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INGOS And The Future Of Unemployed Youth in Pakistan

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Pakistan has experienced a mushrooming growth of INGOs and NGOs during the Musharraf era, the Earthquake of 8th October 2008, the super flood of 2010 and the frequent drought in Thar and other desert areas. Many international INGOs helped people in rescue, Relief, Rehabilitation people and reconstruction of damaged houses.

Every INGO came with their own key areas  such as  poverty alleviation , Environment , Peace  , Water and Sanitation ,shelter  , social mobilization and advocacy  ,governance and Democracy , voter education and women representations , Human rights , Child rights  , Old age people  , Alternative Energy such as  Solar , wind and Biogas initiatives , health and education , reproductive health, Honour Killing , religious harmony and other sectors.  So much so that every INGO had own priority to work and even involved local NGOs as implementation partners (IPs). Most of NGOs are funded by Unicef, WHO, European Union ECHO, UK AID, AusAid, USAID, Kingdom of  Saudi Arabia, UAE, Qatar, Turkish Government, Bangladesh.

The INGOs benefitted the local youth through employment, vendors and hiring labour for the projects with high wages. I still remember, when I was working with a development organization as Program Manager, I was startled to see youth workers aged between 20 to 30 working in various projects of emergency especially the super floods of 2010. The Average salaries of these youth were equal to grade 16, 17 or even grade 18 government officer thus luring the people to Development sector after shrinking public and private jobs in Pakistan ., They were earning 30 k to 80K per month given their qualification, Skills and experience. The Project Managers, Coordinators, Provincial managers crossed 100K to 300K depending on the INGO and Nature of donor-funding as per approved budget.

A local mason was reported by saying that during 2010  floods he managed to earn 100K in a month by working on shelter projects of an INGO namely Acted. He said prior to flood emergency, he had hardly earned his living and hardly had eaten the two times meals.
He said that INGO contracted him to work on the construction projects and he was under heavy overload that impelled him to hire own workers and even started his own construction company and won contracts.

Another vendor selling paints and sanitary fittings said that working with INGOs, his sales multiplied to extent that he started two warehouses to meet demand.

One of the development workers said that working with the INGOs, He was able to buy his own house in a year as prior to this; he lived in a rented house.

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These were the few examples that became the case studies due to the intervention of these International Development Organizations throughout  Pakistan especially in Baluchistan, KPK and Sindh.

Sindh, KP and Punjab experienced severe damages to roads, properties, infrastructure and livestock during the super floods of 2010. INGOs from major  European and Asian countries pour in Pakistan and started working on flood emergency Projects from Rationing to shelters and tents, Health and hygiene kits, Public Health Promotion, Education and Water tankering.

Several Organizations engaged the people for Cash for Work activities in the villages to rebuild their houses and damaged tracks and roads. This gave great satisfaction to these flood affected segments to earn the respectable living working on their village development Plan. Hundreds of educated and talented youth became part of various INGOs and helped their fellow Pakistanis besides the foreign Aid workers. The relief camps were set up as per the Government plan with help of local district Administration.

The government had to fulfil a  mammoth task to mitigate the disaster as it was beyond the capacity of Government to have dealt with all alone but with the help of development partners, it was fulfilled smoothly and effectively.

It was reported that people continued receiving aid for food, shelter and nutritional items from INGOs including the UN agencies such as UNICEF, UNDP, WHO, UNOCHA, UNHCR, FAO, UN-HABITAT, WFP etc for a year. UNOCHA was drawing and preparing maps for the affected areas and it played a pivotal role in targeting the population that needed relief and located them properly. WFP provided food items for adults as well as nutritional products for the children including chocolate, biscuits and milk for infants and babies.

UNICEF promoted the healthy-learning activities among the children such as games, play way learning techniques and painting competitions for children in relief camps and brought smiles back on their faces to forget the miseries of the flood.

All the INGOs did their best and helped the Federal and provincial governments to mitigate the natural disaster and helped in rebuilding the infrastructure and creating resilience among the people.

Now the question arises that asking INGOs to pack up owing to their suspicious activities may lead to making these youth jobless again since they cannot get such handsome salaries even in government or public sectors.

The initiative may put jobs of hundreds of aid workers and development professionals on stake since they have been working in these development organizations for the last 18 years and have gained tremendous knowledge, experience and developed their skills and have become professionals in their field. Snatching bread from their hand tantamounts to throwing them in muddy quagmire of unemployment as most of them have become overage and are not eligible to apply for any government job thus their opportunities become limited with the looming sword of the ouster of these INGOs and ever-shrinking job market.

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It is recommended that the Government should regulate the activities of INGO either through SECP or Interior Ministry with the help of Ministries of Social welfare and the Ministry of Labour so that the activities of INGOs and their local implementation partners may be monitored to avoid any breach of trust or violation of regulatory framework envisaged by Pakistan.

