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Converting Garbage into Dreams

E-ducation without Borders

For sheer innovation in ideas in a wide range of disciplines varying from business to pleasure, Pakistan has a lot to learn from the UAE, this country is certainly the “new frontier”. One can never cease to be surprised by the new in the Emirates every other day. Strategic planners in education should look at the model of the recent international 3-day student conference ‘e-ducation Without Borders 2003’ (EWB 2003) in Abu Dhabi organized by the Higher Colleges of Education (HCT) in Abu Dhabi. The brainchild of HE Nahayan Mabarak Al Nahayan, the UAE Minister for Higher Education, this extraordinary idea was crafted into shape by the brilliant Vice-Chancellor of HCT, Dr Tayyab Kamali. Being personally closely associated with Shaikh Nahayan for over 5 years in a professional capacity in a financial entity, one now takes it to be the norm that this outstanding leader always combines his experience and knowledge with an inherent instinct to achieve what others would consider amazing. With a profound vision for the future, His Highness gave the ebullient Dr Kamali the necessary space and freedom to design EWB 2003 not only to be a portal for global initiatives in implementation of technology in education and lifelong learning to be explored but also a platform for discussions and creation of focus group for dialogue that would create an unique education environment in the global community.

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Sparking the Economy

There is nothing more important for re-vitalizing the economy than increasing employment opportunities, the increased cash flow in the economy has a snowball effect that in turn creates more jobs and so on. Maximum emphasis must also be put on population control, with population growth at nearly 3% the highest in the world we have diminishing job slots in Pakistan. Besides 3 million more hungry mouths to feed, we have to create at least 3 million more jobs, impossible even for the most vibrant of economies. That’s why we are playing “catch-up” all the time!

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Nationalizing “Bundoo Khan”

World War 2 sustained communism far beyond the 50 years it should have gone on its own momentum, the impetus of that war acting as a “manufacturing force-multiplier” for the socialist economy. As it is Communist China chose economic emancipation in the mid 70s under Deng Tsao Peng, President Jiang Zenin nailing the coffin of its socialist ideology last October by allowing free enterprise entrepreneurs officially into the Communist Party. By the late 60s it had been clear that the romantic notions of socialism that the leaders of independent third world States newly created in the 50s was seriously flawed. Saddled by an inefficient and indolent public sector which was into railways, telecommunications, water projects, electricity, sewerage, etc but flanked by socialist ideologues like JA Rahim and Dr Mubashar Hussain, Zulfikar Ali Bhutto plunged Pakistan into three decades (and still counting) of economic wilderness by his nationalization-binge of the early 70s.

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Economic Perception and Reality

Blessed with a bountiful supply of economy-sustaining resources, the country’s economy has been successively mauled by a cabal influenced by Harvard Business School model theorists, populist leaders charmed by the romantic socialist economic notions of the 50s and 60s and commercially ignorant bureaucrats bent upon imposing their Kafka-esque will on the economic destiny of the nation. We happen to have one of the most resilient economies in the world. It had to be in order to survive some very destructive economic Rasputins over the years. Notwithstanding the fact that we Pakistanis love to run ourselves down, the economy is certainly in better shape than 3 years ago.

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How the Rot Started

US Secretary of State Colin Powell recently called US President George Bush, Jr. with some good news and bad news about UN inspections for Iraq’s weapons of Mass Destruction (WMD), “Mr President, the good news is that Saddam Hussain has agreed to unconditional across-the-board inspections, the bad news is that he has asked for “Arthur Andersen” to carry out the inspections.” That joke sums up the backlash of the ENRON financial scandal that has afflicted a score of previously untouchable US blue-chip multi-billion dollar companies like Worldcall, Tyco etc, almost all major international accounting firms like “Arthur Andersen” are under pressure because of “creative accounting” and/or fudging financial numbers. When World Bank President Wolfensohn accused the Ms Benazir Regime in 1996 of fudging statistics, he was being discriminatory, almost all governments are guilty of this “soft” white collar crime of inflating their revenues and masking their expenditures, India regularly puts military pensions and border fortifications under innocuous “Heads” other than “Defence Expenditures”. In this new world of accounting “glasnost” it is becoming harder to mask the financial shenanigans of the kind that this country (and the world) has been witness to.

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Creeping Economic Anarchy

In order of priority the three major sectors of our economy are, viz (1) agriculture (2) industry and (3) services. Our planners set very ambitious targets for Financial Year 2000-01, most of which cannot (and will not) be met. Because of acute shortage of water (and other reasons including WAPDA’s shift to metered electricity in place of a flat fee), farmers were forced to reduce acreage under cultivation. The output of sugarcane and rice declined by as much as 19.1% and 11.4% respectively. Cotton registered a slight increase of area under cultivation, the overall production remained the same. Punjab harvested more wheat, it was offset by decreases in Sindh due to lack of irrigated water, even if grain production manages to reach 700,000 tons if the rains do come, it will be well short of the projected 772,000 tons. Given that cotton, rice, sugarcane, grain and wheat account for 94% of the agriculture sector, there will be an overall decline in all the levels forecasted. According to the Islamabad-based dream merchants’ optimistic predictions the people will not starve, shortages will be made up from buffer stocks but even they concede that the overall economic outlook for the year 2001-02 is exceedingly bleak. Given that acute water shortage is imminent, we are well on our way to a creeping economic anarchy.

