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The 4.9 billion-dollar blunder

Updated May 10, 2018

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A BIG round of applause for the honourable chairman of the National Accountability Bureau (NAB) is due. And following the applause, a medal is in order. Something to recognise and acknowledge Mr Javed Iqbal’s contribution to ensuring that $4.9 billion did not scurry unnoticed out of the country to neighbouring India via ‘remittances’.

In many years of carefully following economic developments in our country, I have yet to see a high official of state make such a laughing stock of himself as Mr Chairman just did. More than 24 hours after the matter erupted on the airwaves, NAB finally came out with a statement explaining how they came to believe that somehow $4.9bn worth of ‘remittances’ supposedly sent to India and Pakistan were in fact laundered proceeds belonging to former prime minister Nawaz Sharif who was purportedly using this channel to send funds to his ‘business partners’ in India.

The explanation deserves a separate round of applause: it turns out NAB based its decision to initiate a probe based on a column written in a newspaper by the title of Daily Ausaf back in February this year. In the meantime, major media had a field day, running wall-to-wall breaking news that NAB had initiated an inquiry into a new scandal just discovered. ‘Nawaz Sharif ... money laundering ... $4.9bn ... India ...’ went the refrain on the airwaves, again and again. The official Twitter account of the Pakistan Tehreek-i-Insaf tweeted the news with glee. Just as one case is winding up, the impression was created, another is about to start!

This is epic-level bumbling. This is the sloppy way the highest office in one of the most powerful law-enforcement bodies of the country operates. This is the level of degradation of mind at the top levels of our country’s institutions. This is a post-factual world, where what one hears at a dinner party or reads in a WhatsApp forwarded-as-received message from a stranger shapes our thinking more than even a simple Google search would.

Let’s put it in plain words first: there is no $4.9bn worth of remittances going from Pakistan to India.

Because that is all it takes to realise that the supposed ‘news’ upon which this idea of $4.9bn of ‘remittances’ going from Pakistan to India is based, has been profoundly misunderstood: a simple Google search.

Editorial: NAB’s flawed pursuit

Let’s put it in plain words first: there is no $4.9bn worth of remittances going from Pakistan to India. The number is a mere estimate of what the sum could be, if we assume that all those who migrated from India to Pakistan back in 1947 were in fact economic migrants, much like those who have migrated from Pakistan to the Gulf or to Saudi Arabia are. If that mass of people then took up employment in Pakistan, then judging by their income level, and the propensity to remit back to their families a portion of their savings, the figure could potentially be as large as $4.9bn. That’s all.

The $4.9bn figure comes from a table in the 2016 Migration and Remittances Factbook on the World Bank website. A tiny asterisk appears next to the table heading. Go down to the bottom of the page, and the text next to the asterisk reads: “Estimated outflows based on remittance inflows and the bilateral remittance matrix”. There is your first clue that the figure is not a real remittance flow, but an estimate.

Then look up how the “bilateral remittance matrix” is constructed. You will learn that it projects potential remittance flows using variables like stock of migrants, Gross National Income and GNI per capita, as well as some measure from bilateral remittances actually recorded by the relevant country’s monetary authorities (in this case the State Bank) to determine how much of their income migrants from the given country actually send as a remittance and how much they keep for themselves. In short it is a projection of what might be the actual number, provided the migrants in question are indeed economic migrants, but in South Asia, Partition migrants are skewing the picture.

For the purposes of the report that’s alright. They are building a global picture of remittances and migrations for 214 countries, using vast databases and national registries ranging from labour force participation surveys to population censuses, amongst much else, and a few regions with a skewed picture does not change their perspective very much.

The report does provide very interesting insights on a global level. For example, more than 247 million people live outside their home country in 2013, up from 175m in 2000, or about 3.4 per cent of the global population. The United States is the top country for migrants, followed by Saudi Arabia, Germany, the Russian Federation, the United Arab Emirates, the United Kingdom, France, Canada, Spain and Australia. The top six countries with the highest proportion of immigrants are Qatar (91pc), UAE (88pc), Kuwait (72pc), Jordan (56pc) and Bahrain (54pc).

If one plods through the numbers, and the methodology, to get to the conclusions, it makes for some very interesting reading indeed. Where the advanced industrial countries are host to the majority of migrant populations in the world, it is developing countries that host the largest refugee populations. Between them, Turkey, Pakistan, Lebanon, Iran, Ethiopia, Jordan, Kenya, Chad and Uganda have the largest refugee populations in the world (35pc of Lebanon’s population comprises refugees!).

Between them, these migrants and refugees send remittances back to their home countries totalling $601bn, with $441bn going to developing countries, which is triple the amount of official development assistance provided to the developing world by the advanced industrial countries.

But none of this would be of interest to anybody in our government. As the actions of the chairman NAB have shown, all we are interested in is our local witch hunts. Wonder who’ll write what in which rag to spark the next mob-feeding frenzy. A round of applause please, for the geniuses calling the shots in our country!

The writer is a member of staff.

khurram.husain@gmail.com

Twitter: @khurramhusain

Published in Dawn, May 10th, 2018