Context

Pakistan has one of the largest populations in the world of people living in poverty. The population is over 189 million, with a poverty rate of just below 30% (National Poverty Line, 2013).  Poverty rates have been falling rapidly as a result of rapid economic growth which has increased income per capita more rapidly since around the year 2000.

Helping to ensure a prosperous and stable Pakistan is critical for the future of millions of poor Pakistanis, and the stability and security of both the region and the UK. Almost a third of Pakistan’s population lives in poverty (over 60 million people), with women most seriously affected.  22.6 million children do not go to school and half of the population, including two thirds of women, cannot read or write. One in eleven children die before their fifth birthday, every year 8,000 women die in childbirth and 44% of children under five are stunted. Pakistan’s population is set to grow by 40 million people in the next 15 years and the economy needs to grow by more than 7% a year to create jobs for this growing young population. There is major inequality based on geography, gender, ethnicity, disability and faith and a significant modern slavery problem amongst the poor, minorities, women and children. Pakistan carries a high risk of natural disasters; it has the second highest number of refugees in the world and continues to suffer from extremism and militancy. Consolidating the growing democracy and capacity of government institutions remains essential.

The World Bank Country Partnership Strategy 2015 to 2019 aims to expand policy-based support for strengthening the business environment. This outlines that the Bank plans to improve Pakistan’s Doing Business ranking through federal actions to improve power access, streamline tax payments, setting up a One-Stop Shop for business registration, and approving the credit information law (all actions supported by the Fiscally Sustainable and Inclusive Growth Development Policy Credit and ongoing Technical Assistance). Further assistance can be channelled through the Indicator Based Reform Advisory.  The Pakistan Board of Investment reports that it has undertaken provincial consultations and had developed an Action Plan for the reforms.

The Bank aims to use the Multi Donor Trust Fund for Khyber Pakhtunkhwa (amongst other area/regional funds) to leverage finance from other sources/donors. It also planned that during the first half of the strategy implementation period it would provide analytical support – in particular for the private sector development component.

According to the Asian Development Bank growth accelerated in FY2017 (ended 30 June 2017), mainly on recovery in agriculture and stronger manufacturing. With higher global prices for oil and other commodities, inflation slightly exceeded the forecast. The projection for the current account deficit was surpassed by a wide margin because of a very large increase in imports. Foreign exchange reserves were drawn down to fill a financing gap. For FY2018, projections for growth and inflation are maintained, but the current account deficit is expected to exceed the earlier forecast again by a wide margin. Read more on the outlook for Pakistan in the Asian Development Outlook 2017 Update

BERF’s Work in Pakistan

DFID Pakistan has been a major client for BERF.  The joint research and diagnostic report looked at business environment constraints in key sectors.  There have been two studies in the area of stakeholder engagement, including the scoping of a project for improving stakeholder engagement using information and communication technology (which may be followed up with implementation support), and support for a public private dialogue in Punjab.  BERF has also been commissioned to do a diagnostic study for Sindh province on Business Environment Reform.

BERF Paksitan Projects

  1. Pakistan Punjab Support to Public Private Dialogue
  2. BERF Research and Diagnostic for Punjab
  3. Pakistan Online Feedback Mechanism Scoping

 

World Bank Doing Business

The World Bank Doing Business Indicators for Pakistan for 2018 show a ranking of 147, three places below its 2017 ranking of 144.  The Distance to Frontier indicator showed a slight improvement to 51.65, but was still below the regional average of 53.64. A range of reforms are identified for 2018:

  1. Starting a business was made easier by replacing the need to obtain a digital signature for company incorporation with a less costly personal identification number.
  2. Karachi improved the transparency of the land registration process by publishing online the fee schedule and the list of documents necessary to complete any property registration.
  3. Minority investor protections were increased by making it easier to sue directors in case of prejudicial transactions with interested parties.
  4. Importing and exporting was made easier by developing a new container terminal and enhancing its customs platform for electronic document submission.

 

DFID Pakistan Strategy

Ending extreme poverty and providing humanitarian assistance: Since 2011, UK aid has delivered: primary education for more than 6.8 million children; skills training for almost 150,000 people (55% women); access to small loans for 1.56 million people (56% women); more than 1 million safer births; cash supplements for 5.2 million of the poorest families; and humanitarian assistance for over 4.1 million people affected by floods.

Economic development: The UK was integral to Pakistan’s completion of a three year International Monetary Fund programme in September 2016, averting a financial crisis in 2013. Between 2013 and 2016, economic growth rose from 3.7% to 4.7%. The fiscal deficit was reduced by 2.5% of GDP to 4.6% of GDP and foreign exchange reserves increased from the equivalent of three weeks’ imports to four months’.

Building institutions: The UK works at federal and provincial level to build capacity, improve public sector institutions and delivery, and tackle corruption. With UK support, the tax take has increased from 10% of GDP in 2013 to 12.4% in 2016; citizens’ budgets have been published in Punjab and Khyber Pakhtunkhwa; £147 million of bank loans have been facilitated for 22,000 small and medium enterprises; and 17 million poor people have access to digital banking. Pakistan joined the Open Government Partnership in 2016 demonstrating a commitment to greater government accountability and transparency.