Pakistani polity into a complete failure. Pakistan is suffering from an unimaginable crisis of a lack of governance, because there is no government in Pakistan. Period.
It seems that elections of 2008 did not elect a government to power as much as it installed a political party into power. Pakistan Peoples Party is a dysfunctional party, whose loyality is divided between the idolized cult of Benazir Bhutto and the dread of Asif Ali Zardari. Its leadership is centralized within the cabal that supports Asif Ali Zardari and runs the country from the presidency, law ministery and the interior ministery in Islamabad. All the laws and decisons, which affect Pakistan are made in the presidency and the parliament, which is supposed to be the sovereign voice of the people of Pakistan, is ignored.
The government itself is confused. It claims to be a parliamentary government headed by a prime minister but yet appeases a presidential rule. Its ministers are dogged by allegations of corruption made worse by the fact that they are generally incompetent and mostly self-serving individuals. In the last two and a half years that this government has been in power, other than increasing its own sphere of power through the Eighteen Amendment, it never offered a solution to the problems faced by the people. Its battles in the parliament and its policies are designed to prolong its hold on power.
Its silent partner and accomplice in the fraud being perpetuated on the Pakistani people is the Pakistan Muslim Leaque - Nawaz. The PML-N is also confused. Its leader, Nawaz Sharif, seems to be out of his depth, because he only wants to be the prime minister for a third time and does not wish to harm his changes of attaining that position. Nawaz Sharif, like other Pakistani politicans, is a bad leader not because he makes awful decisions, but because he makes no decisions at all! Nawaz Sharif generally follows the politics in Pakistan, hoping to exploit them for his benefit, instead of shaping the politics of Pakistan. In true sense of the word, he is more of a follower than a leader and that too a stunted bonzai leader groomed by his patron the Pakistani military.
Still, this government has to be given the chance to do nothing till 2013, because it will make the people realize the value of their vote and that they should not vote for a political party on the basis of sympathy, but what it will do for them once elected! Since 2008, the people of Pakistan have matured as far as their understanding of what democracy is and for many clowns in power; this is perhaps their last ride on the merry-go-round of power. Granted that there will be slips, but the levels of political expectations in Pakistan are increasing and with that comes a sense of accountibility to hold those in power responsible.
On the whole, things are looking up in Pakistan!
UNDP publishes the Education Index which is measured by the adult literacy rate (with two-thirds weighting) and the combined primary, secondary, and tertiary gross enrollment ratio (with one-third weighting). The adult literacy rate gives an indication of the ability to read and write, while the GER gives an indication of the level of education from kindergarten to postgraduate education.
On this UNDP education index, Pakistan scores 0.665 and ranks 137, ahead of India's score of 0.638 and ranking of 142nd.
Former Pakistani president Gen Pervez Musharraf launched a political party today. Here's a BBC report on his press conference held in London:
Former Pakistan military ruler Pervez Musharraf has apologised for "negative" actions he took while in power, as he launched his new political party, the All Pakistan Muslim League, in London.
Mr Musharraf said: "I... sincerely apologise to the whole nation" for the "negative repercussions".
But he vowed to galvanise Pakistanis and fight a "jihad against poverty, hunger, illiteracy and backwardness".
Correspondents say there is no real likelihood of him returning soon.
Mr Musharraf also appears to lack the kind of political organisation that could win him an election in Pakistan, they say.
Mr Musharraf unveiled the All Pakistan Muslim League at a gentlemen's club in Whitehall.
There was tight security, with checks on all those entering the room.
Mr Musharraf apologised for some of the actions he took when in power.
"I am aware of the fact that there were some decisions which I took which resulted in negative political repercussions, repercussions which had adverse effects on nation building and national political events, and my popularity also, may I say, plummeted in that last year. I take this opportunity to sincerely apologise to the whole nation."
Mr Musharraf attacked the "total despondency and demoralisation and hopelessness which prevails in society today".
He added: "The time has come to redeem our pledge... to ensure the fruits of freedom are shared by all. The time has come for a new social contract to keep the dream of our forefathers alive... to make Pakistan into a progressive Islamic state for others in the third world to emulate."
Mr Musharraf said he wanted a party of national salvation that would "galvanise all Pakistanis regardless of religion, caste or creed".
Punctuated by chants from supporters, he added: "It is time to unfurl a Muslim league umbrella for all - this umbrella for all shall be the All Pakistan Muslim League."
The former army chief, who now lives in London, earlier told the BBC: "When there is a dysfunctional government and the nation is going down, its economy is going down, there is a clamour, there is a pressure on the military by the people."
He said he was launching the party in London because he risked assassination if he returned to Pakistan. He has survived a number of plots in the past.
Last month, Mr Musharraf told the BBC he would be standing for a seat in the 2013 parliamentary elections. From there he said he hoped to become either prime minister or president.
He made London his base, as a number of Pakistani politicians have done over the years, after his allies lost elections and he was ousted as president in 2008.
If he does go home, he faces legal cases, which he says are politically motivated.
Mr Musharraf seized power in 1999 when, as chief of Pakistan's army, he ousted elected Prime Minister Nawaz Sharif in a coup.
Here are a few excerpts from a New York Times report filed Sabrina Tavernise on Pakistan:
In Mr. Dasti’s area, one of the hardest hit by the recent flooding, the state has all but disappeared. Not that it was ever very present. In the British colonial era, before Pakistan became a separate country, the state would show up a few times a month in the form of a representative from the Raj dispensing justice.
Later, the local landowner took over. For years, feudal lords reigned supreme, serving as the police, the judge and the political leader. Plantations had jails, and political seats were practically owned by families.
Instead of midwifing democracy, these aristocrats obstructed it, ignoring the needs of rural Pakistanis, half of whom are still landless and desperately poor more than 60 years after Pakistan became a state.
But changes began to erode the aristocrats’ power. Cities sprouted, with jobs in construction and industry. Large-scale farms eclipsed old-fashioned plantations. Vast hereditary lands splintered among generations of sons, and many aristocratic families left the country for cities, living beyond their means off sales of their remaining lands. Mobile labor has also reduced dependence on aristocratic families.
In Punjab, the country’s most populous province, and its most economically advanced, the number of national lawmakers from feudal families shrank to 25 percent in 2008 from 42 percent in 1970, according to a count conducted by Mubashir Hassan, a former finance minister, and The New York Times.
“Feudals are a dying breed,” said S. Akbar Zaidi, a Karachi-based fellow with the Carnegie Foundation. “They have no power outside the walls of their castles.”
Mr. Dasti, a young, impulsive man with a troubled past, is much like the new Pakistan he represents. He is one of seven siblings born to illiterate parents. Despite his claims of finishing college, he never earned a degree, something his political opponents used against him in court this spring. One of the 35 criminal cases against him is for murder, a charge he said was leveled by his political opponents. Detractors accuse him of blackmailing rich people in a job at a newspaper. He said he was writing exposés.
“I have more enemies than numbers of hairs in my head,” he said, bouncing down a road in a borrowed truck. “They don’t like my style, and I don’t like theirs.”
Here's The Express Tribune piece on "changing face of retail" driven by the growth of middle class and FMCG sector in Pakistan:
The retail sector in Pakistan, long dominated by thousands of small corner shops, is about to go through a dramatic facelift as consumers become more discerning and demand greater choice.
The advent of hypermarkets and wholesalers such as Carrefour, Metro Cash & Carry and Makro has given Pakistanis a taste for a consumer choice driven shopping experience which is likely to deepen the market for consumer goods throughout the country and alleviate what has hitherto been the central problem in developing that sector: logistics.
A fragmented market
According to the Small & Medium Enterprise Development Authority, there are over 125,000 retail outlets all across Pakistan. Approximately 94 per cent of these are miniscule corner shops and small retail outlets in cities and villages. Perhaps most critically, there is no nationwide chain of retail or even wholesale outlets.
This poses a significant challenge for most businesses looking to enter the food and agribusiness sector. Despite the fact that Pakistanis spend close to $36 billion a year on food and other retail shopping, businesses find it very difficult to reach the mass market of Pakistani consumers simply because it is not a single marketplace but tens of thousands of little shops.
What it all means
The existence of these chains means that Pakistanis are about to be inundated with outlets that seek to create a better shopping experience and offer consumers more choice. The larger these chains become, the more those choices they offer will be produced locally.
If food production companies can have lower distribution costs and easier access to a wider swathe of the consumer market, they are more likely to expand existing lines of business and introduce newer markets. In other words, food producers will go from selling raw commodities to selling higher value goods which will not only expand consumer choice but will also increase the productivity of the Pakistani workforce and thus their incomes.
