issue
Is this a Revolution?

Pakistan is in the throes of major developments; but this, by no stretch of the imagination, means a revolution. It is only a political movement
By S Akbar Zaidi
Many of Pakistan's best known newspaper columnists and analysts, especially those who were politically active in the late 1960s, are calling the present times and mood in Pakistan, 'revolutionary', and are making numerous references to the 1968-70 period. Of a later generation of writers, there are those who are comparing Pakistan today to the 1986-88 period, and here too, one hears the word 'revolution' repeated many times in columns, as well as on the electronic media.

budget
An Independent 'Tax Foundation'

The 'Foundation' would not only simplify tax laws/procedures but also ensure smooth implementation and a conducive environment for both the tax payer and the tax collector
By Huzaima Bukhari & Dr Ikramul Haq
This was the last budget of the present regime in the election year. The our soft-spoken Prime Minister-cum-Finance having no first hand experience of people's suffering and humiliation at the hands of tax collectors, could not realise what kind of bashing the citizens of this country get every day from the Central Board of Revenue (CBR). For the last three years, CBR has been showing wonderful and all time record high tax collections by resorting to indirect taxes even under the garb of income tax, making the life more and more miserable for the poor of this country.

How 'healthy' is our budget?
Although the allocation for health sector in the current budget is commendable, a host of changes on the policy and institutional level are required
By Dr Sania Nishtar
Subsequent to the federal budget 2007, a special parliamentary session is convened to debate the budget. Given this context, this article focuses on budgetary allocations for the health sector with a view to lend impetus to a dialogue on the short and long term imperatives of allocations in the health sector, on four areas in particular: aggregate level of allocations, quality of expenditures, allocation distributions and the issue of leakages and pilferage from the system.  

debate
Masters of their destiny

A review of microcredit programmes in backward areas of water-deficient interior Sindh
By Shahzada Irfan Ahmed
Bhagwand of village Yaroo Rind, Khairpur struggled all through her early life. When she got married to a drug addict, Shah Bux Rind, her life became even more miserable. It was she who had to earn single-handedly for her family including her husband. After doing embroidery work all day, all she could earn at the day's end was not enough to cater to her family's most basic needs.

Microcredit or undue credit?
In a country like ours, microfinance can evolve into a means for the 'non profit' financial institutions to play on the desperation of the poorest of the poor
By Farheen Hussain

Ever since Dr Mohammad Yunus, founder of Grameen Bank, was awarded the 2006 Nobel Peace Prize, microfinance has received an unprecedented level of validation the world over and is touted as the new tool for bailing millions out of abject poverty. 

'We have a strict monitoring side'
Syed Kamal Hyat is the Chief Executive of Pakistan Poverty Alleviation Fund (PPAF) -- an apex body that routes World Bank funds for micro-finance to the poor through its partner organisations. PPAF is the leader organisation in the sector as it provides 54 per cent of the total microcredit available in the country. Incorporated under section 42 of the Companies Act 1984, PPAF claims maximum autonomy with minimal interference from the government. In an interview with The News on Sunday, he talks about the philosophy of the organisation, its objectives, achievements and many other issues. Excerpts of the interview follow:


essay
The politics of order

The fact that dictatorship can never be benevolent is ultimately exposed, particularly in times of popular uprising
By Aasim Sajjad Akhtar
Marx famously wrote that the ideas that prevail in society are the ideas of the ruling class. Unfortunately, this is more true than one would like to admit, perhaps more so in Pakistan than in most other societies. Yet this is not because of some deep and essential cultural defect, a conclusion that too many people are far too eager to make. In fact, the internalisation amongst many Pakistanis of the myths that the powers-that-be have widely propagated can only be explained in historical context.

Targeting women, the Taliban-style
Womenfolk in NWFP face a serious threat to their education and employment, at the hands of radical religious clerics 
By R Khan
The phenomenon of Talibanisation is increasingly posing a threat to the education and employment of womenfolk across the length and breadth of the NWFP. Extremists and radical groups of clerics have started threatening openly, 'advising' women, their parents and husbands, in writing, via telephones and speeches through FM radio stations, mosques' public address systems, etc. The threats from extremists aim at women's complete banishment from public sphere, their prompt target being the education of women. 

Emerging food markets and small farmers
Emerging food markets in South Asia present opportunities as well as hazards for small producers
By Aoun Sahi
For generations, Pakistanis have shopped for food and groceries at open markets and from roadside vendors. But the trend is now changing as some superstores chains are catering to the country's growing middle-class. These emerging food markets have changed the pattern of food consumption and consumer habits. 



issue
Is this a Revolution?
Pakistan is in the throes of major developments; but this, by no stretch of the imagination, means a revolution. It is only a political movement

By S Akbar Zaidi

Many of Pakistan's best known newspaper columnists and analysts, especially those who were politically active in the late 1960s, are calling the present times and mood in Pakistan, 'revolutionary', and are making numerous references to the 1968-70 period. Of a later generation of writers, there are those who are comparing Pakistan today to the 1986-88 period, and here too, one hears the word 'revolution' repeated many times in columns, as well as on the electronic media. Whatever one wants to call it, there is no doubt that the political process underway in Pakistan today is probably the most significant development that has taken place in many, many, years. Numerous events and developments have taken place in the last ten weeks, which may have changed Pakistan's future for some time to come, if not permanently.

If one looks at just the last few weeks, there are four main events -- or series of events, or processes -- that have taken place which have changed Pakistan's political map. A number of smaller happenings have also added additional dimensions to these developments. The four main actors/events which have come to the fore relate to the Chief Justice 'issue', the muhajir Muttahida Qaumi Movement (MQM), Benazir Bhutto's Pakistan Peoples Party, and the extraordinary new role and power of the electronic media.

 

I

On 9 March, the fully-uniformed Chief of the Army Staff, President General Pervez Musharraf, summoned the Chief Justice of Pakistan Iftikhar Muhammad Chaudhry, to his office, and is supposed to have kept him waiting for five-and-a-half hours. In this period, it has been stated, that the Chief Justice was pressurised by the president along with a number of uniformed Generals, to resign his post. The president's team had created a charge-sheet against the Chief Justice on a number of accounts related to the misuse of his office. He was accused of many things, including his using a government helicopter to attend a funeral and ensuring for his son, a public servant, privileged postings. When he did not voluntarily resign, the Chief Justice was made 'dysfunctional' and sent home to await further charges, and an Acting Chief Justice of the Supreme Court of Pakistan, appointed in his place.

There is no denying the fact that this has been President General Musharraf's worst mistake and greatest miscalculation, and that he was ill-advised in taking this decision. He himself, very soon after it became clear what the reaction to this move was, said that a 'conspiracy' had been hatched against him personally. For the government, there may have been reasons to take some action against the Chief Justice since he had taken a stand in a major privatisation case last year which embarrassed the government and revealed its wrong-doings, and the Chief Justice was increasingly making some (albeit, muted) sounds, about Pakistan's disappeared -- those people, many of whom Baloch, who have been picked up by one of Pakistan's many 'agencies' and have disappeared. It is important to state that the Chief Justice is no trail-blazing revolutionary for, as a judge of the Supreme Court, he had signed all the nefarious laws and constitutional changes which President Musharraf had creatively made, without a whisper of protest. Chief Justice Iftikhar Muhammad Chaudhry was as much part of the establishment as was the Chief of the Army Staff, himself. With the Chief of the Army Staff seeking a second term as President of Pakistan -- which many judges and politicians feel is unconstitutional -- he was advised by someone close to him that the Chief Justice would create a problem when it came to his re-election and, hence, should be removed.

No one, least of all President General Pervez Musharraf, could have expected the response to this order, by no means novel in Pakistan's military-led history, which has made these last ten weeks the weakest and most difficult of his seven-and-a-half years. In the beginning, seeing that their Chief Justice was not bowing down to military pressure, some lawyers were emboldened and started a public campaign to have a fair trial of the deposed Chief Justice and to have him reinstated. Slowly, this small campaign grew in nature and size, and some judges resigned their posts in protests, and many judges started supporting the ousted Chief Justice. In the first few weeks of the campaign, the slogans were largely those related to the restoration of the Chief Justice and regarding upholding the stature and sanctity of the judiciary. The judiciary fought back to protect its own institutional interests and so in the process, emerged united. There was little 'politicisation' and political parties, as always the opportunists most have been in the past, watched from the sidelines.

However, very soon it became clear that this was not just a protest against one decision, but there were clear beginnings of a 'movement', for justice and with political overtones. The lawyers were joined by some activists from some political parties and by some members of the public. While there has been considerable support from the public -- as seen by popular meetings and response to the Chief Justice's various visits and trips to different parts of Pakistan -- this has not been a 'public' movement, but very much a lawyers' protest movement, with some and growing, help from political parties.

