Pakistan’s COVID-19 Response: Logistics and Essential Services

“..This train from Yiwu to Madrid, which is the longest rail line in the world, has been regularly running since 2014. It usually carries electronics, automobile components, and other goods, but from now until the crisis ends the company has made space available to any individuals or companies looking to make a donation to the COVID-19 relief efforts in Europe..” so reported Forbes a few days ago.

Logistics and transport services are at the core of any pandemic response. So, why would Pakistan be thinking twice about this? To answer this, we need to look deeper and separate this into its four dimensions which will help understand the suggestions proffered later in this blog. The first obviously is passengers and goods, the second is across the border versus within the borders, the third one is the mode of transport—rail, road, air, and water, and the fourth one is the reliance on indirect supply and demand patterns for pricing. I will not focus much on another dimension which is intra and intercity, as we are basically discussing continuity of cross-Pakistan logistics and essential services.

We will start with modes. Trains don’t usually jump tracks and neither to airplanes take multiple pitstops and chat with other airplanes along the way. Ships have ports of call and rather large crews barring very modern ones. Road traffic—trucks, buses, cars—has choices to do all the above. In fact, when dealing with aids, it is truckers we tackle as they not only are a source of carrying and transmitting and intervening, but their social ambivalence levels normally exceed average people. So be there wars or pandemics, the first choice for logistics and transport are trains and aircrafts. Pakistan unfortunately has very rudimentary railways’ capability and for us the choice for major within country movement falls on the road sector services. Air service and airport are also very easy to ‘contain’ and as such need revised SOPs during pandemics. In fact, restricting people travel to strictly rail or air in a contained manner is a preference in both war and pandemics.

Within our borders, road transport and logistics followed by air and rail will have to be continued as essential services. Across borders, it is obvious that essential inputs to our economy (both finished and unfinished) must be continued and for this our ports need to be operational. Now’s not the time to focus on Gwadar rather it is time to concentrate on our two major ports, Qasim and Karachi. Air services can and will continue to pay the appropriate role followed to some extent by road sector in the case of our links with Afghanistan, Iran, and to a very small extent China. Ensuring continuity and in fact acceleration of Customs and related clearance services is required, to ensure that Goods Clearance times are brought to nought.

Most important is to decide on who avails the continued essential transport and logistics services. The priority must be goods transport followed by security and medical. The many transport and logistics services serving transport of people need to rethink the business model on how they can stay relevant and survive. Transport of people is secondary given the nature of this pandemic and the country would serve well to regulate the same.

This brings us to cost of services. Pakistan like other transport markets has its own peculiarities when it comes to how costs are estimated. Pakistan exports less than it imports, and it does so primarily through two seaports. This results in a directional imbalance in the availability of transport which impacts costs. This imbalance is compounded by the fact that the nature of our exports tends to be less cost dense which the imports tends to be more cost dense. Further, being a large agricultural country crop seasons impact availability further. In times such as now, these costs become further unpredictable.

Be ready to reestablish ‘fair price’. I say this as otherwise continuity of services will be jeopardized. With approximately 200,000 trucks on the road and about a million plus employed directly in trucking, this is very much part of the daily wagers’ and almost- to actual- poor that government is talking about targeting.

All this points to a COVID-19 response strategy for continuity of logistics and essential services as follows. A) Focus on continuity of goods transport. B) Focus on improving CONVID-19 awareness amongst the truckers in Pakistan. C) Revise the established government ‘rates’ at local, provincial and federal levels to above pre-CONVID-19 levels. D) Reduce harassment [primarily by provincial security agencies] of truckers providing these essential services along the roads. E) Request and recognize those people transporters who are willing to run essential ‘goods supply routes’ both inter- and intra-city. F) Decree Customs and clearance services to operate 24/7 at the seaports, in shifts. G) Develop and decree revised SOPs for ‘contained’ movement of people though air and rail.

Pakistan’s COVID-19 Response: What of the Small and Medium Enterprises?

I am lucky to be part of a very able and noble group under the aegis of Pakistan Institute of Development Economics (PIDE) who are daily undertaking analysis and discussions and recommendations geared towards the policy makers in our holy state of Pakistan.

Today, after the daily morning virtual meeting of this group around COVID-19 issues, I came out thinking about the reality of my existence and of my associates in my small ‘do tank’, Reenergia! I am therefore going to talk about and present a use case of a Pakistani SME albeit on the ‘small’ rather than on the ‘medium’ side.

Between Reenergia and its sister concern Paidartwanai, we have an annual turnover of less than 120milPKR. We have about a dozen employees and another half a dozen temporary/short-term staff, and all the typical overheads you can think about! Just FYI, loans to banks are not one of these overheads as banks in Pakistan tend not to look favorably on us—though included are loans extended either as advances by Clients or individuals. Let us review how COVID-19 is impacting us by asking some questions.