Here are excerpts from a report on Pakistan's retail sector:
The ongoing shift in population from rural to urban areas has underpinned the expansion of the retail sector. Strong real GDP growth until fiscal year 2006/07 (July-June) provided the foundation for years of double-digit growth in net retail sales in US dollar terms. However, net retail sales contracted by 1.2% in 2008. Sales then grew by only 5.7%, to US$75bn, in 2009, as the inflationary surge of 2008, which reduced spending power, abated only moderately. In local-currency terms retail sales growth in 2009 is estimated at 22.7%, owing to depreciation in the value of the Pakistan rupee against the US dollar. A gradual shift towards more formal retail facilities will facilitate the expansion of sales in 2012-14, but this process will be slow and confined to urban areas. (In 2010-11 retail sales expansion will be subdued, as overall private consumption growth slows sharply owing to the catastrophic floods that struck Pakistan in August-September 2010. Electronic retailing is almost nonexistent in Pakistan because of the low levels of Internet penetration and credit-card use in the country.
Consumer finance accounted for 4.2% of the total stock of credit in the country in June 2010, according to the State Bank of Pakistan (SBP, the central bank). Credit for purchases of consumer durables was down by 25% year on year..... Because of their limited financial resources, most retailers sell on a cash-only basis. This is gradually changing, and credit-card use is likely to become an increasingly important element of personal finance in the long term. However, in the short to medium term credit-card use will be constrained by the poor economic climate: outstanding credit-card loans were down by 25% year on year in June 2010. Large, centralised shops have not been popular in Pakistan, as low levels of car ownership mean that people prefer "corner shops" near their homes. More importantly, frequent and often prolonged power failures reduce the advantages of refrigeration, leading to a preference for fresh goods bought for immediate consumption from neighbourhood retailers. Online retail sales are negligible, owing to the country's extremely low levels of Internet penetration and credit-card ownership and the absence of Internet merchant accounts to facilitate online credit-card transactions.
The retail market is highly fragmented and underdeveloped. There are over 125,000 retail outlets across the country, according to the Small and Medium Enterprise Development Authority, but around 95% of these are tiny corner shops. The few supermarkets that exist are concentrated in Karachi and Lahore. USC is the largest supermarket chain by far, with 5,850 outlets throughout the country in 2009, according to Planet Retail, an international industry consultancy. The other major chains are Whitbread (with 17 outlets in 2009), GNC (with six outlets), Metro (five outlets) and Carrefour (one outlet). However, even USC's market share is virtually insignificant in terms of retailing as a whole, according to Planet Retail, accounting for only 1.2% of total grocery spending in the country. The vast majority of retailers in Pakistan are small family-run shops, and this will remain the case throughout the forecast period (2010-14).
One of the measures of the goodness of a nation, particularly its middle class, is its level of civic engagement.
By this measure, advanced western nations lead the pack with the United States in #1 position, followed by Ireland, Australia, New Zealand, Britain, Holland, Canada, and lo and behold! Sri Lanka.
In South Asia, Pakistan is a distant second to Sri Lanka's 51% participation rate. Pakistan's participation rate of 42% ranks it at 27, the same as Israel.
India lags far behind with the participation rate of only 28% ranking it at 48 among 130 nations, according to a recent Gallup poll on civic engagement that included 130 nations.
While 53% of Sri Lankans gave money to charity and 53% volunteered time, 51% of Pakistanis contributed money and 27% volunteered time. In India, 28% donated money and 18% volunteered time. Comparable figures for the top-ranking United States are 65% and 43%.
Here are a few excerpt from an Op Ed piece by Francis Fukuyama in today's Wall Street Journal. It's titled "Is China Next?":
Observing the high levels of political instability plaguing countries in the developing world during the 1950s and '60s, Mr. Huntington noted that increasing levels of economic and social development often led to coups, revolutions and military takeovers. This could be explained, he argued, by a gap between the newly mobilized, educated and economically empowered people and their existing political system—that is, between their hopes for political participation and institutions that gave them little or no voice. Attacks against the existing political order, he noted, are seldom driven by the poorest of the poor in such a society; they tend to be led, instead, by rising middle classes who are frustrated by the lack of political and economic opportunity.
All of these observations would seem to apply to Tunisia and Egypt. Both countries have made substantial social progress in recent decades. The Human Development Indices compiled by the United Nations (a composite measure of health, education and income) increased by 28% for Egypt and 30% for Tunisia between 1990 and 2010. The number of people going to school has grown substantially; Tunisia especially has produced large numbers of college graduates. And indeed, the protests in Tunisia and Egypt were led in the first instance by educated, tech-savvy middle-class young people, who expressed to anyone who would listen their frustrations with societies in which they were not allowed to express their views, hold leaders accountable for corruption and incompetence, or get a job without political connections.......
It is certainly true that the dry tinder of social discontent is just as present in China as in the Middle East. The incident that triggered the Tunisian uprising was the self-immolation of Mohamed Bouazizi, who had his vegetable cart repeatedly confiscated by the authorities and who was slapped and insulted by the police when he went to complain. This issue dogs all regimes that have neither the rule of law nor public accountability: The authorities routinely fail to respect the dignity of ordinary citizens and run roughshod over their rights. There is no culture in which this sort of behavior is not strongly resented....
Indeed, there is some reason to believe that the middle class in China may fear multiparty democracy in the short run, because it would unleash huge demands for redistribution precisely from those who have been left behind. Prosperous Chinese see the recent populist polarization of politics in Thailand as a warning of what democracy may bring.
The fact is that authoritarianism in China is of a far higher quality than in the Middle East. Though not formally accountable to its people through elections, the Chinese government keeps careful track of popular discontents and often responds through appeasement rather than repression. Beijing is forthright, for example, in acknowledging the country's growing income disparities and for the past few years has sought to mitigate the problem by shifting new investments to the poor interior of the country. When flagrant cases of corruption or abuse appear, like melamine-tainted baby formula or the shoddy school construction revealed by the Sichuan earthquake, the government holds local officials brutally accountable—sometimes by executing them.
Here's a Dawn piece on rising rural income disparities from high commodity prices:
..Is the current spike in the commodity prices benefiting everyone living in the villages, particularly in Punjab and Sindh which together contribute more than 90 per cent to the country’s agricultural output and where more than two-thirds of the country’s population lives?
“Whereas a large chunk of this income has ended up with the agriculture elite, there are signs that some of it has trickled down to the small farmers as well,” according to Waheed. Others argue that the transfer of additional cash has widened income disparity in the rural society even if many small farmers have also benefited from the soaring crop prices because the “trickle-down” has been uneven and limited.
Ashfaque Hasan Khan, dean and principal of the NUST Business School who served as a special finance secretary in Musharraf government, says the income disparity in the rural areas has widened as a result of the rising crop prices.
“Only 40 per cent of the rural population is engaged in the crop sector and a vast majority of them are small landholders. This means only a small portion of population in the rural areas has gained from the increasing crop prices,” he elaborates.
In Punjab, for example, less than half of the rural population is engaged in the crop sector. Some 90 per cent of it falls in the category of small farmers with landholdings up to 12.5 acres.--------
“An overwhelming majority of small farmers buys inputs on credit and, thus, is forced to pay a much higher price than those who pay cash for these inputs,” claims Mughal. “Even if they have cash their cost has gone up manifold, offsetting the gains of
higher crop prices.”
There are people who are of the view that smaller landholding have helped a more equitable distribution of additional incomes among the growers in Punjab compared to the farmers in Sindh where landholdings are very large.
Salman Shah, former finance minister, says the additional incomes generated by higher commodity prices have been distributed more evenly in Punjab compared to Sindh.
Shah is of the opinion that the landless labour in the villages has also benefitted from the new economic prosperity being experienced in rural areas and their wages have also gone up. But he says only a comprehensive study of the impact of commodity prices on the rural society could give answers to many questions.
Many fear that the growing agricultural commodity prices may rob the farmers of the incentive to boost their productivity. Mughal says the rising prices and decreasing productivity is not good for the economy.
“Our productivity per acre has decreased significantly over the decades whereas India has successfully managed to substantially boost its crop output. The new wave of economic prosperity in the rural areas should not be allowed to take our focus off the need to boost productivity. That will be disastrous for the economy as well as people,” he warns.
While the soaring prices have brought a semblance of prosperity to the rural areas, it has added to woes of the urban population where poverty levels are rising and the quality of life suffering. The Consumer Price Index (CPI) has increased by 55 per cent over the last three years whereas salaries have not risen accordingly, according to Waheed.