However, the colour of the protest has changed, and from a collective action issue concerning the lawyers and their self-interest, the slogans and the politics of the movement, have become far more political. From being in favour of the Chief Justice and his reinstatement, they soon became anti-government, anti-Musharraf, and have now become audibly anti-military. There is growing support for the lawyers' movement amongst different cross-sections of society, as can be envisaged by the number and nature of people who are participating in the movement, many as observers, rather than as activists and participants. Even the more radical slogans are being repeated in many quarters and the 'Go Musharraf, Go' chant heard at most of the jalsas of the lawyers, is no longer uncommon. Yet, it must be remembered, that while the lawyers' movement may have a lot of public support and sympathy and it has increasingly become 'politicised', this is not, as yet, a 'political movement' in the sense that is usually recognised.

 

II

An extraordinary May 5 road-trip from Islamabad to Lahore, which usually takes four hours took 24, completely changed the mood and scale, of both the lawyers and the government. The lawyers and their supporters realised that they were on to something bigger than they had envisaged, while the government/military felt that this was certainly not normality for them. After all, this was the Punjab, which was following the journey of the Chief Justice. In his address to different Bar Councils across Pakistan, the Chief Justice was scheduled to address the Sindh Bar in Karachi on May 12.

Karachi has been ruled by the Mutahhida (previously Muhajir) Qaumi Movement, since the early 1980s, when the MQM emerged as an urban militant political party, speaking for the rights of the settled migrants (muhajirs) from India after partition. Its politics was known to have been one which was overtly violent, yet they were also popular. They have won all the elections that they have participated in since the 1980s, from the larger towns of urban Sindh, especially Karachi. Because of their urban Sindh vote bank, they have also been part of the Sindh provincial Government, as they have been since the General Musharraf Elections of 2002. The city of Karachi has faced much violence, destruction and mayhem since the rise of the MQM, especially during the second Benazir Bhutto government in the 1990s. However, since 1999, when General Musharraf and the military took over power, Karachi has been at peace and has prospered perhaps more than any other region/part of Pakistan. The MQM-Military-Alliance, is the other MMA which is part of the Pakistan political map.

The period since 1999 has been the longest period of peace and prosperity that Karachi has seen since probably the 1960s. The first MQM cadre, brought up in an era of terror and violence in the 1980s and 1990s, is probably in its late thirties and forties, or even older. The MQM youth have, since 1999, lived in an era of peace, prosperity and stability as it has been part of government and has not needed the violence or terror to achieve its political or economic interests and goals. Most citizens of Karachi who support the MQM have lived seven-and-a-half years in peace and prosperity. Clearly, demography and economic well-being, have remade the MQM and its supporters, and until May 12, overt violence was not part of the MQM's strategy.

On May 12, the Chief Justice of Pakistan, Iftikhar Muhammad Chaudhry, was scheduled to make a trip to Karachi. As a counter measure, the MQM decided to hold its own rally in support of General Pervez Musharraf. However, the MQM (which is the Government of Sindh and a major partner in the Federal Government) tried everything possible to stop the Chief Justice from coming to the city. After putting hundreds of road blocks across the main streets from the airport, they attacked small groups of those lawyers and political activists who wanted to come to the airport to receive the Chief Justice. Over 40 people were gunned down in cold blood. This was not the first time so many people were killed in Karachi in a matter of a few hours, but it was the first time for almost a decade, and the peace of the city was destroyed by those who were responsible for that peace.

The consequence of the killings of the 40 people in Karachi this time around, unlike the killings in the past, was unprecedented. Never before has there been such condemnation of the Federal Government, the Provincial Government and the MQM and its leaders, as now. The MQM has never had to make a tactical retreat in the past and has weathered every political storm that has come its way. This time, however, it has been shaken by the reaction of politicians and from the media -- on which more below.

What seems of interest is to try and understand why the MQM has been more loyal than the king himself. Why did the MQM do what no other political party in government has done, even when it could have disrupted the Chief Justice's visits and addresses? One reason for this is, that there is a strong MQM military alliance, when both need the other. It could be that the MQM panicked over the growing support for the Chief Justice and against General Pervez Musharraf. It could be that they wanted to show him that they were on his side and would not allow 'their' city to be taken over by his opponents. (In fact, President General Pervez Musharraf has come out in extensive support of the MQM's way of handling things on May 12, and has said that they are completely innocent of the killings). The MQM needs the military as much as the military needs the MQM, and hence the enthusiastic support to each other. Other reasons suggest that the MQM military alliance is based not simply on any ideological/political basis, but that both have benefited from the billions of dollars worth of land deals made in Karachi. While the military may run Pakistan, MQM runs Karachi. The MQM military nexus is based on each benefiting political and economically through each others' backing.

However, then reaction against the way the MQM took over Karachi on May 12, has backfired and added to a renewed resentment against the MQM, and many of its supporters too, have been shocked and find it difficult to defend their party's actions. Importantly, the MQM, for the moment at least, stands isolated from the political mainstream, and only the President and his Prime Minister are left with making embarrassing statements in their defence. Even many of Musharraf's Ministers are unable to support MQM's actions of May 12.

 

III

The biggest and most embarrassed loser in the process which started from March 9, has been Benazir Bhutto and her Pakistan Peoples Party, with more egg on her face than she would like. Benazir Bhutto in April, when the Chief Justice 'issue' had neither become as politicised as it is or had grown in scale to the size it is, had said that she was willing to make a deal with President General Musharraf allowing her to come back to Pakistan to participate in the 2007 elections. She had even said that she had no objection to being his Prime Minister to him as President. President Musharraf too, had said that this was a possibility he could work with. However, after the lawyers' movement became bigger than anyone anticipated, and especially after the May 12 killings in Karachi, the main route open to Benazir Bhutto, is a littered minefield. With so much antagonism against the MQM for breaking with the settled political, parliamentary, process since 2002, Benazir Bhutto would face excessive protest if she were to go ahead with accepting a minor, junior, partnership to General Musharraf.

The big winner as a consequence of the events of May 12, and with the deal for the moment in hibernation, has been the King's Party, the party in power at the moment, the PML-Q. What would have happened to the seventy or so Ministers in government, or the Chaudhry brothers of Gujrat who rule the Punjab under the banner of the PML-Q, if Benazir and Musharraf made a deal, has never been discussed. Clearly, while Musharraf may have required an alliance with the PPP, his current crop of ministers from the PML-Q, would not have. Also, with the MQM and the PPP having a bitter past, it was never quite worked out how both will work together in Sindh, a province from where they draw their greatest support. For the moment at least, the Benazir-Musharraf deal has been put on hold. Many in government hoping to be elected, hope this stays so for some time to come.

 

IV

The star of the show since early this year, has been what one can collectively call 'the media'. The 'revolution' or political movement with its consequences, are all the making of the media. They certainly are real and have mass support, but without constant live coverage, with history in the making as one watches, the sort of reaction one sees would not have taken place. The 24 hour long car ride from Islamabad to Lahore of the Chief Justice, was shown live on television, as was the murderous attacks on citizens and on TV stations in Karachi May 12.

While the visuals have been revolutionary in what they have depicted, what has been even more extraordinary, has been the media content, which has been truly revolutionary. Never before has one heard the slogans of 'Go Musharraf Go', or 'No more military rule', on live television. Never before has the MQM been called a fascist party on live television by dozens of analysts, nor Altaf Hussain, the leader of the MQM equated with Hitler. Both in the electronic media and in the press, these examples are made with great ease and with a great deal of space, and repeatedly, daily. Just a few years ago, at least in Karachi, it would have been impossible to survive calling the MQM fascist, in private leave alone in public, or calling Altaf Hussain, Hitler. Or for that matter, chanting slogans in the National Assembly which were reproduced in all newspapers after May 12, of the type: 'qatil, qatil, MQM' or 'qatil, qatil, Musharraf'. The press has been fairly free for some years now, but never so free or so powerful.

The power of the press has been recognised and used by both government and those who oppose it. Every speech of the leaders of the lawyers' movement is televised live, and they get away saying whatever they want, including statements televised live, such as 'down with the Generals, down with the military'. There have also been many attempts to gag the press, and to scare it off, but all such attempts have failed and rebounded back into the face of the government. The press is emerging as perhaps the most powerful unknown force in Pakistan's politics.