First, how much has our work suffered due to the COVID-19 slow-down—in terms of pre-COVID-19 versus now/post COVID-19 business projections. These projections do not include slow-down in business development; but are based on work already developed and about to be signed/contracted. Our estimate of this slow-down is about 30 percent of projections.

Second, how much is the slowdown in business development? This has two parts: a) the slow-down in the reactions to the work already solicited—includes delayed responses to proposals already submitted or being submitted; and b) the slow-down in solicitations for our services. Both are due to the Client base business slowdown or simply difficulty in working-from-home or even revision of priorities. All this hits our bottom line over the next six months by another 20 percent.

With a cumulative impact on our SME of a reduction in revenues of around 50 percent of projected, we are beginning to see another, third, aspect which is hurting SMEs like us: the slow-down in receivables on work already in hand. This is also alarming as we are the part of a value chain and with a small size SME like ours, we are literally the ‘daily wagers’ of the SMEs and businesses. We don’t have reserves to keep paying our employees and our bills and rentals.

I have not accounted for another fourth element which I see affecting almost every SME around us, especially in the tech and services sector; the inability to keep up the pace of work while working-from-home or the absolute inability to work remotely. I will not handle this presently as we are relatively less impacted by this element, till now.

Pakistan, our operating environment, categorizes enterprises that have up to 50 employees and an annual turnover of 150milPKR as Small Enterprises (SE), and those with an annual turnover between that of 150milPKR and 800milPKR as Medium Enterprises (ME). The Small and Medium Enterprise Development Authority (SMEDA) of Pakistan categorizes SMEs overall as enterprises with up to 250 employees and turnover up to PKR 250 million. Pakistan has between 3.2 to 4.5 mil SMEs.

These SMEs contribute up to 40 percent of GDP—adding more than 17trillionPKR. SMEs employ around 80 percent of the non-agriculture labour force—employing a total of around 32 million Pakistanis [between 7 to 10 employees per SME]. Estimated average monthly salary of a SME employee is anyone’s guess but I estimate we can take a range between 30,000PKR and 55,000PKR.

Where are we heading with talking about how the COVID-19 is hurting a SME business like mine and about SMEs in Pakistan? Here’s the thing. If we, at Reenergia, are estimating revenues going down by 50 percent by June, what does this mean for other SMEs? Are we looking at SMEs laying off workers? []

Are we looking at an almost 8trillionPKR drag on the economy? How can we cater for the SMEs’ workers? Looking at the 100milPKR relief in the Prime Minister’s COVID-19 relief package, I am wondering if it is adequate? There is obviously no way that Pakistan’s government can afford emulating Canada or others, but even a 100bilPKR package for SMEs alone implies a onetime support of 3,125PKR per person employed in the SME sector of Pakistan.

Who is thinking about this? Planning Commission? Ministry of Finance? Pakistan’s National Security Council? Should not institutions supporting SMEs in Pakistan not be taking a closer look? Karandaaz? SMEDA? Who?

Pakistan’s COVID-19 Response: To Test or Not to Test

With so much information floating around and being absorbed or otherwise, I will not bore you with the numbers but simply provide a distillation of our on-going discussions focused on “should we be testing everybody in Pakistan?”

This is an important discussion as it impacts other on-going discussions around the cost of testing, the mode of testing (which test), access to testing kits, delivery of these tests (citizen goes to test or test comes to citizen), and handling of those testing positive.

From the discussions I have been a part of the consensus seems to be emerging towards testing through symptomatic targeting and, definitely, against universal testing! Here is the logic leading to this conclusion.

The cost of universal testing is a prohibiting variable but not primarily due to the outright fiscal burden but rather the procurement aspect. Even if delivered cost of the testing was around USD 50 (~PKR 8,000) per unit, we are looking at 3 to 4 percent of GDP as the cost (same as the annual defense spending of Pakistan). Then is the issue of procuring and delivering over 200 million tests.

This does not stop here, as this is followed by a review of how these tests will be delivered. Whether the citizen is asked to approach a test delivery site, or the test is delivered to the citizen’s doorstep, the universal testing process is time un-wieldy and impractical based on simple back of the envelope calculations.

Should the universal testing somehow become practical, there are daunting social challenges. Since more than 95 percent either fall in the no effect plus recovered bracket, and almost half the population will eventually be infected (based on present predictions), knowing that a citizen is positive will create a social stigma and a social pandemic in the ability of society to deal with each other.

