A recent World Bank report pointed out that total urban population of about 3.5 billion people is projected to reach five billion by 2030, with two-third of the global population living in cities. About 54 percent of the population lives in urban areas globally, and this trend is expected to continue. Pakistan has South Asia’s highest proportion of urban residents. By 2030, an expected 50 percent of the population will live in cities, up from the current 40 percent. This is because these urban areas contribute 55 percent of GDP, maximum tax revenues, and 60 percent of the employed labour force. But we have to understand that the speed and the scale of urbanisation bring challenges, including meeting accelerated demand for affordable housing, well-connected transport system and other infrastructure, and basic services as well as jobs.
On June 3, the federal government presented Rs 4.394 trillion national budget, which shows a 7.3 percent increase from the previous year, with a growth target set at 5.7 percent. The Economic Survey of 2015-16 revealed that the government had “failed” to meet major economic targets, including GDP growth that stood at 4.71 percent against a conceived target of 5.5 percent during the outgoing fiscal year. In the National Assembly, some opposition lawmakers clearly said that the actual budget deficit was six percent but the government had shown only 4.3 percent. In the budget making process, economists have ignored the very important subject of urban economic growth. We hope that the agriculture sector will receive good attention, as the government had announced in the budget.
Pakistan is more urban than what the official statistics show. A foreign research claims that almost 70 percent of Pakistan is either urban or urbanising. This is rather exaggerated, and it further complicates the task of reforming urban economies. But our policymakers will have to understand that the urban land is the instrument of wealth creation. For equitable economic growth, access to the state land for planned development has to happen for all, and not just for the privileged few. Government would have to focus on creating the right environment for urban centres to become engines of economic growth, and to provide employment to the millions of youth who are looking here and there for their future. The policymakers must know that urbanisation and economic growth come in a package.
In Pakistan, cities could be transformed into engines of economic growth. However, this would remain a dream as long as urban economic development stays on the backburner of economic policymaking. We have to understand that the urban economic development has to be at the forefront of the economic policymaking, which in the past has focused exclusively on agriculture and manufacturing, and more recently, also on remittances. There is a suggestion that the government should focus on direct taxes rather than the indirect ones to expand its tax collection net, and to reduce its dependency on foreign loans. Clear directions and goals should be set to overcome challenges including unemployment, strengthening industry and reduction in inflation.
The non-developmental expenditures should also be decreased to strengthen the economy. The government should give equal share to all provinces in the Public Sector Development Programme (PSDP) projects to provide equitable opportunities for growth and development, and to neutralise feelings of deprivation among people from different provinces. Every year, the growth numbers are exaggerated during the budget preparation in order to cover inability of the policymakers to accelerate the economic growth process. To achieve a growth rate of seven percent we need to give this job of planning and devising plans and budgets to real economists, statisticians and mathematicians who are internationally acclaimed, and know what they are doing.
In 2009, the State Bank informed the government that the country is facing shortage of over nine million housing units as formal financial sector caters only up to two percent of all housing transactions, the lowest ratio in the region. In 2014, there was again a shortage of 10 million homes, mostly reflecting the low-income market. An estimated 47 percent of the country’s urban population lives in squatter settlements, where low-income residents pay high premiums to live in what are often unclean conditions. Financial weaknesses and the absence of clear and fair business practices have affected property development industry’s credibility, contributing to the reluctance of financial institutions in providing development and construction finance. There is a need to strengthen property titling and land administrative procedures, including improvements of legal provisions and computerisation of all relevant revenue records.
Although the regulatory framework for land registration and transfer regime exists, the process by which land is acquired and registered is clumsy at times because of the sheer number of institutions and registration procedures required to execute property transactions. Our cities are expanding without sufficient planning, leading to poor infrastructure, inefficient public services and unaffordable housing. This has prevented the realisation of mass benefits in terms of lower production costs, growth of entrepreneurship and creation of much needed jobs. Without a sound policy for urban development, Pakistan is being denied the full economic and social advantages that cities offer. If cities continue to operate with low levels of employment and poor service delivery, a class of disaffected youth could emerge as a precursor to political and social strife.
Public policy makers have neither paid much attention nor allocated adequate resources for the urban development or services because of the fear that they may antagonise majority of legislators who hail from rural constituencies.
The urban-rural divide has created an environment of adversity and confrontation instead of building linkages and more interactions. Large metropolitan areas can spawn intermediate cities and towns through better connectivity, and these in turn can serve as pivots for the rural areas. The big cities can also draw workers from these towns through making commuting easier by expanding intermediate cities and towns. Government will have to give full attention to urban planning and development, and it is time to understand the fact that Pakistan needs to carry out a census in order to actually know how many people inhabit this country.
The writer is an engineer and is an urban development practitioner. He can be reached at zec.engineering@yahoo.com
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