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Pakistan

Vigorous ideas for ‘Powering Up Growth’ through energetic policy reforms

Christopher Colford's picture
In an era of chronically slow economic growth, what steps can policymakers take to help jump-start productivity, spur employment and build long-term wealth? Recognizing that the private sector must create about 90 percent of the economy’s future jobs, which policy reforms can most effectively encourage private-sector investment?

Questions like those – focusing on the private sector as the principal driver of growth, with deft public policy as an indispensable catalyst – inspired a dialogue among some of the developing world’s most experienced policymakers at a major forum, “Powering Up Growth: Ideas for Beating the Slowdown,” during the recent Spring Meetings of the World Bank Group and the International Monetary Fund. All four government Ministers on the panel – from both commodity-exporting and  -importing countries – voiced a sense of urgency, describing their efforts to attract private investment to spur job creation, amid a global economy that seems destined for prolonged weakness.

Before the policymakers ascended the Preston Auditorium stage, sobering updates had arrived from the Bank and the Fund: The Bank’s latest forecast for global growth has been lowered from 2.9 percent to 2.5 percent – with the caveat that this latest forecast is subject to further downside risks. That downward revision is in parallel with the Fund’s similar projection, which sees global growth this year in the neighborhood of just 3 percent.

Policymakers worldwide are eager to explore any option to try to lay the foundation for an eventual return to a long-term economic expansion. It was clear that the panelists in the “Powering Up Growth” event – which was convened by Jan Walliser, the Vice President for the Bank Group’s practice group on Equitable Growth, Finance and Institutions (EFI) and organized by the Global Practice for Macroeconomics and Fiscal Management (MFM) – were focused on long-term structural changes that can energize the private sector’s ability to drive growth.
 
Powering Up Growth: Ideas for Beating the Slowdown


The panelists – from Bolivia, Pakistan, Angola and Ukraine – represented countries from different regions and at various levels of economic development, but they shared a determination to jump-start growth through reforms that will strengthen the private sector’s long-term confidence. The Ministers, at times, seemed to envision opportunities, not just for short-term structural adjustment of their priorities or medium-term structural reform of their policy farmeworks, but for far-reaching structural transformation of their economies and societies.

Pakistan Microfinance Network commits to reaching 50 million new depositors through UFA2020 initiative

Syed Mohsin Ahmed's picture

Two billion people worldwide still lack access to formal and regulated financial services. In 2015, the Bank Group with private and public sector partners committed to promoting financial inclusion and achieving Universal Financial Access by 2020.  We've invited our partners to reflect on why they've joined the UFA2020 initiative and how they're contributing toward this goal. This contribution comes from the Pakistan Microfinance Network. #FinAccess2020


Photo Credit: Muhammad Kaleem, Courtesy of the Farmers Friend Organization (FFO)

Kaneez Fatima is a 50 year-old entrepreneur living in Sheikhupura, a city situated 40 km northwest of Lahore, Pakistan. Years before when her husband passed away, she had no idea to find the means for raising a family of six and her future seemed bleak. In her childhood she had acquired the skill of stitching footballs, and she thought about setting up her own workshop. But as a woman in a male dominated market, in an already challenging entrepreneurial environment, she faced what seemed to be an uphill challenge.

Sadly, Kaneez is not alone. World Bank Group Findex data estimates that Pakistan is home to 100 million unbanked people, or 5.2% of the world’ unbanked population, and the ‘Access to Finance Survey 2015 commissioned by the State Bank of Pakistan states that only 23% of adults use formal financial services offered by formal financial intermediaries with only 16% of Pakistani adults have an account with a formal financial institution.

Celebrating women entrepreneurs on International Women's Day

Cecile Fruman's picture
WomenX – Taking It To Scale – Women At The Helm


It takes a special type of woman to be an entrepreneur.

I didn’t quite know what to expect when, earlier this year, I met with a group of women entrepreneurs in Karachi who are participating in the World Bank Group’s womenX program. I had read a lot about the low numbers of women running businesses in Pakistan, the challenging environment they operate in, and their many constraints. But I was struck by the positivity and drive of the women I met. They shared with me how they are improving their business and financial practices, building their confidence, and expanding their networks.