 

V

While all this has been going on, there has also been the dramatic developments in Islamabad, around the Lal Masjid and the Jamia Hafsa, a madrassa for girls. As all writers have been emphasising, just a few kilometres from the Presidency, a group of ulema and their students, have raised the flag of the sharia and of the call to a 'Talibanisation', all in Musharraf's enlightened, moderate, Pakistan. It seems that this group of students and their leaders have been given a free hand to instil the fear of God in the hearts of Islamabad's Muslims. The comfort level of these instigators is so high, that many believe that this freedom being given to them is deliberate and meant for publicity reasons. The fear, the argument goes, is not to be instilled in the hearts of the populace of Islamabad, but in the hearts of the Americans in Washington. The hope is that these cries of the 'Talibanisation of Pakistan' will be heard in Washington and will lead to continued and further support to President General Musharraf's enlightened moderation (or is it moderate enlightenment? one forgets), and the Americans -- so critical and influential to the political economy and geo-politics of the region -- will continue to back the man in uniform and in power in Islamabad today, rather than bring about any change over which they may have little control or influence.

 

VI

While Pakistan is in the throes of major developments, by no stretch of the imagination is this a revolution. It is barely a political movement, although it is in the process towards becoming one. Unlike 1968-70, 1977, or even 1983, 1986-88, all political movements were organised around political parties and political leaders. Today, the only 'leader' is a Chief Justice, while some of the political parties are waiting to see when they can join President General Pervez Musharraf's camp and cut a deal with him, while most have only shown symbolic support to the lawyers' movement, without at all jumping in. The opposition to military rule is still as disorganised as it is opportunistic.

Nevertheless, President General Pervez Musharraf is in a spot of bother, and needs to extricate himself from this hole he has dug himself into. It is probable that there will be some sort of change or transition in this year of two elections, but at the moment it is difficult to predict the outcome of this transition. President General Musharraf may emerge further weakened for the moment and may need to rebuild his rule, more inclusive this time, along with more partners. It does not look likely that he will leave voluntarily nor give up power. He can always make a number of tactical retreats, and salvage some room for himself. One does not know what his most important constituency, the army, is thinking, but they may prefer to enjoy the benefits of military rule by supporting someone who has ensured that they all benefit. On the other hand, with the military being abused publicly, on television, it may be the army which calls for a collective retreat, to re-emerge after playing its ubiquitous 'behind the scenes' role, which it did throughout the decade of democracy in the 1990s. The TINA factor -- there is no alternative -- however, might just result in the General-President's political longevity. Sixty years and still the serving Chief of the Army Staff General, as President of Pakistan. Ignominy of the worst kind.

The article has been published in Economic and Political Weekly Mumbai

 


budget
An Independent 'Tax Foundation'
The 'Foundation' would not only simplify tax laws/procedures but also ensure smooth implementation and a conducive environment for both the tax payer and the tax collector

By Huzaima Bukhari & Dr Ikramul Haq

This was the last budget of the present regime in the election year. The our soft-spoken Prime Minister-cum-Finance having no first hand experience of people's suffering and humiliation at the hands of tax collectors, could not realise what kind of bashing the citizens of this country get every day from the Central Board of Revenue (CBR). For the last three years, CBR has been showing wonderful and all time record high tax collections by resorting to indirect taxes even under the garb of income tax, making the life more and more miserable for the poor of this country.

For the last many decades, the concerned citizens have argued that the tax laws and procedures in Pakistan should be simple, stable, neutral, and favourable to economic growth. There is a consensus on this point and the CBR's present Chairman is also now motivated and committed to play his role in the achievement of this goal [we are not sure about his team, especially the old timers who are usually change-resistant]. At this critical juncture of our history when economic revival is at the core of our survival, we must strengthen the hands of State for the generation of revenue to come out of neo-colonial influence imposed on us through 'debt prison' of foreign donors.

The policymakers sitting in the Finance Ministry, instead of wasting huge amounts in hiring foreign consultants for Tax Administration Reform Project Reform (TARP), should concentrate on evolving a consensus strategy aimed at simplifying tax laws/procedures and their smooth implementation. Its goal should not be defending the shenanigans of CBR or reminding the people of their tax obligations but to ensure environment conducive for both the tax collectors and taxpayers. In today's tough circumstances, our emphasis should be on reconciliation and not exchange of bitter accusations and mud slinging. Our action plan [borrowing a popular phrase from General Musharraf] should be 'Tax Reforms: Moving From Study to Action' [till today we have plenty of studies but hardly any result-oriented action]. 

Recently, the government took a small step by instructing its own handpicked tax experts at the Special Task Force (STP) to conduct a study on the income tax code's complexity. The STP delivered a massive study, a testament to the code's complexity. The STP's Chairman, an ex-bureaucrat, concluded that there is no single source of complexity in the tax code. Rather, tax complexity is brought on by a combination of forces, including:

(1) the law's lack of clarity and readability, large number of exemptions with 'ifs' and 'buts'

(2) the use of the tax system by the government to realise ambitious collection targets and

(3) the dictates of foreign donors.

Many independent tax experts, who have never been invited by the CBR to sit in their meetings relating to tax reforms for their known hostility towards them, believe that the list of income tax code provisions that deserve elimination or reform is the presumptive taxes on individuals and corporate sector. Created in response to charges that a handful of wealthy individuals and corporations were able to avoid paying income tax by using various deductions and credits and get enormous refunds with the connivance of tax collectors, the Presumptive Tax Regime [PTR] no longer serves the purposes for which it was intended. 

Indeed, within last 10 years, the number of individual taxpayers required to comply with the PTR continued to grow, but tax incidence fell heavily on the poor and negligible or zero, in some cases, on the rich. For example, a rich person earning Rs 2 million per annum as profit from bank deposits pays Rs 200,000 as tax under presumptive regime, whereas his normal tax liability on this income is 35 per cent. In contrast, a widow, who is earning just Rs 100,000 per annum from her deceased husband's gratuity kept in a bank to make both ends meet, has to pay Rs 10,000 as tax although her income otherwise is below taxable limits. In fact, the importers, suppliers and contractors have managed to shift their tax burden on the consumers/clients and enjoyed enormous saving in taxes due to this ill-conceived tax device that was the brainchild of a perceptive taxman who just wanted to portray high figures of tax collection under Income Tax in order to obtain rewards from his political masters. Now this colossal benefit has been extended to even the wealthy property owners, who are earning enormous rents. They will be just taxed at the rate of 5 per cent of gross amount of rent from tax year 2007. This shows the callousness of our governments, who have always been subservient to the landed interest, civilian or military alike.

Independent economists and tax experts [not part of the official bandwagon of self-styled, foreign-sponsored tax reforms] are proposing a number of suggestions to fundamentally overhaul the tax codes/procedures and withdrawal of PTR. Any action on these proposals will bring more shortfalls for the CBR, which it cannot afford as its main thrust of taxes is on withholding taxes on imports, exports, contracts and collection of taxes on profits on deposits, bank instruments etc. It is worthwhile to mention that there are nearly 20 withholding tax provisions under various sections of the Income Tax Ordinance, 2001 alone. The CBR never tried to broaden the tax base by bringing the mighty into the tax net and relied mainly on withholding taxes. The percentage of taxes collected by own efforts by passing orders and creating demands other than withholding and voluntary payments under the direct taxes is just 10 per cent. Since the promulgation of new law no effort has been made to conduct any effective or meaningful tax audit to unearth massive tax evasion.

As CBR is passing through a reform process (only time will show how successful or sustainable the changes were), all the tax associations/independent tax experts/concerned citizens/journalists/NGOs should seriously consider to launch a non-governmental, public purpose and non-partisan organisation [Foundation for Tax Justice, or under any other suitable name] that can inform and educate Pakistanis about tax matters and issues, through research and analysis, using objective, reliable data on government finance. The proposed Tax Foundation should promote a sense of 'tax consciousness' in the public. Its dissemination of information and objective analyses will help both the parties; it can provide guidelines to policy makers in the ongoing debate over tax and budget policies, and at the same time will inculcate a greater understanding of the official tax policies/issues/laws to the public at large. At present, numerous groups conduct research on tax and budget policy, but it should be institutionalised. The Tax Foundation can:

a) analyse data from all levels of government

b) explore the effect of tax policy on businesses and individuals alike and

c) channel this information to the general public. 

In this way, the Tax Foundation, a non-partisan, non-profit research and advocacy organisation dedicated to fair taxation at the federal, provincial, and local levels, can serve as a national resource centre, providing Pakistanis with a better understanding of their tax system and the effects of tax policy. The Foundation's mission should be to educate the public about taxes, and to that end, it should publish reports, books/leaflets and through Internet site, make complex tax system comprehensible for the layman; and answer queries from the public and the media on tax policy, rates and collections. As a non-partisan educational organisation, the Tax Foundation shall not represent any particular economic sector's point of view. It must have a charter for independence, and credibility. It should commit itself to principles which guide its research and public information programs and which should be the touchstones for all tax policy such as: 

• Well Informed Citizenry. People must know who and what is being taxed and how tax legislation is enacted.

