Future Afghanistan economy? Taking clues from the economy of the ‘Taliban Group’

The author, third from left at Afghanistan side of Towrkham, sometime post 9/11, with his guards, provided by the then Afghanistan National Army

Amer Zafar Durrani with Tehseen Ahmed Qureshi and Hudda Najeeb Luni

Islamabad, September 8, 2021

The debate on how Afghanistan’s economy will fare, once the coalition forces, and their proxies and supporting service providers, have left, rages on. These forces are now almost gone. Taliban have announced their interim government structure after reasserting their control over what we know as Afghanistan.

From an economic point of view, much has changed and yet much stays the same. Falsely propped-up consumption is fast going down. The prevalence of abject poverty in the masses stays the same. If anything, it is worsening by the day!

What will be the shape of the economy going forward? A question that is linked very much to the structure and ‘spirit’ of the ‘Taliban Group’ governance going forward. Will the re-assertive 21st century Taliban dominated government follow the neo-colonial models, or, like Iran and China decide to beat a different drum?

Leading all this preface is the still an unanswered question. When we talk of a country, a nation-state, do we talk of its people or its government? Naïve? Yes, and no. Is the comity of nations now an enemy of Afghanistan or a friend of Afghanistan? Why should assistance be stopped to Afghanistan due to a change of government given that primarily it is the people that suffer? These can be explored at another time. Important, though, to keep these in mind as one mulls the present primary topic.

The author photographing an Antonov being unloaded at Kabul airport while he waits impatiently, midair, to land

Afghanistan faces an economic collapse resulting from a sudden stop of foreign inflows, with a last measured[1] trade deficit at 25 percent of GDP in June 2021. Its foreign reserves, of USD 9 billion or so, have reportedly been frozen—by, you guessed it, their best friends till recent years, USA. There is no other, immediately visible, credit line.[2]. In the absence of foreign money, the only way left for the economy to balance the deficit is to contract. GDP shrinks, so demand falls, so imports decline. Exchange rate devalues a lot too, to cut imports.

Unlike what is being hyped in media, this is not altogether sudden—as, not all was rosy pre-August 15, 2021. The Afghan economy stopped growing post-2012 after foreign aid started to decline from a high of about 50 percent of GDP. ‘Development’ was not being, as it cannot be, imported. Afghans living below poverty were increasing from 34 percent to more than half of the resident population[3]. The large injection of foreign money did not translate into sustainable growth.

‘Foreign’ money boosted temporary consumer spending but did not increase the domestic productivity. Imports, and exports, more than tripled. From USD 2.5 billion to USD 8.9 billion in 9 years—2003 through 2012—from USD 100 million to USD 390 million. Despite the increase, exports underperformed despite this tripling leaving the wide trade deficit mentioned earlier[4]. The exports were hurt by the real exchange rate appreciation—a result of the internal spending boom. Domestic revenue mobilization was also artificially buoyed due to this temporarily enhanced economy.

The author, sometime post 9/11, inspecting Customs documents at Islamqala, Afghanistan, for trade coming in from Iran

Not all of Afghanistan’s revenue—about USD 5.3 billion in 2021—was directly ‘imported’. Domestic revenue mobilization until 2021 was about half of the total government budget. Like any other dysfunctional government in its neighborhood, much of this ‘domestic’ revenue was collected at the border—direct border tariffs and presumptive business taxes. This, also, was declining in recent years. Primarily due to reduced imports and with lessening foreign footprint and thereby the overall consumption through imports.

Afghanistan’s total budgetary outlay for FY21 was roughly USD 6 billion—30 percent of its GDP. Operation expenditures accounted for nearly USD 3.8 billion or 65 percent of the budget. With a domestic revenue collection amounting to around a third of the overall budgetary outlay and adding the external grants—also counted as revenue—the budget was short by almost USD 0.5 billion. IMF was to cover half of this.

