Thriving informal business

April 30, 2012


Karachi's semi-organised business sector has in its fold thousands of shopkeepers, taxi drivers, tailors, repair men and middlemen etc contributing to city’s economy. - APP photo


Karachi, described as Mini-Pakistan, handles 95 per cent of the country’s foreign trade and contributes 30 per cent of industrial production and more than 20 per cent of the total GDP.

However, a major chunk of industrial and commercial growth comes from the informal sector, which continues to expand both in absolute and relative terms.

Mini industrial and commercial hubs in the city’s Katchi Abadi areas like Orangi, Azam Basti, New Karachi, Qasba, Landhi and Malir are known for operating an economy in shadows. They generally do not pay taxes or follow labour laws.

Businesses of these squatter settlements are thriving despite the law and order and the country’s difficult economic situation. Migrants from all over the country come here to earn their livihood. Initially, they mostly settle in slums where vendor activities flourish. They learn skills of various lines of unregulated businesses and do not bother about frequent rise in cost of energy/electricity as their requirements are met through unauthorised kunda system.

Many of these industrious people uprooted from former East Pakistan mostly settled in Orangi and it’s outskirts and under the guidance of late Dr Hamid Akhtar developed the area on self-help basis by providing sewerage, regular water supply and low cost housing to this area.

With the bold initiative of the Orangi Pilot Project (OPP) – a brain child of Dr Hamid Akhtar—- dwellers of the area were provided micro credit to enable them to set up small / micro businesses. Inmates of Banaras colony are known for weaving best quality banarsi fabric for exportable fashion garment houses.

Besides this semi- organised business sector, Orangi has in its fold thousands of shopkeepers, taxi drivers, tailors, repair men and middlemen etc contributing to city’s economy.

According to guesstimates , 75 per cent of the working population of Karachi is deployed in the informal sector.

Unlike the Sind Industrial Trading Estate and other big industrial and commercial zones in Karachi, Orangi, Shershah and other katchi abadis on the outskirts of the city can be taken as self-created special economic zones for the poor. Unfortunately the government has failed to provide necessary infrastructure for development of formal sector and as such a major chunk of economic activity is the preserve of informal sector.

The OPP’s micro credit programme has given fillip to micro businesses not only in Karachi, but also has expanded in other cities of Sindh. The youth initiated Technical Training Research Centre (TTRC) provides housing support service to the community and trains youth to become architects specialising in low cost housing. In a way the OPP promotes Katchi Abadis as franchise all over the country as youth of Karachi from low and middle income class learn construction and other trades skills from TTRC and then move to other settlement to set up their businesses. These katchi abadis and slums are not only working class settlements, but also have growing population of doctors, engineers, architects and business administration graduates who, in large numbers, are mainstreamed in economic process every year.

Although the government is responsible for providing main sewerage lines and treatment plants yet the Orangi Pilot Project works as a link for developing partnership between poor residents of the area and the government for accomplishing the task.

This, apart from facilitating the work of government for developing and regulating these settlements, has given impetus to construction and also construction material supply business in these areas, providing employment and self-employment to thousands of people.

Almost all katchi abadis in Karachi have business clusters in their folds, particularly of garments and leather goods manufacturing establishments. Garment factories have proliferated throughout katchi abadis which make women and children outfits including exportable fashion and designer dresses. A lot of embroidery works and small printing factories are coming up in these areas which handle the work of large scale textile industries producing fashion fabrics on sub- contracting basis.

Another important economic feature of these settlements is that all recycling operations of discarded plastic and news prints is done here. Thousands of people are employed in this business. In a way these squatter ‘bastis’ are helping clear the waste and improve the environment.

Along with the OPP quite a number of NGOs and CBOs operating in katchi abadis have initiated micro enterprise credit programmes to enable the poor to set up home- based family businesses. The OPP alone has so far expanded its micro credit programme to more than 12 cities and 50 villages of Sindh.

The Sindh government’s recent initiative to regularise katchi abadis will promote a sense of security among its dwellers.

Self-reliance philosophy evolved by dwellers of katchi abadis rightly proves Sylvia Nasar’s- an eminent economist of modern age- saying that “development economics was invented largely to free people from poverty and that humanity could turn the tables on economic necessity rather than being enslaved by material circumstances.”