The Development partners may help government end the faulty contract system that has plagued the development schemes and incurring the loss of billions through the delivery of substandard structures owing to commissioning and percentage system existing in public sector especially the Government Treasuries and Accounts offices.

The rampant corruption committed by the contractors and the Public works departments call for the government to assign public sector schemes to INGOs/NGOs through competitive bidding and shortlisting on the basis of their previous performance. The Development organizations have deep roots in the masses and may prove beneficial in delivering standard outputs as per the demands of the public.

PTI Government should act sensibly and should come up with INGOs/NGOs governance or regulation policy to curb the suspicious activities of any INGO or local NGO and save thousands of Development professionals specially the Youth from falling prey to the monster of unemployment  as government seems to have no alternate option to engage these professionals elsewhere given  their knowledge in emergency nature projects . Their career will be at stake if the INGOs are forced to close their operations in Pakistan.

Pakistan frequently faces emergencies and natural disasters in terms of food scarcity, drought, malnutrition, stunting and famine in Thar desert of Sindh as well as in the desert areas of Punjab and Baluchistan while these international development organizations may steer the country out of such crises and disasters if their services are availed and valued in the purview of job creation and disaster mitigation instead of forcing them to pack up and leave .

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Development

The Development of microfinance industry depends upon the resilience and risk management: SECP Chairman Amir Khan

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Islamabad : SECP Chairman, Aamir Khan emphasized that in these challenging times the development of microfinance industry depends upon the resilience and risk management, achieved through quintessential pillars of liquidity-tapped through private capital and technology embracement. Khan was addressing the Non-Bank Microfinance Companies Stakeholders Forum organized by SECP to devise a way forward and collaborate strategic response to cope the challenges posed by COVID-19 pandemic and ensuing lockdowns.

The SECP Chairman Amir Khan, along with Commissioner Specialized Companies Division, Farrukh Sabzwari chaired the session. Representatives of Pakistan Microfinance Network (PMN), State Bank of Pakistan (SBP), National Bank of Pakistan (NBP), Pakistan Poverty Alleviation Fund (PPAF), Pakistan Microfinance Investment Company Limited (PMIC), Karandaaz Pakistan and multilateral donor agencies including the World Bank, International Finance Corporation (IFC) and Department for International Development (DFID) attended the session.

 The Chairman SECP advised NBMFCs to go far product diversification to insurance solutions and saving products and build capacity of their workforce to attain business development and operational efficiency. He endorsed formation of a working group consisting of nominees from SECP, PMN, PMIC and NBMFCs to further analyze the situation. The working group will also take up the matters with relevant forums including ministry of finance, SBP and multilateral donor agencies for possible solutions.

Khan expressed SECP’s firm commitment to providing all possible support to industry not only during the current pandemic times but also in developing the industry on a strong footing. SECP Commissioner, Sabzwari highlighted the measures taken by SECP to provide relief and flexibility to the NBMFCs and their wholesale lender in managing funding requirements. He also talked about SECP’s advice to NBMFCs to defer and reschedule borrower loans.

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Participants acknowledged SECP’s timely intervention to provide regulatory relief to NBMFCs in managing their credit lines and funding requirements. However, industry representatives expressed their concerns on potential defaults by borrower and liquidity crunch that may lead to capital crisis in the industry.

They raised the need of new money injection into the industry through collaborative efforts of microfinance regulators and the government. Representatives of international donor agencies attending the Forum expressed their resolve to extend fullest possible support to Pakistan’s microfinance sector.    

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Gov’t releases Rs 533.33 billion for various development projects so far

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Islamabad: The federal government has so far authorized release of Rs 533.33 billion for various ongoing and new social sector uplift projects under its Public Sector Development Programme (PSDP) 2019-20, as against the total allocation of Rs 701 billion.

Under its development programme, the government has released an amount of Rs 230.3 billion for federal ministries, Rs 175.65 billion for corporations and Rs 43.46 billion for special areas, according to a latest data released by Ministry of Planning, Development and Reform.

Out of these allocations, the government released Rs 38.5 billion for security enhancement in the country for which the government had allocated Rs 53 billion during the year 2019-20.

An amount of Rs 81.37 billion has also been released for the blocks managed by finance division under the government’s 10 years development programme.

Similarly, for Higher Education Commission, the government released an amount of Rs 27.07 billion out of its total allocation of Rs 29 billion while Rs 301.47 million were released for Pakistan Nuclear Energy Authority for which the government had allocated Rs 301.48 million in the development budget.

For National Highway Authority, the government released Rs154.94 billion. Under annual development agenda, the government also released Rs 10.7 billion for Railways Division out of total allocation of Rs16 billion, Rs 7.7 billion for Interior Division, and Rs 8.38 billion for National Health Services, Regulations, and Coordination Division.