Afghanistan became a member of IMF fund in 1985, since then eleven arrangements were made between the two. The country’s “Outstanding Purchases and Loans” stood at nearly SDR[5] 0.4 billion in June of 2021[6]. Interestingly, IMF pledged its largest ever allocation of SDR to Afghanistan—USD 0.4 billion—which was to be effective in August of 2021. This has now obviously been put on hold or ‘seized’.[7] Was the IMF, read US Government lackey, per global narrative, not aware of the ground realities, or was it giving a false sense of security to the US installed government of Ashraf Ghani? Will we ever know?

A major casualty of this upcoming budgetary contraction will be internal security and governance in Afghanistan—vide the inability to support the relevant institutions. Defense and internal security and justice accounted for almost 40 percent of the overall budgetary outlays. Couple this with economic affairs, we are looking at more than two thirds of the required budget to manage peace and stability in Afghanistan. Grants[8] and IMF financed this spending, hitherto. Where will this money come from now? More factors complicate the answers further. The opium economy of Afghanistan and the economy of the ‘Taliban Group’.

Afghanistan being a quasi-narco-state is not, and has not been, a myth since last 3 decades. Afghanistan produces a major share of the world’s opium with a record of almost 10,000 tons set in 2017. Farmgate prices’ returns, direct money going to growers, was estimated at USD 1.4 billion—7 percent of Afghanistan’s GDP. Taliban, the 19th century version, banned poppy growing in 2000 with a view to acquiesce international legitimacy—popular backlash from Afghan growers and less than expected international reception led them to change their stance.

Things, as mentioned earlier, have been on a steady decline, leading to August 15th. Three of the last four years have seen some of Afghanistan’s highest levels of opium production. Even as the COVID-19 pandemic raged, poppy cultivation soared, according to UNODC, 37 percent in 2020. UNODC also reported that the Taliban, the 21st century version, likely earned more than USD 0.4 billion in FY19 from the drug trade.

So, the ‘Taliban Group’, if one can call it in corporate terms, has been running a state within a state. Call it the Taliban Group economy. This group has been running defense and civil expenditures. Consider, therefore, that they now need to adjust their budget to incorporate the wider state they have now charged themselves with. In some ways, they handled the defense part of this budgetary outlay far more efficiently than the Ghani government! There is hope in this. Instead of questioning the ability of this group to manage the Afghanistan economy, providing doomsday scenarios, speculating on how they should follow the neo-colonial diktat, maybe they should be given an update on what they are now taking charge of.

Afghanistan’s economy is now a classic nexus of fragility and disasters, beyond simply an overt aid-dependency. Private sector, the key driver of growth, is almost non-existent—the formal side of it, at least, though some would argue that Afghanistan is entirely running on private largesse. Security and political instability are the major hindrance to private sector growth. Private sector development and diversification is constrained by insecurity, political instability. Institutions are weak, infrastructure is inadequate, corruption is widespread, property rights are ambiguous! Majority of the labor force is concentrated in low-productivity agriculture—44 percent of the total workforce works in agriculture and 60 percent of households derive some income from agriculture (can be read poppy by some). Afghanistan has weak. In other words, a textbook failed state as neo-colonials would put it.

Displaced Afghan nationals compound the situation. Afghanistan has the third-largest displaced population in the world. Since 2012, some five million people have fled and not been able to return home, either displaced within Afghanistan or taking refuge in neighboring countries. Add this to a high birth rate, we have a young unemployed population looking towards the new government—more than quarter, or maybe even more, of Afghans present, were born after 9/11. With internal receipts dwindling and external aid—at least on surface—drying up some external financing will be sought by the Taliban Group—directly or indirectly. Here is where the most possible clash of ideas looks likely. The global financial architecture is not Sharia[9] compliant.

Islamic finance, Sharia compliant, has two crucial parts, banking services and the Sukuk market—the Islamic equivalent of the bond market. Together they equate for around 95 percent of the documented USD 1,800 billion worth of Islamic finance assets.[10] Taliban like Iran, or even in fact China, will opt for integration into this system.