“The urban population that relies on manufacturing growth and trading, or earns fixed salaries has generally experienced a deterioration in its standard of living, and is not happy about it. Large scale manufacturing growth has declined by about one per cent over the last three years whereas the wholesale trade has risen by a marginal four per cent,” he says, underlining the impact of rising price inflation on the urban consumers
Here are some excerpts from an Express Tribune piece by Sher Khan from Lahore:
As one scans the underground music scene, small venues have increased for aspiring artists and musicians to promote their music. The use of cafe’s and the development of the university scenes have begun to nurture a platform for a variety of artists.
Across MM Alam, Lahore’s ‘rodeo drive’, several cafes such as the World Fashion Cafe or Cafe Rock and even Gloria Jeans have become regular stops where young artists try to showcase their music. Student and music societies ranging from University College Lahore (UCL) to LUMS have also provided venues for artists.
“There are shows happening in cafes such as Peeru’s, and almost every university has some sort of music society,” said Curtain Call Society’s general secretary Nausherwan Billa, who was also the president of the famous UCL music society. “There are around eight to nine gigs in Lahore in any given month.”
He said that his society organises monthly concerts, free of cost, for artists at Al Hamra and the Ali Institute. Guitar School, Origami and Curtain Call’s own initiative Octave, have also been working in a small way to provide musicians with venues and opportunities to perform in front of an audience.
In terms of the electronic music scene which has also seen a rise with artists such as Talal and Zoi, an avenue has been found in terms private parties at farmhouses on the peripheries of Lahore, such as Bedian and Thokhar.
“It’s a struggle for underground artists, because to get attention you have to play everywhere,” said Elysium Entertainments Director Mukarram Jamil, who has been managing underground bands for the past five years in both Islamabad and Lahore. “It’s not necessarily a positive trend because shows are not happening — whatever is happening is usually at the cafes and school level.”
Jamil, who also manages the underground band Moen Jo Daro that started off 2008, explained that cafe’s currently seem like the best place for underground musicians to start. “If I was starting out or I had band, I would not limit myself just to schools because the point is getting access to an overall market. An audience of seventy to hundred people with a varied crowd can spread news like social wildfire.”
Jamil explained the band Moen Jo Daro started under the same circumstances: First at cafes on MM Alam, then toured every major university in the city free of cost, till they finally forayed into the Islamabad scene by opening at a major concert there. Once the band pursued being paid for their performances, they had found that schools had an advantage in terms of facilitating and providing a venue for music shows. Schools are also more eager to accommodate as, due to their limited budget, they could not afford more mainstream artists.
In the past, the underground music scene, which was dominated by rock, had certain hidden venues which had become the hotspots out of which bands such as EP were built. For instance, there was a basement at Model Town Society and the Al Hamra room number one, as well as the open-air theatre at Gaddafi stadium.
EP’s bassist and manager Hasaan Khalid, who also is the Editor of the Student’s Blog, said that schools such as LUMS, UCL and Beaconhouse, Defence, had taken a step by providing venues for young artists to perform through school events, but also mentioned events such as the rock festival which was cancelled due to security.
Here are a few excerpts from Asif Noorani's Op Ed published in Pakistan Link:
.....the Edhi Foundation is doing in different spheres – from running cancer hospices and ambulance services (Edhi Foundation has the largest fleet in the world, as the Guinness Book of Records mentions) to providing shelter to battered women and education to poor children. ...
The Shaukat Khanum Memorial Cancer Hospital in Lahore is doing a remarkable job too. Most of its patients are poor and unable to pay for the long drawn and expensive treatment provided by the hospital. The model is being replicated in Peshawar.
A state-of-the-art health institution, the SIUT (Sindh Institute of Urology and Transplantation) and the Indus Hospital are both providing excellent services in the health sector. What is more they don’t charge anything. That goes for the LRBT (Layton Rehmatullah Benevolent Trust) as well. I remember an affluent lady who could have got ophthalmic treatment in any country in the West but she opted to have her surgery done at the LRBT, which is cleaner than most private hospitals in Karachi and where treatment can be described as state-of-the-art. Cured and satisfied, she gave a hefty donation to the institution and continues to pay from out of her zakat to the institution every Ramadan.
LRBT has 16 hospitals all over Pakistan, two of which – one in Karachi and the other in Lahore – are the best equipped ophthalmic institutions in the country. There are also 41 community centers where ophthalmic technicians examine patients and decide whether they can be treated as outpatients or are in need of surgery. As many as one-third of all OPD patients with problems of vision in the country are treated in one of the LRBT institutions and one-fourth of ophthalmic surgeries are done in the 16 eye hospitals run by the not-for-profit organization.
There is no institution that I have watched more closely than The Citizens Foundation. Fifteen years ago, five or six friends from affluent families, who met every weekend, grumbled about the flaws in our country. Finally, one of them said, “OK, enough is enough. Either we make a positive contribution to alleviate the miseries of the unprivileged people in Pakistan or we just shut up.” There was a pause and then everyone was convinced that they ought to join hands and work in one field. The one they chose was education, for the lack of it was the main cause of many ills that the country suffered from. They agreed on a target of setting up five schools for children of economically underprivileged parents in the first year.
The goal was achieved and the bar was raised. Today they have as many as 731 schools in Pakistan and Azad Kashmir (also Northern Areas). The fee structure is incredibly low because Pakistanis in and out of the country have been donating generously to TCF. Non-Pakistanis are also impressed with the institution and try to help it in many ways. The well known Indian novelist and columnist Shobhaa De donated more than Rs 50,000 that she had earned through her weekly columns for Dawn, when I wrote to her about the great job TCF has been doing for so many years.
Partnering TCF is the Honehar Foundation which provides vocational training to young men in Karachi. But that’s not the only place that they want to professionally help our youth. Construction on four such projects in smaller towns is on at a rapid pace. My friend, Nighat Mir, who is a member of the foundation’s steering committee, informs me that very soon work will commence on an institute meant exclusively for young women in Karachi.
Moreover, I recently learnt about the Aman Foundation and the excellent work that it is doing. It provides nutritious food to students at lunch time at 10 chools in Khuda ki basti.....
Here's an inspirational story of a young man from rural Balochistan who graduated from Harvard University:
Located on the outskirts of Quetta, is the barren valley of Mariabad where the Hazara lead slow-paced lives. These tribal people, living in narrow brick huts speckled along the rugged hillside, typically sell loose cloth, sweaters or tea for their livelihood.
Like most poor people, their aspirations rarely go beyond sustaining themselves in this underdeveloped nook of Balochistan. Many of them live and die in Mariabad — unaware of the complex concerns and tremendous pace of life in urban centres like Karachi and Lahore.
But one student — the son of a trader who sold Quaid-e-Azam style caps in Mariabad for a living — dared to tread a radically different path. Karrar Hussain Jaffar transcended the confines of an obscure town in Balochistan, where people rarely educate themselves beyond matriculation, to study at the prestigious Harvard University. His story — a narrative about the wondrous possibilities of equal educational opportunities — is truly inspirational.
“My childhood friends, with whom I spent my youth playing cricket, drive suzukis and rickshaws in Quetta for a living, while I am a PhD student in the US,” says Karrar in a humble tone. “I often wonder why God chose me, out of all the people in my community, to get ahead in life?”
But his herculean struggle with English often left him frustrated.
Often feeling like a misfit during his first year at university, Karrar mostly spent his days with other NOP students. “But after a year I managed to befriend other students from Lyceum and Karachi Grammar school.”
He sheepishly adds, “After a year I figured out that ‘what’s up?’ is equivalent to saying salaam.”
Karrar graduated on the Dean’s honour list, with a cumulative grade point average of 3.7 and 3.68 in his majors, Maths and Economics, respectively.
“I got job offers in the banking industry after graduating but I turned them down because I wanted to tread an academic path,” he explains in a categorical tone.
A year after graduating, Karrar got a Fulbright scholarship to study in the US.
“I simply told the interview panel that I want to come back to Balochistan after completing my studies. That’s where my home is; that’s where I belong,” he explains passionately.
But perhaps the most memorable moment in his life — an incident he recalls quite animatedly — was when he found out that he made it to Harvard University.
“I had no internet at home in Mariabad so I walked 15 minutes or so to a nearby internet cafe to check my email for Harvard’s decision,” he explains. “When I saw the acceptance email, I just thought it was too good to be true.”
Yet after he raced back home to reveal the news to his parents, his moment of rapture soon transformed into a session of lengthy clarification.
“My mother asked me what Harvard was and my father asked me to wait for potential offers by other universities” he says with a laugh. “It took a while to convince them that I got into the world’s top university.”