• Simplicity. Complexity makes accurate tax compliance needlessly expensive and punitive.

• Stability. Frequent change lessens citizens' understanding of the tax code and complicates long-range financial planning.

• No Retroactivity. Taxpayers must have confidence in the law as it exists entering into a transaction.

• Neutrality. The primary purpose of taxes is to raise revenue, not to micromanage the economy with subsidies and penalties. The tax system should favour neither consumption nor saving and investment.

• Promote Economic Growth. The tax system should not impede the free flow of goods, services and capital, domestically or internationally.

If our worthy Prime Minister-cum-Finance Minister is committed to improve tax system of Pakistan and his efforts are well directed to make the country free from debt shackles of the foreign donors, then the following steps are imperative: 

• Fair taxes for middle and low-income families.

• Requiring the wealthy to pay their fair share.

• Plugging corporate tax loopholes.

• Adequately funding important government services.

• Reducing the foreign and domestic debt.

• Taxation that minimises distortion of economic markets.

Indeed, an independent Tax Foundation in Pakistan can be a key turning point in the tax reform process that is needed to raise public revenue and minimise ire against tax machinery and tax evaders. The Foundation can exert public pressure on the wealthy to pay their due share of taxes, help propel the tax-overhaul effort, and reduce the government tax deficits. Only such an independent Foundation can study the impact of tax exemptions/concessions for the wealthy and corporations and keep the issue alive in debate over the federal and provincial budget deficit. In USA such a study, Inequality and the Federal Budget Deficit (1991), conducted by an independent organisation examined the linkage between tax cuts for the wealthy and the mounting federal deficit. This attention helped set the stage for President Clinton's 1993 Budget Act, which took back some of the tax cuts previously granted to the wealthiest Americans by the supply-side tax plan of 1981. We need similar studies and actions in Pakistan. 

In Pakistan there is an urgent need for such an independent public-spirited organisation so that fairness and justice in tax system is ensured and watched by citizens themselves. Unfortunately, our official viewpoint is totally different on the issue. They want to be in charge of everything through State control. The CBR stalwarts want to supervise 'Tax Reform' under their tight noose and the Prime Minister-cum-Finance Minister wants to be the in-charge of Supervisory Council, controlling CBR. You cannot reform in this way. The lawful but excessive use of power is also maladministration. In this country nobody is willing to exercise his authority in moderate fashion. We do not like criticism of any kind, even the most positive and constructive one, and are found of flattery. However, if they want any meaningful tax reforms, they will have to give up encouraging the sycophants and will have to develop a tolerant and positive attitude towards studies/articles/criticism surfacing in the media or at seminars/meetings. 

The public and policymakers both can benefit from the independent Tax Foundation, the role of which will be that of a watchdog. In tax matters there is always be a third party interference concept, as taxpayers and tax collectors are always parties to dispute, whether it is tax codes, procedures, policies and assessments. In civilised societies, they have, therefore, established fast track independent dispute resolution commissions, outside the traditional appellate system, as an alternate means to achieve harmony and reconciliation between the payers and collectors. Such steps in Pakistan have been destroyed by CBR by keeping everything under its control, whether it is Advance Ruling Mechanisms for non-residents or option for Alternative Dispute Resolution.

The writers (www.huzaimaikram.com), tax advisers, are authors of many books and teach tax laws at the Lahore University of Management Sciences (LUMS).



How 'healthy' is our budget?
Although the allocation for health sector in the current budget is commendable, a host of changes on the policy and institutional level are required

By Dr Sania Nishtar

Subsequent to the federal budget 2007, a special parliamentary session is convened to debate the budget. Given this context, this article focuses on budgetary allocations for the health sector with a view to lend impetus to a dialogue on the short and long term imperatives of allocations in the health sector, on four areas in particular: aggregate level of allocations, quality of expenditures, allocation distributions and the issue of leakages and pilferage from the system. 

At the outset, it must be recognized that a discussion on budgetary allocations for health is important for one specific reason: health is fundamental to the social sector and in countries where macro policy decisions are largely shaped by geopolitical realities and market forces. In these countries, allocations for the social sector are a true reflection of any government's commitment to meet the equity objective.

First, with respect to total allocations, it is well-recognized that there have been increases in budgetary allocations in recent years; the present allocation is a positive development. However, even as it currently stands, public sector spending on health amounts to roughly $4 per capita, after adjustment for population growth and inflation. Therefore, there is a wide gap still to be bridged between this and the internationally recommended public sector spending of US $ 34 per capita - a level on which the delivery of a package of essential health services to populations becomes possible. In other words, it would then become possible to achieve goals such as the Millennium Development Goals (MDGs) and others articulated in the Midterm Development Framework (MTDF). Theoretically, this would necessitate a five-fold increase in the existing budget or a 50 per cent increase every year for the next 10 years. Pakistan's Fiscal Responsibility Act does not stipulate such an increase. As a first step, therefore, we must set a 5-10 year plan for gradual but substantial increases in the health budget. Here, it is important to address the next question: even if we achieve this impossible fiscal target with the existing health system, would we have the ultimate cure for our health woes? The answer is clearly 'No' because of the issues inherent in the utilization capacity. An important indicator of this is the 'allocation versus expenditure' lag.

Budgetary lapses in the social sector are ascribed to lack of utilization capacity; this masks systems challenges, which make the utilization of budgets challenging - excessive centralization of operational decision-making, onerous financial and administrative procedures and lack of accountability for delays in decision making, which have implications for fund flows, are to mention a few. Coupled with this is the limited capacity to plan and implement, which further negatively impacts the limited ability to expend. Therefore, alongside budgetary increases in aggregate and in program-specific categories, it is critical to set aside dedicated funds for procedural reforms.

Linked to this is the issue of quality of expenditure and expenditure targeting. A careful tracking of fund flows in the health sector shows a predominance of expenditures in the month of May and June before the financial year ends. In addition, there are no mechanisms in place to evaluate the impact of given allocations on outcomes vis-a-vis the equity objective and the poverty reduction strategy focus, which should be the core objective of the state health sector. Enhancing quality and appropriate targeting of expenditures is closely linked with governance, which creates yet another imperative for dedicated budgetary allocations to strengthen governance structures that enable the delivery of programs. A core prerequisite for sound governance is reliance on timely and appropriate information for decision-making. Again, this flags the need to provide substantial budgetary support to bridge the current gap in Pakistan's health information system. There are several components of a health information system already in place, albeit with many gaps; however, there are also clear opportunities where the right investments in structures and technology in particular can enhance connectivity in the existing health management information system; enable building infrastructure for hospital information systems both in the public and private sectors; improve death registration and enhance the potential within existing survey instruments. It would be logical to make investments in these areas where gains can be achievable in the short term. This would require enhanced allocations over and above what has been currently budgeted for the National Plan for Disease Surveillance and the National Health Information Resource Center; reliable sources indicate that this amounts to Rs. 10 million and Rs. 28 million respectively. Additionally, it is important to earmark funds for policy research, at least in areas where evidence is badly needed such as in the case of the post WTO impact on prices of drugs and the impact of WHO' International Health Regulations 2007 at a country level.

The third area, which must form the substrate for the budget debate is the distribution of allocations in the budget of 2007. With reference to allocations within preventive health domains, a careful analysis reiterates the need to enhance allocations in certain areas. According to reliable sources, the health budget allocates 500 million each for blindness, maternal and child health and hepatitis; 350 million for HIV/AIDS, 100 million for malaria, and 205 million for tuberculosis. As opposed to this, only 5 million have been allocated for the prevention and control of non-communicable diseases (high blood pressure, diabetes, heart diseases and stroke).

It would be important to look at these distributions in the light of contemporary evidence on mortality (deaths) and morbidity (disease). The Burden of Disease Studies conducted to date by the World Bank and US-based academic institutions show that both communicable and non-communicable diseases (NCDs) share an equal burden in terms of morbidity. In terms of mortality, data from the Pakistan Demographic Survey of the Federal Bureau of Statistics shows that the percentage of deaths attributed to NCDs has increased from 34.1 per cent in 1992 to 54.9 per cent in 2003. Critics argue about the validity of the Pakistan Demographic Survey data and refer to issues inherent to the validity and accuracy of these statistics. But does it make sense to disregard local data completely, particularly when global trends and independent international evaluations also validate the same trends? Critics also argue that these diseases are not part of the MDGs; however, even if the MDGs are taken as a yardstick, we must be reminded of the fact that Goal 6 refers to the 'other disease categories' on the premise that countries would have the indigenous capacity to determine what constitutes a locally-suited priority. Non-communicable diseases should clearly be a public health priority, given that they kill more people than malaria, tuberculosis and HIV/AIDS combined. The point is not to question the validity of investments in these areas but to argue for increased investments for NCDs in addition. NCDs are equally important and merit due attention.