Here again, there is hope, as currently there are more than 200 Islamic financial institutions around the world with investment funds in excess of USD 250 billion and growing at 16 percent annually, offer a possible solution.[11]

In summary, there is hope as long as the Taliban Group recognize that the state is its people and the welfare of its people is what legitimizes the existence of the state, not integration into neo-colonial systems, alone. In ensuing dialogues, we should talk in detail about role of neighbors, especially Pakistan, and the likelihood of the Taliban Group showing the tenacity and perseverance in staying away from the neo-colonial legacies and striving to better the lives of Afghans beyond their current narrow interpretation of what betterment of lives entails!

This article by the author was originally written for the Global Village Space, September 2021, edition, and this is the unedited submission.

[1] World Bank. (2021). World Development Indicators, available at https://databank.worldbank.org/reports.aspx?source=2&country=AFG

[2] Bloomberg (2021). US Freezes Nearly $9.5 Billion Afghanistan Central Bank Assets, available at https://www.bloomberg.com/news/articles/2021-08-17/u-s-freezes-nearly-9-5-billion-afghanistan-central-bank-assets

[3] Ibid

[4] World Bank. (2021). World Development Indicators, available at https://databank.worldbank.org/reports.aspx?source=2&country=AFG

[5] What is an SDR, exactly? SDR is an international reserve asset created by the IMF from a basket of currencies including the US dollar, Japanese yen, Chinese yuan, the euro and the British pound. While not an official currency itself, the SDR is like an artificial currency that IMF member states can exchange for freely usable hard currencies like US dollars. Countries can exchange their SDRs for those freely usable currencies at a fixed exchange rate, which changes daily and is posted on the IMF’s website.

[6] https://www.imf.org/en/Countries/AFG#

[7] https://www.aljazeera.com/economy/2021/8/19/what-will-happen-to-afghanistans-economy-under-taliban-rule

[8] The Afghanistan Reconstruction Trust Fund (ARTF): This is a multi-donor trust fund that helps coordinate international aid to improve the lives of Afghan people, this fund is administered by The World Bank on behalf of donor partners. The fund includes 34 donors who have contributed to development and reconstruction in Afghanistan. Major Donor Partners include Germany, US-USAID, UK-FCDO, Sweden, Canada, EU-EC, Netherlands, Norway, Italy, Finland, Austria Denmark, Japan, Czech Republic, Switzerland, Estonia, Ireland, Poland, and Republic of Korea. ARTF is the largest single source of funding for Afghanistan’s development expenditures, including 30 percent of Afghanistan’s civilian budget, as well as it supports core government functions.

[9] According to IMF’s definition “The provision of financial services that are compliant with Sharia law. Sharia does not allow the payment or receipt of interest (riba), gambling (maysir) or excessive uncertainty (gharar). In practice, this means that common investing techniques such as short selling (betting against a security) are banned and all transactions must demonstrate a real economic purpose.”

[10] https://www.weforum.org/agenda/2015/07/top-9-countries-islamic-finance/

[11] https://www.sbp.org.pk/departments/ibd/lecture_8_related_reading_1.pdf


2021, snakes and ladders and a virus exposing virulent buffoons

2020 has ended, at least by the Gregorian calendar. As always, we are fooled by the time buffoons. Hope springs eternal. This turn of the year, I, for one, am part of this clan, though albeit, reluctantly. 2020 for me was the year of snakes and ladders. Chance pitted morality and malice in a game of realization; conspiracy theories aside.

It was not who did it, but rather what happened, that decided the outcome of 2020—it did not take much to expose the neanderthal within, and the global community was exposed for its posturing and conflict. The earth won.

It showed us the power of regeneration. The Earth made a comeback and reminded us, much as Claude Lévi-Strauss alluded to in Tristes Tropiques, that it was here long before we came and will be here long after we are gone.

The sheer banality of the human, especially the so called human leaders’, discourse in 2021 left me wanting to retch, which I did with abandon. No multilateral claims, nor bilateral ones or unilateral ones, stood any chance in the face of a microcosm of a beast—the COVID-19 virus. We were all exposed as selfish nations, as selfish global communities. Let there be some cheer in that.