But ironically for a student, who was left disconcerted by the ‘westernised’ student body at LUMS, adjusting to life at an American institution was smooth sailing.
“After LUMS, I was very used to being around different types of people so studying and living in the US was not such a problem.”
Karrar completed his Master’s last year and is currently pursuing a PhD in Economics from the University of Southern California.
“I can make them realise the value of education,” he says.
Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".
Increased load shedding in Pakistan alone has cost 400,000 jobs in recent years, according to the World Bank. Although the World Bank report does not address it directly, the anecdotal evidence suggests that almost all of Pakistan's job growth for the decade occurred from 2000-2007 when the economy showed robust gdp growth. During 2000-2007, Pakistan's economy became one of the four fastest growing economies in Asia with its growth rate averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program. Contrary to its public criticism of the Musharraf-era economy, the preceding facts were acknowledged by the current government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008.
Here's a brief summary of Pakistan foreign education market put together by the British Council:
Pakistan is one of the six countries which accounts for 54 percent of the UK’s (non-EU) international students. After September 2001, it has become the market leader, a place traditionally taken by the US, but the US is picking up after a long time, owing to simplified visa procedures and increased marketing efforts, not to forget the excellent scholarship opportunities that thy have to offer Pakistani students.
There were 5222 students from Pakistan studying in the United States in 2009/2010 (Source:IIE Opendoors). Pakistan now has the largest Fulbright Scholarship Programme in the world. There is an upward trend of Pakistani students studying in Australia. 2557 students studied in Australia in 2009/2010 compared to 2190 in 2008/2009 (Source: AEI). Other European countries have also become quite active in marketing their education in Pakistan. Countries such as Thailand, Malaysia and Singapore are more visible and perceived as offering quality education at lower prices. UK has remained the highest in this with 10,420 students studying in the UK in 2009/2010 (HESA, 2011).
Pakistan is predominantly a postgraduate market, of the students currently studying in the UK, approximately 71 per cent are postgraduate and 29 per cent undergraduate. While the further education market is still relatively small, there is potential for growth, as there is a greater need for skills in a more service sector-led economy.
One-year Master's programmes are popular, due to their shorter duration compared to competitors. A further major aspect of the postgraduate market is the relatively wide availability of scholarships by UK institutions and Government funding agencies. In addition to the Pakistan Government‘s new overseas scholarship schemes, this target group also has access to scholarships offered by international organisation such as IMF, Commonwealth and World Bank. Popular subject areas are for 2009- 2010 are Business Studies, Engineering, Computer Sciences, Social Sciences followed by law.
Based on HESA statistics, the total number of Pakistani students enrolled in the UK was 10,420 in 2009 / 2010, a 2 percent growth on 2008/2009.
There is also significant growth in GCE O- and A-levels conducted in Pakistan, which naturally leads to demand for UK undergraduate study. More than 46,000 students took these examinations in 2010 / 2011. Popular subjects include business, law, accountancy, IT, management and engineering.
Foundation programmes have a market in Pakistan as a pathway from 12-year study into UK higher education.
Vocational programmes are a new market in Pakistan, with increasing student awareness of the opportunities. National Vocational and Technical Education Commission (NAVTEC) is a regulatory body for promoting linkages among various stakeholders to address challenges aced by Technical and Vocational Education Training (TVET)....
Here are some of the findings of a recent paper by Durre-e-Nayab of Pakistan Institute of Development Economics (PIDE) titled "Estimating the Middle Class in Pakistan":
Depending on the definition applied, it is found that the size of the middle class ranges drastically in the country, as can be seen from Table 2. Applying the definitions having solely an economic rationale, we find the middle class to range from 60 per cent of the population (Table 2, Definition One) to being totally non-existent (Table 2, Definition Five). Translating it in number of people, using the population base of 187 million as it stands on mid-year 2011 (USCB, 2011 and UN, 2009), the size of the middle class ranges from a huge 112 million to no one. This variability, as stressed earlier, reflects the complexities and
arbitrariness associated with defining and measuring the middle class.
Among all the definitions given above, Definition Eight and Definition Thirteen, based on gradation of income and expenditure per person per day, respectively, are currently the most
extensively used measure employed to estimate the middle class (as also used by Chun (2010) and Bhandari (2010) among others)3. This definition too, however, suffers from the same drawback of relying solely on one criterion. As also pointed out by Eisenhauer (2008), Atkinson and Bourguignon (1982), Kolm (1977), Bourguignon and Chakravarty (2003) and Gilbert (2003), being a part of the middle class should be ascertained by a person’s socio-economic attributes holistically. Income is an important aspect but other qualities like level of health, wealth,
education and specialised knowledge are also significant factors for constituting a class. Technically speaking too, most of the definitions suffer from serious drawbacks. For instance, the ‘quintile approach’ can be useful in measuring or comparing income or expenditure growth but cannot be used as a method to estimate the middle class as the size cannot shrink or expand and by definition would permenantly remain at 60 percent. Any denomination of the median income should also be used with caution in low income countries like Pakistan. Taking 75 per cent of the median income might lead to the inclusion of people below the poverty line in countries with very low income levels. In the above-stated definitions and resulting estimates there are issues with the lower bounds
set for inclusion in the middle class. While some of the definitions (like Definition Three and Five) set the limit too high4, resulting in a very small middle class or in the absence of a middle class altogether, there are other definitions that set the limit too low, like those that set the lower
bound at $2 per person per day. Does the middle class begin where poverty ends? Ravallion (2010: 446) supports, “the premise that middle class living standards begin when poverty ends”.
This paper, however, supports the argument forwarded by Horrigan and Haugen (1988:5) when they posit, “to ensure that the lower endpoint of the middle class represents an income
significantly above the poverty line”. The middle class should, hence, include only those households that do not face the risk of experiencing poverty at all, and are not just those who
are outside the the realm of poverty at a particular time.
Rising per capita income and a growing, young population spending more time online and at Western movies are helping build a mass market in Pakistan, according to Businessweek:
One way to take a city’s economic pulse is to check out where locals shop. In Karachi, Pakistan, shoppers are flocking to Port Grand, which opened in May. Built as a promenade by the historic harbor for almost $23 million, the center caters to Pakistanis eager to indulge themselves. This city of 20 million has seen more than 1,500 deaths from political and sectarian violence from January to August. At Port Grand the only hint of the turmoil is the presence of security details and surveillance cameras. “The whole world is going through a new security environment,” says Shahid Firoz, 61, Port Grand’s developer. “We have to be very conscious of security just as any other significant facility anywhere in the world needs to be.”
Young people stroll the promenade eating burgers and fries and browsing through 60 stores and stalls that sell everything from high fashion to silver bracelets to ice cream. Ornate benches dot a landscaped area around a 150-year-old banyan tree. “Port Grand is something fresh for the city, very aesthetically pleasing and unique,” says Yasmine Ibrahim, a 25-year-old Lebanese American who is helping set up a student affairs office at a new university in Karachi.
One-third of Pakistan’s 170 million people are under the age of 15, which means the leisure business will continue to grow, says Naveed Vakil, head of research at AKD Securities. Per capita income has grown to $1,254 a year in June from $1,073 three years ago.
The appetite for things American is strong despite the rise in tensions between the two allies. Hardee’s opened its first Karachi outlet in September: In the first few days customers waited for hours. It plans to open 10 more restaurants in Pakistan in the next two and a half years, says franchisee Imran Ahmed Khan. U.S. movies are attracting crowds to the recently opened Atrium Cinemas, which would not be out of place in suburban Chicago. Current features include The Adventures of Tintin and the latest Twilight Saga installment. Mission: Impossible—Ghost Protocol is coming soon. Operator Nadeem Mandviwalla says the cinema industry in Pakistan is growing 30 percent a year.
Exposure to Western lifestyles through cable television and the Internet is raising demand for these goods and services. Pakistan has 20 million Internet users, compared with 133,900 a decade ago, while 25 foreign channels, such as CNN (TWX) and BBC World News, are now available. And for many Pakistanis, reruns of the U.S. sitcom Everybody Loves Raymond are a regular treat.
The bottom line: With per capita income rising quickly, Pakistan is developing a mass market eager for Western goods.
Here's an Express Tribune report tiled "Nokia Sees Pakistan Becoming a High-Growth Market":
KARACHI: Foreign delegates and local entrepreneurs discussed challenges facing businesses, sought greater industry-academia collaboration and highlighted business models to succeed in an emerging market at the 12th Management Association of Pakistan (MAP) Convention on Leadership Challenges for Business Success here on Wednesday.