To date, the prevention and control of NCDs has been addressed through a very small program at the Ministry of Health, which is supported technically through the pro-bono contributions of an NGO and the partnership of professional associations. However, it is hoped that the Ministry of Health will develop a full program for NCD prevention and control.

Turning to infrastructure in the distribution of allocations domain: there has been news of allocations for 900 (803) proposed heath care centers in the urban settings on the premise that these would decrease the workload burden on existing tertiary care hospital sites. This warrants revisiting a fundamental question in health which relates to the role of the state in health? The state should clearly be a 'financier' and 'regulator' of services; however, it need not be a 'provider' of services. Lessons learnt from the lack of sustainability and failure of the BHU initiative launched in the 1980's should be instructive in this regard. This experience indicates that it might be best for the state to stay away from being a provider of services and focus on creating structures, which enable it to leverage the outreach of the private sector to deliver services. True that options for revitalizing existing state-owned healthcare infrastructure must be explored as in the case of the BHU restructuring arrangements given that something has to be done with the 'existing' infrastructure; notwithstanding, 'future investments' in infrastructure should weigh the benefits of 'government provision of services' vis-a-vis 'government financed private provision'; the latter appears more plausible in a country where the law of the land lets the private sector operate. The same argument applies to another area in the current budget. The federal government will be paying for a tertiary care facility in NWFP, the annual recurring cost of which could enable the government to purchase services from market to achieve the equity objective. These options reiterate the need to revisit some fundamental policy standpoints - continuing to make investments in infrastructure vis-a-vis exploring alternative modes of service delivery, which can make service delivery more equitable.

Last but not the least is the issue of leakages from the system - an outcome of various forms of financial and moral corruption. There is an anecdotal evidence of various practices, which lead to leakages from the system - kickbacks, over-invoicing, and outright graft in the contracting process, collusion among bidders in the procurement process and theft from central stores in hospitals are to mention a few. These occur as a result of poorly managed expenditure systems and poor fiscal controls over flow of public funds. Improving governance is critical to addressing these issues; from the budgetary standpoint, however, allocations in certain areas can give quick dividends. For example, electronic public expenditure tracking procedures and electronic equipment and supply inventories can track leakages from the system and a nationwide database for matching staff and wage payments can maintain up-to-date personal records and as such can assist in eliminating abuses such as paying ghost workers. Budgetary allocations should therefore leverage technology to enhance efficiency and promote greater transparency in health systems and to eliminate wastage of scarce resource, which lead to poor quality of care, compromised safety and efficiency and de-motivation of the staff. 

To summarize, the budgetary increases this time around are commendable. However, as a short-term measure it is also important to reanalyze priorities for allocation and pay attention to systems strengthening with the understanding that these investments will not be visible for a while - quite unlike physical infrastructure. Over the long term, strategic planning exercises in the Ministry of Health, the Planning Commission and civil society think-tanks should focus on the following from a budgetary perspective:   

Firstly, an essential package of health services should be carefully costed; the government should then make a five-year plan to enhance allocations to a level where the delivery of these services becomes possible. Simultaneously, they should also enhance their capacity to utilize funds, both through procedural as well as personnel reforms. Secondly, they should look carefully into policy and strategic directions both for the provision of essential health services for all citizens as a public good as well as other services for the under privileged who are not covered under any pre-payment scheme. In this connection, they should clearly articulate a policy on infrastructure vis-a-vis provision through the market and in the event of the latter, aim for the creation of an enabling and transparent regulatory environment. Thirdly, they should analyze alternative means of health financing by leveraging the potential within existing arrangements - mainstreaming safety net resources for health and insurance-based arrangements.

As the Parliament gets into session to debate the budget for 2007, they must therefore, be mindful of the fact that it is not enough to put money in programs; unless the systems to deliver them are reconfigured and strengthened, programs will find it difficult to deliver on objectives.

 

The author is the Founder President of the NGO Heartfile. E-mail: sania@heartfile.org

 


debate
Masters of their destiny
A review of microcredit programmes in backward areas of water-deficient interior Sindh

By Shahzada Irfan Ahmed

Bhagwand of village Yaroo Rind, Khairpur struggled all through her early life. When she got married to a drug addict, Shah Bux Rind, her life became even more miserable. It was she who had to earn single-handedly for her family including her husband. After doing embroidery work all day, all she could earn at the day's end was not enough to cater to her family's most basic needs.

It was a lucky day for her when she came to know about a credit programme being offered in her area. It was the micro-credit finance offered by Sindh Agricultural Workers Coordinating Organisation (SAFWCO), a non-government organisation working in backward areas of Sindh. She wasted no time in approaching the organisation's team and borrowed Rs 5,000. She bought a calf from that money and left it with her brother for rearing. "When it becomes a buffalo, I will sell it and get enough money to spend on my daughters' marriages," she tells TNS.

Then someone advised her to buy chaff with the micro-credit offered by SAFWCO. She did and stored it. Later when the demand for chaff rose, she sold it for a handsome amount and saved a good amount after paying back the loan.

Microfinance is the provision of small loans and other financial services to poor entrepreneurs who are otherwise excluded from conventional banking. This, according to definition, is a development strategy with significant potential for poverty alleviation and economic empowerment.

However, the difference between micro-finance and charity disbursement is that the former has to be returned and the latter doesn't. Ideally, microfinance does not only cater to one-time financial needs of the poor, it develops their entrepreneurial skill and make them masters of their own destiny. This means only a fraction of the poor are eligible to avail this facility. The rest neither have the capacity to generate income from this money nor to return it.

The system that was seen in place on a field visit to selected communities in interior Sindh was that the financing organisations had involved local communities in the whole process. At many places these communities were called Village Development Organisations (VDOs). For example in Sanghar and Khipro, SAFWCO is making such disbursements.

SAFWCO is a partner organisation (PO) of Pakistan Poverty Alleviation Fund (PPAF), an independent body that provides 54 per cent of the total micro-credit disbursed in the country. PPAF on February 28, 2007 had a resource base of US$ 826.17 million. Its board of directors consists of 12 members of whom nine are from the private sector. Seth Hussain Dawood of Dawood Hercules Groups is the sitting chairman. PPAF disburses the funds given by the World Bank to the poor through POs working in their respective areas.

"The loans aren't disbursed just like that. Immense weightage is given to the rationale of the proposal submitted. The local needs of a community are also kept in mind just to ensure that the money is given for viable projects," says Tufail Rajpar, General Manager, Credit & Enterprise Development, SAFWCO.

For example, in the backward and water-deficient areas of interior Sindh, the most viable projects are agricultural development ie trade in seeds, fertilisers and chemicals, livestock rearing, handicraft development and use of donkey carts for transportation of goods.

Tufail tells TNS that the recovery rate in these areas is 100 per cent and people are availing loans over and over again. He says that though there might be organisations that do not keep a follow-up, all those partnering with PPAF have to keep track of what is going on their areas of operation. In fact, it is binding upon such organisations to do so.

He says a lot of stress is laid on forming innovative alliances and partnerships with the corporate sector to reach out to the poor. In this regard, PPAF signed a memorandum of understanding (MoU) with the Government of Pakistan, Engro Foods Limited (EFL) -- the owners of Olper's brand -- and three of its POs in 2005. Under this initiative, people rearing livestock in water-deficient areas will be selling milk to Engro Foods at market rate.

Abdul Ghafoor, a villager tells TNS that though they are getting vocational/skill development training in the area, it is not easy to win orders. "We are being taught how to make candles, soaps, detergents etc. But the fact is that the factories producing these goods have flooded each and every corner of their country. The packaging is better and so is the quality and price," he adds. "So what we do is that instead of using micro-credit for these purposes, we simply go to the market and bring seeds, fertilisers etc at wholesale rates. As middlemen are out we can sell these agricultural inputs to the locals and are free to sell the produce to whoever we want to," Ghafoor says.

During the visit, it was observed that the micro-finance organisations working with PPAF had issued a list of business activities for which money could not be disbursed. These included property/real estate development, commercial construction, hazardous toxic waste, plastic bags, radio-active material, tanneries, timber, logging, deforestation, financial services, explosives, armaments, ammunition, mining, breweries, poaching/hunting and informal cross-border trade.

 

 


Microcredit or undue credit?
In a country like ours, microfinance can evolve into a means for the 'non profit' financial institutions to play on the desperation of the poorest of the poor

By Farheen Hussain

Ever since Dr Mohammad Yunus, founder of Grameen Bank, was awarded the 2006 Nobel Peace Prize, microfinance has received an unprecedented level of validation the world over and is touted as the new tool for bailing millions out of abject poverty. 