Cheer, for now we can, if wise, set a course where technology and this realization should allow us to set a new path for this century and beyond. Will we be doing that? Not much gives me hope. All I see is a hope to get back to what we were doing. Sad, indeed, for this pandemic has shown us how to re-write the basics of global interactions if we want a better future for our children.

Who cares about children, for, virulent buffoons, driven by a false sense of community and wealth, are driving us insane? That we are still unable to build a global governance structure post Westphalia and the World Wars, and the emerging humanity submerging in the nexus of disaster and conflict, is a clear indication that we have no game-plan.

From a cry-baby in the largest democracy on earth to the chest thumping racist pig leading the second largest one, and the self-presuming rats running the game of prosperity, we are nowhere.

The market of human emotions is being played by Bretton Woods multilateralism sloganeering, while we, the people of this world, are behaving like innocent chumps and crying hoarse and befooled into Black Fridays of desires and deprivations.

Indebted nations and indebted people are the harbingers of much that will be at play this year. No degrees or CEOs or pretend leaders can save us. Only a collective bargain amongst humans using the technology platforms of social media can bail us out. Will they organize?

Leadership itself must be rethought. We need a collective and inclusive mind with a desire for action. I sense that if we do not take charge the artificial intelligence, we so nurture, may well beat us to it.

Before I close, a thought about Pakistan. Time has come for rebuilding a national consensus through plebiscites and by delinking election of representatives from election of ideas. The problem here and the problem globally is the same. We must take on serious thought and discourse as a building block and let the rat-race die. I know, you will say, dream on! But dreams are the builders of hope and good cheer! Blessings for 2021.

No substance, no poetry, no thought, no Pakistan—the world, friends, is moving on!

In this last week, alone, much has happened outside the land of the pure and plenty.

The Egyptians earned foreign exchange and tourism flourished. Not a lot happened at Sharm El-Sheikh, except that the red seacoast lit up with suits and dresses and some scanty-dresses. The usual moral stampede by the less favored nations—read all of us and Africa! The polluters paid us lip service—as usual—and ‘copped out’ out of COP27. Even Pakistan’s erudite Sherry’s amazing soliloquy “fell on deaf ears.” You need a country with some substance to be heard as its representative!

The Turks hosted the spy chiefs of two of the three world superpowers, soon after Istanbul’s Oxford Street—Istiqlal Street—suffered a terrorist attack leaving bodies and injured in its wake. Amazingly, this Constantinople of the world, recovered the next day. The locals and tourists were back and laying wreaths for the departed. This NATO ally sets the trend in diplomacy!

The Saudis and Emiratis told the Americans to stuff it, and to not dictate them on taking sides. The second major rebuke since the oil pricing clash a few weeks ago. Not to be left behind, the Qataris, yeah those spoilt children of God, took on the media about LGBTQ flags, football, and not politicizing sports! These Arabs have surely come of age! Proud of them.

The Chinese told off the Americans about ever dreaming of excluding the Big Bear from any global talks—who else but the denizens of the land of the Czars. Then, the most superb foreign emissary, Sergei Lavrov, told the world to suck it up and witness the emergence of a post Yalta global multilateral order! Duly followed by surgical strikes on Zelensky’s aspirations. These people mean business. The sooner the world realizes it the better.

All this happened in just a week, and nothing rocked the internal narrative in the land-of-the-pure-and-plenty. Pakistani news, which I unfortunately tuned in to after entering the superb Serena in Dushanbe, was stuck in the 20th century—the army chief, the not so long long-march, and finally a falling nation’s celebration of mediocrity in cricket. More on this is required, so read on.

The long march of PTI is an offense to the Chinese. The Chinese Communist Party, under the eventual command of Mao Zedong and Zhou Enlai, covered a grueling nine thousand kilometers over more than a year, and lead to what we know as China today—you cannot deny the labor, the resurgence, and the revolution that it underwrote—with such history, even the Tianneman experiment failed. The PTI long march is not even an orange revolution—even the Americans can get a million people in Washington to fight for voice—let me not bring back memories. Listen to me, Imran, the ‘Khan’! If you don’t, I simply ask the youth of Pakistan to “wake up and smell the roses”.