Emerging markets will account for 80% of the world’s growth the next decade and Pakistan will be an important emerging market in future, Senior Vice President of Nokia India, Middle East and Africa Shivakumar said in a speech titled “Winning in emerging markets”.
Speaking to a conference packed with businessmen, Shivakumar – who is also the senior vice president of All India Management Association (AIMA) – said growth in developed economies has slowed down dramatically and the world is now looking at emerging markets, which account for 42% of population and 13% of income.
Pakistan is listed in four categories of emerging markets including Dow Jones 35 and emerging and growth level economies (EAGLES), he said. “Pakistan will be an important high-growth emerging market.”
In order to succeed in an emerging economy, he said, it is important to understand its segments and consumers. The emerging market consumers – most of whom live under $2 a day – are value-sensitive and not price-sensitive, he said and added entrepreneurs have to work on their business models to accommodate that segment of consumers who believe in the doctrine of “pay more, get more” and “pay less, get less”.
Sharing his experiences, he said, there are three things that he applied and succeeded. “Always put the country’s interest first, keep fixed costs very low and turn as many cost variables as possible,” he said.
“Never cut the features and offer your product at half the price. Consumers don’t want an incomplete product.”
Speaking to the participants earlier on, event’s chief guest and State Bank of Pakistan Governor Yaseen Anwar said it is time for all business leaders and managers to take the lead. Leaders must be more aware of the challenges facing the country – inflation, unemployment and power crisis.
There are no shortcuts to sustained economic development, Anwar said. “We need to develop the right strategies and then translate these strategies into action.”
AIMA President Rajiv Vastupal also addressed the event, saying IMF has lowered growth projection for both 2011 and 2012. “Today’s corporate leaders must focus on innovation to counter the global economic challenges,” he said. He elaborated the successful example of Apple’s iPad, which was launched during recession and earned a great success.
Here's a report in The News on the PPP's unwillingness to face rising poverty in Pakistan:
The World Bank has said that poverty assessment is underway in Pakistan, which will provide the basis for an update on poverty trends, sources said on Saturday.
But the government is making efforts to drag its feet away from revealing any poverty figures in a bid to avoid controversy, they said. In its latest report on Country Partnership Strategy (CPS), the World Bank took conscious decision to sticking the poverty figures of 17.2 percent on the basis of survey done in 2007/08.
The figure of 17.2 percent was not endorsed by the PPP-led government, despite validation extended by the World Bank, they said. There is a sharp divide among the economists over this issue as some are favouring to concede poverty figures validated by the World Bank, but some close to the incumbent regime are raising doubts about the credibility of the data compiled by the Federal Bureau of Statistics (FBS).
“There is a need to form high-powered committee with clear cut terms of reference to decide this matter once and for all,” the sources said, adding that the methodology of calculating poverty figures should also be analysed to update it in accordance with the ground realities. Now, the Federal Bureau of Statistics (FBS) has once again accomplished Pakistan Social and Living Standard Measurement (PSLM) Survey 2010/11. But the Planning Commission has not yet done analysis to come up with the latest poverty figures, the sources said.
However, the World Bank’s country partnership strategy report said that as reported there are indications that Pakistan saw an impressive decline in poverty trends during most years of the last decade, with the poverty rate falling from 34.5 percent in 2001/02 to an estimated 17.2 percent in 2007/08.
Over the last two years, the WB said, there have been signs that poverty levels may be rising, due to the downturn in the economy, floods and inflation. The rapid post-floods recovery in parts of the agriculture sector (those not hit by back-to-back floods), market price for wheat, and a surprisingly strong growth in remittances would likely to have benefitted the poorest (mainly rural) income groups, according to the report.
While Pakistan’s overall level of inequality remains steady and relatively low as compared to other developing countries, some of the volatile border regions and some rural areas within other provinces have a higher than average level of poverty, it said. Increased migration to the cities has also strained their capacity to deliver the much-needed basic services.
Here's an interesting story in Express Tribune on the rise of the middle class via banking sector:
Hasan Rizvi used public transport to get around the city, and didn’t have a house of his own 10 years ago, while he studied for a Bachelor of Commerce degree at a college affiliated with University of Karachi. Today, he owns two motorcycles, one car and a modest apartment in a middle-class neighbourhood that he rents out to supplement his monthly income.
Rizvi’s upward movement on the social ladder corresponds with the growth in Pakistan’s banking sector that he has been part of since 2004.
In 2000, the combined profit-before-tax of all Pakistani banks was Rs4.5 billion. It reached Rs80.7 billion in 2009 – almost 17-fold increase over nine years!
With more than 8,000 branches of 41 scheduled banks all over the country, the banking sector has witnessed phenomenal growth in the past 10 years: assets of the banking system have been growing at an average of 14.8 per cent since 2001.
The exceptional growth in the banking sector has created thousands of private-sector jobs. The public sector controlled almost 80 per cent of the banking industry in 1997. However, after privatisation of several banks, the figure reduced to 20 per cent in 2004.
Rizvi said that to buy his apartment he took out a loan from his bank in 2008 at a reduced interest rate. Generally, the mark-up on home loans for ordinary customers is around 20 per cent. But the interest rate Rizvi is paying on his home loan as a bank employee is just five per cent.
He said he now lets out the apartment for Rs14,000 a month. The monthly instalment he pays to his bank is Rs.13,000, which means that without paying a single rupee out of his pocket, Rizvi not only bought his own apartment, but also makes an additional Rs1,000 every month – thanks to the fringe benefits of his bank job.
Similarly, car financing is also cheap for bank employees. While ordinary customers pay a 16-18 per cent mark-up on car loans, a bank employee gets it at a nominal rate of about five per cent.
“Every banker out there drives his own car and lives in, or rents out, his own flat. Banks pay well. And they give you facilities no other employer can afford to give its employees,” Rizvi said.
High profits for commercial banks over the past decade have resulted in the expansion of the banking sector, creating more jobs and promising better compensation packages for middle-class young men and women with tertiary education.
There are many reasons for the expansion in the banking sector in Pakistan. Most importantly, privatisation of nationalised banks spurred growth and increased overall banking standards in the 2000s. The share of private-sector banks in aggregate assets of the banking industry surged from 44 per cent in 2000 to over 77 per cent in 2005....
The State Bank said on Wednesday that the value of e-banking transactions aggregated to Rs12 trillion during the second half of 2010-11, showing an increase of 19 per cent as compared to the first half of the year, according to a Dawn report:
The Payment Systems Half Yearly Review released by the State Bank here noted speedy rise in e-banking transactions in the country.
The volume of such transactions during the period under review reached 125.9 million depicting an increase of 15.5 per cent as compared to the first half of FY11, the review said, adding that the payment system infrastructure has maintained an overall growth trend for the second half of FY11.
However, the review also said that the volume and value of paper-based retail payments during the second half of FY11 were recorded as 177.3 million and Rs84.6 trillion respectively, indicating an increase of 3.5 per cent in the volume of transactions.
“The value of transactions has increased by 13.3 per cent as compared to the first half of FY11. The contribution of paper-based payments in total retail payment transactions was 58.5 per cent in terms of volume and 87.5 per cent in terms of value,” it added.
The review said the Automated Teller Machines (ATMs), which are the largest channel of e-banking transactions, showed 16.5 per cent increase in number of transactions and 19 per cent increase in value raising the share of ATM transactions in total e-banking transactions to 58.8 per cent and 5.4 per cent respectively, the review said.
It said the number of Real-Time Online Branches (RTOB) transactions grew by 14.7 per cent and the value of transactions increased by 18.8 per cent as compared to first half of FY11. “These transactions contributed 31.6 per cent in total volume of e-banking and 93.2 per cent in the value of such transactions respectively,” the review observed.
According to the review, as many as 466 more Automated Teller Machines were added bringing the total number of ATMs to 5,200 while 380 more bank branches were converted into Real Time Online Branches (RTOBs).
“A total of 7,416 bank branches (78 per cent) are now offering real time online banking out of a total of 9,541 branches in the country. The number of plastic cards at 14 million also registered an increase of 6.2 per cent during the period under review as compared to the numbers during the preceding half year,” the Review added.
The overall increasing trend in payment system infrastructure was also witnessed in the large value payments settled through Pakistan Real-time Inter-bank Settlement Mechanism (PRISM), which increased by 14.8 per cent in volume and 21.9 per cent in terms of value as compared to the first half of FY11.
