THE decision-makers in Pakistan must recognise that we operate in a global market, and if the Western economies experience a recession, other countries, like, say, Bangladesh and China, will adjust their strategies to support their exporters. Therefore, it is imperative to provide support to exporters in Pakistan during this challenging period. They can bring in valuable foreign exchange, which can help lift the country out of its sovereign debt crisis.
Drawing from the wisdom of Herman Kahn, the renowned military strategist and founding member of the Hudson Institute, who formulated the Kahn’s Escalation Ladder, it appears that the world tends to have a blind eye to potential risks.
With geopolitical tensions escalating in the Russia-Ukraine conflict as well as in the Middle East, and with the possibility of a miscalculation between China and Taiwan leading to a war, the potential danger of a global trading disruption cannot be ruled out. In such a scenario, it is crucial for Pakistani decision-makers to have a contingency plan in place to address the possible decline in our exports.
Small businesses have been described by many, including former United States president Barack Obama, as the true backbone of any economy. In Pakistan, these enterprises contribute significantly to employment and gross domestic product (GDP). However, the ongoing currency crisis, dollar shortage and rampant inflation have together devas- tated the small and medium enterprises (SME) sector. This, in turn, has had a severe impact on the country’s employ-ment rate and overall economic growth.
It is disheartening to note that despite their significance, the SMEs are being systematically destroyed due to the glaring disparity in electricity and natural gas tariffs.
The unit price of electricity for SMEs is three times higher than that of large undertakings which enjoy the privilege of captive power plants and special treat- ment from the government. This unfair advantage creates a detrimental envi- ronment for the SMEs, and stifles their growth potential.
The SMEs are pivotal in fostering economic growth, contributing around 40 per cent to the country’s GDP. These enterprises make up approximately 80pc of all registered enterprises and employ a substantial portion of the national workforce. Yet, they find themselves at a disadvantage, struggling to survive. It is crucial to recognise the multiple roles played by SMEs.
They are instrumental in generating employment, reducing poverty, promoting local development, fostering entrepreneurship and innovation, ensuring access to basic goods and services, and facilitating skills development and capacity-building.
The solution is simple and just. The SMEs are merely asking for equitable treatment in electricity pricing. By granting SMEs the same price as the large units, the true potential of the SME sector can surface.
This will provide a level playing field, and empower everyone to have a fair share.
Those behind the SMEs have already consumed their savings due to inflation. What they want is for their businesses to survive so that their employees may survive in these critical times.
It is only through collective efforts and a commitment to justice that we can hope to overcome the current economic crisis and build a prosperous future for Pakistan and for all the Pakistanis.
Adil Hanif
London
Published in Dawn, January 17th, 2024
