When will Pakistan become Ethiopia?
Abiy Ahmed was given the award for his efforts in trying to end the decades old dispute with Eritrea, but his country’s economic success story is of equal importance. Many of Karachi’s businessmen have shifted their businesses to Ethiopia, playing an important role in the African nation’s success.
At the dinner in Karachi, the woeful state of the economy hit me harder than it had before. Talk there centered around the economy, and taxes. None of the businessmen there were reluctant to pay tax. However, the complicated method of tax collection and tax rates had taken away their concentration from their trade, and focused it on NAB and FIA.
The current government’s view on tax is directly opposite to how the business community and economic ideologies view it. Every day we are told how the number of tax filers has increased. The federal finance team fails to realize that the real root of economic progression is trade. If trade and businesses continue to exist, taxes can be collected. If they don’t, well, you get the picture.
One other thing that the PTI government and its supporters emphasize on, quiet intensely, is the age of the government. Government officials and politicians all say that 14 months is too short a period in which miracles can be wrought. The business community, on the other hand, insists that they do not expect miracles, but neither do they expect policies that have placed obstacles on their paths.
If we talk about the age of the Ethiopian government, then Abiy Ahmed came into power just 20 months ago. He has performed no miracles but he did lay down a solid economic policy, and laid the foundations for making the political situation better than it was. Since the past 15 years, Ethiopia had been on the fast track towards progress, with a growth rate hovering near the double digits, but all business had to be conducted under the government’s supervision.
When Abiy Ahmed took over, he announced this plans for privatization of the government’s railways, industrial parks and sugar mills. The national airline, telecom, shipping and logistics and industrial zones were to be partially privatized. In a country with 60 million landline and mobile phone connections, two new licenses were to be given out.
To increase investment, Ethopia has built industrial parks that were modeled on China. Five of these are government owned, while two are private enterprises. Abiy Ahmed plans to take this number up to 30 by 2025, so that more jobs are created and production rates are increased. His policies are paying dividends, as many big brands are making their way to his country. The World Bank has pledged $1.2 billion as part of Direct Budget Support while a construction group from the U.A.E. is going to invest $2 billion, to be used in the construction of 4,000 houses. More investment is on the way.
To keep the business sector progressing, Abiy Ahmed decided to stabilize the political situation in the country. In the very first month that he spent in power, the Ethiopian Prime Minister released hundreds of political prisoners. Other than finishing tensions with Eretria, he also concentrated on making relations with neighboring countries friendlier. All Africans were given visa-free status for Ethiopia.
A far cry from the drought stricken, starving nation that we imagined Ethiopia to be.
In Pakistan, businessmen look towards Nigeria and Bangladesh as successful models that can be emulated. The former East Pakistan has foreign reserves worth $32 billion, while Pakistan has just $8 billion. Pakistan, an agricultural country with a cotton crop as its backbone, is far behind Bangladesh’s textile manufacturing and exports.
It has been a tradition here, to hide one’s own bad performances behind complaints of corruption and seventy years of mismanagement. The government should at least bring forth a concise economic plan. Last year, Haseena Wajid said that despite harsh relations between Pakistan and Bangladesh, she was ready to offer help to Pakistan, should we ask for it. Commenting on Imran Khan, she said he is a sportsman and has struck many sixers, but it remains to be seen how many sixes he strikes as Prime Minister.
The World Economic Forum has categorized Pakistan’s economy as one of the worst in the region. Its report states that corruption, too, has increased. Infrastructure has worsened, while Railways has seen a remarkable downturn in its expansion.
If this report is accurate, then the government has failed in its primary promise of making the economy better by reducing corruption. Those that claimed that they will bring back looted wealth from foreign shores now do not want to talk about it. One minister claimed during the election campaign that the PTI would bring back $200 billion. Now, he knows that it was nothing but a fantasy.
All these economic claims and predictions now lie in waste. The Prime Minister, who used to espouse “right man for the right job,” should finally act upon his own words. The only way to bring back Karachi’s businessmen from Ethiopia is to copy Abiy Ahmed’s tax reforms and become a business-friendly destination.