People, business and growth

Doing business in Pakistan is a challenging venture that tends to surpass professional competence, entrepreneurial skills and acumen. Those who have chosen this country as their business destination must, therefore, have very strong nerves and the ability to tackle the fluidity, rent-seeking, nepotism and kleptomania of the political elite. It requires extraordinary dynamism and risk absorption abilities to carry out profitable businesses in this country.

Those who have earnt billions through kickbacks, commissions, tax evasion, contraband and the misuse of public office have stashed away their ill-gotten money for offshore investments. These investments are meant to accumulate wealth exponentially so that a portion of it can be reinvested to buy voters as well as the administration and, at times, to evade accountability and justice. This ugly business continues at the cost of public welfare, social services and economic development.

There must a serious assessment and an empirical analysis of the core factors of corporate sickness and the impact of industrialisation on poverty. It has been argued that the inefficiency of the corporate sector as well as the slow industrial development and business growth in our country is primarily an outcome of an interventionist state. Pakistan lags behind the Asian economies in industrial development and business growth because of an over-reliance on the government.

Contrary to this liberal economic ethos of rational choice and the invisible hand to push economic growth, Pakistan has promoted the visible hand of the government as a key decider of the economic growth trajectory rather than the free market. This reliance on state interventionism has been much deeper than a Keynesian model of demand management. The argument goes further to advocate a free-market business ethos as a way forward for economic growth and business development.

This classical model of economic liberalism often loses sight of the deep-rooted issues of local governance and leadership. Furthermore, it is a proven fact that all the developed economies of the world never practised a free market economic theory at any stage of their economic development. Governments have always played a critical role as the stabilising agents of the capitalist economy, not only during slumps but also during times of an economic boom. Newly-emerging economies like India, Brazil and China have never followed a free-market economic model. Instead, they have followed central planning and protectionism to achieve global competitiveness. What has worked more than the free market is improved governance, fiscal autonomy, promoting local business initiatives and encouraging protectionism to safeguard the national industry first.

The challenges for the economic managers in Pakistan to achieve corporate and industrial growth are multifold. They include an environment of energy crises; security concerns; rising public debts and external liabilities; widening fiscal deficits; soaring inflation; unemployment; and sluggish economic growth. An effective implementation of long-term growth strategies alongside the aggressive pursuance of contextually-informed actions for all the major sectors of the economy is critical to achieve rapid economic growth.

The major internal reasons identified for the sickness of corporate entities include the lack of effective corporate planning; production issues; the unavailability of raw materials; financial problems; and the lack of managerial capacity to effectively manage operations. The obsolete technology, the inability to effectively market products and services in the local markets, the barriers to entry in the international markets due to the lack of quality standards and a shortage of skilled human resource have added salt to injury.

The challenges confronted by various sectors of the economy owing to the external business environment include the high production cost triggered by the high input cost of raw materials and utilities; huge transportation costs; a high incidence of taxes, monopolies and cartels; the declining exports due to non-tariff barriers; the devaluation of the rupee; the energy crisis; the spike in fuel prices; the deteriorating law and order situation; high markup rates; and rundown transport networks.

The core objectives of economic growth should revolve around the central idea that fostering sustainable improvements in the social and economic life of the people will result in (and is a prerequisite for) sustainable peace in the country. This will build the requisite capacity of the population, which includes engendering the desired vision, values, hope and determination and helping people develop a wide range of knowledge and skills. We may conclude that promoting learning must be central to any effective intervention.

The people we reach will need to learn how to think, act and interrelate in ways that produce the outcomes that they want within themselves, their communities and through their institutions of governance and local development processes as well as through the collaborative networks and partnerships that they build. Until this required learning happens, no amount of money will suffice. But the form of learning that is needed must be anchored in concrete development action.

In this context, people don’t really ‘learn’ simply by being exposed to top-down business and economic growth models. They ‘learn’ by engaging in real-world development challenges, reflecting on their experiences, gaining exposure to the experiences of others (experts, literature, research and role models) and then by being “walked with” (ie accompanied) on a journey of learning and action through which they gradually refine what they are doing until they get the results that they need.

At times, development solutions can appear to be relatively straightforward and even simple. However, development challenges are often quite complex and there are no easy answers, recipes and technical formulae that can simply be “plugged in”. More often than not, workable solutions must be home-grown – usually through repeated trial and error.

Worldwide experience shows that this process can be greatly accelerated through effective and sustainable learning programmes that go beyond downloading information and the far more effective process of coaching and mentoring people through a journey of discovery that is rooted in real-world development processes.

We, therefore, need to develop prototypes of indigenous leadership and development forums that can be referred to as ‘learning engines’ to work directly with community development institutions, community leaders, key actors within communities as well as with the public and private sector.

The term ‘engine’ implies a driving mechanism that can support, enhance and sustain the process of social and economic improvement in a geographic and social context. This includes the development of many small and medium-sized ventures that build on existing opportunities and capacities. It also entails the development of institutional capacity to connect people to good ideas as well as the technical know-how, capital, market chains, viable partners and the infrastructure required to support social and economic initiatives. In addition, it includes the development of social enterprises, which comprises initiatives that serve a market need and also contribute revenue that can be ploughed back into human and community development initiatives. The development of utilities and infrastructure for the public good and enhancement social and economic capabilities through a multi-sectoral intervention plan are also a part of these ‘learning engines’. This will eventually organise these functions into a publicly owned and operated sustainable institutional framework that is transparent and responsive to grassroots direction.

The ‘starter motor’ for this is the encouragement and enthusiasm for the process that the people can gain from a few ‘quick-win’ initiatives, in which some sort of short-term and relatively viable success is achieved.

It is inevitable that the government, the civil society and the private sector must work together to create an inclusive economic growth model. This form of interconnectedness is the only viable solution to promote business growth, fuel economic development and ensure a prosperous future for the poor in Pakistan. If democracy fails to deliver, we must question it and aspire towards a higher level of participatory democracy.

The writer is a freelance columnist based in Islamabad

Email: ahnihal@yahoo.com