Coming to the homecoming of the Pakistani team from the 2022 T20 Cricket World Cup. It looked like a celebration of Beavis and Butthead, and Simpsons—celebrating underachievement—for, in this game only the team that wins all, counts. For the millennials and the Gen-Z, Beavis and Butthead, and Simpsons, will be documentaries of the Americans post nineteen-nineties, from the sanitary worker to the President—the struggle towards, and the pride in, being the best at whatever one does was, thence, lost, leaving, only, ‘entitlement’—. The Silicon Valley survives on post WWII ideals that the Chinese and the South and East Asians, adopt as migrants and government largesse to science—an exception that still drives technology in USA.

Folks, as I traveled from Uzbekistan to Tajikistan, this week. I realized that we have lost the proverbial plot. There is no inflation in this so called-poorest of countries, it is growing, the currency is stable, it is not ‘democratic’, the food is cheap, it is doing as it pleases, it is building the world’s highest dam and damn well proud of it—the whole country and its gold is contributing. Let me not bore you more.

“Nations are born in the hearts of poets; they prosper and die in the hands of politicians.” So said our poet, Mohammad Iqbal. Pakistan today is dying at the hands of its army, its judges, and its media—our real politicians. The so-called politicians are simply scavengers. Sad, but true!

The world today is less about ideals, more a commercial slaughterhouse. Those who have, something to sell, be it goods or ideas, win! People who are caught up in internecine issues and warfare and introverted, are losing. Pakistanis are living on their past glories. We have no global voice, no global thought, no matter how glib our bureaucracy and pseudo aristocracy are. No substance, no Pakistan. No, us!

The world, my friends, is moving on!

Sheep, Shepherds, Pakistan, and Social Pollution!

“To be born again, first you have to die. How to ever smile again, if first you won’t cry? How to win the darling’s love mister, without a sigh?”

I will not even dare and explain whose quote I am using. Those who know, do shut up. Pakistan is, I think, in need of this tipping point. Do we continue as we are, and have been, or do we turn a new leaf?

We are not a small number of people—230 million or so of us sheep. Sorry, minus 40 odd million who believe that they live on the largesse of the shepherds. That still leaves 190 million odd sheep. Wow! Some 10,000 odd shepherds, take away our lives and our souls. Our right to life! Who are these people? We know them know, as we knew them always.

These shepherds have their roots in the extractive British colonial system we inherited. Bureaucrats, also formerly known as “brown sahibs,” were the harbingers. They were closely followed by the pseudo-politicians, and on their coattails came the military. Mark my word, this is how it happened. Though I do mix the politicians and the social polluters—the feudal lords and ladies, who lived off their roles in culling the “natives” for the “gora sahib,” aka the British. As time moved on things got interesting and the industrialists and later on the real-estate moguls all became part of the shepherds.

“Ae Watan ke sajeele jawaano; mere naghme tumhaare liye hain; sarfaroshi hai imaan tumhaara; jurraton ke parastaar ho tum; jo hifaazat kare sarhadon ki..” – Sang by our awesome lady-crooner, Malika-e-Tarannum, Nur Jahan.

This is a quote from a favorite song that did the round in 1965 and 1970—the wars. It has history and I have been part of it. The song, literally, makes me want to go and lay down my life at the borders for dear Pakistan! It now, though, also makes me sad.

What is the military doing inside our borders? It has no mandate here. Yes, many will quote this and that part of the constitution and precedent legal judgements. Fact of the matter, my dear Pakistanis, is that we need to get them back into their barracks. Tough, not really, I will explain.