Revenue Division received Rs 4.3 billion whereas the Cabinet Division also received Rs 30.18 billion for which an amount of Rs 39.986 billion has been allocated for the year 2019-20.

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The government also released Rs 26.9 billion for Azad Jammu and Kashmir (AJK) block and other projects out of its allocations of Rs 27.26 billion and Rs 16.54 billion for Gilgit Baltistan (Block and other projects).

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Covid-19

Pakistan’s small businesses hit hard by COVID-19

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Small businesses in Pakistan have been adversely affected by the Covid-19 pandemic. The low demand at home, disruptions in supply chains, constraints in international trading, and expected prolonged lockdowns are now leading to severe cash flow problems, the inability to pay back debts and cancellation of orders from clients. 

This rising uncertainty is gradually leading them to lay off employees which will have welfare implications. In some sectors where recovery is difficult to predict, small businesses have started planning for the worst: complete shutdown. This crisis could also imply a much bleaker outcome for the startup ecosystem in Pakistan.  

The government has announced a SME relief package. The central bank has also come forward to relieve some of the funding and finance related concerns of private enterprises. Yet, many micro and small businesses do not understand how to apply or if they are eligible, to receive such assistance. There are others who argue that this one off relief may not be enough given that businesses are going to face depressed demand for a longer term. Pakistan’s past record of small businesses trying to access such fiscal packages is also not encouraging, partly because many such firms do not access formal banking channels for their needs or banks impose steep collateral requirements. Also, large segments of micro enterprises have the entire or some components of their businesses in the informal sector.

Federal and provincial governments have two issues to address now: how to ensure that small businesses are able to access and utilize existing government-provided assistance, and secondly, what more can be done to support private enterprise in these times.

A progressive fiscal policy and commitment to redistributive taxation is in line with the spirit of Riasat-e-Madinah to which Prime Minister Imran Khan often refers to. A sincere effort is required to reduce the burden of compliance costs faced by small firms- often filing returns several times during a year and to multiple tax bodies across the country. 

Dr. Vaqar Ahmed

On the former, it would be best to start by addressing information and outreach gaps. As the problems for businesses are evolving in real-time, hence there remains a need for structured and more frequent public-private dialogue which should be inclusive enough to also give representation to women, youth-led firms and social enterprises. Such a dialogue will also give a sense to the government about how these businesses will get affected in the forthcoming rounds of Covid-19.

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On the latter, I believe the forthcoming budget for the fiscal year 2020-21 should be seen as an opportunity not only to provide support to collapsing businesses but also to put in place economic incentives that encourage enterprises to consider resilient business models. A large part of this has to do with reimagining a better taxation regime.

A progressive fiscal policy and commitment to redistributive taxation is in line with the spirit of Riasat-e-Madinah to which Prime Minister Imran Khan often refers to. A sincere effort is required to reduce the burden of compliance costs faced by small firms – often filing returns several times during a year and to multiple tax bodies across the country. It is an opportunity now to automate, rationalize or eliminate several filing and payment layers in taxation to ultimately help reduce the cost of doing business.

After a lot of persuasion from local think tanks and the International Monetary Fund (IMF), federal and provincial governments agreed to establish a National Tax Council (NTC) to harmonize the general sales tax (GST). 

Currently all provinces have a different structure of GST on services. There are also issues regarding definition of certain activities which the federal government may assume to be under its jurisdiction. Perhaps smaller firms have been the hardest hit due to the fragmented tax structure across the federation and it is time now to expedite NTC’s establishment and work in this direction. Even when the system is finally harmonized, the GST should not be collected by multiple windows at federal and provincial levels. A unified tax return and collection should be made possible through online mechanisms.

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It will also be timely to think about which sectors should be motivated to scale up production and services in the face of this health-related emergency. Hospitals and private clinics operating at micro, small, and medium scale are primary candidates for cut in GST on services and even rationalization in direct tax rates. Firms producing personal protective equipment should also see a relief in taxes. The trade taxes faced by such producers or even hospitals importing from abroad need to be revisited. The agro-based and food processing enterprises will need similar help as their input supplies face price and supply volatilities.

Covid-19 also increased demand on several other sectors providing essential services. Our policy circles have rarely seen these sectors as important for the social and mental wellbeing of society until the pandemic struck. It will now be timely to recognize the services of firms (including schools) providing online services. The economic policy managers must think out of the box how best to leverage e-commerce in the battle against Covid-19. 

– Dr. Vaqar Ahmed is an economist and former civil servant. He is author of ‘Pakistan’s Agenda for Economic Reforms’ published by the Oxford University Press. Twitter: @vaqarahmed

Courtesy : ArabNews

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