Here's an Express Tribune story on social mobility and a middle class suburb in Karachi:
The decision by Abdul Manan Shaikh’s family to move to Gulshan-e-Hadeed 10 years ago marked the beginning of his upward social mobility. Hailing from Larkana, where he learned the English alphabet at a government-run ‘taat’ school in sixth grade at an annual fee of less than Rs50, Shaikh has since attended three elite business schools of Karachi in the past decade.
Although he now drives a company car to a textile mill located in SITE every day, and attends evening classes at a business school in Clifton on weekends, he does not want to move out of Gulshan-e-Hadeed. In fact, his family bought a modest house there just three years ago.
So what makes Shaikh stay in a place as far removed from Karachi’s city centre as Gulshan-e-Hadeed?
Real estate in Gulshan-e-Hadeed is affordable. A 120-squareyard independent housing unit with a lounge, drawing room and two bedrooms with attached bathrooms costs somewhere around Rs2.5 million. Similarly, 240- and 500-squareyard housing units are available for around Rs5 million and Rs6.5 million, respectively.
The average monthly rent for a 120-squareyard, single-unit house in Gulshan-e-Hadeed is between Rs4,000 and Rs6,000. Compared with other middle-class areas of Karachi, that rate is cheap.
Moreover, an improvement in the city’s inner highways means that it takes almost the same time from these areas to go to the centre of the city. Gulshan-e-Hadeed may be a remote place in terms of kilometres, but an easy drive through National Highway and Sharae-Faisal makes it a choice neighbourhood for mid-level corporate managers, like Shaikh, who have company cars and receive subsidised fuel.
Peaceful and suburban
Although Gulshan-e-Hadeed is 48 kilometres from SITE, and 42 kilometres from Clifton, it offers what many localities closer to the centre of the city do not: better security.
Gulshan-e-Hadeed connects to the main city through National Highway and Shahrah-e-Faisal. Even during the worst law and order situations, one can expect these two roads to stay clear of trouble. Moreover, the ethnic and religious harmony within Gulshan-e-Hadeed, thanks to a heterogeneous population mix, has kept the crime rate under control for years.
All streets in Gulshan-e-Hadeed are paved and have ample space to park vehicles. There are no slums. Public transport is easily available, as buses leave for Karachi’s financial district every two to three minutes for the most part of the day.
Other than several degree colleges offering a decent standard of education, Gulshan-e-Hadeed is dotted with both government and private schools, including a cadet college and a branch of Beaconhouse School System in the adjoining Steel Town.
“A school, mosque and market are always at a walking distance from your home no matter which street of Gulshan-e-Hadeed you live on,” a local real estate dealer told The Express Tribune. “How many localities in Karachi offer that kind of closeness to these places?”
The real estate agent’s question is rhetorical. The fact that is that many of Pakistan’s largest cities now have similar suburban areas, which are in many ways similar to the Levittowns that sprouted around the United States after the World War II. Pakistan’s middle class has grown rapidly, and this is where many of them increasingly live.
Indeed, many of the villages that used to surround cities in Punjab’s GT Road belt have since turned into suburbs, no longer truly rural and offering an affordable option of the good life to many of the Pakistan’s up-and-comers. Indeed, these areas are acquiring a character of their own...
Here's an Express Tribune story on the opening of British Dept store Debenhams:
When Pizza Hut opened its first franchise in Pakistan in 1993, few were familiar with the concept of franchising. Soon it became a household name, and was followed by other fast food franchises. Many observers viewed these import-oriented luxuries in an underdeveloped country like Pakistan, with scepticism and considered it a waste of our precious foreign exchange. However, the trend of foreign retail outlets continues to expand into other products, services, and brands.
The press launching of the 200 years old British department store, Debenhams’ branch in Karachi earlier this month on 27,000 square feet space, at the upbeat Dolmen City Mall, was attended by important personalities, like, UK Minister of State for Trade and Investment, Lord Stephen Green and UK Cabinet Minister Baroness Sayeeda Warsi. It appears to have pushed the retail franchising business to another level. The skeptics are turning into fans.
This will be the first international department store in Pakistan offering a complete range of product categories synonymous with Debenhams, including a full range of women’s, men’s and children’s clothing, as well as, home, beauty and accessories. It is promised to be a truly world class shopping experience.
“I am very bullish on retail, not just for local but also foreign brands,” said Yasin Paracha, Managing Director, Team-A Ventures (Pvt) Ltd, which is the franchisee in Pakistan for Debenhams. “Foreign brands will perhaps give Pakistan that softer image we need; that we are normal people, with normal tastes and preferences and actually do drive in cars and wear western clothes! Furthermore, foreign brands will give the local brands the required positioning on the brand scene and will give customers the choice to decide where they want to spend their money.”
It is worth noting that before the fast food franchises, auxiliary industries like the home-delivery service and suppliers of quality poultry, meat etc, according to modern quality standards, hardly existed.
Paracha is very upbeat about the employment possibilities this presents. “This creates immense number of jobs; the average requirement per 1,000 square foot, of retail space is around six, which means Dolmen City, with a leasable area of 650,000 square feet will provide jobs to around 4,000 people! These will be mostly undergrads who might struggle to find good jobs in offices. Here they have the chance to work in a comfortable environment, look nice, and develop the discipline to deal professionally with customers. It also provides students the opportunity to work. Almost every teenager in the UK has worked in a retail environment.”
About government revenue and taxation, Mr. Paracha says, “This adds immense revenue, as most brands will progress towards declaring and paying taxes, they are too much ‘in your face’ to avoid it. Furthermore, instead of considering this as an outflow of foreign exchange, it actually saves it, as most people spend on shopping when they travel, they will convert to shopping within the country if they have the option and the right environment.”...
Here's an Express Tribune story on housing trends in Lahore, Pakistan:
...as the middle class of the city has expanded, real estate developers have now increasingly begun to offer more affordable variants of the gated housing community, primarily by reducing the size of the average house. Builders predict the fastest growth in demand for the 125-square-yard duplex or townhouse, which is made affordable by offering an instalment plan for the full price, which can start as low as Rs1.2 million.
“The higher end of the market is saturated. Now the industry needs to cater to the rapidly growing middle class that is seeking comfortable housing facilities,” said Abdul Aleem Khan, who runs a real estate development business based out of Lahore.
“After completing one project with mostly larger units, I announced that I would build one with smaller, more affordable units and an easy instalment plan,” he said. “The response was very positive. People clearly need affordable housing and this [middle class] is a very neglected market segment.”
Eden Housing, one of the largest real estate companies in Pakistan, was the first to create such housing schemes in the 1990s, which typically include better roads and infrastructure than the rest of the city they are in. Since then, this formula has been copied by many developers, who saw how rapidly Eden was able to sell off its inventory.
“To live in such a community, which provides you with good infrastructure and security, is relaxing,” said Mujahid Ali, a resident of Eden Avenue, a gated community in Lahore developed by Eden Housing. “I moved here two years ago and have the peace of mind that there is no street crime or robberies within the scheme’s premises. My job requires me to visit other cities and I used to worry for my family’s safety. But since moving here, I can travel without that tension.”
Many of the facilities have hired a full-time staff of maintenance staff. The security is often provided by one of the more than 600 private security companies that now hire out both equipment and guards to a Pakistani middle class that is increasingly concerned for its safety.
Lahore has at least two dozen of these gated communities. In keeping with the temperament of the people in the Central Punjab region, there are hardly any apartments. Most of the housing units are bungalows, townhouses or duplexes. Some of the largest units can be spread over as much as 1,200 square yards, with the smallest ones generally being no more than 125 square yards. Other common sizes include 150 and 200 square yard units.
Builders often locate these communities close to major thoroughfares. Yet as real estate within Lahore proper grows increasingly scarce, many developers have begun to create such offerings on the outskirts of the city, taking advantage of the improvements in the transportation infrastructure in Punjab that includes a highway network comparable to that in some parts of the developed world. Once Lahore’s Ring Road is completed, such housing projects will be able to offer even faster access to the inner city.
Khan, the real estate developer, says that nearly all of the buyers of houses in these projects tend to be buying their own primary residences. “These schemes are not really meant for investors,” he said.
Here are excerpts of a Bloomberg piece by Indian journalist Pankaj Mishra on Pakistan's "unplanned revolution":
However, I also saw much in this recent visit that did not conform to the main Western narrative for South Asia -- one in which India is steadily rising and Pakistan rapidly collapsing.
Born of certain geopolitical needs and exigencies, this vision was always most useful to those who have built up India as an investment destination and a strategic counterweight to China, and who have sought to bribe and cajole Pakistan’s military-intelligence establishment into the war on terrorism.
Seen through the narrow lens of the West’s security and economic interests, the great internal contradictions and tumult within these two large nation-states disappear. In the Western view, the credit-fueled consumerism among the Indian middle class appears a much bigger phenomenon than the extraordinary Maoist uprising in Central India.
