YOU can’t judge a book by its cover. Whether or not the ‘Rozgar Scheme’ will actually provide employment to deserving youth is anybody’s guess. We will have to wait till it becomes operational. The scheme that is expected to be launched later in July by National Bank of Pakistan was announced in what has been defined as ‘a people friendly budget’, by the Minister of State for Finance, Omer Ayub Khan.
The Rozgar Scheme must have fired some hope amongst the enterprising youth of the country. Several hundred thousand qualified aspirants, the unemployed young people and their guardians, waited for the details.
Some sketchy details that the advisor to the Prime Minister on Finance Dr Salman Shah gave while talking to media in a post budget briefing brought out that some 400,000 jobs will be created under the “Rozgar Scheme” being launched in July at the cost of Rs12 billion.
“Educated persons in the age bracket of 18-40 years will get loan for self-employment,” the minister said, adding that under the scheme, people could establish public call offices, mobile utility stores, get franchise for utility stores and own transport (taxi etc).
How nice. But for reasons beyond comprehension, three weeks after the announcement of the scheme senior officials in Islamabad were found groping for an answer to even generalised queries regarding the salient features of the scheme. Could the idea has been inducted at the very last minute to make speech sound more people-friendly without proper preparation?
The fact is that the Rozgar Scheme seems to be the updated Pakistani version of a similar scheme experimented in India. Even the name seems to have been borrowed from there. In 1993 a self-employment scheme Prime Minister Rozgar Yojna was launched in India to provide self- employment opportunities to one million educated unemployed youth of in the country.
It was designed to provide employment by setting up seven hundred thousand micro enterprises by the youth. The purpose was to cover urban areas only in the first phase. The qualifying age was same as the Pakistani version i.e. 18-40 years. The upper limit of credit in Indian scheme was 40,000 whereas in Pakistan it was announced at a generously high Rs 100,000.
There is no issue in learning a few lessons from next door neighbours but replication, as we have learnt the hard way, is neither workable nor advisable. Earlier “Yellow Cab” and “Green Tractor” schemes were implemented but an objective study of their cost to the economy and their benefit to the targeted segment has not been done. Results of such a study would have come handy in designing of this new credit product.
When officials in the State Bank were reached for their comments on the prospects of this new initiative their attitude was too reserved. Their view was that the National Bank has been asked and has agreed to handle ‘Rozgar’ scheme.
A senior officer said that the SBP sees nothing wrong in the arrangement. “The Prudential Regulations are there with generalised guidelines for all banks. If a certain bank wants to bring a certain product in the market, it is it’s right to do so. The SBP will intervene only if and when some violation of rules is committed or framework limits are violated”, said a senior banker at the State Bank who declined to own his comments.
He, responding to a question said that it would be inappropriate to equate Rozgar to Yellow Cab Scheme. “It is a different ball game altogether. We have come a long way. Today banking sector is a lot more independent than what it was back in early 1990s and to my mind would not opt to be part of a project that is not commercially viable” he said.
“It again is a concessionary scheme supported by the government targeting to benefit a certain segment of the society. The spirit is the same as that of ‘Yellow cab’ or ‘Green tractor’ scheme of Nawaz Sharif period. The implementation strategy could be different, it can be better this time round. But call spade a spade, in essence Rozgar scheme is same as the ‘Yellow cab’ or ‘Green tractor’ scheme,” commented a senior private sector banker.
President of NBP, Mr Ali Reza, who got three years extension recently at the end of his second term after the Ordinance prohibiting any extension after two terms was amended, was not available for comments as his cell phone was constantly switched off.
His Retail Banking Head Amir Siddiqui declined to disclose the salient features on the plea that it was a part of the commercial strategy of the bank and cannot be made public unless a decision in that regard was made at the highest level.
“We will announce features of our new product ‘Rozgar’ at a press conference when we will decide to launch it”, Amir gave a measured reply. He, however, promised a detailed response to a written questionnaire later.
A high placed source in the banking sector told Dawn that the NBP has sent a detailed letter highlighting features of the proposed scheme and seeking support of the government on terms that it considers suitable for such a scheme. The said letter proposed terms and conditions for cost and risk sharing with the government. As the PM holds portfolio of finance as well in all probability the matter will be decided at the highest level.
A dependable source told Dawn that the scheme will be called ‘President’s Rozgar scheme of the NBP’. Under the scheme loans of 5,000_100,000 will be extended to qualifying candidates for: (a) community utility stores, (b) community transport scheme, (c) community communication centre. The loan tenure of utility stores and transport scheme will be five years with three months grace period and that of communication centre will be two years with three months grace period. The mark-up will be at the rate of one year KIBOR+2 per cent that comes to about 12 per cent.
The bank has asked the government for following support: i. The GOP should subsidise in form of payment to the bank the differential in the mark up rate. ii. The GOP should share 50 per cent burden of the mark up. iii. The GOP should share 10 per cent credit losses. iv. The GOP must ensure to provide the franchise of utility stores to the NBP clients on priority basis. v. The government cannot terminate the franchise contracts with NBP clients without prior consent of the NBP. vi. The GOP will support NBP in repossession of NBP financed vehicles from defaulters of the scheme. vii. The government will ensure employer undertakings in cases where the bank needs a surety and clients cannot offer one. viii. The government will ensure uninterrupted supply of quality goods to utility stores outlets of the bank clients by the Utility Stores Corporation. ix. The supply to the utility store outlets of the NBP clients will be on 30 days credit.
The Minister of State on Finance Omer Ayub was also not available to comment of the implementation strategy of the scheme. Some senior finance ministry officers were contacted in Islamabad but they were not able to update the press on the issue. One wonders if all those on the high offices have decided to shun the press on matters of public interest?
In the past socio-political objectives have not been jelled so well with commercial interests of a business entity. In Pakistan the power structures, work culture and lack of transparency have led most egalitarian projects into a mess with little or no gain at a very high cost. All concessions and subsidies find their way into the pockets of everyone but the dispossessed targeted segments. It can only be hoped that the unemployed will finally find the “Rozgar”.
YOU can’t judge a book by its cover. Whether or not the ‘Rozgar Scheme’ will actually provide employment to deserving youth is anybody’s guess. We will have to wait till it becomes operational. The scheme that is expected to be launched later in July by National Bank of Pakistan was announced in what has been defined as ‘a people friendly budget’, by the Minister of State for Finance, Omer Ayub Khan.