Symptomatic and citizen responsibility driven testing as opposed to universal testing is thus the right approach which also appears to be followed by most including by the Pakistan government. We suggest using technology in both push and pull modes supplemented by radio and TV broadcasts and further supplemented by the volunteer (the “Cororna Tiger Force” being assembled by the Prime Minister).

A mind-mapping exercise around the symptomatic and citizen responsibility driven testing shows that with these options working in parallel, we can cover almost all of Pakistan in about 45 to 60 days and really understand the magnitude of the pandemic allowing us to rapidly assemble coping and mitigation strategies!

Pakistan’s COVID-19 Response: Getting Rations to the Needy

As is often the case with solutions, it is the simplest ones that are the most elegant and applicable. Problem statement is as follows: delivery of food or rations to needy in urban and in rural areas.

Solution can be as follows: use the local kiryana-stores and hawkers supplemented by mohalla and village volunteers.

Constraints to be overcome include the following: identifying the needy; keeping basic food and household consumer goods supply chains operational; avoid people to people physical contact; avoid lines and congregations; avoid prompting households to leave homes.

I must have forgotten some, but I narrow down the problem as to how unpaid distribution of such rations can be managed. The assumption here is that such rations will preclude perishables.

Almost every community knows its needy—by and large. Exceptions are the sprawling urban and peri-urban kothis’ based neighborhoods, like in Islamabad and in the Bahrias and DHAs of this country’s many large cities. We should use the mosques and the mohalla committees and the community and village and union-council based organizations to do the targeting. This also holds for all katchi-abadis and other illegal settlements. These sources can be farmed using smart phones or regular phones with IVR type technology.

Once needy are identified the aim should be delivery to the doorstep. For this to happen the government can through the army utilize local kiryana-stores and other small to medium general merchandise stores in urban and rural localities as the source points for the deliveries to originate from. Utility stores can also be coopeted and so can the armed forces CSDs. These locations can be geo-tagged for ease of ensuring the supply chain. Supply chains and related logistics can be ensured through a communion of army and civil logistics and depots of such supplies can be martialed by force if required. This entire exercise, if crowd sourced, can cover Pakistan in two weeks or thereabouts. Deliveries can be started in one to two days in without waiting for the overall exercise to complete.

Once these lowest distribution points are established these rations can be delivered through the store employees and mobile-vendors, thereby creating a second tier benefit of employment continuity through food-for-work or cash-for-work options for these delivery agents. These delivery agents can be supplemented through army and other civil agencies lead and coordinated through a single entity throughout Pakistan (also read We can also request the National Incubation Centers and the Digital Pakistan effort to attempt technological innovations to supplement these delivery agents and this overall approach.

Pakistan’s COVID-19 Response and the International Financial Institutions: Where is the Rapid Needs Assessment and a National Action Plan?

In times of disaster, and we are in one, almost all nations opt for a national action plan to both react and to proactively prepare for relief, recovery, and restoration/rebuilding; often including building resilience post disaster. In global vernacular it is called DRM or Disaster Risk Management, also often Disaster Risk Mitigation and Management. Disasters often lead to or exacerbate existing fragilities and conflicts leading to localized or spreading violence. Pakistan has hitherto been well served by always timely preparing such disaster needs assessments and plans—not only for internal consumption but to manage external offers of assistance. Has Pakistan done so for the CONVID-19 pandemic at our hands? I provide here, some suggestions unless these actions have already been undertaken and the public has not been informed.

On the Corona assessment, the govt can request the ADB, WB, EU and UN to do a joint assessment under the 2008 Protocol of Cooperation, or it can ask the Bank only (both options have pros and cons). This could be a simple letter to Bank from MOF, requesting for “support the Government of Pakistan in carrying out and Covid-19 Impact and Needs Assessment (CINA), in accordance with the global EU-UN-WB PDNA/DALA methodology. PDNA is Post Disaster Needs Assessment and DALA is Damage and Loss Assessment (which is a sub-tool of PDNA used by EU, UN and WB).

However, this is more complex that a PDNA. In FCV situations, the tool that comes closest to this kind of situation is the Recovery and Peace Building Assessment (RPBA)—previously known as the Post Crisis Needs Assessment (PCNA). A very successful PCNA was conducted in Pakistan by WB, UN and EU (and ADB) under Govt leadership in 2009-10 for the FATA crisis. Hence there is a precedence that can be established and used.

The tool that I propose using is a PDNA-RPBA hybrid that was developed in Ukraine, later used in Nigeria and many other places. A recent one was the Rohingya crisis in Bangladesh.

While some may rebut this idea, this can be an enormous management tool for the government even post crisis and can be done by a dedicated team while reactive measures are being taken to manage the pandemic. Do let us know if we can assist in any way.

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