Pakistan is not a corporation rather it is a collective of people with diverse timelines, objectives, and economic and social paths tied together by a national vision—a possible nation. A government’s job especially one which is elected for a limited time is not to create wealth rather to provide the enabling environment to create wealth—particularly by staying out of that business itself! A clear subset of the aforementioned, is to reduce the size and footprint of the government and to reduce (not increase) the resources in the hands of the government—as measure per unit such as capita or square meter.

Pakistan today, is touted as a de-industrialized state. Let me tell you why? When government is in business and all private capital flows to dead real estate—no real appreciation or productivity in global terms—a country dies, and we are. Between the Bahiras and the Defense Housing Societies and the civil and military (yes, military, also public with a pretense of being private) and public state-owned-enterprises, the private sector is doomed. The sheep are being culled, not just being harvested for wool!

Time has come to cut all this nonsense back to size! All civil and military assets not operationally required to provide defense of our borders, deliver social services, provide internal security and justice, should be shed. This is an assailable truth. At the core of all this is the failing of the people, yes, commonly known as sheep, for being labeled as such and evolving into “electing the best wolf they want to be eaten by.”

We are all equal citizens of Pakistan, and all in office are the servants of the common people, who swear an oath to protect our rights to be so—least some have forgotten the ‘servant’ part. Servitude is the last attitude we see in those who serve us—the main problem, it is!

Unfortunately, no one amongst us is ‘imported’. All of us, are a product of our society. So do not play holier than thou with me. Each institution of Pakistan is a microcosm of the family, the community, the village, the union council, the district, in short of us as a society. We are all to blame!

Before you point fingers at anyone, know that you are here because you are a product of the social pollution you have all been a part of over the last century. All the excrement you see and so exuberantly report about in the media is of your own making, so don’t be ‘holier than thou’ and accept your personal blame, for only then will you bring about the Pakistan I dream about. Do you?

Adapting Pakistan To Post Covid-19 Technology Gains: Some Thought Pathways

The Covid-19 pandemic has transformed our lifestyles in so many ways. The revolution in the conduct of business and the increased role of technology are the most crucial ones. Changing patterns of earning and spending have resulted in people and businesses being more reliant on digital means. Technology-driven businesses survived and thrived during this global pandemic. Evaluating the patterns of the past year, one thing is clear that these changes are here to stay.

Post pandemic, a massive compression of technology adoption and adaptation is happening in Asia, but Pakistan, still amongst the least technology-friendly states, is lagging. Is the enabling environment in Pakistan holding back this technology adoption and adaptation? Is dearth of capital chasing technology innovation in Pakistan holding back emergence of ideas and innovations and entrepreneurs, or is it the absence of ideas and skills and ‘real’ education?

Here is an attempt to provide some thought pathways for Pakistan to adopt and adapt to post Covid-19 technology gains.

For arriving at these pathways, we must review post Covid-19 and other emerging trends underpinned by technology.

Remote work is here to stay changing the geography of jobs and therefore living preferences. With the outbreak of Covid-19, offices, firms, and industries had to encourage their employees to work from home through online systems. Today, it is observable that virtual meetings are held through apps like “Zoom” and “MS Teams” and more. Since remote work is becoming increasingly common, the geography of jobs is also going through a transition. Now that everything has become accessible through the internet and technology, the demand for staying in cities has been decreasing rapidly. Due to this, the property prices in the urban areas, particularly those in the developed states, are on the continual decline as well.

Last mile delivery, remote shopping, and e-commerce have gotten a boost and these trends will not back off. People have now become acclimatized to the new normal. By adapting to the changing patterns, people now prefer having most tasks done while staying at home and using emerging digital customer service trends pervading e-commerce. During the pandemic, retail and financial and food services have undergone change. Instead of having to go to the malls, people now prefer shopping online. Due to restaurants being shut down, food is ordered online through apps like “Foodpanda”. Grocery stores have also shifted their business to being more e-commerce oriented. Even the Karachi icon Agha’s Super Market Store attempted e-commerce before completely dying down due to a late transition post pandemic.