Briefly defined "Microfinance is the practice of providing financial services, such as micro credit, micro savings or micro insurance to poor people." To get a holistic idea of poverty we must accept that poverty is not just living on less than a dollar a day but in countries like Pakistan, there is poverty of opportunities; that is, those who are born poor are condemned to die poor.

Today there are more than 50 microfinance providers (MFPs) offering financial services across Pakistan with a current outreach of 750,000 borrowers. With an estimated 10 to 50 million potential clients, less than 10 per cent of the microfinance market is being utilised. So it is hardly surprising that our young industry is gripped with issues of financial sustainability and outreach. However, a microfinance institution (MFIs) is not an end in itself but a means to an end. MFIs have a dual objective: to attain financial sustainability so they have a continued presence in their borrower's lives and to ensure that their loans are resulting in an increase in the borrower's permanent income. Unfortunately in Pakistan's microfinance industry, sustainability of the MFI is the dominant discourse and it is assumed that simple access to financial services will be enough to alleviate poverty.

Recently, one got a chance to take part in an impact assessment being conducted by a prestigious academic institution, in collaboration with two major MFIs operating in Lahore. Our research hypothesis was to ascertain the impact of microfinance on women empowerment. For this purpose we drew a sample from the female client population of the two MFIs and devised a lengthy questionnaire that was designed to gauge the nature and profitability of the business started with the loan, the resultant change in income, asset base, decision-making power of the borrower in household and community and also the opportunities it opened up for the borrower and her family after her induction into the microfinance programme.

Our field work took us to the semi urban area of northeastern Lahore, and during the course of our study we progressively got disillusioned with the services of these MFIs. I am not generalising our observations to the entire industry nor am I criticising the commendable contribution of Dr Mohammad Yunus and the concept of microfinance. But no matter how noble and genius a concept, its translation into action is a function of the prevailing conditions of the country it is practiced in. Unlike Bangladesh or Latin America the institutions, in Pakistan, have collapsed. There are no regulatory authorities or law and order so when prominent NGOs and state owned institutions engage in micro financial services and claim to emulate the Grameen model, no regulatory body or authority bothers to verify the validity of these claims.

Most MFIs that charge exorbitant effective interest rates of up to 35 per cent, justify this by declaring they are well within the global benchmarks of interest rates levied by other MFIs. What they fail to add is what the Grameen Bank or other successful MFIs in Latin America charge are not just interest rates but the charges for an assortment of services. Before dispensing the actual loan most successful MFIs carry out a host of preliminary steps (which we observed are entirely missed by our MFIs); firstly the loans are not for consumption but entrepreneurship, MFIs must ensure that the borrower utilises these loans to start or invest in a business. Though a business idea is never imposed, the Grameen Bank conducts an informal appraisal of the borrowers' business plans and monitors its profitability over progressive loan cycles. So as to rule out any possibility of borrowers investing one loan after another in failed entrepreneurial ventures.

Nevertheless, during our research work we encountered numerous examples of borrowers who used the loans to pay off debts, rents and other expenses, indicating that the MFIs are not involved and do not ensure that the loans are utilised exclusively for entrepreneurship. More disturbingly, many borrowers had undertaken business ventures doomed to fail at the outset, yet the MFIs proceeded to give larger loans in the subsequent loan cycles.

Rasheeda Bibi, resident of Guldasht Colony, described how she reluctantly became a member of an MFI in order to buy spare parts for the rickshaw her teenage son drove; their main source of income. The rickshaw broke down again but she continued to take two more loans to pay for its repair. The rickshaw broke down again, a few months ago. However, Rasheeda Bibi has again applied for a loan. What is problematic is that the MFIs will continue providing their financial services given that Rasheeda Bibi or many like her can't afford to pay off the loan as well as the interest. To the MFI, it is irrelevant that the borrowers are effectively increasing their financial needs and sinking deeper into a debt/loan quagmire by consuming these loans or investing them in failed businesses. What does matter to them is that the principal plus interest is paid back.

Another important preliminary step is to check if the borrower has relevant skill required for the business they intend to undertake. If not, then with additional charges the Grameen Bank provides the necessary vocational training to its borrowers. During our research we discovered that this was not only entirely absent but unheard of. Lastly and most crucially, successful MFI models provide the borrowers with backward and forward linkages to the market. This I personally felt was the most critical step, not only can the borrower buy the inventory in bulk, at reasonable rates, but also sell their finished product totally cutting out the role of the middle man.

Many of our respondents used their loans to start embroidery 'businesses' which in reality meant that they put in long hours to heavily embroider pieces of garments that were whisked away by elite boutique 'aunties' who paid them a pittance for their drudgery. Shahida Bibi resident of Baghbanpura proudly displayed an intricately embroidered duppatta she had just finished. On my inquiring what it would fetch her she replied the Baji would pay her around Rs 17 for the entire duppatta.

I was dumbfounded by her answer, I am sure these elaborately embroidered garments would be exorbitantly priced at any chic designer outlet in a posh locality and if one is to subtract the cost of sequin, thread and cloth it is entirely the labour of these women that adds to the value of the finished product. So why is the labour valued so cheaply? What an invaluable service would the MFI provide if they could link the borrowers directly to the market, so that the role of the middle man who extracts the entire profit is eliminated.

Microfinance, a global phenomenon, is spreading like wildfire amongst the poorest classes. The idea of 'social collateral' as conceived by Dr Muhammad Yunus is pure genius since it allows a poor labourer, domestic servant or even sex worker become credit worthy and access financial capital. However, in a country with no effective regulatory authorities or institutions even a noble practice can evolve into something ugly, a means for the 'non profit' financial institutions to exploit the desperation of the poorest of the poor.

MFIs must institute changes internally, and conduct impact assessments of their activities as regularly as they review their financial performance and implement relevant changes in order to do justice to their tall claims of poverty alleviation and empowerment. The state regulatory bodies must be more involved and monitor the social impact of MFIs.

Stringent measures should be taken internally and externally in order to curtail a massive proliferation of credit addicts. Otherwise microfinance is just good business for those who wish to capitalise from the wretched of the country while maintaining a noble facade.

The writer is Research Associate, NGO Pulse, LUMS-McGill Social Enterprise Development Center (SEDC)

 


'We have a strict monitoring side'

Syed Kamal Hyat is the Chief Executive of Pakistan Poverty Alleviation Fund (PPAF) -- an apex body that routes World Bank funds for micro-finance to the poor through its partner organisations. PPAF is the leader organisation in the sector as it provides 54 per cent of the total microcredit available in the country. Incorporated under section 42 of the Companies Act 1984, PPAF claims maximum autonomy with minimal interference from the government. In an interview with The News on Sunday, he talks about the philosophy of the organisation, its objectives, achievements and many other issues. Excerpts of the interview follow:

The News on Sunday: PPAF is sponsored by the Government of Pakistan. How can it keep the government out of it?

Syed Kamal Hyat: We are quite fortunate that the government has practically refrained from interfering in our affairs -- despite the fact that it's the government that negotiates loan agreements with donor bodies. Our role starts when it comes to disbursement of this amount. Involvement of private sector people with excellent track records definitely brings credibility to the whole thing. The fact that we are registered under Companies Act 1984 also grants us structural autonomy.

TNS: Who are the people managing the affairs of PPAF? And how is the body different from other organisations having the same mandate?

SKH: I would simply say that the people who are on our board of directors have impeccable careers in their respective fields. They are leading businessmen, bankers, former bureaucrats etc. For example Hussain Dawood, Chairman Dawood Group is our chairman and former Secretary General Finance Moeen Afzal is a member of our board of directors. The rules are so strict that anybody who assumes a public office has to quit the organisation. But this doesn't mean there is no state representation. Two members of our board are from the government sector. But they normally perform the task of negotiating matters with the donors or the related government departments. Here I would to tell you that we have a lean staff of only 65 to 70 people all over Pakistan. Our administrative/operational expenditure is less than 1 per cent of our total disbursements -- a fact that makes us one of the most cost-effective organisations in the world.

TNS: How do you ensure that the microfinance reaches the persons who deserve it the most?

SKH: We do not intervene in any area directly. What we do is that we disburse the funds through our partner organisations. These organisations have a considerably long history of working in the respective areas. PPAF has a very strict criteria in selecting partner organisations. There is a long list of pre-requisites that a qualifying partner organisation must have. The partner organisation identifies which areas have to be focused on and which sectors to be financed there.

Today, we have presence in 111 districts of the country where around 70 partner organisations are working with us hand in hand. To name a few, they are Aga Khan Rural Support Program (AKRSP), Baanhn Beli (BB), Bunyad Literacy Community Council (BLCC), Balochistan Rural Support program (BRSP), Green Circle Organization (GCO), Islamic Relief (IR), Omar Asghar Khan Development Foundation (OAKDF), Sindh Agriculture Forestry Workers Coordinating Organization (SAFWCO), Sungi Development Foundation (SUNGI) and Thardeep Rural Development Program (TRDP).

