Khyber Pakhtunkhwa: opportunities and challenges

Khyber Pakhtunkhwa: opportunities and challenges

By Tahir Ali

(The News 03-05-10)

Khyber Pakhtunkhwa is one of the poorest and most backward provinces of the country. There is general belief that this province should go for its own comparative advantages instead of waiting for others to help it out. Any development strategy, experts point out, should be prepared in the light of major challenges, constraints and opportunities of the provincial economy.

The reasons for its less developed economy are many. The main resource-generating sectors of its economy have been badly affected by the negative effects of terrorism inside and outside its borders. There is a sluggish economic growth. Natural disinclination of local and foreign entrepreneurs to invest in Khyber Pakhtunkhwa due to growing insecurity and the inflow of millions of refugees has harmed its prospects. Sales, investment, and credit-transactions have decreased. Factories are either mostly closed or have reduced their outputs. The increased joblessness has caused a surge in poverty.

Prime Minister Gilani unveiled a package for the insurgency-hit province and tribal belt which was praised but was, literally speaking, a drop in the ocean.

The province possesses over 70,000 mega watt potential for hydro-power generation, as per Water and Power Development Authority (Wapda) figures but it could not be utilised thus far.

As there is no freight equalisation in Pakistan, Khyber Pakhtunkhwa’s long distance from seaports makes its products less competitive and costlier due to high transport costs. The provincial growth strategy should focus on production of products that can be made from local raw materials like marble, furniture and gemstones.

The province often faces an economic crunch and 93 per cent of its revenue needs are dependant on federal transfers. The provincial GDP is almost $16 billion. However, the informal economy of the province is believed to be three times bigger than the formal economy.

The trade terms between the province and Afghanistan are unfavourable. Smuggling has been on the rise. The parallel economy having its roots in the Afghan transit trade is depriving the fund-deficient province of billions.

Joblessness is on the increase in the province. Many of the erstwhile industrial zones are wearing a deserted look as industries have been transferred to other provinces. Due to the law and order situation, rather than concentrating on developmental expenditures the province is overwhelmed by security related issues.

The province has a bulky and cheap workforce available, which can be an asset. But the workforce mostly comprises of illiterate and unskilled persons and therefore results in low productivity. A huge number of them work overseas, but remittances are also considerably lower as most of them work on low-paid unskilled jobs. Around 82 per cent of the youth are either unemployed, under employed or self employed. High literacy ratio and skill training centres can tackle the problem.

Furthermore, Khyber Pakhtunkhwa has not been provided its constitutional right of net hydel profit. According to financial experts, Wapda owes around Rs700 billion to the province as per estimates. The arbitration tribunal head had fixed the amount at Rs110 billion, but the province is yet to get its due, despite repeated promises.

The agriculture sector has also been neglected. Land under cultivation and yield per hectare in the province are less than the national average.

What needs to be done?

As the province is expected to get huge sums of money in the near future, the ANP-led provincial government should chalk out a detailed development strategy to revitalise the province’s economy. Some suggestions are made below:

(1) To get the province out of its current economic turmoil, development programs are vital. Importance of a clear vision, sustained growth strategy and political will cannot be overemphasised.

(2) A proactive public-private relationship and robust private sector’s role is a must.

(3) There are plenty of commercial lands available in several major cities across the province, which can be better utilised by the private sector.

(4) To ensure industrial growth, the provincial government should build as many hydro-power generation units as possible.

(5) Investment in technical and higher education is the key to development.

(6) Subsidised electricity and gas facilities for industrial units are the need of the hour.

(7)The province should be authorised to enter into trade pacts with it neighbours.

(8) The provincial government should be provided with enhanced inflows for handling the ever increasing security expenditures.

(9) The province should have labour and energy intensive industries. Value addition in all, especially the mineral and furniture sectors will do wonders for the province.

(10)Advanced technology and infrastructure development are needed.

(11) A self support fund should be opened, and locals and expatriates should be asked to contribute in it. The funds should be used for retiring the provincial debts, start productive projects and for infrastructure development.


About Tahir Ali Khan (Official)
I am an academic, columnist, and a social worker.

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