Demand for resilient skills and not university graduates in traditional fields is changing the demand for learning. Cognitive skills and critical learning are very crucial to survive in the contemporary world. Grasping the understanding of socio-behavioral patterns and utilizing them to deliver services through critical thinking is the emerging need in all spheres of commerce and life. The share of employment in occupations intensive in non-routine cognitive and socio-behavioral skills is on the rise since 2001—from 19 to 23 percent in emerging economies and from 33 to 41 percent in advanced economies. People with critical thinking and cognitive skills with a better understanding of the socio-behavioral patterns are preferred in the employment processes. These adaptable skills enable people to transfer more easily from one task to the other. This in turn is changing the nature of demand for education and skills—learning of different nature is being sought.

Digital platform jobs are raising opportunities for jobs in connected rural areas. Technology is challenging the traditional boundaries of firms and global value chains. The geography of jobs is changing due to the pandemic and the emerging digital platforms. New business models involve dependency on digital means and can thus evolve rapidly from local startups to global behemoths, often with few employees and tangible assets. These digital platforms tend to form and run clusters of businesses in underdeveloped rural areas.  Even in the places like Vietnam, Bangladesh, Nepal, Kenya the economies are moving to rural areas due to digital platform jobs.

Digital platforms have rationalized the hype about the gig economy. The gig economy refers to a labor market dominated by freelance work. Though there has been much talk about this, the takeover of the gig economy is a rather gradual process. Freelance work today is less than half a percent of the total economic labor force of the world—Freelancer, Upwork, and Zhubajia have a total of 60 million users. What is happening is that before the gig economy came about, organized platforms or e-commerce platforms have started coming around. There is a limit to what an individual contractor can do unless they are a part of a team. The team is where the innovation happens. Virtual clusters have been formed and continue forming. Instead of the gig economy, we now have platform firms which are dominating the markets.

Pandemic or not, technology has already been shaping the way future services are delivered—the pandemic is simply shrinking the timeline.

Manufacturing shop floors are now dominated by robots—replacing people and jobs. The major manufacturers around the world have amalgamated their commitment to artificial intelligence and technology in their business agendas. Mercedes, Toyota, Nissan, etc. are implementing the idea of artificial intelligence and technology in their product lines and factory stores to survive in the emerging business trends. In the next ten years, the global economic patterns are expected to transform completely. Since mid-2020, nearly three million industrial robots got into operation. That is more than the total number of robots that got into operation between 2014-2020. Due to increased dependency on technology, it is evident that robots are the future—pandemic or no pandemic!

Reshoring could potentially impact global value chains. Global economic institutions are debating whether global value chains will survive? A lot of people feel threatened due to the pandemic and related chaos. Immense work is being done to draw out ways to get out of this turmoil. A continual vast-scale expansion of the businesses like Amazon and Alibaba has been observed recently where brick and mortar stores are unable to compete. The trend of carrying out businesses over the internet has been more immune to potential lockdowns. Thus, investing in automation and reshoring production can prevent the value chain disruption greatly. Travel restrictions have impacted the trade patterns greatly. Many states, including China, are working on reshoring. Businesses reliant on imported inputs are facing a crisis due to disruption in global value chains. Amendments in the trade policy are required and many multilateral institutes like World Trade Organization, World Bank Group, and World Economic Forum are pondering upon how to deal with this matter.

The key to learning the pathways towards future resilience lies in those who survived best through the pandemic—be that resilience against the current or future pandemic or a war or any other natural or created global disaster. Those businesses that were resilient, were the ones that were either already adaptive to technology or had adopted it quickly in their business plans, were the ones that survived the best during the pandemic. Such businesses were able to harness technology to simulate operations and automate manual processes. Businesses that had amalgamated the use of technology had productivity advantages as well. The past year has made it evident that spending is now going to technology-driven businesses. They were able to immediately gear up to work remotely, collaborating through technology. Thus, in times when several businesses were going through loss and many being shut down, these businesses with digital advantage were able to maximize their productivity and sustain company culture. Furthermore, having a digital advantage also prompted businesses with an agility advantage. By providing them with data-driven insights, the ability to make faster decisions and faster action. Usually, cultures halt the process of adaptivity to change, but because such businesses had cultural flexibility, it made it easier for them to adapt to the changing course.