TNS: Is it okay to leave it to the partner organisations to make major decisions?

SKH: No, this is not the case. Beneficiaries are not left at the mercy of anyone. The partner organisations are engaged mainly for the reason that they have better understanding of their local requirements. PPAF regularly interacts with them and holds training programmes for them. They have to follow a standard accounts and financial reporting system as the operational manuals devised by PPAF. The monitoring side of the programme is very strict as well. Our teams make regular visits to the areas where our projects are running. Besides, we engage independent organisations like Gallup to conduct surveys in these areas. We involved Gallup Pakistan in 2005 and asked it to conduct an impact study for us. The body carried out its survey in 1760 villages and came out with positive results. Now we are planning to ask a foreign body to conduct a survey for us. Secondly, I would say the financial matters are as transparent as possible. We have disbursed $272 million (Rs 15.53 billion) under the head of micro-finance till March 31, 2007 since the launch of the programme in 2000. The total number of our micro-credit loans exceeds 1.3 million. We are proud to say that not even a single finger has been raised against us. Sidat Hyder and Associates are our auditors and every one of us has a clean bill.

TNS: What plans do you have for those who are not lucky enough to come under the umbrella of PPAF? Don't you think it's a sort of discrimination?

SKH: We always try to ensure that the funds are equally distributed in all parts of the country. But sometimes there are constraints that cannot be overcome easily. Presently, 60,000 communities in 27,000 villages of the country are benefiting from PPAF programmes. Our model is that we make a community self-sufficient and then exit. Once this happens, we look for newer areas where we can intervene. Running our programmes in each and every part of the country simultaneously is not possible because of resource constraints. Secondly, I would like to tell you that we don't go to the area just like that. Interventions are made where they are needed the most, many a time on urgent basis.

-- Shahzada Irfan Ahmed

 

Marx famously wrote that the ideas that prevail in society are the ideas of the ruling class. Unfortunately, this is more true than one would like to admit, perhaps more so in Pakistan than in most other societies. Yet this is not because of some deep and essential cultural defect, a conclusion that too many people are far too eager to make. In fact, the internalisation amongst many Pakistanis of the myths that the powers-that-be have widely propagated can only be explained in historical context.

British rule in India -- not unlike the rule of other European colonial powers -- survived for as long as it did because enough Indians accepted the logic of colonialism which decreed that order and stability were the defining features of any forward-looking society. In other words dissent was not to be tolerated and was equated to backwardness and unruly traditions. In this context, Gandhi's choice of civil disobedience as the method to challenge the British was far from incidental. It reflected the need to debunk the myth that order and stability in society were preferable to freedom and other basic rights.

Unfortunately aside from the NWFP the Pakistan areas did not experience as much popular mobilisation in the final decades of British rule as the rest of India. Thus the logic of bureaucratic paternalism remained deeply rooted; it makes perfect sense therefore that our post-colonial rulers would reinforce the tradition of viceregal rule and continue to rely on the same principles of government perfected by their colonial predecessors.

Thus even today, 60 years after the creation of this country, there is a widely-held conviction amongst many of our thinkers, politicians and ordinary citizens that 'benevolent dictatorship' is preferable to the rule of the people. Of course the fact that dictatorship can never be benevolent is ultimately exposed, particularly at times of popular uprising. The current resort of the government to all manner of repression in the face of widespread resentment is testament to the essence of undemocratic rule. And much to the government's chagrin, the draconian restrictions being imposed on the media and the arbitrary arrests of political activists have produced more political action rather than dampening it.

The pro-order/stability individuals and groups amongst us are finding it increasingly difficult to defend their philosophy. This is because the post-colonial model of bureaucratic paternalism has been characterised by serious contradictions that did not exist under the British. The military has encroached into the political and economic realms in a manner that has seriously undermined its reputation as the guarantor of the state. A well-known advisor to General Yahya Khan, Major Sher Ali, presciently warned almost 40 years ago that the military's aura of infallibility was directly correlated with its mysteriousness. In other words, the military did and should not come into contact with ordinary Pakistanis except when it could project itself as the national saviour. Major Sher Ali's advice was not heeded by subsequent military rulers, and even though the institution still projects itself as national saviour, it has expanded its own corporate interests so much that it no longer stands aloof from society, and is accordingly suffering the consequences.

The pro-order/stability lobby is therefore hard pressed to come up with a response to the assertion that a military that has such well developed political and economic stakes cannot remain immune to censure. Arguably it would still be possible to hoodwink the wider population if criticism of the military's overarching role in Pakistan was limited to political workers as was the case during the Zia dictatorship. But the broadsides are now emanating from all corners. Slogans targeting 'fat and flabby generals' -- as Bhutto famously referred to them -- are commonplace. And it would appear that the societal consensus against the military's dominance is growing.

Expectedly, the response from the champion of bureaucratic paternalism has been reactionary. But the fact of the matter is that it is at times like these that the most healthy and vibrant features of Pakistani society come to the fore. In spite of what all the pro-order/stability intellectuals insist, dissent and debate are the markers of a progressive society. Indeed, there is a time and place for order and obedience, but not of the kind that our ruling class has propagated for the last 60 years. From our homes to the masjid to the classroom to the workplace, most Pakistanis are taught to be docile and submissive to authority, women obviously more so than men. As suggested above, to the extent that this is a cultural trait, it has been used moulded by power to project the omnipotence of the state and its allies.

It is precisely to prevent the emergence of a popular challenge to oligarchic rule that the ideals of order and stability have been propagated far and wide. It is important to bear in mind that Ziaul Haq spearheaded a nationwide project to demobilise society in the name of Islam. The populism of the Bhutto era was dangerous enough to the powers-that-be that it was necessary to crush it entirely. Debate and dissent had emerged in the late 1960s as popular values, and it was only by reasserting the necessity of order and stability -- and that too under the guise of Islamisation -- that the champions of bureaucratic paternalism could reassert themselves.

Since end of the Zia period, the vanguard of order and stability -- the military -- has been counter-posed to the inept and corrupt vanguards of disorder, the politicians. Through the 1990s this charade was successfully repeated, and at the time of the Musharraf coup in 1999, the military was sitting pretty, along with those traditionally complicit in the project of bureaucratic paternalism.

But as events since March 9 have proven, things change, and quickly too. The arrogance of the powers-that-be has been exposed beyond any doubt, and they are now undoubtedly worried. But those of us that are committed to seeing this society move towards ideals beyond order and stability should not be worried in the least. Indeed we should be cautiously optimistic. We are making steps, however small, to rid ourselves of a colonial legacy that has haunted us for 60 years.

O general hum bhi zinda hain!



Targeting women, the Taliban-style
Womenfolk in NWFP face a serious threat to their education and employment, at the hands of radical religious clerics 

By R Khan

The phenomenon of Talibanisation is increasingly posing a threat to the education and employment of womenfolk across the length and breadth of the NWFP. Extremists and radical groups of clerics have started threatening openly, 'advising' women, their parents and husbands, in writing, via telephones and speeches through FM radio stations, mosques' public address systems, etc. The threats from extremists aim at women's complete banishment from public sphere, their prompt target being the education of women.

According to the data available on Peshawar-based women and human rights organisations, the trend of threatening girl students and forcing closure of educational institutions initially emerged in Waziristan. In Dera Adam Khel, some teachers were threatened and, later, a number of schools as well as an under construction degree college for women were bombed at night time.

In another incident, two Talibans, planting bombs in Sheraki Girls High School, were killed when the device accidentally went off.

Threats have also been given to the staff of girls' educational institutions in Bannu, Tank, D I Khan, Swat, Charsadda, Mardan, Kohat, Dir Upper and Lower. Even in Peshawar some private schools have been threatened with suicide attacks. It may be mentioned here that a blast occurred near the gate of a girls college in downtown Peshawar a few months ago.

The recurrent and compelling threats have forced half of the girl students in Dera Adam Khel to drop out. A significant number of girls have also left schools in Bajaur and Swat, Tank, and Bannu. Whereas, in both Waziristan agencies, there is a complete shutdown of female schools. Sources reveal that hundreds of female teachers have also asked in writing that they are incapable of serving in the said areas under the circumstances. Many, according to them, have also taken long leaves.

Threatening women's educational institutions has since then become a routine, with occasional bombings. In Bajaur, edicts were issued declaring a complete ban on women education and scores of schools were bombed in Mardan. According to a member of the HRCP NWFP chapter, "Threats come from various extremist outfits, and it is very difficult to estimate their number."