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The Pussycat ain’t Purring Yet

Despite Pakistan’s economic travails and the battering it has taken with respect to fudging of statistics, the State Bank of Pakistan (SBP) survives in international financial perceptions as a credible institution, this reputation derived from being blessed with good leaders. While disagreeing with Dr Yaqub on some issues, among them the freezing of foreign currency accounts which made his inclusion in the military regime’s initial National Security Council incongruous, he ran a very taut ship in deteriorating economic circumstances, balancing the economy on a fail-safe line between the penchant of two successive political governments alternating in taking us down the slippery road to economic apocalypse by contradictory self-serving economic policies. Instead of abandoning ship under fire, Dr Yaqub remained on the burning deck to try and limit damage to the economic fabric of the nation, together with the then Finance Ministers holding off IMF-savaging of our poverty-stricken masses, during this period almost the whole of the lower middle class, mostly salaried persons, slid below the poverty line. Inheriting an exceptionally horrific economic situation but Dr Ishrat Hussain’s no-nonsense performance-oriented abilities have been complemented by the singular authority of a military regime, the perfect recipe prescribed for economic recovery, provided sound policies are conceived and implemented by those who are supposed to do so.

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Private Security

The prime requisite of good governance in any society is the safety and well-being of its citizens but peace and harmony cannot be imposed in isolation by law enforcement agencies alone. A sound economy, an equitable system of justice, affordable utilities, employment opportunities etc are only some of the factors directly contributing to good law and order. The security of the individual may be the general responsibility of the regime in power, personal security whether by guards or by electronic means, remains the responsibility of the individual, group, corporate body, establishment, etc in any country of the world. Increasingly government departments are turning to private security as a cost-effective means in the same manner as individuals and entities. In a historical sense, private security has come a full circle. In a feudal society the concept of private security has not changed in thousands of years, in today’s modern world the same principles apply. Tribal, clan chiefs, etc had private bodyguards paid out of their own pockets, it is the same today. The Swiss Guards at the Vatican were formerly called “mercenaries”, in fact they exist as a living model for private security through the ages. Most monarchs and absolute rulers preferred “mercenaries” from other countries to protect them against their own people. These mercenaries sometimes took control of the State itself, e.g. as recently as in Comoros Island in the Indian Ocean. To distinguish between private security and private armies, that fine line may be blurred. It is therefore understandable why any government would like to regulate the private security services industry, in the wrong hands a weapon designed for personal protection could well become a weapon for coercion or destruction. This business can be a double-edged sword for some entrepreneurs, more often than not those who have reasons to be afraid and/or jealous of will move Heaven and Earth to damage the success of the enterprise as well as the individual himself. Merit will always remain a disqualification in the eyes of the inferior and the incompetent.

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Micro-credit Pakistani, Buy Only Pakistani

When individuals and businesses cut down on the quantum of credit they take from the financial institutions, that is a clear danger signal for the economy. On the other hand, acquiring of loans beyond one’s ability to pay back is far more lethal. Defaults lead to liquidity crunch, threatening the viability of the financial institutions. Failing banks are a luxury no economy can afford. In Pakistan, there is an attitude of mind that makes even those with the ability to pay back seem to think that it is their God-given right not to do so. Prudential regulations were on the books of the State Bank of Pakistan (SBP), after Oct 12, 1999 there was greater compliance. Banks are now far more prudent over the past year in lending, collateral is looked at with greater cynosure. With a host of “untouchable” defaulters being “Nabbed”, businesses have become far more conservative in borrowing. As a cumulative result, economic activity is far below the optimum levels which one would term satisfactory for future development. Only when entrepreneurs begin to take calculated risks is such activity generated. With huge loans souring in the manufacturing sector, cash-starved financial institutions generally became gun-shy in giving out large credits, as the cash situation improves lending has not reached commensurate levels. To break out of this Catch-22 situation, i.e. to become profitable banks must lend monies and to avoid losses loans must be carefully engineered, some of the banks have created a new division as a sort of an investment arm, calling it the “Structured Finance Unit” (SFU). As opposed to the activities of the SFU, almost all financial institutions are turning to smaller loans/credits reaching out to a greater number of people. Citibank was a pioneer in consumer credit but indifferent management caused panic situations. And other financial institutions are rapidly catching up. “Khushali” micro-credit bank has been created in the public sector, whether it is effective on the “Grameen Bank” pattern has yet to be seen. Another way of indirect micro-credit is the credit card business, again pioneered on a mass basis by Citibank. Whereas leasing, securitization, etc are among the modes for financing vehicles, equipment, etc, the new financial buzzword is small-credit to individual consumers. Consumer hire/purchase activity of the middle-class fired the cylinders of the economies of the developed world. This easy access to small credit has now finally arrived in the heart of the Third World and has been grasped at with both hands by South Asia’s aspiring millions. One note of caution, if we do not exercise prudence in regulating the micro-credit idea, it can work as a poison pill that will destroy the economy.

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Vision, and the Lack of It

The last Federal Cabinet meeting saw the Chief Executive exhorting the Finance Minister to process proposals for water for Karachi on a “fast track” basis. Simultaneously he tasked the Ministry of Water and Power to solve KESC’s financial and technical problems so that Karachiites would not be subjected to the acute discomfort of 2-3 hrs of daily loadshedding at prime office time. The Chief Executive probably does not know that one member of his Cabinet made a historical “contribution” to the lack of potable water and uninterrupted electricity being faced by Karachiites in particular and Pakistanis in general.

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