These emerging and evident trends have immediate lessons for Pakistan and its government to help commerce and society to adapt to this increased role of technology.

Invest in human capital and that does not mean merely sending them to educational institutions. Rather introduce to them the concept of life-long learning. Provide them with opportunities to gain knowledge, polish skills, and train cognitive skills—the narrative of higher education degrees as panacea for progress needs to be rethought.

Innovative education is the need of the hour. It is important to rethink the ways how the youth is being educated. Having a piece of paper (degree) in the hand must not be the only precondition of getting the job. Just look at how Google education program is questioning traditional ‘knowledge for commerce’ institutional approaches. People must be given chances to acquire cognitive and socio-behavioral skills. Competence must be evaluated based on skills rather than based on a degree that one holds. Education for livelihoods is veering apart from education for purely knowledge and learning.

Provide the populace with social protection. This is a two edged sword and helps cut through inequity while providing avenues to mainstream technology—whether targeting or adopting universal basic incomes. This links directly to creating appropriate fiscal space and ensuring nobody escapes tax—yet another policy that will need main streaming technology to implement. Government must introduce new tax structures that involve advancing IT and artificial intelligence to enhance appropriate taxation rather than the current inequitable presumptive and use based tax net.

Government must ensure affordable and accessible internet connectivity for all. Today, this is better than providing physical access through roads and much cheaper. The job creation potential of universal internet and broadband access is incredible. This can also enable emerging Pakistani digital platforms to grow and also for global digital platforms to use Pakistan as a base.

Immense emphasis must be placed on minimizing rural energy poverty. One hundred and forty million or nearly half of the people in Pakistan have either no or partial access to power, even though the government claims achieving ninety percent electrification. All the services that we are going to have to deliver are not going to happen by building new schools and universities but rather through making technology accessible. Since it is difficult to go to everyone’s doorstep to provide them with services, it is crucial to ensure easy access to electricity and the internet.

Governmental authorities must consider steps to reduce labor market rigidities. People must be allowed to move and transition jobs, reform financing arrangements, and labor market norms. Conversely too much informality in the employment sector due to labor market rigidities thwarts formal accounting and transition and mobility of jobs as prospective job seekers and those employed. For job market to respond to signals it first has to be formal.

Adapting to the changing patterns, the government must introduce IT-enabled governmental services. IT demand development must be encouraged to move jobs from one generation to the other. Government as the largest formal employer in Pakistan provides the natural platform to lead in technology adoption and adaptation by IT enabling governance.

Government should get industry to focus on establishment of data centers which are at the core of all future technological adoption and adaptation. Pakistan’s northern areas provide the natural environment to enable sustainable power driven green data centers for the growing local and global cloud storage and computational needs. There are three good reasons why data centers must be established in the northern areas of Pakistan. First, because they require abundant clean energy. So, you need a lot of renewables and the northern areas have a lot of water and hydropower potential, in addition to other renewable power sources. Secondly, they require a cooler climate which northern Pakistan provides. The third requirement is literate and youthful human resources—abundant in Gilgit-Baltistan, and Chitral.

Developing new cities that are clustered, high-rise, small, innovative, youthful cities. Pakistan has an acute dearth of middle sized and small cities given the size of its population. Coupled with this is the trend to spread development horizontally thereby making it difficult to provide services efficiently. Investing in vertical city centers and new cities attracting the youthful population will enable innovation and entrepreneurship—albeit with a new local model of governance for these cities. This will help to shift the geography of jobs and will work as a catalyst to boost development and prosperity.

For Pakistan to ensure its stability in the emerging technology-reliant world, it is important to adapt to the digital means. Pakistan needs to start working over the free provision of internet services, encouraging innovative education and making technological usage common.

Note: Written with support from Yemeen Hasan (yemeenhasan@gmail.com).

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