According to sources in the southern district of D I Khan, recently, the parents of girl students of Gomal University have received letters from the 'commander' of local Talibans, forcing them to stop their daughters from attending campuses.

The radical, militant clerics are also antagonistic towards working women. A woman from a Wazir tribe, who was recently appointed Educational District Officer (EDO) in D I Khan, received threats from extremists telling her not to join the service.

Interestingly, illegal FM radio stations are being used by the clerics continuously. According to reports, in Swat and Dir, a large number of parents have pulled their daughters back from schools and colleges. In this regard, the religious sermons of a radical cleric, namely Fazlullah, in Imam Dheri village of Kabal, Swat, has played an instrumental role. He has effectively convinced, by labelling education for girls 'un-Islamic', a large number of people.

The HRPC officials in Peshawar say, "Fazlullah literally felicitates those who discourage and stop their daughters from going to educational institutions. But, no clear cut action has been taken by the government against him."

Locals are of the view that the more liberal parents are not quite convinced by the mullah's anti-women education campaign. They end up risking their ties with the society at large.

This means that the clerics' influence is not the only variable in discouraging people from sending their daughters to educational institutions.

A sociologist at the University of Peshawar says, "In the face of growing number of threats, the little improvement attained over the past few years in the Gross Enrollment Ratio in schools for girl would come down significantly."

Regarding the spread of the phenomenon, he says, "When lawlessness becomes prevalent, criminal behaviour is further encouraged. It does not remain confined to a particular area, and ripples out. This is what is happening in the Frontier."

Of late, there have been reports that some radical groups have also made physical, including suicide, attacks on girl schools and colleges in Peshawar and Mardan, if the female students and teachers decline or fail to comply with their 'command' of wearing veil (hijab). It is indeed alarming because Peshawar is the provincial metropolis and has a large number of educational institutions for women as well as a host of co-educational campuses, where students from all over the country have enrolled. Mardan is also the second largest city of the province. One can easily gauge that when woman education in such places is in jeopardy (from the clerical militant onslaught), what could be the condition in remote Dir and D I Khan.

The growing number of instances of clerical radicalism targeting women in the Frontier is reminiscent of the Taliban regime (1996-2001) in Afghanistan under which all schools for girls were closed down and complete ban was imposed upon women employment even in such professions as nursing and teaching.

It is strange that despite so many instances of threats to women in the region, the provincial government (led by the MMA) and the federal government are unmoved. The Human Rights Commission of Pakistan (HRCP) NWFP chapter is said to have written letters to the governor and the interior ministry to take appropriate steps against the perpetrators. But, there has been no response so far.

Some observers consider the lack of action on the part of the NWFP government as being due to the fact that it is also dominated by the clerics. This, despite the fact that some ulemas, including those associated with the MMA, have condemned the anti-women education propaganda of Maulvi Fazlullah and others.

The writer is a Peshawar-based journalist/political research analyst who has also worked in senior government positions.

Email:razapkhan@yahoo.com

 


Emerging food markets and small farmers
Emerging food markets in South Asia present opportunities as well as hazards for small producers
By Aoun Sahi

For generations, Pakistanis have shopped for food and groceries at open markets and from roadside vendors. But the trend is now changing as some superstores chains are catering to the country's growing middle-class. These emerging food markets have changed the pattern of food consumption and consumer habits.

Mudassar Ali, a vegetable seller in Kasur pura and adjacent areas in Lahore, is slowly wheels his cart back home. His day begins at four in the morning, when he sets out for the wholesale vegetable market a 30-minute walk from his house. From there, it's another two hours to the market where he tries to get best products available and then in the next four or five hours, sells these vegetables by visiting different streets in his area. But the past few months have been disastrous for him. A new superstore was opened in his area of business and he lost almost half of his customers, even the ones he considered 'permanent'. "I am struggling to sell my vegetables. Whatever is left at the end of the day is sold at half the price or simply discarded. I cannot store them," he says. He is not the only who is facing this situation in Lahore. According to him, many of the vendors and small shops are facing a similar situation.

According to the website, PlanetRetail.net, super and hyper markets are dominating the markets all over the world, and 60 to 65 per cent of buying and selling is done through them. At present, the retail sector, according to World Bank statistics, is contributing 6-12 per cent to the world GDP and its share in international trade is US$8 trillion. The processed food consumption is on the rise in the lower-income countries by about 28 per cent per year. It means that the target markets for the super-stores right now are the low-income countries where the middle-class base is widening. The statistics further reveal that highest growth-rate (48 percent) is observed in breakfast cereals in low-income countries. According to the website, Pakistan, with a population over 160 million, is the 9th largest consumer market for food.

According to household survey, an average Pakistani spends 42 per cent of his income on food items. Experts think that these days, preserved food is being preferred to fresh food, both by superstores and consumers. "For superstores it has more shelf life while for consumer it is more nutritious and ready to eat," says Dr Abid Qayyum Sulahri, Research Fellow and Head of Globalisation and Rural Livelihood Program at Sustainable Development Policy Institute (SDPI). According to him, Pakistan, in 2005-06, imported processed food worth $0.5 billion but in 2006-07 the import bill of processed food commodities has increased to $2 billion. Most of this processed food is being sold by superstores. The situation is similar in many other low-income countries where the food processing industry is doing a business of over $3 trillion every year. Because of this, a multi-country and multi-donor research initiative, led by International Institute for Environment and Development (IIED), UK 'Re-governing Markets' has been launched.

According to Dr Abid, the basic idea of this research is to study the success and failure of small farmers or producers to integrate them in emerging food markets. "The purpose of this study is to learn from those developing countries where modern agro food markets have emerged fully, such as in Latin America, South Africa, Thailand, Malaysia Turkey and to recommend policy measures for more recent markets like India, Pakistan and China, because due to the increase in per capita income and liberalisation of markets, food patterns have changed in these countries." The other purpose of the research is to know whether the countries, where modern agro based markets have emerged, are able to integrate small farmers or not.

In South Asia, SDPI is conducting this research and is trying to intervene on different policy levels regarding emerging food markets in South Asia. "We are trying to influence policy matters on public and private (industrial level) levels to make them aware of the most recent phenomenon in food markets; while, at the same time, we are also trying to consult farmers to see their practices. We will try to change their cropping pattern according to the needs of the emerging food markets," he tells TNS. "At present, in Pakistan, we are facing greatest resistance from public sector."

Small farmers in Pakistan are facing a lot of problems in integration in the new atmosphere and the real beneficiaries have been middlemen. Dr Ali Abbas Qazilbash, National Expert - Laboratory Accreditation of United Nations Industrial Development Organization (UNIDO), believes that one reason is that in Pakistan agricultural research is based on pre-harvest statistics and there is no guide for farmers after that. "If a farmer has information about markets and the standards and gets his products accredited, he can dictate the price and there is no harm in value-addition to products," he tells TNS. He urges the need for research-oriented interventions in the sector. He also stresses the importance of cooperation among various government departments and civil society organization with the similar objectives and mandates. "Extension system should be in functional form, and should be able to deliver at the grassroots. There should be a link between research and farmers through efficient extension services to enable them to exploit the situation to their favour," he says.

But small farmers' representatives believe that it is hard for small farmers in recent situation to exploit the situation. Shujaat Ali Khan, secretary Sustainable Agriculture Action Group (SAAG), stresses the need for polishing entrepreneurial skills of small producers. "Our small farmers should have market information and should know how to make their products market-oriented. But because most of small farmers in Pakistan are under huge pressures and illiterate, they stand to be more marginalized in the emerging food markets," he says. Shujaat thinks that as most of the policies in Pakistan are made for landlords, who own more than 70 percent of total agricultural land in Pakistan, while small farmers are neglected. ôI think policy-makers should give importance to small farmers as well," he says.

According to Shujaat most of the agro industry is in the urban areas and if farmers can be provide with the food processing and storage technology, it can increase their income and enhance their bargaining power. "Because most of the agro products perish within one or two days, farmers are forced to sell them on very low rates. Recently, in the Pakistani market both producers and consumers are suffering. Producers are forced to sell their products at cheap rates while consumer has to buy it on very high rates, while most of the profits are going to middlemen and industrialists." Shujaat thinks that the emerging food markets cannot do anything for small farmers, if they are not trained. Shujaat stresses proper and objective-oriented harmonization among departments, institutions and ministries to avoid horizontal overlapping in agricultural sector.

Dr. Wajid Pirzada, Chief WTO Cell, Minsitry of Food, Agriculture and Livestock, says that there may be some overlapping in public sector because there are many departments working for agriculture and farmers in country. He thinks that contract and cooperate forming is the best solution to increase bargaining power of small producers in emerging food markets.

 

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