Traveling through Pakistan, I realized how much my own knowledge of the country -- its problems as well as prospects -- was partial, defective or simply useless. Certainly, truisms about the general state of crisis were not hard to corroborate. Criminal gangs shot rocket-propelled grenades at each other and the police in Karachi’s Lyari neighborhood. Shiite Hazaras were being assassinated in Balochistan every day. Street riots broke out in several places over severe power shortages -- indeed, the one sound that seemed to unite the country was the groan of diesel generators, helping the more affluent Pakistanis cope with early summer heat.
Gangsters with Kalashnikovs
In this eternally air-conditioned Pakistan, meanwhile, there exist fashion shows, rock bands, literary festivals, internationally prominent writers, Oscar-winning filmmakers and the bold anchors of a lively new electronic media. This is the glamorously liberal country upheld by English-speaking Pakistanis fretting about their national image in the West (some of them might have been gratified by the runaway success of Hello magazine’s first Pakistani edition last week).
But much less conspicuous and more significant, other signs of a society in rapid socioeconomic and political transition abounded. The elected parliament is about to complete its five- year term -- a rare event in Pakistan -- and its amendments to the constitution have taken away some if not all of the near- despotic prerogatives of the president’s office.
Political parties are scrambling to take advantage of the strengthening ethno-linguistic movements for provincial autonomy in Punjab and Sindh provinces. Young men and women, poor as well as upper middle class, have suddenly buoyed the anti-corruption campaign led by Imran Khan, an ex-cricketer turned politician.
After radically increasing the size of the consumerist middle class to 30 million, Pakistan’s formal economy, which grew only 2.4 percent in 2011, currently presents a dismal picture. But the informal sector of the economy, which spreads across rural and urban areas, is creating what the architect and social scientist Arif Hasan calls Pakistan’s “unplanned revolution.” Karachi, where a mall of Dubai-grossness recently erupted near the city’s main beach, now boasts “a first world economy and sociology, but with a third world wage and political structure.”
Even in Lyari, Karachi’s diseased old heart, where young gangsters with Kalashnikovs lurked in the alleys, billboards vended quick proficiency in information technology and the English language. Everywhere, in the Salt Range in northwestern Punjab as well as the long corridor between Lahore and Islamabad, were gated housing colonies, private colleges, fast- food restaurants and other markers of Pakistan’s breakneck suburbanization....
Here's a Daily Times story on higher education growth in Pakistan:
Shaikh also highlighted the performance and achievements of government during last 10 years. He said that there are 71 universities in Pakistan in 2002, but in last 10 years, 66 new universities have been added in Pakistan. Previously, female enrolment was 37 percent, now it is 45 percent. Previously, numbers of PhDs were 1,500, now 10,000 new students have been enrolled in PhD, added the minister. He also mentioned that federal government has spent Rs 160 billion on promotion of higher education in the country. The federal minister said that federal government has transferred additional Rs 800 billion to provinces during the last four years to enable the provinces to provide their population best social services like health education. He also advised students to be proud and loyal Pakistanis. Shaikh said that it is a great day for the degree holding students, so they must thank their parents and teachers. He also assured that the government is doing every effort for the promotion of education sector in Pakistan.
Here's an LA Times story on gated communities in Pakistan:
Reporting from Rawalpindi, Pakistan — The houses and manicured lawns slope up the artificial hill edged by unbroken sidewalks and white picket fences, as children play and residents exchange pleasantries.
This sprawling subdivision called Bahria Town — "Come home to exclusivity," it boasts — operates its own garbage trucks, schools, firehouse, mosques, water supply and rapid-response force — a kind of functioning state within a nonfunctioning one. And all supplied without the bribes you'd pay on the outside, residents say.
"I like living here," said Abdul Rashid, a sixtysomething retired government worker. "It's like you're in a little protected country — tidy, utilities work, the family can relax. If there's any problem, you just ring up security."
The jarring presence of a middle- and upper-class retreat in this increasingly violent nation has been paved, in part, by the involvement of the country's powerful military. Benefiting from laws put in place during British Empire days to reward friendly armies and militias with land grants, the military now controls about 12% of Pakistani state land, by some accounts. And its privileged position allows it to partner with and otherwise route valuable tracts to favored developers.
Bahria Town and its partner, the military-run developer Defense Housing Authority, occupy twice as much land as Rawalpindi, the garrison city 30 minutes from the capital, Islamabad.
In the posh Safari Villas subdivision, past Sunset Avenue and College Road, Mohammad Javed, 69, surveys his pocket garden before heading into his three-bedroom corner house with a beige sofa ensemble and Samsung flat-screen TV. Houses in the neighborhood run from $25,000 to $60,000, well out of reach of most Pakistanis.
Bahria Town has been a hit not only with moneyed Pakistanis but also with returnees. Javed, who owned a gas station in Canada before retiring, hopes to replicate his North American lifestyle. Bahria's protective walls bring security, he said, although he still won't let his grown children visit lest something bad happen beyond its confines. "We meet in Thailand or Canada," he said.
"No one besides the military has such access," she said. Bahria Town advertised on a recent Sunday for retired major generals and lieutenant generals to fill positions at the company, Siddiqa said: "These are his keys" to greater access.
But for resident and food industry entrepreneur Shaheryar Eqbal, these are minor issues relative to what Bahria Town delivers.
"The government should take these communities as a model and replicate them," he said. "The army already has a joint venture with Bahria Town. Things work. Pakistan must get through this terrorism phase, but this could really be the future."
Here's an ET story about rising middle class consumption in Pakistan:
It is the paradox that puzzles everybody: the headline numbers indicate an economy in an abysmal state, but everywhere one looks, there are people shopping like there is no tomorrow. How is this possible? An analysis conducted by The Express Tribune reveals a surprising answer: women.
While the headline GDP numbers suggest sluggish economic growth, not all sectors are underperforming. A closer look suggests that the economic slowdown has been far from uniform, with some sectors booming, while others are in a deep slump. The retail and wholesale sector in Pakistan was worth about $40 billion in fiscal year 2012, and has been growing at 5.3% in real (inflation-adjusted) terms for the past five years, much faster than overall economic growth during that period.
And the benefits of this growth have been visible throughout the country. While large shopping malls opening up has become common place in cities like Lahore and Karachi, national newspapers now carry advertisements for shopping malls in smaller cities like Dera Ghazi Khan, Sukkur, Sargodha, etc as well. The average Pakistani household is very clearly more able and more willing to shop than ever before.
The reasons for this newfound consumerism are complex. Despite all the complaints about inflation, household incomes for Pakistanis in urban areas rose faster than inflation by an average of about 1.5% per year between 2006 and 2011, a period of extraordinarily high inflation rates. (Rural Pakistan did not fair quite as well.) The average household size also fell during that period, further raising per capita gains....
The reasons for why women have entered the workforce are manifold. Education levels have been rising rapidly across the board. Fertility rates have dropped from 7.1 in 1980 to just over 3.1 in 2011, causing household sizes to decline. Women with fewer children have more freedom to pursue careers outside the home.
And persistently high inflation may also have forced many families to consider being more open to women working outside the house: a second income can clearly go a long way in changing the fortunes of a household. It has clearly already helped the economy through a particularly difficult time.
Here's a Financial Times Op Ed on Pakistan:
Pity the people of Pakistan, trapped between self-serving, complacent elites who preside over a crumbling state, and a rich array of violent extremists who seem determined to tear the same state apart....
The military, the country’s most meritocratic and efficient institution, is widely regarded as the only force that can break this grim cycle. Yet there are other, largely hidden forces at work in Pakistan that hold it together and offer it a better future:
adaptability and resilience, entrepreneurship and shared coping.
These forces can be found in the very new – widespread mobile banking services – and the very old – Islam’s traditions of charity, justice and learning. When government and donors work creatively with these forces, amazing things can happen.
Pakistan has one of the best regulatory environments in the world for microfinance and one of the fastest-growing microfinance sectors, with 3m borrowers. It is also one of the most innovative places in the world for mobile banking services, partly due to the State Bank of Pakistan’s moves to encourage the market. About 1.5m customers make about 30m transactions a quarter through their mobiles, using a network of 20,000 agents, mainly local shops, to collect their cash.
A wave of charitable giving by individuals has helped to ensure that the hundreds of thousands of people displaced by floods in 2010 are not still living in tents. A guerrilla army of more than 100,000 Lady Health Workers, funded by government, has helped to reduce markedly the number of women and babies who die in child birth, according to studies by the World Bank.