Take for instance, Mussarat Ishaq, who runs Al-Karam Packages. Mussarat was a Karachi-based housewife, pregnant with her third child, when her husband divorced her. With no work experience, little education, no money and no plan, she learned the ropes of polythene production and with a business partner, started out small – purchasing the raw material from local markets, using outdated machinery to produce plastic bags, and supplying them to small businesses in their area. Today, they have purchased more sophisticated equipment and they employ 250 employees, working to provide low-cost, high-quality, reusable and environment-friendly packaging materials to Pakistani clients.

Financial inclusion in Asia – time for disruption?

Nataliya Mylenko's picture



More than half of the world’s population lives in Asia and its robust growth is supporting the world economy.  After weathering well the 2008 crisis Asia is now in the spotlight with currencies depreciating and capital markets in retreat.  One widely voiced concern is rapid expansion of credit in the past decade fueled by abundant liquidity.  Globally, and in Asia, regulatory response to the 2008 crisis has been to strengthen financial regulation and de-risk financial intermediation.  Yet the reality of credit markets in most Asian economies is quite different from that in high income economies.  While domestic credit by financial sector represented on average over 100% of GDP for high income OECD countries, emerging Asia’s average in 2014 stood at 60%. The differences across countries are substantial in this diverse region, but in two thirds of Asian economies domestic credit is less than 60% of GDP.  The reality for most economies in Asia is that of limited and often inefficient financial markets which do not serve fully their growth needs. Low level of financial inclusion is a major contributing factor and a major challenge.

Treasure-Hunting for Women Entrepreneurs

Qursum Qasim's picture



Pick any country in the developing world.

Say, Pakistan.

Where are the women entrepreneurs in Pakistan?

They start and manage digital-content creation firms serving international clients. They are sole proprietors of construction businesses bidding for government projects. They supervise tailors and embroiderers in windowless storage rooms that double as stitching units. They export high-end gems and jewelry around the world.

Women entrepreneurs in Pakistan lead cutting-edge, innovative businesses – but there are far too few of them. The recent Global Entrepreneurship Monitor report finds that only 1 percent of Pakistani women are engaged in entrepreneurship – the lowest proportion in the world.

Pakistan is not alone in its dismal ratio of growth-oriented (or indeed any kind of) women entrepreneurs. Even in the developed Asian economies of Korea and Japan, only about 2 percent of women are entrepreneurs. Sub-Saharan Africa does much better in this regard, with 27 percent of women, on average, engaged in entrepreneurship -- but they are mostly involved in low-productivity sectors of the economy.

Women entrepreneurs, in Pakistan and globally, have narrow networks of friends and family who provide them with some initial capital to start their small businesses, with little expectation of further financial support. Their export customers are located wherever they have extended family. And they rarely feature in local chambers of commerce activities.

Banks are often reluctant to extend lines of credit to, provide working capital to or lend to women-led enterprises. This makes it difficult for these enterprises to pursue growth. Perhaps this is why the average growth projections for women-led enterprises are seven to nine percentage points below those for their male counterparts.

Recovering jobs and building security in Pakistan

Kiran Afzal's picture


 Local businesses can create jobs in Pakistan's conflict areas (Credit: Zerega, Flickr)
 

How can you effectively support areas shaken by years of regional instability? The Western border areas of Pakistan are one such region, where a 2009 insurgency and subsequent military operations in the Khyber Pakhtunkhwa (KP) and Federally Administered Tribal Areas (FATA) led to one of the worst crises in the country's history. More than 2 million people were forced to leave their homes and considerable damage was caused to physical and social infrastructure. The unprecedented floods of 2010 only made the situation worse.

Is Pakistan’s microfinance sector serving women entrepreneurs?

The idea for looking into the issue of microfinance outreach to women in Pakistan had been of interest to the World Bank for some time.  Outreach of the microfinance sector to women borrowers had always been extremely low – hovering between 50 to 60 percent of borrowers.  Compared to the rest of the region, where we see outreach to women in the 90 percent range in India, Bangladesh, and Nepal, it raised the question as to why similar targets could not be achieved in Pakistan.   We reviewed a number of  possible explanations, but none of them seemed satisfactory.  On top of that, Pakistan is probably one of the most progressive microfinance sectors in the World.  The central bank has developed the most enabling regulations possible, Pakistan continues to top the Economist Intelligence Unit  list of the most enabling regulatory environment, innovations in branchless banking and new modes of financial service delivery are being incubated here, and the microfinance network in Pakistan continues to be regarded as world class.  So, given all the positive attributes around the sector, why was it not possible to more effectively reach this important constituency?