Wednesday
December 22
2010

Bryan Farris

Five Reasons BusinessWeek is Wrong About Pakistan

Last week, NextBillion’s newsfeed featured an article from BusinessWeek entitled, “A Silver Lining in Pakistan’s Floods”. The premise of the article was that “This natural disaster may have given the country an opportunity to tackle a recurring point of contention in Pakistan—feudalism.”

The author went on to state that aid money going to Pakistan should focus on job-creation strategies in addition to housing. The article argued that the provision of jobs in relief work and an emphasis on business training would pave the way for the end of Pakistan’s feudal system and sustained improvements for the country’s poorest.

Though I appreciate the optimism, I respectfully disagree with BusinessWeek. As I’ve written before, Pakistan is a land of opportunity, but it is also a land that has many needs. Yes, it is critical to create jobs, but it would be an error to believe that jobs alone will solve the issue of poverty.

Pakistan is akin to a rose bush nurtured inside of a closed box. Watering the plant (creating jobs) is necessary and will help it grow. Yet, for the flower to really flourish, one must add fertilizer, open up the box and allow sunlight to flow in freely. Only then will the rose reach its full height and blossom unfettered.

It is a mistake to assume that a simplistic approach would alleviate the hardships that Pakistan faces. I have probably missed several things that Pakistan needs to focus on, but you can help me out by commenting below. The point is that a holistic approach is necessary; there are five key reasons why jobs alone are not enough:

1. Feudalism is an entrenched system
Corruption is rampant in Pakistan, and those with power and money have the ability to run the country. Feudalism has existed in Pakistan since its inception and at times has been reinforced by politicians in need of a vote.

In his book, “Pakistan: Eye of the Storm”, Owen Bennet Jones describes how feudal lords have either ordered or tricked their subjects into voting a certain way. Thus, democratically elected politicians tend to be respectful of the feudal lords.

Short-term jobs may help subjects break their dependency from their feudal lord on a temporary basis, but the reliance is so entrenched that it will take more than a job to instilllasting change.

In fact, in feudal areas, law tends to be nonexistent; instead lords are often consulted for judgment regarding civil disputes. Thus, dependency is so great that it is linked to law and order; eliminating the feudal system too quickly would likely lead to chaos.

2. Homes provide more than just a roof
Don’t under-estimate the power of homes in and of themselves. One of the key pitfalls of feudalism is that the residents don’t own their own land.

Through flood relief efforts and subsequent housing projects, it is possible to empower residents by providing access to clear title.

As described in the book “Mystery of Capital” by Hernando de Soto, one of the primary reasons the poor across the world cannot build assets is that their homes and businesses exist only in the extralegal sector.

Owners of homes can use their title as collateral for raising debt. Additionally, access to a title defends an owner’s rights to improvements made on their property. As a result, the risk of investing in one’s land and farms is significantly reduced because ownership cannot be retracted.

The informal (extralegal) sector is quite widespread and currently many people hold assets that they cannot legally prove to be their own. Overcoming the immense litigation challenge of incorporating informal arrangements into the formal sector will be required.

Providing housing with a clear title is a start.

3. Sustained improvements are impossible without education
Wikipedia ranks Pakistan as the 18th least literate country in the world with a 54% literacy rate.

It goes without saying that education is essential to the growth of any economy.

The feudal areas probably boast an even lower rate. It’s no surprise that parents prioritize education for their children so highly. It is for this reason that Greg Mortenson’s schools are so critical.

However, as I discussed back in March, much more effort is required to make a difference—in particular to keep the poor from turning to terrorism.

No business training program can make up for the lack of proper basic education in the country.

4.
Pakistan needs community building
One benefit of feudal systems is they provide residents with a sense of order (not to be confused with certainty). Residents do not need to feel accountable for their land because the feudal lord is responsible for that.

As I’ve written before, Pakistanis need to take ownership over communal spaces to maintain order and cleanliness.

Community development efforts are required to enable a transition to go smoothly and to empower residents to participate in their community’s decision making and maintenance.

(I’m currently in Lahore working with Ansaar Management Company, which is an organization that prioritizes community development).

5. Immediate need required
Granted, the long term view is crucial, but right now Pakistan also has so many immediate needs that cannot be ignored.

The international community has largely forgotten about Pakistan and, given the flood’s unfortunate chronological proximity to the earthquake in Haiti, donor-fatigue is at a high. The real tragedy however, is that the domestic community has also moved on.

Worst of all, as Aid Watch reported, significant amounts of aid from the US to Haiti went to US contractors rather than local businesses. The same exact issue has been observed in Pakistan.

Right now, aid is still needed to help the flood victims. Before we start asking for the next round of aid to create job programs, money needs to be spent on redevelopment. As a bonus, it wouldn’t hurt if that money went to Pakistani companies instead of going to foreign contractors.

The Bottom Line:
Let’s be realistic: apart from creating conversation about how to help Pakistan, the floods did very little to help the poor. What is needed is long term, sustained investment in several areas; if anything, the floods diverted resources to address the immediate need.

Pakistan is a beautiful country full of wonderful people, lets not let them down.

Business week is right that jobs need to be created. A rose does need water. But, there is much more that needs to be accomplished and it should be stressed that the answer is not simple. The restrictions imposed on the rose by the closed box need to be removed and sunlight allowed in.

We should re-double our efforts but not expect an overnight solution. Even under the perfect conditions, it takes time and maintenance for a budding beauty to flourish.

Unrealistic expectations are dangerous. Should they fail to materialize, we risk sustained disillusionment with the state of Pakistan.

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Entrepreneurship
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Acumen Fund