Too many children are still out of school and many government schools are woeful. Yet Pakistani parents go to enormous lengths to give their children, girls and boys, a chance at an education.
Low-cost private sector schools, charging perhaps $2 a week, are booming in slums and villages. Wherever girls receive a secondary level education, small private schools run in the homes of their owners start popping up, as they put their education to use to improve their standing in society. Even the government’s conservative figures suggest that a third of children in Pakistan and half in Karachi, many of them from poor households, attend such schools.
Indeed, Pakistan has a record in picking up new approaches to learning. The Allama Iqbal university in Islamabad, the first open university outside the UK, is the second largest in the world with 1.8m students. Start-ups such as Tele Taleem, tucked away on a dusty industrial estate on the outskirts of Islamabad, are pioneering ways to take learning to schools in the remoter regions, through satellite links and cheap tablet computers.
Donors are playing a vital role in promoting social innovation. The UK’s Department for International Development has pioneered a new road map for school improvement in Punjab, which Sir Michael Barber, the education reform expert, says is delivering one of the world’s fastest improvements in school performance. In Karachi, tens of thousands of poorer families will next year receive vouchers to send their children to low-cost private schools.
In agriculture, social venture capitalists such as Indus Basin Holdings are leading efforts to link groups of small-scale rice farmers to multinational companies.
Pakistan’s institutions may seem frozen, its elites worried that taking on the extremists will provoke even more violence in the run-up to next year’s elections. Yet, at the grassroots, Pakistan is in perpetual motion, with ceaseless creativity as people find affordable solutions to their basic needs. These largely hidden forces of resilience offer the best hope for the country’s future. In Pakistan, the state may be fragile but society is far stronger than many think.
Here's a Bloomberg story titled "Pakistan, Land of Entrepreneurs":
On a warm Sunday morning in November, Arif Habib leaves his posh home near the seafront in southern Karachi and drives across town in a silver Toyota Prado SUV. About half an hour later, he arrives to check up on his latest project: a 2,100-acre residential development at the northern tip of this city of 20 million. He hops out, shakes hands with young company call-center workers who are dressed for a cricket match, and joins them at the edge of the playing field for a traditional Pakistani breakfast of curried chickpeas and semolina pudding. After a quick tour of the construction site, he straps on his leg pads, grabs his bat, and heads onto the field. “The principles of cricket are very effective in business,” says Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”
Habib, who started as a stockbroker more than four decades ago, has expanded his Arif Habib Group into a 13-company business that has invested $2 billion in financial services, cement, fertilizer, and steel factories since 2004. His group and a clutch of others have become conglomerates of a kind that went out of fashion in the West but seem suited to the often chaotic conditions in Pakistan. Engro (ENGRO), a maker of fertilizer, has moved into packaged foods and coal mining. Billionaire Mian Muhammad Mansha, one of Pakistan’s richest men, is importing 2,500 milk cows from Australia to start a dairy business after running MCB Bank, Nishat Mills, and D.G. Khan Cement.
These companies have prospered in a country that, since joining the U.S. in the war on terror after Sept. 11, has lost more than 40,000 people to retaliatory bombings by the Taliban. Political violence in Karachi has killed 2,000 Pakistanis this year, and an energy crisis—power outages last as long as 18 hours a day—has led to social unrest. Foreign direct investment declined 24 percent to $244 million in the four months ended Oct. 31, according to the central bank.
At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad. A boom in agriculture and residential property, as well as jobs in hot sectors such as telecom and media, have helped Pakistanis prosper. “Just go to the malls and see the number of customers who are actually buying in upscale stores and that shows you how robust the demand is,” says Azfer Naseem, head of research for Elixir Securities in Karachi. “Despite the energy crisis, we have growth of 3 percent.”
Sherani of Macro Economic Insights estimates the middle class doubled in size between 2002 and 2012. “Those who understand the difference between the perception of Pakistan and the reality have made a killing,” Habib says. “Foreigners don’t come here, so the field is wide open.” The KSE100, the benchmark index of the Karachi Exchange, has risen elevenfold since mid-2001. Shares in the index are up 43 percent this year alone. Over the past decade, stocks have been buoyed by corporate earnings, which were bolstered in turn by rising consumer spending.
Today, Habib has 11,000 employees and annual revenue of 100 billion rupees. He plans to expand into commodities trading and warehousing. “I’ve created all my wealth in Pakistan and reinvested all of it here,” says Habib, who drives himself to his cricket matches and is never accompanied by security guards. In 1998, when Pakistan’s share index fell to a record low after the government tested nuclear weapons, Habib bought shares even though “people thought I was mad.”...
Here's an excerpt of Express Tribune report on LG Electronics investment in Pakistan:
“We have decided to expand our operations by enhancing production capacities to capture growing consumer demand in Pakistan,” said DY Kim, President of LG Electronics Gulf, while talking to The Express Tribune on Thursday.
“Currently, our production in Pakistan is only limited to televisions and LCDs, but in a couple of months we will start producing other household items like microwaves and washing machines,” he added.
LG Electronics is a global leader and technology innovator in consumer electronics, mobile communications and home appliances with 117 operations around the world.
LG achieved global sales of $49 billion in 2011. It is offering products in four segments – home entertainment, mobile communications, home appliances and air conditioning & energy solutions.
In Pakistan, LG is increasing investment to enhance production capacity, but Kim did not divulge exact figure and only said it would be in billions of rupees.
The company is looking to compete with Samsung, which has increased its market share in recent years.
“We want to give consumers with some other option and we are hopeful this will not take much time,” Kim said.
World Bank report on population planning in Pakistan:
In 1950, the average Pakistani woman had more than 6 children. This has dropped to a little over 3 but has stalled in recent years.
Men show increasing interest about family planning and contraception due to the financial challenges of raising large families.
Interventions should be backed up by an improvement in the supply of contraceptives and availability of family planning services in accessible facilities.
While healthcare systems have numerous opportunities for women to discuss family planning (e.g. antenatal care, deliveries, mother-and-child health services), far fewer opportunities exist for men. A recent study in Pakistan carried out by the Population Council with funding from the World Bank through the Bank-Netherlands Partnership Program (BNPP) found that men indeed want fewer children and are eager to receive technical information about family planning.
The study explored couples’ decision making processes regarding family size and contraceptive choices. It also looked at community perceptions of male-focused family planning interventions and men’s suggestions for future intervention strategies.
The qualitative study took place in four districts in Punjab, Pakistan and consisted of focus group discussions with men and in-depth interviews with couples. Data from existing quantitative baseline and surveys in the same area were also reanalyzed to assess the impact of male-directed interventions on fertility intentions and behavior.
The Emerging Middle Class in Pakistan: How it Consumes, Earns, and Saves
Dr. Jawaid Abdul Ghani
Professor, Strategy and Marketing Research,
Karachi School of Business and Leadership
During the first decade of the twenty first century, and for the first time in the history of
Pakistan, over half of the households in the country belonged to the middle class (M-class).
During this period (2002-2011) the M-class, defined as households with daily per capita
expenditures of $2-$10 in 2005 purchasing power parity dollars1
, grew from 32 percent to 55
percent of all households in the country, and the number of people in this class doubled from 38
million to 84 million. Real aggregate national consumption increased by about $60 billion, of
which $55 billion was accounted for by the increase in consumption of the M-class. As a result
90 percent of the increase in national consumption during this decade came from the increase in
consumption of the M-class2
. It is not surprising that the Asian Development Bank listed
Pakistan as among the top five countries3
in the Asia Pacific region with the fastest growing Mclass
during 1990-2008 (Chun 2010).
What characterizes the M-class? Bannerjee and Duflo (2008) suggest that holding a relatively
secure job is the single most important characteristic of the M-class. Individuals with higher
levels of “permanent income” are less vulnerable to economic shocks, have lower discount rates
for future rewards and thus invest more in health, education, and other “rent generating”
credentials. Professionals and others in the “service class” with large amounts of human capital
and stable employment relationships are considered the most likely to invest in securing their
own and children‟s future. Indeed, according to Sorenson (2000) it is the level of uncertainty in
“lifetime wealth” and resulting living conditions which result in differences among social
. M-class values are described as optimism and confidence regarding the future, a
preference for moderation and stability, a willingness to pay a little extra for quality, the “ability
to defer gratification”, and income often based on specialized skills. As a result the M-class has
the “base amount of income to invest in productive activities that contribute to economy-wide
welfare” (Chun 2010), and is more likely to accumulate human capital and savings, and more
inclined towards entrepreneurship (Lopez 2012, Meyer 2012).
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